Is work from home productivity higher or lower than in the office? As companies are figuring out how to succeed in the post-COVID world and determine their long-term work arrangements, the debate between hybrid, remote, and office-centric options will depend on productivity at home vs. in the office.
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My experience of helping 18 organizations, including several Fortune 500 companies, transition to a permanent post-vaccine office return provides important insights for any leaders who want a productive team. Hybrid and even fully remote teams can gain a substantial productivity advantage if their leaders stop relying on traditional office-based culture and methods of collaboration. Instead, by adopting best practices for hybrid and remote work, forward-thinking leaders can drastically outcompete in-person teams in productivity.
Work From Home Productivity in a SaaS Firm
Alex, the Chief Executive Officer of a 900-employee SaaS company, asked me to help him figure out his future of work arrangements. He told me his default plan is an office-centric environment. He felt that if his team doesn’t return to the office full time, he feared losing out to rivals who do so, and gain productivity benefits by working from the office.
I told him that many employees might leave if forced to come back to the office full time, because the large majority of employees prefer fully remote or at least hybrid work arrangements. That applies especially to tech workers, such as at Alex’s SaaS company.
Alex responded that “this is just another change in work structure, like any other.” While I agreed with Alex that there have been many changes in work structure over the years—some more difficult than others—it does not negate the fact that some changes are easier to adapt to than others. And it’s not necessarily wise to make changes that go against the desires of your workforce without having a clear, evidence-based business case for doing so.
This is not an unusual situation. Indeed, I have seen numerous companies concerned about workplace productivity in remote work. Like many other business leaders, Alex thought that working from home or remote work may have a negative impact on his company’s success, as his employees may struggle with their work ethic.
Why Do Leaders Fail to Make an Evidence-Based Business Case for Their Decisions?
Today, leaders at every level are constantly being asked to make decisions in situations involving unprecedented levels of uncertainty. The stakes have also never been higher. Hence, leaders need to use best practices to guide their decision-making process to reduce risk. However, research shows that they often fail to do so, resulting in profit-destroying outcomes.
Leaders who fail to adopt best practices for determining work arrangements often fall prey to dangerous judgment errors called cognitive biases. These mental blindspots impact decision making in all life areas, ranging from business to relationships. Fortunately, recent research has shown effective and pragmatic strategies to defeat these dangerous judgment errors, such as by constraining our choices by focusing on the top available options, such as by constraining our choices to best practices.”
The leadership of a company is one of the most important factors in determining its culture. Many leaders have succumbed to a cognitive bias known as “anchoring” in this regard. Anchoring bias is a cognitive bias in which a piece of data becomes “anchored” in the mind of a decision-maker and affects how he perceives subsequent data.”
Alex was reluctant to adapt to novel work arrangements. He was anchored to believe that employees performing well in full-time office work in the past meant his employees should perform best in full-time office work settings. In doing so, Alex forgot that employees during COVID have learned to overcome challenges related to coordination by working from home and should be able to continue doing so.
For C-suite leaders, whose decisions have real consequences for people, success, and profits, falling prey to cognitive biases can be particularly costly. These errors render leaders unable to resist following their gut and rely on personal preferences instead of trusting in external best practices to implement policies, procedures, activities, and principles to ensure better productivity of employees. One of the biggest mental blindspots responsible for this tendency is called the not-invented-here syndrome, where leaders reject methods invented outside an organization as inapplicable to their supposedly unique case. A deeper investigation reveals that such methods – slightly adapted to each individual case – generally produce the same benefits in a wide variety of organizations. That’s what I focused on with Alex: convincing him that external practices are indeed relevant to his needs.
External Research on Work From Home Productivity
So what does external research suggest about work from home productivity? A two-year study published in February 2021 of 3 million employees at 715 US companies, including many from the Fortune 500 list, showed that working from home improved employee productivity by an average of 6%. Additionally, this survey performed a productivity study and discovered that the characteristics that have the greatest effect on remote work productivity are the same as those that drive in-person productivity: organizational culture and leadership.
Another survey of 800 employers found that 94% of employers said their employees were just as productive or even more productive while working remotely. Employees were generally satisfied with the shift to remote work. 83% of workers said they were happy with remote work arrangements, while only 7% wanted to return to an office immediately. Most workers said they wanted a hybrid setup when they do eventually return to their workplaces, splitting their time between home and the office.
Such remote work productivity gains aren’t surprising. Prior research showed that telework boosted productivity pre-COVID. After all, remote work removes many hassles taking up time for in-office work such as lengthy daily commutes. Moreover, working from home allows employees much more flexibility to do work tasks at times that work best for their work/life balance, rather than the traditional 9 to 5 schedule. Such flexibility matches research showing we all have different times of day when we are best suited for certain tasks, enabling us to be more productive when we have more flexible schedules.
Some might feel worried that these productivity gains are limited to the context of the pandemic. Fortunately, research shows that after a forced period of work from home, if workers are given the option to keep working from home, those who choose to do so experience even greater productivity gains than in the initial forced period.
An important academic paper from the University of Chicago provides further evidence of why working at home will stick. First, the researchers found that working at home proved a much more positive experience, for employers and employees alike, than either anticipated. That led employers to report a willingness to continue work-from-home after the pandemic.
Second, an average worker spent over 14 hours and $600 to support their work-from home. In turn, companies made large-scale investments in back-end IT facilitating remote work. Some paid for home office/equipment for employees. Furthermore, remote work technology has improved over this time. Therefore, both workers and companies will be more invested into telework after the pandemic.
Apart from that, non-survey research similarly shows significant productivity gains for remote workers during the pandemic. Moreover, governments plan to invest in improving teleworking infrastructure, making higher productivity gains even more likely.
Academics demonstrated a further increase in productivity in remote work throughout the pandemic. A study from Stanford showed that efficiency for remote work increased from 5% greater than in the office in the summer of 2020 to 9% greater in May 2022, as companies and employees alike grew more comfortable with work-from-home arrangements.
Employee Views on Work From Home Productivity
Alex’s original remarks where he thought that remote work was unproductive match those of many top leaders, such as Netflix’s Reed Hastings, who felt remote work was a “pure negative.” The belief underlying this thought process is that people can’t be truly productive outside of the office: thus, Elon Musk claimed those working remotely are only “pretending to work.”
However, as I showed Alex and the rest of his C-suite, there’s little evidence in support of this statement. The extensive amount of research eventually helped address the not-invented-here syndrome and de-anchor the anchoring bias issue for Alex and his leadership team.
The next step involved figuring out how to improve worker productivity further for the SaaS company. To better understand what staff needed, I proposed conducting an internal company survey to ascertain work preferences and productivity.
Following my advice, Alex’s team conducted an internal survey of employee preferences, with the goal of increasing workplace productivity and keeping them suitably engaged. Workers were asked how they thought they could be more productive and what type of work environment would best enable them to do so.
Upon gathering data on the preferred working styles of employees, I discovered that employees expressed a strong desire to work from home. 59% of employees indicated a preference for hybrid work environments (1-2 days per week in the office) and no full-time in-office work, while 32% indicated a strong willingness to work at home full-time, and only 19% wanted 3 or more days of in-office work.
When asked which working preference would maximize productivity for individual tasks, 79% indicated that they would feel more productive working remotely on individual tasks. 63% indicated that they would feel more productive working remotely on collaborative tasks.
Compared to office work, 80% of employees reported less stress when working remotely, indicating that remote work facilitates a reduction in stress, thus resulting in a healthy work/life balance. When asked about their connection to their supervisor in remote work settings, 87% of employees stated they would feel the same way in an in-person office setting.
Thus, the internal company survey revealed that employees support hybrid and fully remote work environments because of flexible scheduling options, long periods of uninterrupted work, increased concentration, and increased work energy levels by eliminating disruptive and time-wasting elements.
It goes without saying that Alex’s employees overwhelmingly preferred the more flexible work environment, according to the results of the internal survey. So having a mix of hybrid and fully-remote options, together with some in-office work, would maximize both productivity and retention, so important in this time of the Great Resignation.
Applying Working From Home Strategies for Effective Output
After analyzing the results of the internal as well as external investigations, I advised Alex to implement a hybrid-first approach with one day in the office for most staff, and fully-remote options for those who wanted them. A hybrid-first approach proved most compatible with the desires of the vast majority of employees, allowing them to remain productive while retaining them effectively. I concluded that the company should transition to a hybrid-first model in which some work is done from home and some from the office.
Alex and the rest of the management team were initially skeptical of the proposed hybrid-first approach, but after trying it out and seeing months of high employee productivity and retention, they are now believers. Those employees permitted to remain fully remote proved willing to go above and beyond to get the job done. They also swiftly adapted to changes required for their company’s success by working flexible hours to accommodate the shift for most employees to working occasionally in the office. As a result, the hybrid-first work strategy established an environment where employees could effectively manage their tasks while maintaining a good work/life balance.
It was clearly evident from both internal and external sources that rather than crippling employee productivity and work satisfaction by forcing them to return to the office, hybrid work either helps maintain it at the same level or improves it compared to previous situations.
As the political and social events around us continue to show an increasing trend of uncertainty, hybrid and remote work will no doubt remain a cornerstone of the future of work.
Employees are the most valuable resource for any company. In order to best maximize the productivity of the employees, companies must understand where they are most productive. And if they wish to retain them, employers need to appreciate and meet the preferences of their employees. Fortunately, hybrid and fully-remote work options allow the best of both worlds. Most employees are more productive, especially on their individual tasks, when working remotely. And most employees prefer to spend most or all of their time working from home – so a hybrid or fully remote work schedule. The best balance for most staff is to have them work on their individual tasks at home, and on their collaborative tasks in the office. Given that most employees spend over 80% of their time on individual tasks, they should be spending no more than a day or two in the office. This hybrid-first model is the best practice for hybrid and remote work, enabling leaders willing to let go of their intuitions and rely on evidence from both academic research, internal and external surveys, and case studies from progressive companies to seize a competitive advantage in the future of work.
Work from home productivity is higher than in the office, especially on individual tasks. Since most employees prefer hybrid or remote work, a policy of flexibility helps companies maximize both retention and productivity...> Click to tweet
Image credit: Ivan Samkov
Originally Published at Disaster Avoidance Experts on September 6, 2022.