Does Working From Home Increase Or Decrease Productivity?

Replying to emails on your bed. Taking a nap between calls. Having your kids walk in while you're having an important meeting.

So, does working from home increase or decrease productivity?

Before COVID19, several Work From Home (WFH) experiments were conducted to examine the impact of remote work on productivity and engagement.

The History of WFH Experiments

In 2010, Chinese travel website Ctrip, gave the staff of their call center the opportunity to volunteer to work from home for 9 months. Those working from home completed 13.5% more calls than the staff in the office did. The conclusion of the study revealed, in comparison with the employees who came into the office, the at-home workers were not only happier but also less likely to quit.

In 2012, the US Patent and Trademark office divided employees into Work-from-home and Work-from Anywhere programs. Working from home meant they went to the office at least one day a week, while a work-from-anywhere (WFA) program meant they traveled to headquarters no more than five times a year. Those in the work-from anywhere program were 4.4% more productive, with with no increase in work that needed to be redone.

But it's not all good news. In 2013, Yahoo CEO Marissa Mayer famously canceled that company's remote work program, citing concerns about employees slacking off.

If working-from-home boosts productivity, how does the process work?

To start off, employees should be more flexible working from home. This ties into productivity for 2 reasons. Employees get to manage time, energy and attention - all of which play a crucial role in producing quality work. In addition, they have more freedom - autonomy being an important ingredient in motivation.

Employees working from home can also be exempt from the "cake in the break room effect". Believe it or not, the office can be an incredibly distracting place. According to Freakonomics, the "cake in the break room" effect involves employees taking longer breaks and being exposed to more distractions at an office space. In the Ctrip experiment, researchers linked the productivity boost to a quieter environment for making phonecalls.

The third reason, simply put, they could be working longer. A study conducted by researchers in the early weeks of the pandemic found showed the average workday increased by 48.5 minutes during lockdown.

Of course, there's many reasons for productivity boosts but Stanford economist Nicholas Bloom argues the situation of the pandemic is different. With past experiments, employees may have volunteered to work from home but the pandemic hasn't given us the same freedom.

The inability to stay focused at home can also be an issue.

"As a married father of four trying to maintain his research productivity and preparing to teach an online class to Stanford students, Bloom can speak with authority on this point."

Other negative impacts come from social isolation and not being at our most creative. A recent study by Microsoft shows that employees at home are more likely to contact current team members but less likely to get in touch with new ones. Limiting cohesion can affect innovation in the long-run.

Bloom believes working-from-home works, in moderation. The formula is creativity in the office, efficiency at home.

Check out our video on whether working from home increases or decreases productivity:

References

1. Bloom, N., Liang, J., Roberts, J., & Ying, Z. J. (2015). Does working from home work? Evidence from a Chinese experiment. The Quarterly Journal of Economics, 130(1), 165-218.

2. Choudhury, P., Foroughi, C., & Larson, B. (2021). Work‐from‐anywhere: The productivity effects of geographic flexibility. Strategic Management Journal, 42(4), 655-683.

3. Dubner, S. J. (2019, December 3). There's Cake in the Breakroom! (Ep. 89). Freakonomics. https://freakonomics.com/2012/08/23/theres-cake-in-the-breakroom-a-new-marketplace-podcast/.

4. Goudreau, J. (2013, March 22). Back To the Stone Age? New Yahoo CEO Marissa Mayer Bans Working From Home. Forbes. https://www.forbes.com/sites/jennagoudreau/2013/02/25/back-to-the-stone-age-new-yahoo-ceo-marissa-mayer-bans-working-from-home/?sh=6801544e1667.

5. To Raise Productivity, Let More Employees Work from Home. Harvard Business Review. (2014, August 21). https://hbr.org/2014/01/to-raise-productivity-let-more-employees-work-from-home#:~:text=At home people don't,the end of the day.

6. University, S. (2020, April 16). The productivity pitfalls of working from home in the age of COVID-19. Stanford News. https://news.stanford.edu/2020/03/30/productivity-pitfalls-working-home-age-covid-19/

7. Teevan, Jaime, Brent Hecht, and Sonia Jaffe, eds. The New Future of Work: Research from Microsoft on the Impact of the Pandemic on Work Practices. 1st ed. Microsoft, 2021. https://aka.ms/newfutureofwork

8. Guardian News and Media. (2021, March 21). Our research shows working from home works, in moderation | Nick Bloom. The Guardian. https://www.theguardian.com/commentisfree/2021/mar/21/research-working-from-home