Working from home not to blame for Australia’s productivity slump

A new study from the Australian Productivity Commission has found that working from home is not responsible for the country's declining productivity growth, challenging common assumptions among many employers.

Australia has experienced a notable drop in productivity growth, slipping from an annual average of 2.2% in the 1990s to just 1.1% during the 2010s. Despite the urgency to reverse this trend, the Commission's findings indicate that companies may be focusing on the wrong solutions by prioritising return-to-office mandates as opposed to addressing deeper process issues.

Remote work examined

The study reports that 36% of employed Australians now usually work from home. The Commission concluded that outdated work systems and processes were a more significant barrier to productivity than flexible work locations. The report cautions employers against attributing low productivity solely to remote working arrangements.

"When productivity numbers drop, most companies panic and think 'we need everyone back in the office'," said Ryan Zhang, workplace productivity expert and CEO of Notta.ai. "But this study shows that's like trying to fix your car's engine problems by washing the exterior. You're not addressing what's actually broken. The real issue isn't where people sit—it's whether they have the right tools, clear priorities, and systems that actually make sense for how work gets done today."

The study identifies a recurring mistake among organisations: treating productivity as a discipline problem rather than identifying systemic process failures.

Common missteps

Zhang describes several missteps companies often make as they seek to address falling output:

• Monitoring activity rather than outcomes: Organisations frequently measure productivity by hours logged or the number of emails sent, rather than focusing on deliverables and overall impact.
• Increasing controls when performance drops: Employers commonly introduce additional layers of oversight and approvals when output decreases, leading to a reduction in employee autonomy, which can further diminish performance.
• Solving communication breakdowns with extra meetings: Instead of addressing the root causes of miscommunication, some opt to schedule more meetings, which may compound inefficiency.

To address these problems, Zhang advocates for a set of alternative strategies designed to improve both remote and in-office productivity.

Five key strategies

According to Zhang, the following actions can help optimise workplace productivity regardless of location:

• Measure results, not hours: Define clear metrics for success on roles and projects, and evaluate performance by results instead of time tracked.
• Remove controls, add clarity: Clarify expectations and objectives, providing employees with autonomy, rather than increasing supervision.
• Address systems, not meetings: Streamline information flow using shared documents and clear processes, reducing the need for superfluous meetings.
• Streamline decision-making: Clarify decision-making authority to accelerate processes and eliminate unnecessary bottlenecks.
• Invest in effective technology: Deploy user-friendly collaboration tools that enable seamless remote and hybrid work, ensuring technology does not become a barrier.

Impact on business

"While companies debate office policies, their competitors gain advantages through better systems and processes," Zhang comments.

He adds that organisations making operational investments in effective systems and tools, while focusing on measuring results rather than enforcing office attendance, are more successful in attracting talent. He continues, "The window is closing fast: every month spent on office mandates is a month competitors spend building the streamlined operations that attract top performers."

Employee outcomes

Zhang observes that employees report higher satisfaction in organisations that focus on functional processes rather than surveillance mechanisms.

"The biggest productivity killers for employees are unclear expectations, endless meetings, and clunky technology—not working from home. When companies fix these fundamental issues, workers can focus on delivering great results instead of navigating broken processes."

He further explains, "Employees choose their employers based on operational efficiency, not just salary or benefits. They want to work for organizations that respect their time, provide clear direction, and remove administrative friction. Companies that get this right don't just see productivity gains—they become talent magnets in a competitive market."