Remote workers actually aren’t more productive. Will bosses finally call them back in this year?
Jan. 4, 2024 3 AM PT
These days, it looks like the bloom is coming off the rose for remote work: Many employers are talking tougher.
New research shows employees are actually less productive when they work from home full-time. And, with the tight job market starting to slacken, some predict 2024 will be the year employers finally clamp down.
But don’t be too quick to conclude things are going back to the days of 9 to 5 in the old cubicle.
It’s true that widespread studies based on standard measures of efficiency have found that fully remote employees are 10% to 20% less productive than those working on company premises. Challenges related to communications, coordination and self-motivation may be factors in the decline.
And some employers have been warning that those who fail to meet new standards for being in the office may find adverse effects on their performance evaluations and incomes.
But the new research that showed lower productivity by full-time remote workers also found that those on a hybrid schedule — some days at home and some on site — were about as productive as those in the office full time. And there’s some evidence that companies offering greater flexibility to workers may achieve better financial results.
Potentially even more important than abstract data are the surprisingly deep feelings of a great many workers about holding on to at least some degree of flexibility. And those personal feelings, which involve such cut-to-the-bone issues as commuting and the cost of child care, are being reinforced by gains in communications technology and the persistent shortage of qualified workers.
Since the pandemic, John Sturr, a 58-year-old social worker for Sonoma County, has been working two to three days a week from his desk in his bedroom. On days in the office he confers with colleagues and responds to walk-ins. He’s come to love the arrangement.
“The commute is beautiful, through vineyards” along the Russian River Valley, he says, “but it’s an hour out of your day.” The time that Sturr saves he uses to put dinner on early and run errands.
“I’ve never been able to telework my whole career. Previous managers were always suspicious. This is kind of amazing.”
Productivity vs. 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 every 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 nonfinancial benefits. “I do think people will come around,” she said.
The outlook for fully remote workers, who currently make up about 10% of all employment, appears more cloudy. Those job openings have been shrinking faster in recent months as the job market has slowed.
Many people working full time from home are in high-paying tech and information industries, which explains why San Francisco and Los Angeles metro areas are No. 1 and 2, respectively, when it comes to the share of all full-time workdays 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 functions, such as customer service representatives at call centers, where many jobs may be further eroded by artificial intelligence.
But even fully remote work has things going for it. For many employers, what may be lost in productivity can at least partly be made up in cost savings from cutting back on office and related expenses. Plus, these companies can hire workers more cheaply anywhere in the world. All told, Nicholas Bloom of Stanford University estimated that those savings may average 10% of a company’s operating costs.
“Firms shouldn’t care about productivity, they should care about profitability,” said Bloom, who is part of the WFH Research group.
Whatever the productivity studies may show, Bloom said, what’s happening is intuitive. “Look at their actions,” he said. “This is no longer a pandemic, and millions of firms in a capitalist economy are doing something consistently [in sticking with remote work]. I can only conclude it’s 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 firm, which operates a digital platform helping consumers shop and price cars.
TrueCar has cut back about two-thirds of its office space and eventually plans to get down to just 4,000 square feet, enough for client meetings and team-building events.
The company currently has about 325 employees across the country. And over the last three years, 48 employees have moved out of 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 firm is betting that over time that will help make it both more productive and more profitable.
“I do know we’re not going back,” she said.
New research seems to support the idea that working from home leads to less productivity. But are employers measuring remote work results by the right metrics?
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