Will management ‘productivity paranoia’ be the undoing of hybrid work?

Blog posts

28 Sep 2022

Dr Zofia Bajorek, Senior Research Fellow 

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Microsoft recently made headlines after publishing survey results suggesting a disconnect between managers and their employees about productivity when working from home. In a survey of more than 20,000 staff across 11 countries the survey reported that while 87 per cent of workers felt they worked as, or more efficiently when working from home, 80 per cent of managers disagreed. In a survey earlier in the year, the company reported that the number of meetings per week had increased by 153 per cent for the average Microsoft Teams user since the start of the pandemic and double-bookings were indicating that employees may be experiencing strain at work, as 42 per cent reported having to multi-task during meetings.

Yet, at the same time, 85 per cent of leaders felt that the shift to hybrid work had made it challenging to have the confidence that employees were being productive. Microsoft Chief Executive Satya Nadella said that organisations needed to get past what she termed ‘productivity paranoia’, defined as where leaders fear that lost productivity is due to employees not working, even though hours worked, the number of meetings and other metrics have increased. So, what can be causing this productivity paranoia, and can better management around the implementation of hybrid work help this?

Firstly, Microsoft is not the only organisation to have this productivity debate, and it won’t be the last. Last year, David Solomon, the boss of Goldman Sachs described working from home as an aberration, with concerns that productivity is compromised through a reduced collaborative and innovative culture, with JP Morgan also expressing similar concerns. However, other organisations, and also IES’ own Work After Lockdown research suggests that productivity has not been affected, or has even improved since the transition to hybrid work.

Some of these differences could be due to the way in which productivity is measured (if it is measured at all). As my colleague Stephen Bevan notes, ‘many companies do not routinely measure productivity…surveys tend not to be good at measuring productivity objectively’. Our Work After Lockdown research (finding that almost 90 per cent of respondents reported that their productivity had been maintained or improved when working from home during the lockdown), used a ‘standard’ method of labour market productivity that is favoured by economists, that being ‘output per hour worked’. However, now could be the time where productivity should be measured by the quality of outputs produced.

The second point is one of trust between managers and their employees and the implications this has for the psychological contract. The Microsoft survey suggests that managers may be missing the traditional visual productivity cues where they could ‘see’ who was working. The survey found that in comparison to in-person managers, hybrid managers were more likely to report struggling to trust employees to do their best work, and report that they have less visibility into employees’ work.

Some organisations are even using tracking monitors to monitor working hours and productivity of staff. Employees in the Work After Lockdown study reported that having hybrid working autonomy meant they could re-order tasks, focus on the task in hand and could resume that task if/when they were interrupted at work. This lack of managerial trust, and the possibility of monitoring devices could lead to employees questioning their psychological contract and consider changing to employers who are more ‘pro’ hybrid work, thus leaving managers with recruitment and retention challenges at a time of a tight employment market.

Thirdly, the survey results raise questions about organisational culture, and whether organisations expect hybrid workers to be ‘always on’, and what the implications this can have for the health and wellbeing of employees. One of the concerns often cited about working from home is around a healthy work-life balance. Last year the health implications of over-working were highlighted, yet individuals who have tried to establish this work-life divide are being accused of ‘quiet-quitting’. If employee health and wellbeing is important for organisations, employees must not feel that there is an expectation that they can be contacted and crucially respond at all times, as this will have an impact on employee productivity as tasks may take longer to complete and be of lesser quality than that of a healthy employee.

Finally, the debate about hybrid working seems to have forgotten about the ‘hybrid’ and has been polarised around either a permanent presence in the office or completely working from home. The Work After Lockdown research suggested that having a hybrid approach, mixing office and homeworking would be beneficial, getting the balance right between social connectedness and autonomy, and allowing for the management of other circumstances such as caring and long-term health conditions.

So, what should managers do to reduce this productivity paranoia and ensure a smoother implementation of hybrid work? I suggest three things:

1: Communication: Learn what is it that your employees want, and then discussions can be had about how this can best work for the individual, the team in which they work and organisation. This also allows for the clarification of expectations and an establishment of trust.

2: Assessment: Evaluate how the transition is working as the hybrid model may not be for everyone. New working patterns need to be evaluated, ensuring that all parties are seeing favourable outcomes, and if not, what tweaks are needed so employee engagement, organisational productivity and managerial trust are all maintained.

3: Management competency: How this transition is managed is often critical to its success, however managers often lack the skills and capabilities (usually due to inadequate training) to respond to changes in working conditions. For hybrid working to be successful it needs to be managed fairly and consistently, which is a big ask for managers.

Ultimately, how organisations approach, manage and implement hybrid work going forward will have implications for their recruitment, retention and productivity, if it is done badly. If organisations can get the actions, messaging and management right then hybrid working can work for everyone.

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Any views expressed are those of the author and not necessarily those of the Institute as a whole.