Productivity and the Pandemic

When the onset of the COVID-19 crisis back in March forced physical offices to close and workforces to go primarily remote virtually overnight, almost every firm was thrown for a justifiable loop. Despite the initial logistical and technological challenges of quickly shifting to an entirely new way of working, many ended up weathering the immediate storm more smoothly than they had anticipated and settled into a relatively stable remote existence.

Nine months later, however, even companies that saw some early success amid the transition are finding it difficult to maintain that positive momentum as the pandemic stubbornly drags on, with cultural issues, communication difficulties and just an overall sense of collective fatigue setting in. And the potential longer-term concern, according to two organizational consultants, just might be a widening of the productivity gap between the top companies and the rest of the pack.

Writing in the Harvard Business Review, Bain & Company partners Eric Garton and Michael Mankins note that while some firms have remained fairly productive during the pandemic, most are less productive now than they were 12 months ago. The key difference between the best and the rest, Garton and Mankins speculate, is how successful they were at managing the scarce time, talent and energy of their workforces before COVID-19 – that is, those that were crushing it before the pandemic have likely continued to shine, while those with less stellar performance have in many cases slipped back even further.

Based on their research, the authors posit that the companies that are the very best at managing scarce time, talent and energy are 40% more productive than the rest – the top quartile versus the average of the remaining three quartiles. But as the pandemic has dramatically affected the way companies manage their three key productivity drivers, the productivity gap between the best and the rest has widened.

Garton and Mankin estimate that the best companies – those that were already effectively managing the time, talent and energy of their teams – have grown 5% to 8% more productive over the last 12 months, as additional work time, access to new star talent and continued engagement have been a boon. Most organizations, on the other hand, have experienced a net reduction in productivity of 3% to 6% (or more) due to inefficient collaboration, wasteful ways of working and an overall decline in employee engagement.

From the perspective of time, for example, companies that were already collaborating effectively and working productively before the pandemic have remained productive during lockdowns and other disruptions, as stay-at-home orders freed up time previously spent commuting and created flexibility in work schedules and employees capitalized on new technologies to stay connected with customers and coworkers. For companies that struggled to collaborate productively before the pandemic, however, work-from-home orders only made matters worse, with the explosion of time consumed in virtual meetings yielding very little in the way of added productivity.

In terms of talent, meanwhile, Garton and Mankin’s research suggests that the best companies are 20% more productive than the rest due to the way they acquire, develop and lead their difference-making people. And the pandemic, they say, has had both positive and negative impacts on talent as a source of productivity. Remote work, for example, has created opportunities for organizations to access talent that may have otherwise been out of reach, as physical proximity is no longer a primary factor in determining the pool of available labor for most companies. For many companies, however, a dearth of demand for products and services during the pandemic has kept them out of the labor market, unable to capitalize on opportunities to acquire new talent. And their current employees have faced mounting pressures at home, often reducing their overall productivity.

And when it comes to energy, Garton and Mankin’s research shows that an engaged employee is 45% more productive than a merely satisfied worker, and an inspired employee is 55% more productive than an engaged employee. Therefore, the better a company is at engaging and inspiring its employees, the better its performance. But the pandemic has hit energy hard, with many companies struggling to engage their employees. Those that have avoided an energy drain have leaned into everything from open communication policies to creative virtual engagement efforts, thus avoiding a productivity drop-off. Others, however, have found that a lack of engagement prior to the crisis has only gotten worse in an all-virtual workplace.

What does it all mean? The authors believe that the impact of this widening gap could be significant. Because if the best organizations were 40% more productive than their peers before the pandemic, they may be 50% or more productive now – a pandemic bump that may enable them to out-team, out-innovate, outgrow and outperform their competitors for many years to come.