Twenty days. Sixty-four games. And nearly $4 billion in lost wages and productivity.
March Madness is hoop heaven for college basketball fans, but many employers worry that the nationwide office fixation with the Big Dance could put big dents in their bottom lines.
American companies could lose up to $3.8 billion in lost wages and productivity this year due to the distraction of the NCAA men's college basketball tournament, according to an estimate by the outplacement consultancy firm Challenger, Gray & Christmas, Inc.
With employees organizing and monitoring betting pools, scouring the Web for the latest updates and even watching games on company time, Challenger says workplace productivity is poised to take a major dive this month.
And thanks (or no thanks) to 21st century technology, slacking off in the office has just gotten way easier: This year, CBS will stream video of the first three rounds (56 games) for free over the Internet. Gentlemen, start your browsers.
• Print out the NCAA men's bracket (pdf)
"We think that [$3.8 billion] is actually a pretty conservative estimate, because it just takes into account time visiting Web sites, but you can't account for time people spend armchair quarterbacking," said Rick Cobb, 48, executive vice president of Challenger, Gray & Christmas.
Challenger estimates that for every 13.5 minutes workers spend watching games online, companies lose over $237 million in lost wages alone. And with 16 games being played on Thursday and 16 more on Friday, computer networks could be strained or even crash under the load.
"Video is a really bandwidth-intensive bite out of your system," Cobb said. "If you have 34 percent of your employees streaming games, your systems are going to come to a screeching halt."
Like it or not, Cobb says, March Madness is a fact of life in most offices. He recommends that companies alleviate the strain on human resources by setting up a designated spot in break rooms where employees can follow progress in their pools or watch the games on TV.
If an office has a betting pool, Cobb recommends that no money should change hands. Instead, employees could win a gift certificate to a local restaurant. And managers should offer "anti-tourney" incentives for non-sports fans to avoid the "smoke break" effect, where some employees feel that the recreational activities of others dumps work into their laps.
Office pools are everywhere, even if they may not be legal. The laws pertaining to this form of gambling vary from state to state. But even where it's illegal, authorities generally agree that enforcement is not worth the time and effort. The FBI estimates that of the $2.5 billion Americans gamble on the NCAA tournament each year, only $80 million is legally bet through bookmakers in Nevada.
According to a 2006 Office Betting Pools Survey conducted by career publisher Vault Inc., 57 percent of workers said they participate in March Madness office pools. The percentage of workers admitting that they participate in some form of interoffice gambling rose from 61 to 67 this year.
But some employers say getting in on the action is the best way to balance bracket obsession with productivity recession during March Madness.
"I just want to try and make [the office] more of a relaxed, fun environment," said Brooke Pfautz, 32, who is the CEO of First Commonwealth Funding in Baltimore, Md.
Pfautz says because the 86 employees at his mortgage brokerage are more likely to be younger and male, he understands that hoops obsession is going to be invading his office whether he likes it or not.
So Pfautz, whose Maryland Terrapins didn't make the cut this year, has organized a freeroll interoffice pool, with the winner getting a weekend getaway at a resort in the Allegheny Mountains.
"I figured it would be better to keep it in-house, where drinking isn't encouraged and where we keep everyone in the office," Pfautz said. "After a couple pints at the local pub, they don't find their way back to the office so quickly. And our business is all sales, so as long as they're in the office and sober, [game watching] can be a good thing."
Salon.com sports columnist King Kaufman, however, says he doesn't buy into the thinking that there is a perennial March Madness productivity slump, and he criticizes Challenger's estimate, saying that it is based on a mountain of false assumptions and sensationalist number-jiggering.
"Three years ago it was $800 million, this year it's $3.8 billion," Kaufman said. "In a couple of years, according to Challenger and Gray, we're going to be wasting the gross domestic product watching the NCAA."
Kaufman points out that Challenger's estimate assumes that employees are wasting more of their bosses' time than usual by following the tournament — time that is likely already wasted in everyday slack-off activities like reading blogs, instant messaging with friends or sneaking in a soap opera.
In fact, a 1999 survey of 2,300 human resources managers conducted by the Society for Human Resource Management revealed that only 6 percent believe that there was a noticeable loss of productivity due to gambling in the workplace; 56 percent said there was no change and 13 percent felt it actually increased productivity.
No matter how much you play up the numbers, Kaufman says, the effect on the nation's productivity is most likely benign.
"I'm going to waste a couple hours of productivity this Friday," Kaufman said. "But I would be doing that anyway: It's Saint Patrick's Day."
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