Hold Off on Major WFH Decisions Through 2021
Despite widespread hype, analysis of objective data suggests strongly that WFH has reduced productivity while increasing costs for most firms. Given current COVID resurgence and business uncertainty, it is inadvisable that any long-term WFH strategy should be decided upon through at least YE2021.
After reviewing more than 200 reports, research notes, articles, and blog posts on the topic, I find that widely-reported productivity improvement conclusions so far have been based on subjective reports by workers or by their managers, based on expectation and emotion rather than on data. None of the formal surveys that I’ve reviewed ask for objective data. Most simply ask questions like this one from Mercer:
Which statement best describes the current level of productivity at your company?
- Productivity increased above pre-COVID levels
- Productivity is consistent with pre-COVID levels
- Productivity decreased relative to pre-COVID levels
Other studies frequently cited suggest that productivity is up because worker communication activity is up. One report from Prodoscore lists increased worker telephone activity (up 230%), email activity (up 57%), CRM activity (up 176%), and chat activity (up 9%) to support its assertion that WFH increases worker productivity. I do not doubt that worker activity of these types has increased, But most competent managers and leaders would question whether increased activity equates to increased productivity.
Survey analyses also self-contradict. Prodoscore’s study, for example, suggests that productivity is up because of significant decreases in employee access to documents and use of calendaring apps. These two capabilities would seem instead to enable and improve remote productivity. Mercer studies tend to favor improved WFH productivity, but at least one also cautions that:
“Other [Mercer] research is showing that employees are working three hours longer per day right now, so there is some question as to whether productivity per hour is actually declining, and these longer hours raise concerns around burnout.“
Looking for Objective Data
Since mid-March 2020, I have interviewed 35 business leaders from mid-sized and large IT services providers, legal services firms, accounting firms, and business consultancies in search of objective data regarding WFH productivity and costs. These firms are all heavily dependent upon the type of work and workers best suited for WFH. All of the firms are global in nature.
These firms have standardized metrics and practices in place for measuring worker productivity in as objective a manner as possible – i.e., something that may be legally recognized and defensible. The IT services providers are required to have and use such metrics to satisfy clients’ service level agreements. The legal and accounting firms utilize standardized metrics and practices to support hourly billing and to reduce liability. The metrics and practices have evolved over time to reflect changing business practices and worker productivity.
I do not suggest that the measures being used by these firms are optimal. But they are standardized by each firm and regularly applied in standardized, documented procedures, so significant deviations in the resulting data over time should indicate real change.
Productivity? Down. Costs? Up
Long story short: these leaders report measured per-worker productivity declines of 20% or more during the first 6 months of COVID response. And they indicate ongoing productivity levels averaging 10% less than pre-COVID work-in-the-office circumstances.
They also report that per-worker IT costs, on average, increased by more than 100% per worker in the first three months of COVID. This was due to the need to provide workers with new or updated hardware, software, and services, to manage secure access to company resources, and to manage more providers and services. Ongoing IT costs are expected to remain between 10% and 25% higher than pre-COVID, office-centric environments due to cost of higher support and more services use. HR costs, including costs of managing employees, increased by an average of 10% as well.
Meanwhile, 11 of the 31 firms are seeking and hiring additional workers to raise overall output levels to pre-COVID amounts. That will further increase IT costs and HR/management costs, and likely reduce per-worker productivity averages.
What does this mean for 2021?
- A boom in HR/HCM consulting and software spending. Prior to making any strategic organizational decisions, enterprises with significant WFH populations should invest well, and quickly, in objective, standardizable, and contextually-accurate worker productivity measurement methods and metrics.
- A stay for workplaces and cities. Widely-predicted massive declines in commercial real estate use, and increased widespread worker relocations, are much less likely to occur if objective measures indicate reduced productivity with increased costs.
- A coalescence of Digital Workspace visions driving services use. As we learn more about what makes workers more or less productive in which environment, a realistic business scope and value of digital workspace services will become more apparent. This makes it easier for services providers to optimize their offerings and go-to-market value propositions.
Does this mean that WFH is a failure? Not at all. Without WFH, who knows how many firms would have failed by now. And it is clear that WFH will be part of future work environments. The genie is out of the bottle. Pandora has opened the box. The toothpaste is out of the tube. You get the idea. Few firms will be able to re-centralize all of their currently-remote workers, because reality has changed.
But the benefits of WFH we wanted to see in 2020 are not supported by enough facts, at least not yet. It will take months for reliable, robust data to be developed. That means that through at least YE2021, most firms will continue to struggle and juggle with WFH change. Enterprises should focus on improving WFH as possible, then look for ways to develop reliable data on their own realities. Expect that it will be mid-2021, at the earliest, before most firms are able to get enough clear insights to make long-term WFH decisions.