Leadership   //   July 24, 2023

How employers measure productivity is changing

Pre-Covid, employers didn’t think too much about the productivity question. Employees had their butts in chairs in the office for at least eight hours a day, which had to mean they were doing their jobs, right? 

Not exactly. 

But the return-to-office pendulum has swung back and forth so many times over the last year, that now the ability to actually see people physically in an office “working” has become the RTO war cry for business leaders who believe that WFH is to blame for productivity drop-offs.

But location is no proxy for real productivity. In reality, seeing people at their desks was, at best, a blunt metric for assessing what was getting done efficiently, and what was merely time spent at a screen. 

“Many managers and executives have used being able to see someone as a management crutch,” said Rob Sadow, CEO and co-founder of hybrid work app Scoop Technologies. “The belief that just because I see you means that you’re working, I think we all know is not necessarily true. I’ve had days in the office where I was there and extremely unproductive, and days where I was remote and no one could see me but I was extremely productive.”

The issue of poor productivity measurement is universal. In the U.K., 37% of 2,000 desk workers surveyed said that their productivity is still measured on visibility, including hours spent in the office or online, according to new research from Slack. As a result, almost one third of the average day is lost to performative work that doesn’t contribute to company goals, but is simply done to appear productive. 

Cost-of-living hikes, shaky economies, mass layoffs, and the workplace flux that has occurred over the last year are putting pressure on organizations to ensure that workforces are performing at their top capabilities. But, to reach that goal without dropping the ball on employee well-being and reversing the strides made in allowing more flexibility, will take time and a willingness to measure productivity more thoroughly, say workplace experts.

‘No final answer to RTO debate’

Choice is at the core of modern work culture. And that extends to people being given the freedom to change their minds, depending on what fits their needs at different stages. “Every organization has a combination of lots of really different types of people,” said Sadow. “The answer of wanting to be remote, hybrid, or in the office is very different depending on if it’s my first year on a job or if I’ve been doing it for 25 years.”

Sadow said when his wife came back from parental leave, the ability to work remotely was extremely important. But then as that passed, she wanted to be able to come into the office. ”Even for the same person, this can evolve based on life circumstances in terms of where they can be most productive. There’s no one-size-fits-all for what’s more productive,” he said.

And employers will have the same autonomy too. 

“Different companies will choose different options customized to their needs: there won’t be a final answer to the RTO debate,” said Dr. Gleb Tsipursky, CEO of hybrid work consultancy Disaster Avoidance Experts. “Different industries, organizations, and even individual roles within organizations have unique needs and constraints. What might work well in one context may not work in another.”

How do we define productivity?

“When people thought about productivity in the workplace originally, what they had in mind was a world of manufacturing, where you could figure out how many hours of labor, how many machines, and how much stuff is getting out per amount of capital and per hour of labor,” said Jose Maria Barrero, an assistant professor of finance at Instituto Tecnológico Autónomo de México, where he studies labor economics. “Now, this idea of ‘what is productivity’ perhaps needs to change. We still haven’t quite done that shift in how we conceptualize productivity.”

There have been numerous studies over the years attempting to answer the question of whether remote or in-person work is better when it comes to productivity. For example, a July whitepaper published by the Stanford Institute for Economic Policy and Research conducted by Maria Barrero, Steven J. Davis and Nicholas Bloom, found that fully remote work is associated with about 10% lower productivity than fully in-person work due to challenges with communicating remotely, barriers to mentoring, and issues with self-motivation. However, hybrid working appeared to have no impact on productivity, but is the popular choice because of employee recruitment and retention. 

“Now, this idea of ‘what is productivity’ perhaps needs to change. We still haven’t quite done that shift in how we conceptualize productivity.”
Jose Maria Barrero, assistant professor of Finance, Instituto Tecnológico Autónomo de México.

Another study, conducted by Scoop Technologies looking at 3,600 U.S. firms, found that firms that allow more WFH grow faster. Those requiring 0 days in the office see a 5.6% growth, while those requiring all five days see only 2.6% growth. Bloom wrote in a LinkedIn post: “My takeaway is WFH increases recruitment and retention, which fuels company growth.” And if employees are happier and want to stay, doesn’t that also mean that they’re likely to be more productive?

There’s a lot to consider. With all of this, employers are scrambling to answer solve the productivity question, so core to assessing the true pulse on how the business is doing. 

“The question about productivity is the big question, and part of why that is, is because measuring productivity is not at all straightforward,” said Maria Barrero.

How do you measure productivity?

Some companies have decided to go the route of surveillance, where a remote workforce is measured through how much the green active light is on or how frequently they move their mouse. 

“Surveillance is something that a lot of companies might jump to,” said Ashley Cooksley, CEO, North America at agency The Social Element. “It’s intrusive and not very trusting of your team members. We have to trust that the people we hire will live up to our own values of being accountable and transparent.”

However, others argue that an outcome-oriented approach is best. Are KPIs, targets and goals being met? If they are, then the company doesn’t care how much time is spent at the desk, because clearly they are being productive enough to hit their targets. That’s what Tsipursky argues.

“Outcomes-based metrics are more reliable than traditional measures like hours worked,” said Tsipursky.

No one has a clear answer, but there are companies who are trying to push the conversation forward and figure out what is the best way to measure productivity. 

Tsipursky suggests looking at milestones achieved, projects completed and KPIs related to the job role. Qualitative factors are also important, like employee satisfaction and well-being. 

Managers must step up to the plate

At Scoop, that looks like setting important goals for each quarter for the entire company that will then ripple down to each job function. Sadow said it’s about asking questions like are we clear on the goals and how to get there. Along the way, it’s checking in on progress and navigating how they can accelerate if needed or get back on track. It’s an iterative process that largely focuses on goals. But managers need to step up to the plate to tackle this.

“Most managers traditionally have not managed outcomes,” said Sadow. “That’s just not the way they thought about it. They assumed if people were in the office, they were being productive. This requires a bit of stepping up our game to get a better sense of productivity.”

Crunchbase, a provider of private-company prospecting and research solutions, has tried to emulate this. The company’s chief people officer Kelly Scheib said that each team has objective goals and deliverables to meet. This helps stay away from only anecdotal evidence that a team member is being productive and instead provides a solid checklist. Managers have weekly one-to-ones with their team, which is where they spend the time to track adherence to those outlined goals. 

“It’s about trusting your employees,” said Scheib. “It’s like Mr. Rogers. You want to be the person that they never want to let down because you’re a good human and care deeply. It’s better to spend time caring deeply than worrying about whether or not they are on their computer.”

“Most managers traditionally have not managed outcomes. That’s just not the way they thought about it. They assumed if people were in the office, they were being productive. This requires a bit of stepping up our game to get a better sense of productivity.”
Rob Sadow, CEO and co-founder, Scoop Technologies.

Cooksley has also encouraged managers to track real productivity outcomes with quarterly check-ins. Aside from looking at goals, Cooksley said that timesheets are a core part of tracking productivity. While it’s not necessarily anything new for any agency, it is a solid way to see how much time they’re spending on projects. She says she has to keep a closer eye on people working too much compared to not enough. She looks at questions like: Are they working way over their hours? Do we have any burnout issues? Do we have areas within the business that need relief? 

“It’s hard to see that someone is at their desk until 7:30 p.m. when you’re not in an office,” said Cooksley. “We want to make sure people have balance and the support they need.”

Sarah Newland is an operations director who works on a contract basis for small businesses and has an array of different ways to scrutinize productivity to maintain a strong bottom line for the company. “Productivity is crucial as margins are tight and inefficiencies really can make the difference between success and failure of a business in growth mode,” she said. In the teams she supports, she measures productivity with timesheets as well, but also by looking at costs and profit margins, client satisfaction, team cohesion and the appraisal and review structure.

“Qualitative measures are just as important as quantitative measures,” she said. 

But for people who are still looking for quantitative measures, productivity and management software products can help. Michael Ritter, founder and CEO of media company Maple Media, said tech tools like Jira [project tracking software] and Slack can also help, in conjunction with check-ins.

In short, it’s up to organizations to figure out what works best for them. However, whether a company is remote or hybrid, basing productivity assessment on a person’s physical visibility in front of their manager, no longer cuts it.

“As we continue to navigate the remote versus in-office work debate, one thing is clear: the future of work is not about choosing one over the other, but about flexibility and adaptability,” said Tsipursky.