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Satisfied with her own small business

The impact of remote working on productivity and effectiveness

Rupert Morrison, CEO, orgvue

At the start of the pandemic, business leaders and economists were deeply concerned about productivity. Some still believed that working from home was really ‘shirking from home’ – and that making remote working compulsory would send businesses and the economy into freefall.

However, following perhaps the most extensive remote working experiment yet, it seems these fears were unfounded. Research by the Wharton School found that 82% of leaders felt that their companies were at least as productive as they’d been before the pandemic.

So should leaders close their workplaces and radically reduce their overheads? Fundamentally, the answer will depend on the specific business. However, to make the decision, every leader should look beyond productivity – or at least subjective measures of productivity – to gain a fuller picture of remote working success.

Productivity in unprecedented circumstances

One problem with looking at productivity alone is that accurately assessing this depends on knowing input and output. This is fairly simple to gauge when it comes to raw materials, but people power can be a little more difficult to judge. Leaders often base their calculations on employees working close to a standard day, but this isn’t always the case.

Numerous studies have shown that employees working from home during the pandemic worked longer hours. The latest of these, from HR software and services company ADP, found that, on average, employees worked an extra two unpaid hours per week during the pandemic. Three quarters of respondents attributed their behaviour to job insecurity.

Such studies underscore the difficulty of basing future, strategic choices on this period. We may have undergone the most extensive experiment yet into the impact of remote working on productivity, but there were no controls in place. We cannot be sure whether we’re really seeing an increase in productivity, or just a simultaneous increase in input and output.

Building a fuller picture

If we’re to really understand the impact – or potential impact – of remote working on business success, we need to look at productivity, but also effectiveness.

Effectiveness denotes the organisation’s ability to deliver on business objectives. An effective organisation will have a workforce of the right shape and size, equipped with the right skills and resources, to deliver the necessary output to an appropriate standard.

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An ineffective organisation can still be productive – but its output may not support business objectives. For example, work may be poor quality, preventing client or customer retention and restraining growth.

The best way to track effectiveness is to look at progress towards business objectives – if this slows or is disrupted, there is likely to be a problem.

Effectiveness could easily become a casualty of remote working. This is because meeting business objectives – or being effective – frequently depends on learning, innovation and creativity. These, in turn, are best brought about by collaboration. People need to work together to share best practice, come up with new ideas and unlock growth opportunities.

That is not to say that collaboration cannot happen virtually – the past year has proved it can. Rather, it occurs more naturally and frequently in a workplace environment.

Proactive problem-solving

While existing evidence suggests that remote or hybrid working may improve productivity, less is known about their impact on effectiveness. As we continue through this period of change, it’s critical that leaders track for shifts in these areas. They need to keep watch on how they’re aligning to deliver the goals of the business and be proactive in mitigating unwanted repercussions.

We know that remote or hybrid working could lead to less collaboration and less informal learning and development, so leaders, assisted by managers and HR, need to make sure this is happening.

To do this, they need to have a deep, data-based understanding of how their organisation works; they need to know who collaborates with who and who learns from who – both formally and informally. They can then make sure these people continue to have enough facetime, either physically or virtually to sustain and improve effectiveness.

Work moving forward

Part of leadership’s role has always been about balancing the needs of employees with those of the business. Now, as we emerge from the pandemic, this is truer than ever.

Leaders may find that meeting new employee requirements for more flexible working models impacts business productivity or effectiveness – positively or negatively. It’s important that they’re able to identify and understand these shifts and take quick, decisive action to remedy unwanted consequences. This capability depends on access to up-to-date business data. Armed with this, leaders can avoid making knee jerk reactions, and instead implement protocols and processes to ensure the organisation meets objectives in this new world of work.

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Rupert Morrison, CEO, orgvue
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