Sometime over the past eighteen months, the newness and novelty of remote work wore off as the everyday elements just became normal. But as Zoom meetings and team virtual happy hours seeped into popular culture, a more subtle change was underway. Beyond just how professionals collaborate and communicate, the pandemic also forced managers to reassess how they think about the success of their team.
Using survey data from over 1,000 U.S. hiring managers, we at Upwork identified management practice changes that businesses made during the pandemic, specifically around how they measure productivity. The data suggests that management is changing how they measure productivity.
In a traditional office setting, managers can easily observe workers. Everyone generally shows up at the office at the same time, spends the same amount of time there, then leaves at the same time. If an employee is putting in less time by showing up late, leaving early, or not showing up at all, a manager will quickly realize it.
Similarly, the office setting also enables casual observation through the common practice known as “management by walking around.” First popularized by Hewlett Packard in the 1970s, this approach took managers out of their offices and had them spontaneously interacting with employees to see what they were working on.
The remote work world blows up these management practices rooted in tracking inputs. A manager’s ability to casually observe work hours and inputs is greatly diminished. An employee who is habitually late to their home office, leaves early, or takes long absences throughout the day, is less likely to be noticed. This presents a challenge for managers who leveraged worker inputs as part of their evaluations of how people are performing.
In order to compensate for this blindness, many are rethinking how they measure productivity.
One approach is to move away from the more casual and extemporaneous measurement of inputs that office workers are used to and towards more formal and continuous measurement. Productivity tracking software is one option, which can measure both when workers start and stop working but also how often they are at their keyboards.
There are downsides to this approach. While workers understand that remote work presents a challenge to management, going from implicit to explicit tracking can easily be interpreted as a lack of trust, and abiding by a digital punch card could feel like an erosion of professionalism.
An alternative approach for management is to change their perspective by focusing less on inputs and more on outputs. Rather than asking whether workers are putting in enough hours, managers taking this approach would, instead, ask whether they are producing enough. This approach affords workers more flexibility, both around how many hours a week they work and when they work those hours. What matters, in this perspective, is what you get done, not when you do it or how long it takes.
Survey evidence suggests that businesses are taking both approaches to measuring productivity. A greater embrace of project productivity software mentioned above, for example, suggests that some are embracing more input measurement. In addition, a significant share of businesses reported that they are placing more focus on the number of hours per week a person works and also whether people are working traditional business hours.
However, while some are focusing more on inputs, an even greater share are focused more on outputs. For comparison, while 26% of hiring managers say they are more focused on whether people are working during traditional business hours, 64% say they are now more focused than they used to be on the quality of work done.
What’s more, a substantial portion say they are less concerned about hours worked and the number of hours per week a person works than before the pandemic.
More remote, more flexibility
What is causing these differing approaches to measuring productivity in a remote work environment? To answer this question, we looked at how a company’s experience with remote work could impact their approach. We found that those who have seen the greatest increase in remote work are also likely to be less focused on hours worked. In other words, the businesses who are leaning most into remote work are the same ones who are focusing less on inputs.
To further understand the connection between changes in how productivity is being measured, changes in how work is being done, and remote work, we ran a second survey. This time, we surveyed 600 clients on Upwork to analyze how companies that are plausibly the most comfortable with remote and flexible work arrangements are adapting their behavior around productivity measurement. Here we see an even greater focus on outputs and a decline in focus on inputs. Notably, 41% are less focused on traditional business hours and 31% are less focused on the number of hours per week a person works.
What this means for businesses and the labor force
These shifts in management practices may seem insignificant at first glance, but, together, they represent broad and deep changes in how businesses operate. Businesses have embraced new software, instituted different management practices, and as this new data shows many have uprooted how they measure the success of their teams.
But what does this all mean for businesses? Originally enacted to accommodate remote work, businesses that aren’t embracing these changes risk falling behind, specifically when it comes to how they think about productivity.
While there is no one-size-fits-all approach to measuring productivity, a greater emphasis on measuring outputs versus inputs aligns with a larger change that is underway in the labor market; the desire for flexibility. As knowledge workers have been exposed to the benefits of working remotely, many are no longer willing to return to the office.
The Great Resignation is one piece of evidence that supports this. With quit rates already at historically high levels, an additional 17% of workers who are currently remote are considering leaving their jobs if they have to return to an office. These professionals are balking at the prospect of returning to hour-long commutes, having bosses constantly looking over their shoulders, and sliding back into the days of rigid, 9-to-5 schedules.
Simultaneously, businesses are facing the gradual realization that these knowledge workers that desire more flexibility, are the same ones who have bargaining power in the labor market. Long gone are the days of doing just what’s best for management. But rather, as businesses face the pressure of attracting and retaining talent, they will increasingly need to ask about the wants and needs of the professionals that they are struggling to hire and retain. This demand for flexibility will be an inevitable piece of the hiring puzzle. Businesses that are adopting a mindset that emphasizes and rewards outputs over inputs will be better positioned for this changed way of work.
Overall, this tumultuous period for businesses has led to new ways of working and new ways of measuring success. The pandemic shattered long-standing best practices and principles for successful management and professionals were keen to these new ways. Even when we are able to put the pandemic in our rearview mirrors, businesses should continue to embrace these management changes. Focus more on the quantity, the quality, and timeliness of the work instead of the amount of time someone spends sitting at a desk.
Adam Ozimek, PhD is the chief economist at Upwork, where he leads research on labor market trends.