Working from home is not more productive. So why is remote work growing?

These days, it seems like the rose is blooming for remote work: many employers are talking harder. New research shows that employees are actually less productive when working from home full time. And, with the tight labor market beginning to loosen, some predict that 2024 will be the year employers finally clamp down.

But don’t be too quick to conclude that things go back to the 9-to-5 days in the old cubicle.

It’s true that widespread studies based on standard efficiency measures have found that fully remote employees are 10% to 20% less productive than those who work on company premises. Challenges related to communications, coordination, and self-motivation may be factors in decline.

And some employers have been warning that those who don’t meet the new standards for being in the office may find adverse effects on their performance reviews and earnings.

But new research that showed lower productivity of full-time remote workers also found that those with a hybrid schedule (some days at home and others on site) were almost as productive as those in the office full-time. And there is some evidence that companies that offer more flexibility to workers can achieve better financial results.

Potentially even more important than the abstract data are the surprisingly deep feelings of many workers about maintaining at least some degree of flexibility. And those personal feelings, involving such profound issues as commuting and the cost of child care, are being reinforced by advances in communications technology and the persistent shortage of skilled workers.

Since the pandemic, John Sturr, a 58-year-old social worker in Sonoma County, has been working two or three days a week from his desk in his room. On days he is in the office he talks to colleagues and responds to walk-ins. He has come to love the arrangement.

“The drive is beautiful, through vineyards” along the Russian River Valley, he says, “but it’s an hour of your day.” The time Sturr saves is used to prepare dinner early and run errands.

“I have never been able to telework in my entire career. Previous managers were always suspicious. “This is something amazing.”

Productivity versus profitability

Today, about 30% of all full-time employees are on a hybrid schedule, according to WFH Research, which monitors remote work trends by surveying thousands of workers each month. Deborah Lovich, who leads Boston Consulting Group’s work on “people strategy,” sees more employers adopting hybrid work as they see the financial and non-financial benefits. “I think people will come around,” she said.

The outlook for fully remote workers, who currently make up about 10% of all employment, appears murkier. Those job openings have shrunk more rapidly in recent months as the labor market has slowed.

Many people who work full-time from home are in well-paying information and technology industries, which explains why the San Francisco and Los Angeles metropolitan areas rank first and second when it comes to the share of all full-time work days done at home. at 46% and 40% as of November.

At the other end of the pay scale are fully remote workers in administrative and more routine roles, such as customer service representatives in call centers, where many jobs may be further eroded by artificial intelligence.

But even fully remote work has its advantages. For many employers, what may be lost in productivity can be offset, at least in part, by cost savings from cutting office and related expenses. Additionally, these companies can hire workers at lower prices anywhere in the world. In total, Nicholas Bloom of Stanford University estimates that those savings can average 10% of a company’s operating costs.

“Companies should not worry about productivity, but profitability,” said Bloom, who is part of the WFH research group.

Whatever productivity studies may show, Bloom says, what’s happening is intuitive. “Look at their actions,” he said. “This is no longer a pandemic and millions of companies in a capitalist economy are doing something consistently [in sticking with remote work]. I can only conclude that it is profitable.”

Santa Monica-based TrueCar decided to go fully remote after the pandemic. “It gives us full access to talent,” said Jill Angel, chief people officer at the company, which operates a digital platform that helps consumers buy and price cars.

TrueCar has already cut about two-thirds of its office space and eventually plans to reduce it to just 4,000 square feet, enough for client meetings and team-building events.

The company currently has about 325 employees throughout the country. And in the last three years, 48 ​​employees have moved from California to other states, with Texas and Washington being the most popular destinations.

Workers are happier when they have control and certainty over their work schedules, Angel said, and the company is betting that over time that will help make it more productive and more profitable.

“I know we’re not going back,” he said.

Flex Index, which tracks employers’ remote work practices, and Boston Consulting Group recently teamed up to study the finances of more than 500 public companies. Their key finding: Fully flexible companies’ revenue grew on average 21% between 2020 and 2022, four times as much as less flexible companies.

Rob Sadow, co-founder of Flex Index, expects more such data to emerge that highlights differences in financial results as well as employee retention rates. He says his research shows that smaller and younger companies are more likely to adopt flexible working policies, so as more companies start operating and more office leases are cancelled, the proportion of employers offering work remote should grow.

“At the beginning of 2023, more than 50% of companies were still on the sidelines without a formal policy or specific work-from-home strategy,” he said. “What happened until 2023 is that more and more companies decided to invest in the land, and that is hybrid.”

Still, many bosses remain cautious about even partial remote work, fearing that it will weaken their company culture, mentoring traditions, and timely decision-making.

“We look at it constantly,” a senior executive at a San Diego media company said of remote work. He did not want to be identified, fearing that anything he said publicly could make it difficult to change work-from-home policies in the future. Currently, his company requires everyone to come in two days a week, including one set day.

“We found value in having everyone in the office at least one day a week because it allowed the younger members of the team to mix and collaborate with the experienced members,” he said.

But many employees want to be 100% remote, he added. “This is one of the most sensitive topics I have ever dealt with.”

Teams know better

At this point, no one knows which of the many possible models will prevail when it comes to balancing management’s desire for an on-site workforce and employees’ desire for greater flexibility.

Clearly, many workers like the hybrid model, but want to work from home about a day more than bosses prefer, which now averages two days a week, according to WFH Research.

In many companies, conflict only intensifies because CEOs have dictated rules and regulations for the company as a whole, according to Robert Pozen, a senior lecturer at the MIT Sloan School of Management who has written books on productivity.

“Let the team decide what is best for the team,” he recommended, noting that what is functional and productive will be different if you are in IT, customer service, sales or financial analysis.

“Bosses want responsibility and they used to get it by counting the hours in the office. I hope they realize the results they get. We should focus on what we want to achieve,” Pozen said. “Let’s figure out the goals and customize the success metrics that would best measure productivity.”

That’s pretty much the playbook for the Chicago-based law firm Chapman and Cutler. Sarah Andeen directs the firm’s library and research services for attorneys working in multiple states. The firm’s basic policy regarding remote work is not unique, but is based on the needs and expectations of the department and clients.

For Andeen and his two research staff, it was two or three days on site, with at least one of them in the office each weekday to open the library and handle any in-person requests from lawyers.

“I think it depends on the person, the work they do and the stage of their career,” Andeen, 54, said about the best way to structure hybrid work.

He said the older of his two librarians is in her 60s, lives in a Chicago suburb and uses the time saved from the 45-minute commute to do a little more gardening and other personal projects. Andeen’s other librarian is in her twenties, she lives in an apartment in the city, and she really likes coming three days a week to the company’s new downtown office, designed to be more collaborative.

“I know my staff. I know they are being productive,” Andeen said, adding that his team has clear productivity goals and measures. “Are we getting answers to the research questions in a timely manner? Are invoices invoiced and research cataloged? Is our website active and operational? “Are our lawyers happy?… I can see the results.”

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