No. 1 challenge Fortune 500 execs say they’re facing with employees: new research

Executives are more concerned about employee productivity than about getting them back to the office, according to new research from Atlassian. 

In September, the Australian software company asked 100 Fortune 500 and 100 Fortune 1000 executives what their biggest organizational challenge is, and nearly half (43%) said low productivity. 

Only a third of executives with an in-office mandate said they thought their in-office policies have had any impact on productivity. Instead, 76% of the Fortune 500 executives surveyed said they are more worried about how their teams are working than where they work.

It’s not the first time executives have said they’re worried that workers are getting less done — and evidence suggests their fears aren’t unfounded.

At the start of the Covid-19 pandemic, productivity soared to levels not seen in decades.

But that surge was short-lived. In the first half of 2022, productivity plunged by the sharpest rate on record going back to 1947 and remained low until this past summer, when workers’ productivity grew 5.2%, the fastest pace of growth since 2020, according to the Bureau of Labor Statistics. 

Although productivity is improving, bosses are still struggling to trust that their employees are working without constant in-office supervision, Atlassian’s co-founder and co-CEO Scott Farquhar tells CNBC Make It. 

“People are still trying to adapt to remote work and managers, in particular, are still wrestling with that loss of control, of having someone sitting right there in front of them,” he adds.

It’s hard to assign blame for lowered output and morale. 

Some CEOs have pointed fingers at remote work, arguing that clocking in from home has made it easier for employees to extend less effort, but research has failed to draw definitive conclusions about remote workers’ productivity. 

In 2022, Microsoft coined the term “productivity paranoia” to describe managers’ anxieties about whether remote and hybrid employees are working hard enough because they can’t see how people are working by walking down the hall or stopping by their desks.

Economists and human resource leaders have attributed the decline in productivity to everything from sluggish economic activity to higher job turnover. Gallup reports that employee disengagement costs the world $8.8 trillion in lost productivity, equal to 9% of global GDP.

Plus, workers are historically stressed and unhappy at their jobs, leading to more burnout. 

The antidote to declining productivity is to focus less on output and more on how employees are structuring their schedules and collaborating, says Annie Dean, Atlassian’s global head of Team Anywhere, the company’s distributed work policy.

Atlassian has run dozens of experiments with its 10,000-plus employees and found that encouraging employees to spend about 30-40% of their week in “focus time,” which the company defines as uninterrupted time spent on work that requires deep thinking, helps boost productivity.

Additionally, blocking off consistent “open collaboration” time each week to be responsive to messages, jump on a call, or just say “hi” to their teammates also helped employees work more effectively, says Dean.