If Sherlock Holmes were to take on the case of the mysteriously dwindling productivity, he would have a complex enigma on his hands. According to a recent report by the Institute for Corporate Productivity (i4cp), worker output in the U.S. has seen its worst drop since 1947, with labor productivity growth at a historically low rate of 1.1% from 2019 to 2023.

This phenomenon isn’t localized to the U.S. The U.K. and Canada have seen the weakest annual growth since 2013, and Australia has witnessed its “biggest fall in labor productivity on record.”

This global productivity predicament has instigated a plethora of theories, and the one that looks most likely is that top-down, forced return-to-office policies that undermine trust and autonomy are making workers less productive.

RTO MANDATES

To truly grasp the productivity problem, we need to look beyond the surface-level statistics. When Microsoft asked employees about their productivity versus leaders’ perception of their teams’ productivity, the disparity was stark. A whopping 87% of employees reported they are productive at work, while only 12% of leaders shared the same confidence. This chasm of misunderstanding widens when we start enforcing return-to-office policies.

Remember the last time you were forced to do something you didn’t want to? You likely felt resentment and a lack of trust. This is exactly what’s happening with forced return-to-office policies.

The return-to-office mandate has not been received kindly. We’ve seen thousands of Amazon employees walk off the job in protest, Apple employees petition against the company’s three-day-a-week in-office policy, and Farmers Group experience widespread outrage after the new CEO required employees to be in the office three days a week. And when workers feel their employment terms are being rewritten, trust erodes faster than a sandcastle at high tide.

TRUST IS THE INVISIBLE FUEL OF PRODUCTIVITY

Productivity and trust share a symbiotic relationship. The i4cp report found a clear correlation between trust and productivity. High-performance organizations prioritize both the “what” and “how” of goal achievement. These organizations understand that empathy and productivity are not mutually exclusive. They cultivate a culture of trust by providing flexibility and considering employees’ needs and preferences.

According to the i4cp’s Organizational Trust Index, trust in an organization is composed of five key elements:

• Senior leaders trust employees
• Managers trust their team members
• Managers are trusted by their direct reports
• Employees trust their team members
• The senior leadership team is trusted by employees

The presence of these five elements explains an 18% increase in productivity since the start of the pandemic for participating organizations.

A fascinating trend emerges when we compare high-performance organizations with low-performance ones. High-performance companies are more likely to strongly agree with the five trust statements by a factor of 3-to-11 times over low-performing companies.

In stark contrast, only 2% of respondents from low-performance organizations strongly agreed that their senior leaders trust employees, and a mere 3% stated that employees trust senior leaders.

If trust is the fuel for productivity, lack of trust is the pollutant that leads to organizational toxicity. The i4cp study found that those who described their organization’s culture as toxic were 16 times more likely to state “lack of trust in senior leaders” as a problem that needs addressing. These respondents were 10 times more likely to report an “unsafe environment for expressing opinions or concerns” as a major issue in their organizations.

On the flip side, a healthy organizational culture is marked by a strong presence of trust. Those who perceived their organization to have a very healthy culture reported that they have leaders who lead by example, are held accountable for employee outcomes, regularly communicate values, and address poor behavior immediately.

A return-to-office mandate, if imposed without thoughtful consideration of employees’ needs and preferences, undermines this trust. The key lies in maintaining flexibility, fostering a culture of trust, and letting productivity flourish naturally. After all, trust is not a nice-to-have; it’s a must-have.

AUTONOMY IS AN INVISIBLE CATALYST FOR PRODUCTIVITY

If trust is the fuel of productivity, then autonomy is the catalyst. It speeds up the process, sparks creativity, and fosters innovation.

According to the i4cp report, companies with the highest productivity provide the highest levels of autonomy to their individuals and teams. This autonomy is closely tied to trust, and together, they account for a significant proportion of productivity. Specifically, autonomy of individuals and teams explains 15% of the variability in productivity.

When companies mandate a return to the office, they may unknowingly be sapping their employees’ autonomy and, in turn, trust.

The most innovative companies understand this well. They provide flexibility and autonomy, allowing teams and individuals to determine the right work model for their roles. This approach is akin to giving the master chef the freedom to experiment with ingredients, techniques, and recipes.

However, not all organizations have grasped the importance of autonomy. The i4cp report reveals a stark contrast between high- and low-performing companies. High-performing organizations are more likely to offer high levels of autonomy to individuals (77%) and teams (82%). On the other hand, low-performing companies trail significantly, with only 58% providing high levels of autonomy to individuals and 62% to teams.

Forced, top-down return-to-office policies that don’t get buy-in from employees undermine autonomy, for individuals and teams alike. And that hurts productivity.

The message is clear: If we want to boost productivity, we need to rethink our approach to the workplace. Autonomy, trust, and flexibility should be at the forefront of this transformation.