Is remote, hybrid work to blame?
The world of work has changed and it may not be for the better, judging by the results of a recent survey.
U.S. worker productivity plunged by 2.7% in the first quarter of 2023 compared to the same period last year, according to a report from EY-Parthenon citing data from the federal Bureau of Labor Statistics. This is also the fifth consecutive quarter that worker productivity has dropped.
“The 5 consecutive quarters of year-over-year declines in productivity is the first such instance EVER with data going back to 1948,” Gregory Daco, chief economist at EY-Parthenon, tweeted.
This resulted from a 3.0% increase in hours worked and just a 0.02% increase in output. Also, unit labor costs increased by 6.3% and compensation upped 3.4%.
The trend “appears to be a recessionary signal with output falling before labor & inflationary pressures,” Draco said.
Why is productivity dropping?
“When you have an environment in which output is outpacing labor growth, that’s an environment of stronger productivity,” he explained to Fortune. “When you have the opposite, when output growth is sluggish but labor growth is strong, you have a weak productivity environment.”
Pay emerged as the biggest factor that would motivate staff to be more productive at work, according to a previous report.
EY-Parthenon clients have claimed that remote and hybrid work may be contributing to the trend, Draco said, according to a Yahoo! Finance report.
“From our clients across sectors, we hear similar stories of reduced productivity because of the new work environment,” he said.
Greg Onyszchuk, head of regulatory affairs at Lexicon Pharmaceuticals, disagrees.
“To me, there is a significant relationship between productivity and degree of engagement,” he said.
“It is fairly easy to attribute reduced engagement to working from home, but I know of workplaces — including mine — where many/most are passionate about the company mission, passionate about contributing to the strategic goals of the business, and bringing more energy than ever before to their work, their teamwork, and getting stuff done. They are doing this while working from home. A lot of it is about growth.”
Other factors in play are the number of job openings, hire rates and quit rates which have all reached record highs, according to the Yahoo! Report.
“That tells you it’s been very difficult for employers to, essentially, train their employees and bring them up to par with the productivity levels that would have been deemed normal pre-pandemic,” he said.
On average, hybrid working employees deliver nearly two extra weeks of work a year for their employer, global workplace consultancy AWA previously reported, citing three studies.
Here are some ways to improve worker productivity, according to Nectar HR:
- Understand where your team currently stands when it comes to productivity.
- Define what productivity means to your organization.
- Think about productivity from the top down.
- Utilize employee recognition to encourage productivity.
- Focus on employee health.