The Truth About Work-From-Home Productivity

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Is work-from-home productivity higher or lower than in the office? Research shows that 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

Alex, the Chief Executive Officer of a 900-employee SaaS (Software as a Service) company, wanted to figure out his future work arrangements. His default plan was an office-centric environment. He feared that if his team didn’t return to the office full time, he would lose out to rivals who could do so and gain productivity benefits by working from the office.

This is not an unusual situation. Indeed, numerous companies are concerned about workplace productivity in remote work. The belief underlying this thought process is that people can’t be truly productive outside of the office: Elon Musk claimed those working remotely are only “pretending to work.”

Alex hired a consultant with expertise in hybrid and remote work, who told the CEO 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. In fact, data clearly show that workers—especially tech workers like at his company—are more productive working remotely.

External Research on Work-From-Home Productivity

A two-year study published in February 2021 of 3 million employees at 715 U.S. companies, including many from the Fortune 500 list, showed that working from home improved employee productivity by an average of 6 percent.

Another survey of 800 employers found that 94 percent of employers said their employees were just as productive or even more productive while working remotely. And 83 percent of workers said they were happy with remote work arrangements, while only 7 percent 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. Pre-COVID research showed that telework boosted productivity; 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 had 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 improved over this time. Therefore, both workers and companies will be more invested in 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 percent greater than in the office in the summer of 2020 to 9 percent greater in May 2022, as companies and employees alike grew more comfortable with work-from-home arrangements.

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A Hybrid-First Model of Work-From-Home Productivity

The next step involved figuring out how to improve worker productivity further for the SaaS company. To better understand what staff needed, the consultant helped the company conduct an internal survey to ascertain work preferences and productivity.

Upon gathering data on the preferred working styles of employees, the consultant discovered that employees expressed a strong desire to work from home. Around 59 percent of employees indicated a preference for hybrid work environments (one to two days per week in the office) and no full-time in-office work, while 32 percent indicated a strong willingness to work at home full-time, and only 19 percent wanted three or more days of in-office work.

After analyzing the results of the internal as well as external data, the consultant 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. The consultant concluded that the company should transition to a hybrid-first model in which some work is done from home and some from the office.

Hybrid-first models work even better when leaders adopt best practices for hybrid work. These involve addressing proximity bias, maximizing social capital, and facilitating remote innovation.

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 of 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.

Conclusion

To best maximize the productivity of their 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. A 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.