Some worry that productivity has fallen recently, since the fourth quarter of 2021, according to U.S. Federal Reserve data. But studies have produced contradictory findings, showing
higher, lower or unchanged worker productivity since about 2020.
Arguably much of the data most susceptible to change were generated by knowledge or office workers forced to work from home because of the Covid pandemic.
With the caveat that some of us are skeptical about the ability to measure knowledge worker or office worker productivity, studies can be cited showing higher; lower and “no change” in productivity because of remote work, for example.
And intangible products accounted for as much as 80 percent of total U.S. output in 2022. The goods-producing sector includes agriculture, forestry, fishing, and hunting; mining; manufacturing; and utilities.
The service-providing sector includes trade, transportation, and utilities; professional and business services; education and health services; leisure and hospitality; and other services.
Still, productivity changes in both goods and services has been in a 1.5-percent to two-percent annual rate of change since shout 1980, according to the Bureau of Labor Statistics. That estimate is based on hours worked, compensation levels and therefore unit costs.
Just anecdotally, one might conclude that knowledge worker productivity has neither increased or decreased since the enforced “work from home” policies caused by the Covid pandemic. The line of reasoning is that so many people report being able to get their work done in less time while working at home.
But studies exist that argue productivity is higher, lower or unchanged because of remote work.
So people use the time to do other things. That might well be interpreted as higher productivity by some; lower productivity by others.
But, strictly speaking, the ability to get one’s expected workload completed in less time should represent higher productivity, assuming one believes the output is measurable. The issue, perhaps, is that employees do not always use the time saved to do additional work.
So firm productivity is likely unchanged, but personal productivity arguably could be higher. Firm unit costs might not change if the same output happens in a remote rather than workplace setting.
But remote workers might create a time surplus that is not used to boost output further.
That would essentially mean a hypothesized “loss” of firm productivity, even if individuals were “more productive,” in terms of getting their accustomed workloads finished faster. There is extra time, but that extra time is not used in the form of “productive” effort for their employers.
Here we must also acknowledge that “extra time” exists even when workers are face to face at work, and such time is not mobilized “productively” in that context, either.
There are all sorts of other possible productivity-related variables. To the extent some firms have been “hoarding” workers “in case” they needed them would be expected to result in lower “output” from those workers. They actually were not hired for “real” unmet needs, but as a hedge against needing their work later.
That might be considered unproductive using any measurement method. A recent study by Microsoft of the amount of time people are using tools such as Microsoft 365 might, or might not, shed much light on “productivity.”
The study looked at the amount of time users spent with various Microsoft 365 apps. Some might say this is a measure of input, out output, but presumably has some indirect effect on “output.”
The study shows people spend 57 percent of their time communicating in meetings, email, and chat, with 43 percent in activities that Microsoft calls “creation” and include use of spreadsheets, word processing, presentation software or notes.
The 2023 Work Trend Index, which surveyed 31,000 people in 31 countries, is not a direct productivity measurement, but tracks time spent in applications, all of which are assumed to have some enabling role in producing actual knowledge worker output.
source: Microsoft 2023 Work Trend Index
The key issue for some of us is that we do not actually believe knowledge worker productivity can be measured accurately. And most of the proposed measures--high level or detailed--seem to confirm the coarseness of metrics.
At a high level, some might argue that knowledge worker or office worker productivity, at a high level, could possibly be measured using metrics such as the “number of units” produced.
That might be lines of code, calls answered, courses taught or stories written. None of that can account for the quality of output, however.
But much knowledge work is intangible, and the intangible is, by definition, harder to measure than the tangible. How do we measure the productivity of those who produce “experiences” for users or customers?
Also, much knowledge work is collaborative. By design, that makes individual contributions hard to measure. And much knowledge work is creative, such as problem solving or innovation. How do we measure, in quantitative terms, qualitative outcomes?
Some might argue that “revenue generated” is a productivity metric, but is nearly impossible to measure at an individual level, since sales are a product of the work of so many different teams.
Yet others might prefer measures of “customer satisfaction.” Again, this can be hard to measure on an individual basis and might be nearly impossible at any level much lower than the single product or company reputation level.
In some cases, a high level “time to market” metric might be considered, but again that is more a work group metric than a single individual measurement.
Cost savings are almost never an actual measurement of productivity, though in principle it might be part of an evaluation in the short term.
The bottom line is that we still have no idea whether knowledge worker productivity is rising, falling or remains unchanged.
