More trust means more productivity – so let’s go even further

Businessman sitting in office
Date Published

28/07/2021

Reading time

8 mins read

Author

Capita Institute

The UK is in the midst of a productivity conundrum.

Despite heavy investment into tech firms, the country has been one of the poorest performing G7 nations in the decade or so since the global financial crisis of 2008-09, when what had been a steady rise in productivity began to flatline. The UK ranked 31st out of 35 OECD countries in growth of output per hour from 2008 to 2017 and the gap between productivity and real wages has been widening. In August 2020, the government announced the opening of a new £32m Productivity Institute as part of an investment to boost UK wage growth and living standards.

Yet at the recent Future of Work Summit, hosted by slow news provider Tortoise in partnership with Capita, a delegate questioned why productivity was such an important topic to debate, in light of recovery from the pandemic. Shouldn’t the societal impact be higher up the agenda? Or how to track progress towards purpose? What about sustainability or trying to stave off another financial crisis?

The word ‘productivity’ incites a broad range of responses. To some it sounds cold, emphasising strictly what is produced by way of ‘outputs’. It’s a measure of efficiency, mathematical in its formulation. In this definition we risk viewing employees as parts in a system, cogs on a conveyor belt, with little concern for health, purpose or individuality. But is there a way of marrying the need to produce more with less input, in order to drive the economy and prosperity for citizens with a ‘warmer’ definition that takes into account the very human elements of productivity?

And while some are reporting that the UK’s productivity situation is less severe than previously thought, and may even be boosted by the pandemic, concerns remain over the long-term growth of the country’s economy and public finances. Parliament’s Treasury Committee launched a ‘Jobs, Growth, and Productivity after Coronavirus’ inquiry earlier this year and the matter continues to be explored by bodies such as the abovementioned Productivity Institute.

Throughout 2021, the Capita Institute is undertaking a study of over 350 key decision makers to understand how as individuals, as organisations and as industries we have been affected by the pandemic and explore how we are adapting in these tough times. In four quarterly ‘pulse’ surveys conducted in partnership with YouGov, we’re looking at whether there is a great opportunity to view work and life after the pandemic as a new frontier.

In our Pulse 1 survey, carried out this January, we asked our respondents about their personal productivity. The overall feeling was that they had, in general, been more productive since the beginning of the pandemic compared with prior to it, with 45% saying so, though 27% believed that their productivity had stayed largely the same.

In our recently published Pulse 2 survey, conducted in April/May and available to download now, 53% of respondents now feel they had been personally more productive during the first three months of 2021 than they were in 2020, with only 14% reporting that their productivity had decreased. This upturn chimes with recent research from the McKinsey Global Institute, which finds that there is the potential to accelerate annual productivity growth by roughly one percent between now and 2024, which would be more than twice the pre-pandemic rate of productivity growth.

But what’s driving these apparent improvements in personal productivity? The top reasons chosen by our respondents were new or updated workplace technology and the switch to a hybrid/remote working environment. Recent ONS analysis suggests that homeworkers are working more hours than non-homeworkers, the analysis finding that those who worked from home in 2020 consistently worked more hours than those who never worked that way.

The outlook may look better, but to what degree this can be sustained in the long term remains an open question. For instance, are those who have got their commuting time back just using it to extend their working day and will longer hours lead to burnout?

As well as looking into how productive they had been, we also wanted to get our decision makers’ perspective on the question of what defines productivity, both from a personal and organisational perspective. As individuals, most told us they place the highest value on quality of outputs delivered (regardless of time spent), but interestingly they think that their organisation cares more about efficiency (producing more in less time).

Both sides would like to increase outputs – there is alignment here. Everyone is happier when the end of the day brings with it a feeling of accomplishment. But the difference in priorities hints that organisations may well be too focused on the more mathematical productivity equation, i.e. more outputs for less time, versus better outcomes regardless of time input. Trying to show that they are producing enough, rather than making sure what they produce is good enough could be an unintended consequence of this approach. If workers feel at odds with their employers, this could result in misaligned expectations and traps such as presenteeism and micro-management.

If an upturn in productivity is to be maintained, organisations should perhaps start focusing more on how to create environments that are conducive to better outcomes and the better reflect how people actually work, including the issue of time and how it is used.

Human beings don’t work steadily and uninterrupted as machines do. We tend to work in bursts, focussing on a task for a while, then switching to doing something else or pausing for a break, and then coming back to the task. This time away can sometimes be labelled as procrastination, or a lack of focus, and can be a source of much guilt when we feel that we have been wasting time. But as author and professor of finance and law Frank Partnoy says, “Procrastination is just a universal state of being for humans… The question is not whether we are procrastinating, it is whether we are procrastinating well.”

What is procrastinating well? It’s taking the amount of time necessary to give our minds the rest they need to absorb and process information. Our brains are busy and eager for distractions and sometimes we need to satisfy that need and then return to our work. The brain also needs time to mull complicated issues over, either head-on or subconsciously, such as when we go for a walk and come back feeling more inspired.

The risk is when procrastination goes on for too long or happens too frequently. When we are no longer indulging the brain’s need for rest and variety but instead putting off going back to what we are supposed to be doing.

This is much more likely to happen when we are unhappy, plagued with doubts about what we are supposed to be doing, or why we are doing it, or are unsure about what the expectations are. In other words, when we feel that we are not trusted.

And trust is the key to improving personal productivity.

An important step away from presenteeism to an output-based work culture is trusting that people are doing what they are supposed to be doing. As noted earlier, the increase in remote and hybrid working has been credited by many as having had a positive effect on productivity (including 64% of our Pulse 2 respondents) and part of the reason is that people are free to concentrate solely on working – how, where and when is best for them – and no longer need to waste energy on worrying about whether they are seen to be working.

Setting arbitrary boundaries on exactly when they need to be working shows very little trust in a person and prevents them from reaching their productivity potential.

The five-day working week has been around for a century and there are strong calls for it to be reviewed. Iceland recently piloted the world’s largest four-day week trial, with evidence suggesting positive results including reduced stress and burnout, and improved health and a better work-life balance. The country’s unions are now negotiating to permanently cut hours. Other examples include Microsoft Japan, which recorded a 40% increase in productivity in one trial, and New Zealand-based financial services company Perpetual Guardian, which increased profits and staff wellbeing. A 2019 YouGov poll found that nearly two thirds (64%) of UK business people supported adopting a four-day week.

The five-day week is clearly too long and is unfit for modern purposes. Four days is an improvement, but why stop there?

Why not set no working hours for the week at all?

Some organisations have no upper limit on their annual leave, such as software company Hubspot, Netflix and Virgin Group. The number of jobs posted on Indeed.co.uk offering uncapped holiday rose 148% from May 2017 to May 2019.

So, the logical next step here is to let people work to complete a task and then log off until they feel ready to start the next. As long as managers are available and outputs monitored, and people are supported with appropriate technology and training, it would mean true flexible working, fully tailored to the individual’s life. More trust and freedom, leading to employees who feel trusted and are less likely to be unproductive during their down time.

Of course, if it didn’t work out for someone then they would have to go back to set hours, and this would not be practical in every industry, only those that have been able to shift to remote working. But it should be remembered that many were cynical about working remotely at the start of the pandemic and, despite some challenges, it has largely been successful. It’s not an experiment or only temporary. It is here to stay and we need to learn from why it has worked out, not waste its lessons by refusing to go even further.

A relationship lives or dies on its level of trust. Why would the one you have with your employer be any different? Making the most of this trust just might be the key to ensuring that any upturn in productivity is not an anomaly but the start of long-term recovery.

You can register using the button below to receive your copy of the full great opportunity debate Pulse 2 report and automatically receive our third pulse report, which will be published in the Autumn.

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