A quiet but distinct shift is occurring, with workers transitioning from virtual conference calls back to in-person office meetings. Wall Street companies have led this transition by compelling their employees to return to work, but even tech behemoths such as Apple, Google, Meta and more are requiring staff to be present at the office at least three days a week. This pivot might seem like a rebuke from old-school corporate hard-liners to proponents of the work-from-home paradigm. Hasn’t pandemic-induced research demonstrated that remote work often surpasses office-based work in productivity?
Regrettably for work-from-home enthusiasts, recent studies primarily contradict this notion, emphasizing the irreplaceable role of offices. A point of interest is a 2020 working paper by Natalia Emanuel and Emma Harrington, then Harvard doctoral students, which drew considerable attention. They reported an 8% surge in calls handled per hour by employees of a digital retail company transitioning from office to home settings. However, a lesser-known revised version of their paper, released in May by the Federal Reserve Bank of New York, indicated that the increase in efficiency turned into a 4% dip.
The discrepancy is not due to an error in the original findings, but rather to the acquisition of more granular data, including detailed work schedules. It was noted that remote employees not only answered fewer calls but also suffered a drop in interaction quality. They kept customers on hold longer and experienced an increase in callbacks, signifying unresolved issues.
This updated research aligns with other studies reaching similar conclusions. For instance, David Atkin and Antoinette Schoar from MIT, alongside Sumit Shinde from UCLA, conducted an experiment assigning data-entry workers in India to work either from home or at the office. Those working from home exhibited an 18% productivity decrease compared to their office counterparts. Researchers from the University of Chicago and University of Essex discovered a productivity deficit of up to 19% among remote employees of a large Asian IT company compared to their pre-remote performance. Further studies noted even chess professionals perform less well in online tournaments than in-person matches, and another demonstrated how video conferences can stifle creative thinking.
The reasoning behind these outcomes will likely resonate with anyone who has had to convert their dining room into an office over the past few years. Collaboration from home proves to be more challenging. In the Fed study, workers expressed missing their in-office “colleagues for quick consultation.” Other researchers studying nearly 62,000 Microsoft employees’ communication records observed that professional networks within the company became more insular and static when working remotely. Video conferencing fails to replicate the dynamics of in-person meetings. For instance, Harvard Business School researchers concluded that “virtual water coolers,” popularized during the pandemic, often added to busy schedules without offering significant benefits. These challenges represent an increase in co-ordination costs in economist Ronald Coase’s terms, making collaborative work more cumbersome.
While some co-ordination costs of remote work may decrease as people adapt, another cost—the stunting of human capital development—may increase over time. A study published in April by Drs Emanuel, Harrington, and Amanda Pallais, also from Harvard, showed a significant drop in feedback exchanges among colleagues after shifting to remote work. Drs Atkin, Schoar, and Shinde reported a relative decrease in learning among home-based workers, whereas their office-based peers acquired skills more rapidly.
The belief in the productivity-boosting power of remote work can be traced back to a pre-pandemic experiment reported in 2013 by Stanford’s Nicholas Bloom and others. Workers at the Chinese online travel agency now known as Trip.com saw a 13% performance boost when working remotely. However, two crucial nuances are often overlooked: first, a significant portion of the performance improvement resulted from longer work hours rather than increased efficiency; second, the company eventually discontinued remote work as it impeded employees’ opportunities for promotion. In 2022, Dr. Bloom revisited Trip.com to evaluate the effects of a hybrid-work trial, which showed negligible impact on productivity. However, employees spent longer days and produced more code when working in the office.
While productivity is an essential aspect of work (and life), there’s more to it. Arguably, the most significant advantage of remote work is happier employees. People save commuting time, which could feel like a productivity boost, even if traditional metrics fail to capture it. Flexibility to manage school pickups, doctor appointments, and personal health and wellness routines is easier. And certain tasks—especially those requiring prolonged, undisturbed concentration—can be executed more effectively at home than in noisy open-plan offices. This may explain the hesitance of many workers to return to the office.
In fact, surveys have found that employees are willing to accept salary reductions for the privilege of working from home. Having contented employees at slightly lower pay might be advantageous for businesses. For many, the future of work will remain a blend of office and home-based work. However, the work week’s balance will probably tilt back towards the office and away from home—not because employers harbor a strange fascination for rush-hour traffic, but because it points towards higher productivity.
