Productivity has always been a major topic in the shared services and outsourcing industry. After the COVID outbreak at the end of 2019, mass implementation of the work from home and the hybrid model, professionals have been looking at KPIs, surveys and studies for clues about the development of productivity.

Shortly after the outbreak, AIBEST (Association for innovation, business excellence, services and technology, previously Bulgarian Outsourcing Association) conducted a study among its members that showed 81% of the companies measured productivity to be even higher than at business as usual.

In 2021, SSON published “One Year In: Did COVID-19 Stop GBS And Shared Services Evolution in its Tracks?” where 51% answered that productivity among their employees increased during the pandemic and 29% that it stayed the same. The authors also suggested that this might be a result of more flexibility, elimination of commuting time, and fewer other distractions.

These arguments are widely accepted in the industry, although not well backed with factual data. In that respect, it is more about how the industry perceives the productivity changed, not that much how actually it did.

Perception of Productivity

In 2003, Karen Dye and Maurice Schwezier did an interesting experiment. 83 participants were asked to rate the quality of two video-taped presentations about an emerging technology.

• In the first part of the experiment, 41 participants were told that the person giving the first presentation – on electronic ink – had spent 8 hours and 34 minutes preparing his remarks, while the person offering the second presentation – on optical switches – had spent 37 minutes preparing.
• In the second part of the experiment, 42 participants were told the opposite: that the optical switches presentation was based on eight-plus hours preparation and the electronic ink presentation was 37 minutes.

After that the participants had to rate the presentations on different factors like quality of information, quality of the presentation skills and knowledge of the subject. The results showed that participants were significantly influenced by the information about the time spent on preparation. They have evaluated the quality of the presentation higher for the presentation they were told took more time to prepare. Authors concluded that in many settings, “irrelevant input measures, such as the amount of time an employee spends in the office, influence outcome assessments, such as performance reviews.” They called that observation the input bias.

How does this relate to productivity? Evaluations of the change in productivity are often made based on irrelevant and questionable assumptions which very much fall under the input bias domain. Flexibility and elimination of commuting time is certainly a benefit for the employees, but does it mean they produce more with the same resources? Are these the only factors impacting productivity in the WFH environment? It is quite easy to point out arguments for the opposite:

• People communicate less and the collaboration is much more difficult. Thus, resolving issues may take more time.
• People in households with many members or with small kids could have trouble concentrating on their work at home.
• One pillar of the meaning of work is the sense of belonging. New employees would feel less sense of belonging as they would not have that many interactions with the rest of the team. In the long run that will lead to higher attrition and loss in productivity.

Thus, concluding that productivity has increased is a bit premature.

It is also important that an objective source of information is used. If you ask employees how they perceive their productivity after moving to WFH they will say “it has increased”. A study from January 2021 “Why Working From Home Will Stick” confirms that and suggests that productivity indeed is expected to go up after the pandemic driven by the WFH and less time commuting. However, the study relied heavily on employees' self-reported data - their perception of productivity at home compared to the one in the office - making the conclusions quite subjective.

Bottom line, drawing conclusions based on limited observations, speculations and inferred relations is not helping much in understanding what actually is happening with productivity. An objective measure and fact based discussion is needed to come to a meaningful conclusion.

Measuring Productivity

The formula of productivity is quite simple:

However, implementing it on a practical level is really hard. The Shared Services and Outsourcing Industry covers a vast number of activities. A typical example is measuring productivity of the payment of invoices. That may sound simple as the metric is just dividing the number of processed invoices to the number of people involved. Nevertheless, it gets complicated if there are different payment processes depending on the local specifics or when the seniority of the employees involved is changing. On top of that the people processing the payments may be involved with other tasks - e.g. reviewing and coding invoices, working on different projects, etc. Additionally, the process may involve robots or external subcontractors. All of these are making it really difficult to correctly calculate productivity, but not impossible. Different factors described above have to be systematically captured and considered. Multifactorial productivity measures are a good approach, although rarely used as they are difficult to implement and hard to interpret. Nevertheless, measurement productivity is possible and essential to make the proper conclusions and take the right decision. Indeed it requires proper methodology, time and investments.

Destroying Productivity

Another big change brought by COVID was the rise of the tattleware. According to the LA Times since the pandemic, employers’ use of employee-monitoring programs has been growing rapidly. The employee monitoring software market is forecasted to swiftly grow and reach $4.5 billion by 2026. One of the main reasons for the usage of the software is “to boost productivity”. It seems ironic that it would most probably destroy it. So what is tattleware doing? It usually creates a detailed timeline of online activity, records emails, keystrokes, takes screenshots, and even activates webcams for recording video or sounds. The natural impulse of the managers to increase control in a situation where they have lost some of it seems logical at first, but has mostly lasting negative consequences. Monitoring attendance and hours of work is something natural in the office, however doing it remotely with an app creates a feeling of mistrust and invasion of privacy. It very much looks like exploitation which only alienates further the knowledgeable professionals, and makes them more eager to quit. It also put the attention on the wrong metric. Time in front of the computer is not going to improve productivity. As Karen Dye and Maurice Schwezier concluded “time in the office is not a good metric for performance”.  If anything, this kind of software forces workers to make constant useless gestures toward productivity – banging arrow keys and swirling cursors.

Conclusion

COVID has forced many businesses to quickly move to working from home. That decision has been implemented quickly and in fact have many positives:

• For the employees that means less commuting, more flexibility, and more personal time
• For employers that means access to more knowledgeable workers (increasing geographical scope) and less rent cost
• For the environment it means less greenhouse gas emissions

However, the impact on productivity is still unclear. We would need more statistical data for a much longer period in order to have an objective conclusion. Nevertheless, the employers could have a great impact on productivity: empowering, motivating and properly structuring the work will certainly improve it whereas not adapting to the new environment, distrusting, and spying will most probably destroy it.