March Madness could cost employers, but should they discourage workers from wasting time?
With the first round of the 2013 NCAA Division 1 men’s basketball championship tournament set to tip off next week, the nation’s employers should be readying themselves for the inevitable drop in productivity that coincides. One new survey found that nearly one-third of workers spend at least three hours per day following the Tournament during work hours.
In the annual “study” hated by working basketball fans everywhere, global outplacement firm Challenger, Gray & Christmas, Inc., estimates that March Madness will cost American companies at least $134 million in “lost wages” over the first two days of the Tournament, as an estimated 3.0 million employees spend one to three hours following the basketball games instead of working.
“At the end of the day, March Madness will not even register as a blip in the overall economy. Sequestration is going to have a far bigger impact. Will March Madness even have an effect on a company’s bottom line? Not at all,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.
“But, if you ask department managers and corporate IT managers, March Madness will definitely have an impact on the flow of work, particularly during the first week of the Tournament. Starting the day after selection Sunday, people will be organizing office pools, researching teams and planning viewing parties. When the games begin around noon, eastern time, on Thursday, many companies will probably notice a significant drop in Internet speeds, as employees start streaming games and clogging up the network’s bandwidth.”
A survey just released by MSN and Impulse Research found that 66 percent of workers will be following March Madness during work hours, with 20 percent expecting to spend one to two hours following games, 14 percent spending three to four hours, and 16 percent saying they will spend five hours or more watching games instead of working.
Challenger March Madness Report
2.5 MILLION WORKERS SPENDING 90 MINUTES A DAY WATCHING BASKETBALL; IT MUST BE MARCH
The annual NCAA Division 1 men’s basketball championship tournament, affectionately known as March Madness, kicks off in less than two weeks and companies around the country know what that means: it is time once again to remind employees that streaming live video slows down everyone’s internet speed.
In its annual “study,” that gives legitimate scientific studies a bad name, outplacement firm Challenger, Gray & Christmas, Inc. predicts that while March Madness will not be the downfall of the American economy, it could result in millions of hours in lost productivity, or at least diminished productivity, as workers across the nation take time from their work schedules to watch games online, check scores and manage their office pool brackets.
Based on last year’s data, online March Madness coverage could attract more than 2.5 million unique visitors per day, each spending an average of 90 minutes watching games. With private-sector workers earning an average of $23.29 per hour, Challenger estimates that employers will end up paying distracted workers about $175 million over the first two full days of the tournament.
Challenger March Madness Productivity Report
NATION’S WORKERS COULD SPEND MORE THAN 8 MILLION HOURS WATCHING GAMES FROM OFFICE
Extra games and wider access to coverage of the NCAA men’s basketball championship (A.K.A., March Madness) on smart phones and tablets could increase workplace distractions that threaten to sap employee productivity during the annual three-week long tournament, according to the workplace authorities at global outplacement consultancy Challenger, Gray & Christmas, Inc.
Challenger estimates that total online viewership during work hours is likely to reach at least 8.4 million hours during this year’s tournament, which begins with special qualifying games on Tuesday, March 15. Multiply that figure by the average hourly earnings of $22.87 among private-sector workers and the financial impact exceeds $192 million.
The Challenger estimate is based on 2010 March Madness on Demand traffic statistics from CBSSports.com, the site’s primary sponsor. Last year, the online streaming service attracted 8.3 million unique visitors, who enjoyed a total of 11.7 million hours of online video and audio (an average of about 1.4 hours per visitor). That was up 36 percent from the previous year.
According to CBSSports.com, 8.7 million hours, or nearly 75 percent of the total, was consumed in the first four days of the Tournament. Approximately 80 percent of the four-day total was achieved in the first two days, based on the fact that 3.4 million hours of March Madness on Demand was streamed on the first day of the tournament alone.
With CBS Sports expanding its reach this year by providing free mobile apps, Challenger conservatively estimates that streaming will increase at least 20 percent in 2011 to about 14 million total hours. Assuming similar viewership trends will occur this year, roughly 10.5 million hours of streaming video and audio will be consumed in the first four days of the tournament, with about 80 percent of that (8.4 million hours) occurring on Thursday and Friday.
Not wanting to be a stick-in-the-mud when it comes to enjoying an American pastime, Challenger, Gray & Christmas CEO John A. Challenger offered to put the 8.4 million hours of lost productivity in perspective.
“At first glance, 8.4 million hours of lost productivity seems like it would deliver a crushing blow to the economy. However, it is important to remember that there are roughly 108.3 million people on private payrolls, each working an average of 34.2 hours per week, according to the latest Labor Department data. So, the total number of hours worked by the American workforce in one week comes to about 3.7 billion hours,” Challenger explained.
“Over the three weeks of the tournament, the nation’s 108 million workers will have logged more than 11 billion hours of work. The 8.4 million hours lost to March Madness is a relative drop in the bucket, accounting for less than one-tenth of one percent (about 0.07 percent) of the total hours American workers will put in over the three weeks of the tournament,” he continued.
“Basically, there is no measurable impact on the economy or even an individual company’s bottom line. However, if you ask department managers or IT staff whether March Madness has a noticeable effect on productivity, they are likely to answer in the affirmative. The situation is comparable to a traffic accident, which does not have any measurable impact on the overall economy, but if you happen to be stuck in the resulting congestion and arrive late to work because of it, it has an immediate and noticeable impact on your day’s productivity.
“For an office with 50 to 100 workers, five or ten people streaming basketball games will definitely have an impact on everyone else’s Internet speed.”
This year, the NCAA basketball tournament is expanding to 68 teams. Four first-round games will be played on Tuesday and Wednesday, March 15 and 16 to determine the final teams added to the 64-team bracket that begins play with the second round on Thursday, March 17.
“These additional games probably will not add to the lost productivity due to the fact that they will be played in primetime, when most people are back at home in front of their televisions. However, it could make filling out one’s bracket a little more complicated, depending on how those running the pools decide to incorporate the new format,” said Challenger.
Last year, Challenger estimated that lost productivity would cost employers $1.8 billion in lost wages paid to unproductive workers. The firm did not reach the same conclusion this year due to a lack of updated market research and statistics that it typically relies upon to compute what the firm admits is a non-scientific ballpark guesstimate.
“This year, we simply did not have enough information to support what is already a very rough estimate. In the end, however, we have already seen that the impact to the overall economy is so minute that it should not cause any concern. What is more important is how individual companies address the issue among their employees. Some companies, in an effort to keep employees focused and bandwidth unencumbered, have blocked access to streaming content of all types, including March Madness on Demand,” said Challenger.
Other employers are concerned about the legal and/or moral implications of permitting or even sponsoring gambling activities on company premises. According to a 2010 survey by the Society for Human Resource Management, about 33 percent of companies have policies prohibiting workplace gambling, but very few (six percent) have actually disciplined or terminated an employee for violating the policy.
“Rather than try to squash employee interest in March Madness, companies could try to embrace it as a way to build morale and camaraderie. This could mean putting televisions in the break room, so employees have somewhere to watch the games other than the Internet. Employers might consider organizing a company-wide pool, which should have no entry fee in order to avoid ethical and/or legal questions,” Challenger suggested.
It is March once again, and like the swallows returning to Capistrano, basketball fans across the country will return to their favorite sports websites to research every one of the 64 teams playing in the NCAA men’s basketball championship tournament, fill out tournament brackets and enter one or more betting pools in what has become an annual rite of spring as sacred as green beer on St. Patrick’s Day.
For the nation’s employers, the men’s college basketball tournament, better known as March Madness, marks the arrival of several other annual rituals: employee-organized office pools, a potential dip in productivity and a marked decline in Internet speed, as workers soak up bandwidth watching live streaming broadcasts of the tournament games during office hours.
“March Madness and the subsequent office pools have been going on long enough, that employers can no longer claim to be caught off guard by the annual event. Some have tried to squash these pools, most simply ignore them and others have found ways to embrace the tournament as a team-building and morale-boosting opportunity,” said John Challenger, chief executive officer of Challenger, Gray & Christmas, Inc., the global outplacement consultancy that each year attempts to predict the tournament’s impact on workplace productivity.
This year, armed with an assortment of statistics from various sources, the firm estimates that workers distracted by March Madness could cost employers as much as $1.8 billion in unproductive wages during the first week of the tournament, alone, based on 20 minutes of daily time wasting.
“Keep in mind that it is nearly impossible to gauge the impact of March Madness on productivity in an information-based economy where workers possess portable technology that allows them to work from anywhere and any time. This estimate is probably about as accurate as the point spreads computed by Las Vegas bookmakers,” Challenger acknowledged.
The Challenger estimate is based on the number of people expected to participate in office pools, the amount of money they earn and the amount of work-time wasted on March Madness related activities, whether it is trash talking at the water cooler or watching live videos of the games during business hours.
A 2009 Microsoft/MSN survey found that 45 percent of Americans planned to enter at least one college basketball pool last year. Assuming that at least that many plan to participate in pools this year, Challenger applied that percentage to total payroll employment in February (129,526,000) to approximate that as many as 58.3 million workers could participate in office pools this year (45% of the total non-farm workforce).
According to the latest available data on average weekly earnings from the Bureau of Labor Statistics, these workers earn $748 per week or about $18.70 per hour (based on 40-hour work week). That breaks down further to earnings of about $6.23 every 20 minutes.
So, among the 58.3 million office pool participants, every 20 minutes of unproductive work time costs employers roughly $363.2 million (58.2 million X $6.23). It is conceivable that workers participating in pools could waste an average of at least 20 minutes per day the week between Selection Sunday (March 14) and the end of the first round (March 19), when March Madness-related activity is at its height as people research teams, put together their brackets and watch games online during work hours.
“By the end of that first week, employers across the country may pay unproductive workers a total of $1.8 billion,” said Challenger, multiplying the $363.2 million by five.
“As the tournament moves beyond the first and second round, the impact on the employer decreases, since few games are played during office hours and workers can no longer make adjustments to their brackets, thus eliminating the need to research teams,” Challenger added.
“Those who insist there will be no impact are kidding themselves. It might be a slight drop in output or it could be slow internet connections as bandwidth is sapped by employees watching streaming feeds of the games.”
During the first two days of the Tournament (Thursday, March 18 and Friday, March 19), approximately half of the 32 games are played during business hours. Fans on the west coast may be able to begin watching games as early as 9:00 AM.
CBS Sports and the NCAA teamed up a few years ago to begin offering March Madness on Demand web streaming service, which provides streaming webcasts of every game in every round of the tournament. Last year, it attracted 7.52 million unique visitors, up 75 percent from 4.92 million in 2008. According to Nielson web ratings data, 92 percent of fans who watched games online during the 2008 March Madness tournament did so from work computers.
Despite the potential impact, most companies see no reason to establish special March Madness policies. Two-thirds of employers do not have policies regarding office pools, fantasy sports leagues, or gambling in the workplace, according to a 2010 survey by the Society for Human Resource Management (SHRM). And, the majority of employers still do not block access to all video streaming sites.
“In the end, employers may or may not see a significant impact. Even if they do, few are compelled to go out of their way to ban March Madness related activities. Especially in this economy, when many employees are already anxious about their jobs, there is no reason for employers to make a big deal about what amounts to a blip on the productivity radar,” said Challenger.
“In fact, with worker stress and anxiety heightened, a little distraction could be just what the doctor ordered. The key for companies is finding a way to maximize the positive aspects of March Madness so that they outweigh any potential negatives,” Challenger noted.
“Companies can use this event as a way to build morale and camaraderie. This could mean putting televisions in the break room, so employees have somewhere to watch the games other than the Internet. Employers might consider organizing a company-wide pool, which should have no entry fee in order to avoid ethical and/or legal questions,” Challenger suggested.
With the onset of March Madness just a week away, the nation’s employers typically would be bracing for a productivity drain, as workers research teams, fill out office pool brackets and watch live, streaming feeds of the games online. However, companies may have little reason to worry this year, according to one workplace authority.
“In this economy, employees are disinclined to do anything that might put their jobs at higher risk than they already are. Meanwhile, employers have bigger issues to address than whether a few workers are using work time to fill out betting pool brackets or sneaking peeks at games online. Even if this is occurring, companies would be better served by allowing this minor distraction during these stressful, anxiety-producing times,” said John A. Challenger, chief executive officer of global outplacement consultancy Challenger, Gray & Christmas, Inc.
“In light of the fact that employers and employees have more important things to worry about, we feel that any attempt to estimate the impact of March Madness on productivity would be counterproductive and inappropriate. We hope to continue this lighthearted look at the intersection of sports and the workplace once the economy is on surer footing,” said Challenger.
“With worker stress and anxiety on the rise as job security declines, a little distraction could be just what the doctor ordered. The key for companies is finding a way to maximize the positive aspects of March Madness so that they outweigh any perceived negatives,” Challenger noted.
“Companies can use this event as a way to build morale and camaraderie. This could mean putting televisions in the break room, so employees have somewhere to watch the games other than the Internet. Employers could also offset productivity losses by using the Tournament to boost morale. Employers might consider organizing a company-wide pool, which should have no entry fee in order to avoid ethical and/or legal questions,” Challenger suggested.
“In the past, one company we contacted allowed workers to wear their favorite team’s apparel for a small fee, which was then donated to a local charity. Another held a free office pool, which rewarded the top four a free lunch and the overall winner a gift certificate,” said Challenger.
Challenger offered some additional ideas on ways companies can co-opt March Madness excitement to build a loyal and more productive workforce.
MARCH MADNESS WORKPLACE MORALE BOOSTERS
Hold team sweatshirt day. Relax the dress code (for employees not meeting with customers) for the first Thursday and Friday of the tournament so that fans can wear the sweatshirt of their favorite college team (even if the team did not qualify for this year’s tourney).
Offer flexible schedules. On the four days when tournament games are played during work hours, allow workers the opportunity to arrive early so they can work a full shift and still leave in time to see the games.
Organize a company pool. Employees can enter free of charge and the winner is given a gift certificate to a restaurant or store.
Keep a bracket posted. For employers without company-wide Internet access, keep a large, updated tournament bracket in a common area so workers can check their teams’ progress.
Stay tuned. Keep television in breakroom tuned to coverage to eliminate the need for workers to sneak peeks online, which can slow everyone’s internet connection as bandwidth is constricted.