Stanford economist Nicholas Bloom has studied work-from-home arrangements years before the coronavirus pandemic. [See the TAP blog, “Nicholas Bloom Addresses Working from Home Challenges During COVID-19” for an overview of Professor Bloom’s research in this area.]
Since May 2020, Professor Bloom has been collaborating with colleagues on Work-from-Home (WFH) Research. This research includes monthly surveys to learn about working arrangements and attitudes of both employers and employees.
In a Time article from this month, Professor Bloom was asked to share takeaways from his research over the past two and a half years. He discussed how remote and hybrid work have been going for all involved, whether executives’ efforts to bring people back into the office will be effective, and what common mistakes companies are making.
Below are a few excerpts from this interview with Professor Bloom: “What We Know Now About the Business Impact of Hybrid Work” (Time, September 6, 2022).
Hybrid Work – Remote Part-time, in the Office Part-time
Generally I think hybrid has worked really well. And the fact that most firms are adopting it tells you that.
But what’s been tricky is there has been this transitionary phase whereby employers said, ‘We’re going to move to hybrid, but we want a bit of social distancing in the workplace. We’re going to let people choose, to deliberately space them out.’ And everyone you speak to complains about the result of that. Most people, apart from introverts, have complaints about coming in and it being quiet and dead and people shouting into laptops—and what’s the point of coming in to be on Zoom all day? … If you look at the surveys, the key reason by far that people come into work is to see colleagues and work with colleagues.
But the biggest challenge—and maybe the one unexpected bit—is how much employees have got comfortable with choice of days in the office and like to flip that around each week, for whatever reason, childcare reasons, work, personal reasons, etc. I think it’s going to settle down into team by team when it makes sense to come in together.
Business Impact of the Shift to Hybrid Work
One is it keeps employees happier. Quit rates are down. In the randomized control trial we are just wrapping up, quit rates are down 35%. People report repeatedly in survey after survey that they value it at somewhere like 7% or 8% of a pay increase. A free pension plan is about the same value to employees.
Benefit two is it improves productivity. The numbers here are low, but the central estimate of over a number of studies is 3%, 4%. Not huge but positive. Where do those numbers come from? They come from two places. Firstly is time. So if you are working from home two days a week, on average, you are saving 70 minutes a day commuting. In survey data it looks like 30 minutes of that day is spent working more, 40 minutes is spent on other things. But as an employer, if you have people working from home two days a week, they work about an hour more for you over a 40-hour week. That’s 2% more hours. So that’s 2%. And then the other 1%, 2% comes from on the days you’re at home if it’s organized well, it’s quieter so people are typically more efficient.
Three is harder to quantify, but it’s definitely important, which is support for diversity, equity, and inclusion. We have surveys showing that everyone, all demographics, ages, races, etc. like working from home. But there’s a slightly stronger preference for people with kids, for women, for minorities.
Mistakes Some Organizations Are Making with Hybrid Execution
The biggest mistake is ceding full control over choice of days to employees over which days and how many days. Employees, when they come in, want to see their coworkers. So if you let people fully choose, you’ll find that in a team of 10 people, you never get a day when everyone’s there. So every single meeting that the full team has, has to have people on Zoom. It’s uncomfortable. It leaves people out. There’s cliques that form. It’s frustrating. The meeting ends, people on Zoom disconnect, and of course the meeting continues in the corridor.
The other thing is trying to get people back for too many days because of sunk-cost fallacies. Like ‘We have this space, we should use it.’ The fact you have this space doesn’t mean you’ve got to force people in unnecessarily. There’s plenty of evidence for the great resistance. And we find the great resistance is from two forms. One is, we survey employers and only 80% are coming in for as many days as their managers or their firm wants them to. So 20% are not, which is a high number. If you surveyed people pre-pandemic and said how many people are not coming in every day they’re supposed to, it would have been close to zero.
Read the full article: “What We Know Now About the Business Impact of Hybrid Work” (Time, September 6, 2022).
About Nicholas Bloom
Nicholas (Nick) Bloom is the William Eberle Professor of Economics at Stanford University, a Senior Fellow of SIEPR, and the Co-Director of the Productivity, Innovation and Entrepreneurship program at the National Bureau of Economic Research. His main research interests are on measuring and explaining management and organizational practices across firms and countries, and trying to use this to explain differences in firm and country level growth. He also works on innovation and IT, looking at factors that affect these such as competition, tax, learning and Government regulations.