RTO mandates do not improve productivity. Here’s what does
With approximately three-quarters of organisations today requiring their workforce to be onsite for at least a few days a week, we have officially exited the era of flexibility and entered an era of forced hybrid. Most organisations do not like the word “forced,” so they have been using softer terms like distributed, agile, or blended work.
Whatever it is being called, the simple fact is these organisations do not trust the workforce to be fully productive working remotely and believe there are benefits to requiring employees to work in closer proximity to each other, at least some of the time. Three days a week is the most popular mandate, and Tuesday, Wednesday and Thursday are usually the chosen days (most have given up on Fridays).
CEOs and corporate communication executives have been providing explanations for the requirement, often going into great detail since several new policies reversed earlier promises (voiced typically in the weeks after the pandemic) that the organisations did not care about individual work location. Despite the detail, the reasons given for requiring time on-premise are actually relatively finite.
“Improving productivity” is one that is frequently uttered as a reason for returning to the worksite.
Unfortunately, that is not playing out as planned. Privately (and quietly), organisations are confessing that forced hybrid is actually hurting productivity. And data from our new study, The Productivity Predicament, supports this. It turns out that what most organisations saw immediately after the start of the pandemic is true: Many people are quite productive working remotely, and assuming everyone’s work styles and habits are the same is not very logical.
So, if work location has little bearing, how does an organisation improve productivity?
Focus on the culture
i4cp research shows that organisations with a healthy culture are far more productive than organisations with toxic cultures. In fact, the health of culture explained close to 20% of the variation in employee productivity since the pandemic started. Cultural health is also strongly correlated to four critical components of business performance, namely revenue growth, market share, profitability, and customer satisfaction.
High-performance organisations—those that excel in those components of business performance—are six times more likely to have a healthy culture than low-performance organisations.
Research shows that healthy cultures also enjoy better retention amongst the workforce, a greater ability to attract top talent, higher engagement, and improved employer net promoter scores.
They typically also enjoy a higher dose of a critical ingredient to higher productivity: trust.
Restore bi-directional trust for employee productivity
With return-to-office mandates and the predictable employee pushback, it is clear that trust between senior management and the workforce has waned significantly in many organisations. Stories of petitions and walkouts by employees dominate the business press these days, but the quitter grumbling is what is concerning many leaders. Equally, a large percentage of organisations are quietly monitoring employee activity and are suspicious of how much work is really getting accomplished.
Bi-directional trust is critical for many reasons but, from a pure business perspective, organisations should accept a simple fact: Trust significantly impacts productivity.
To help understand this, i4cp created an Organisational Trust Index and then mapped it to business performance over the last five years. The index tracked responses to five key variables:
- Senior leaders trust our employees
- Managers trust their team members
- Managers are trusted by their direct reports
- Employees trust their team members
- The senior leadership team is trusted by employees
The difference in trust between high- and low-performance organisations is rather startling, with high performers strongly agreeing with these five trust statements by a factor of 3.5 to 11 times over low performance. In turn, this is affecting workforce productivity: these five trust statements collectively account for 18% of the variance in an organisation’s productivity since the start of the pandemic.
Organisations with toxic cultures are 16 times more likely to say “lack of trust in senior leaders” is an issue that needs to be addressed. These same organisations are also 10 times more likely to indicate an “unsafe environment for expressing opinions or concerns” as a top issue in their organisations. Lack of trust is really what is at the core of any toxic relationship.
Our study covered other areas that impact productivity, not the least of which was the adoption of generative AI, along with a focus on goal achievement. But without first establishing a trusting and healthy culture, at the end of the day, none of those other things really matter.
Not even where someone happens to sit during the day.
About the authors: Kevin Oakes is CEO of the Institute for Corporate Productivity (i4cp) and Mollie Lombardi is Senior Research Analyst at i4cp. This article was first published on Human Resources Executive.