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Worker productivity is falling at the fastest rate in four decades

CNBC 12/18/2022 Susan Caminiti
  • Salesforce CEO Marc Benioff recently complained in a Slack message that new employees at the tech giant are not as productive as he expects, and he can't figure out why.
  • The problem is not isolated to Benioff's company.: 2022 is the first year since 1983 when there's been three straight quarters of year-over-year drops in average productivity per worker.
  • Employees are working more and producing less, and a time when their financial stress is the highest it has been since 2008.
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Salesforce CEO Marc Benioff recently made waves when he told employees in a Slack message that the company's newest hires aren't being productive enough, and he wanted help figuring out why. The tech giant's employee productivity issue is not an isolated one.

Employers are not only battling inflation and slowing growth, but worker productivity that is falling at the fastest rate in four decades. This has been the first year since 1983 to include three straight quarters of year-over-year drops in average productivity per worker, ADP chief economist Nela Richardson said during CNBC's recent Workforce Executive Council Town Hall.

Simply put: People are working more and producing less.

Much of the disconnect can be traced back to a few things, including pre-pandemic events, said Diane Swonk, KPMG chief economist. For starters, people are tired and stressed, leading to more burnout. Without the separation of work and home forced by the pandemic, people worked more.

The skyrocketing cost of living is also taking a toll on workers. Recent data from human capital management software firm Ceridian shows that 61% of North American workers are more stressed about their finances than they were a year ago, the highest level of financial stress since 2008. The firm calculates that such widespread financial worry is leading to $664 billion in lost productivity for employers each year across North America.

As much as remote and hybrid work have given employees long sought-after autonomy and flexibility, not being together in-person can impact the ability of teams to be at their best and to innovate, Swonk said.

Finally, the gains in worker productivity during the early 2000s because of upgrades have already been leveraged. Swonk said that even much of the innovation that's followed has been concentrated in the tech field itself, not spread out among the wider economy.

Worker engagement and job performance

For companies wanting to improve worker productivity, Swonk said the focus should be on engagement. Whether people find their work meaningful and rewarding is a key component of engagement. This is terrain that chief people officers know quite well, but sometimes gets confused with worker happiness or contentment.


Engagement, unlike happiness, isn't tied to an abstract feeling or emotion. It's about producing an improved business outcome. A recent Gallup analysis of 112,312 business units in 96 countries found a strong link between engagement and performance outcomes such as retention, productivity, and profitability.

Swonk said one path to improved engagement is better communication. "I know companies understand the connection between engagement and productivity, but for a long time we were in a world where workers were thought of as commodities," she said. Now, in a tight labor market, employers must be more attuned to the needs of workers. "Companies do not spend enough time asking workers what they want; they try to guess what they want, and they guess wrong," she said.

She recalls a client who, in 2019, wanted to give his low-wage workers a chance to move up in their careers. What he found instead was that his employees were leaving to take jobs elsewhere paying 50 cents more an hour. "He was so confused because here he was offering them this great opportunity to advance, but they were turning him down," Swonk said.

What this boss didn't understand was that his workers didn't have the luxury of maximizing their career wages, they needed to maximize wages for food and shelter for the week. "He would have known that if he had asked his workers in the first place," Swonk said.

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