Is Going Back to the Office the True Cause of the Decline in Worker Productivity?

It runs against the conventional wisdom, but the Bureau of Labor Statistics data suggests that going back to the office is the true cause of the decline in worker productivity we’ve seen recently.

I was writing an article on long-term trends in U.S. productivity when I noticed that if you look at quarterly labor productivity data from the last few years, you see pretty solid productivity growth from 2020 through 2021 but then a hard dip in 2022.

I figured I couldn’t be the first person to draw the obvious conclusion that the return to office is pretty well correlated with a decline in worker productivity, and I was right.

Correlation Isn’t Causation But….

It turns out Gleb Tsipursky, Ph.D., wrote an article about this for Fortune magazine back in February. He even put together a handy-dandy graph based on Bureau of Labor Statistics data.

As Tsipursky neatly sums it up: “U.S. productivity jumped in the second quarter of 2020 as offices closed, and stayed at a heightened level through 2021. Then, when companies started mandating a return to the office in early 2022, productivity dropped sharply in Q1 and Q2 of that year. Productivity recovered slightly in Q3 and Q4 as the productivity loss associated with the return to office mandate was absorbed by companies–but it never got back to the period when remote-capable employees worked from home.”

Maybe There Are Other Reasons

Of course, correlation isn’t causation, and there may be other factors involved. For one thing, the pandemic meant that there were suddenly more people dropping (or being dropped) out of the workforce. In fact, the mini-recession we saw at the start of 2020 could help explain higher productivity numbers.

That’s because as employers shed more jobs, existing employees are forced to take on more work from their former colleagues. Also, new processes may be put in place to keep production relatively stable. Some have called this “cleansing out unproductive inputs,” which certainly sounds harsh but may have some element of truth, at least in the short run.

As the economy recovered, more people were hired back, which might help explain the decline in productivity figures.

Then There’s the Inflation Angle

Inflation demoralizes employees unless employers are matching inflation increases with increases in compensation. A survey from the HR Research Institute recently ask HR professionals, “What do you believe are your employees’ top five sources of financial stress? ” and the number one answer was “inflation issues,” cited by 62% of participants.

It makes sense that if employees feel they are doing the same work for less and less money each month, then they grow less satisfied, engaged and productive. And, although this problem is cumulative over time as employees lose their purchasing power, the highest spikes in inflation occurred in early 2022.

At the same time as this was happening, employees were spending more money on gas as they started to commute back to their workplaces.

Still, Somebody Needs to Tell the CEOs

Whether the increase in labor productivity was caused by an increase in remote work, a sudden spate of downsizings, and/or other factors, the bottom line is that business leaders should be careful not to assume that bringing people back into offices will automatically make them more productive. In fact, if the loss of productivity is being caused or influenced by higher inflation rates unmatched by higher compensation rates, then return to office mandates may make things worse rather than better.

Nonetheless, a lot of CEO seem to think that a return to office program is the way to go. Make It reports, “While half of employers say flexible work arrangements have worked well for their companies, 33% who planned to adopt a permanent virtual or hybrid model have changed their minds from a year ago, according to a January 2023 report from Monster.”

Best Not to Mention the Dog

How CEOs communicate about their desire to get more employees back in the workplace can be a tricky proposition and can result in public relations nightmares if not done well. A case in point is James Clarke, CEO of Clearlink, who was reportedly “slammed on social media after he praised an employee for selling his family’s dog to be able to return to the company’s office.”

I know nothing about Clarke. Maybe he’s otherwise a terrific business leader. But bosses may want need to rethink any allusions to dogs when it comes to return-to-work policies. Most Americans probably like their dogs way more than they like their fellow human beings, especially if those human beings are well-off CEOs forcing people to go back into the office on the perhaps faulty premise that it’ll boost productivity.

But Maybe It’s Not Even About Productivity

Of course, it could be that a lot of CEOs don’t really think it’s about productivity. Maybe it’s more about their own values and attitudes toward work and workers. Insider magazine quotes Joan Williams, the director of the Center for WorkLife Law at the University of California College of the Law: “These are men with very traditional views, who see the home as their wife’s domain and work as men’s domain. These are people like Elon Musk, for whom everything is a masculinity contest, and the workplace is the key arena. They have no desire to continue to work from home. This is not about workplace productivity. It’s about masculinity.”

So, some leaders prefer maculinity over employee performance? Is that the true cause of the decline in worker productivity?

Maybe.

The truth is, it’s complicated. I’m sure there are some female bosses who’d also like to see employees back in the workplace. And research from the HR Research Institute, where I work, shows that even a lot of HR professionals believe that their corporate cultures have suffered due to a massive move to remote work.

I imagine that a lot of this comes down to the specifics at any organization. Every company of signficant size has it own complex ecosystem of culture, policies, work processes and management quality. Business leaders need to make the best decisions they can given all these variables.

But they should keep in mind that a lot of employees might actually be more rather than less productive at home. If that’s true, the guy bosses should put their masculinity aside for the good of the organization. Save it for the handball court, the golf course, the corporate suite at the stadium, or whever they can let their testosterone (and views on dog ownership) flow unimpeded.

Featured image is from Awiseman, posted on Wikipedia at https://commons.wikimedia.org/wiki/File:Goofing_off_in_the_office.jpg