Stanford economist Nicholas Bloom is a true believer, and like many true believers, he lets his message outrun his evidence. Based on a single study of a Chinese travel agency, he enthusiastically declares working from home a “future-looking technology” with “enormous potential.”
Not so fast.
Bloom’s study comes with serious limitations and is contradicted by a later Gallup report. However, while it is far too soon to draw broad conclusions from his findings, savvy business leaders can read between the lines and extract some valuable lessons for working optimally with all employees.
Bloom focused on China’s biggest travel agency, Ctrip, which wanted to expand while controlling office space costs. They instituted a remote work trial, expecting that productivity would slip a little, but not enough to cancel out the savings. Instead, productivity shot up 13%, and attrition dropped 50%. When the work from home option was rolled out to the entire company and employees were given a choice, the productivity gains were 22%.
Those gains are impressive, but it is important to keep in mind that the Ctrip employees are just doing call center work that requires little creativity or collaboration. The trust and teamwork essential for innovation in today’s business world benefit from some in-person interaction, and a Gallup report backs that up.
Gallup found that a remote work option improved engagement and employee satisfaction—but only up to a point. The most engaged employees were those who worked remotely part of the time, anywhere from 60% to 80%. Beyond that, remote work produced diminishing returns. In fact, the least engaged employees were those who worked remotely 100% of the time.
“Working remotely is most effective when there’s a home-office balance,” the report concludes. The optimal home-office balance will vary from industry to industry and within a company. Leaders and managers have to consider the nature of the work and the personality type of the employee.
The larger mission facing business leaders is to design a work experience that gets the best out of each employee. While Bloom’s findings and conclusions should be taken with a grain of salt, they do suggest some broader lessons.
Published on Oct. 12, 2018
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