This one is tricky as the obvious answer is not so obvious.

(A) On average, less-productive employees spend no fewer hours per day at their workstations than do their more-productive peers.
But that doesn't mean productivity. You can even spend more hours at your desk and still be unproductive.
(B) Unpleasant surroundings give employees less motivation to work hard than more pleasant surroundings do.
Yes, that's what the argument is saying.
(C) The more-productive employees are generally rewarded with pleasant office space.
The more productive employees get the pleasant spaces meaning that you have to perform to be something and not vice versa.
(D) More-productive employees do not work any more hours than their less-productive peers.
Ok, but doesn't answer the question
(E) Peer pressure discourages employees in crowded, unpleasant surroundings from making phone calls to their own family members during work time.
This could be tricky , Peer pressure discouraging someone from making class doesn't make them more productive.The just spend more time at their desk. Same as A