The boss was right: Working from home full time really is bad for business

Victoria Wells: Research shows working remotely all the time reduces productivity, but don’t count it out just yet

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Bosses pushing employees back to the office this September suddenly have a lot more ammunition in enforcing their mandates because new research shows working from home really does hurt productivity, despite what workers might say.

Full-time work from home lowers productivity by around 10 per cent, according to researchers at Stanford University. In some cases, the impact could result in a hit as high as 20 per cent.

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There’s more research where that came from. A separate study of remote call-centre workers in India, conducted by the non-profit National Bureau of Economic Research, found that fully working from home dented productivity by about 18 per cent.

A lack of in-office collaboration may be partly to blame for the productivity losses, according to Stanford’s researchers. Communication is harder in a remote-work environment, and Slack messages and Teams meetings don’t appear to be good enough to bridge the gap. Weaker connections ensue, which can quickly turn into a productivity problem.

In contrast, working in an office may result in spontaneous conversations among colleagues, creating and boosting connections that might ultimately spark creativity and innovation, researchers said. There’s also evidence in-person support and feedback help people work better and faster, especially in stressful situations. As an example, the researchers cite police dispatchers in the United Kingdom who turned out to be much more efficient when working together in the same room as opposed to separately. The takeaway: “In-person working may thus allow for richer and faster communication,” the Stanford paper said.

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Being at the office also appears to be good for those just starting their careers. Studies show that junior employees get fewer mentorship opportunities and receive less feedback when working remotely compared to those at the office. That’s bad for productivity in the long run. Indeed, in the study of call-centre workers in India, researchers said the people who worked on-site picked up new skills more easily thanks to all that in-person support. It seems JP Morgan & Chase Co. chief executive Jamie Dimon was onto something when he said remote work “doesn’t work for young kids.”

There’s another downside to remote work that some employees may not want to admit: they’re much more likely to let job-related tasks slide when at home. “Employees that are working remotely on a full-time basis may at times struggle with self-motivation,” the Stanford paper said.

Some people may have a hard time getting down to business without a manager physically looking over their shoulder. And working for a paycheque doesn’t seem to be a big enough incentive for remote workers to overcome their inertia, either. For example, a study of professional chess players showed their performance suffered when they competed remotely even though prize money and status were at stake.

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Employees that are working remotely on a full-time basis may at times struggle with self-motivation

Stanford University paper

The productivity findings will likely be welcomed by many employers who have grown impatient with employees’ insistence on continuing to work from home. Royal Bank of Canada chief executive Dave McKay said he had concerns about the consequences of remote work all the way back in March. “The absence of working together in many ways has led to productivity and innovation challenges,” he said at the time. The bank has since asked employees to be in the office three to four days a week.

Many other companies that once embraced remote work have also reversed course, targeting September as the natural start of their renewed return-to-office plans. Among them is remote-work champion Zoom Communications Inc., which has asked employees to come in twice a week “to interact with their teams.” Meta Platforms Inc. and BlackRock Inc. have also set September deadlines for workers to resume commuting three or more days a week.

But all’s not lost for employees who can’t stomach dragging themselves to the office five days a week. Hybrid work doesn’t seem to lower productivity and might even boost it in some cases, Stanford researchers said. Working from home part time tends to make people happier and they end up doing a better job, studies show. What’s more, the time savings from not needing to commute often get poured back into people’s jobs, so employees get more work done. Plus, the quality of their work improves because there’s fewer distractions in a quieter home-working environment, the researchers said. Hybrid schedules are also a perk companies can wield to attract new hires, and keep current employees from quitting.

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Still, none of this means full-time remote work is destined to disappear. Stanford’s researchers said some employers may conclude productivity losses are worth it when balanced with the cost savings from cutting back on office space or hiring people internationally. There’s also a good chance technological advancements in the years to come will help smooth out the pesky communication issues weighing on productivity. In short, remote work isn’t going anywhere.

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“In the longer run we predict the amount of working from home will continue to grow,” Stanford researchers said. “We expect the rate of technological change in remote-work friendly innovations to fuel a new phase of work from home adoption in the coming decades.”

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A version of this story was first published in the FP Work newsletter, a curated look at the changing world of work. Sign up to receive it in your inbox every Tuesday.

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