Here’s what’s behind the employee productivity slump – and what your firm can do about it.
All over the world, a concerning trend is emerging in corporate offices: Employee productivity is down for the first time since the 1980s.
In late 2022, Salesforce CEO Mark Benioff remarked that new hires at Salesforce weren’t as productive as management had expected, and the tech giant had no idea why. ADP Chief Economist Nela Richardson told CNBC during a town hall that 2022 was the first year since 1983 where employee productivity dropped for three consecutive quarters.
CNBC notes that while working hours have increased since the 1980s, there’s less output to show for the increased work. In essence, for the first time in 40 years, employees are working more and producing less.
What might be behind this unusual trend? Why has employee productivity taken such a hit? And how can professional services firms maintain productivity in this kind of environment?
In a counterintuitive turn of events, the return to in-office work could be behind the drop in employee productivity. Business consultant Gleb Tsipursky, Ph.D. wrote in a column for Fortune that productivity jumped in the second quarter of 2020 and remained high through to the end of 2021 – during the time when offices shuttered due to COVID-19 and employees were forced to work from home.
Then, the trend reversed itself in early 2022 as employers forced employees to come back to the office. Tsipursky notes that while productivity did modestly increase in the second half of 2022, it still didn’t reach the heights it saw when employees were forced to work remotely.
“The best approach for the future of work is a flexible team-led approach, with team leads making the call on work arrangements that serve the needs of their team,” Tsipursky writes.
In a follow-up piece for Fortune, Tsipursky notes that some employees may require the structure of an office in order to stay productive, while others are more productive working from home. Thus, Tsipursky says, a hybrid workplace policy can lead to productivity increases as well as cost savings for companies.
The return to in-office work isn’t the only factor weighing on employee productivity; in many cases, employees are less productive because they’re simply new to the job.
While some have reasoned that “quiet quitting” – workers who choose to do the bare minimum amount of work and no more – is behind the productivity slump, economists say the real reason is actual quitting.
With job openings hitting record highs during the past few years, more and more employees are leaving their positions to take new ones and climb the corporate ladder faster. Data shows that “quick quitting” – resigning from a job within 1 year of starting it – increased by 10% in 2022.
A strong job market with lots of “quick quitters” means significant employee churn. And when your organization is constantly getting new hires up to speed, your productivity slows as less experienced employees learn the ropes.
That’s why investing in employee training and onboarding is an important retention measure. The more your firm can invest in your own people, the more committed and engaged they’ll be – and the more likely they’ll be to not only stay with you, but to stay productive.
But inexperience isn’t the only productivity drag that professional services firms are facing: They’re also struggling with employees working long hours trying to keep up with a high volume of work.
It’s been consistently demonstrated that in knowledge industries like law and accounting, longer hours are subject to the law of diminishing returns. Quite simply: Your team can only stay at peak productivity for so many hours, and every hour worked after exiting that peak results in less and less productivity, until your team is getting nothing done despite working incredibly long hours.
That’s why systematizing your processes – and then offloading them to a cloud-based app like Appara – can help your employees to stay productive. When you can automate tasks like document generation through AI, you’ll have more freedom to pick and choose when to push your team with overtime, and when to scale back and let them rest.
If you want your firm to stay competitive, you’ll need to ensure your staff are as productive as they can be. That means equipping them with productivity-boosting tools, investing in training, and enabling remote work with cloud-based technology.
Remote and hybrid work arrangements gained immense popularity during the pandemic, and they endure for good reason: People who work remotely can be more productive. One study found that 60 percent of workers are more productive working from home than they are working from an office.
When your team is able to work where they want to work, they’re able to calibrate their work environment to their own preferences. Your extroverted employees, for instance, can work in the office where they feel engaged and energized, while your introverted employees can work from home where it’s easier for them to focus.
When your team is remote-based, you can also use remote working technologies like cloud-based database management systems to ensure your employees have access to the knowledge they need, when they need it.
Meanwhile, emerging technologies like artificial intelligence are making it easier for employees to accelerate their work. With AI-powered solutions like Appara, firms are able to cut down on errors, reduce the amount of manual work done, and free up employees’ time to focus on higher-value activities instead of paperwork. Artificial intelligence is increasingly able to take on many of the low-level tasks that paralegals and assistants typically tackle, freeing up your team to work on higher-impact tasks.
Employee productivity has taken a hit over the last year or so. Inexperienced new hires and a forced return to the office are weighing on your team’s ability to produce – and if you’re stuck in an old business mentality that regards remote work poorly, you’re losing out on substantial productivity gains. If you want to boost your team’s productivity, enabling remote work and leveraging emerging technologies that can make up for inexperience are a must.
Has your firm seen a dip in productivity? Is it time to start embracing digital solutions that can boost your output? We can help. Contact Appara today for your FREE trial.
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