Recent years have seen a massive shift in what both people and companies expect in the workplace. Since 2020, hybrid and remote work has been on the rise, but what works and what doesn't?
A New Work Paradigm
In a podcast interview with McKinsey, Nicholas Bloom talks about the new reality of hybrid working, highlighting the effects for employees and companies alike. "If you let people work from home two days a week, they value it at about an 8 percent pay increase," he says.
But it's not only the money. In another study done by Bloom, he found that "resignations fell by 33% among workers who shifted from working full-time in the office to a hybrid schedule,” according to a report published by Stanford.
Bloom does make it clear that some guidelines are necessary in order to ensure success. He talks about "anchor days," or agreed-upon days that everyone is going to come into the office at the same time during the week. He advises against rotational hybrid schedules where people are in person at different times, claiming that this kind of organization can make or break hybrid work for a company.
The Role of The Office
Some of the most important aspects of business happen best when people are around each other. This is why most experts advise against fully remote work.
The first argument cited by experts is that coming into the office just a few times a week allows for mentoring and building of company culture, which are both essential for people to work together.
Another issue is innovation and creativity. In a study published by Nature, researchers showed that video conferencing generally inhibits idea generation and "production of creative ideas". Interestingly, they found that the same was not true of other tasks like selecting which ideas to pursue after they have already been generated.
Something a lot of companies don't think about as well is how their remote work policy might affect their talent pool. For example, many young people want to be in the office at least part-time because it provides socialization and a co-working space. Therefore, it's important to have this option for employees if a company wants to attract more young talent.
All of this isn't to say that fully remote policies never work. There are some cases, like Airbnb, where it can produce fantastic results. However, in cases like this, there are strict guidelines in place, such as requiring employees to meet for team gatherings on a quarterly basis for about a week and not changing compensation based on where employees choose to live.
What The Data Says
Now, the big question: how does working from home affect productivity? Unfortunately, the results reflect a very large spread, with some studies reporting major declines and others reporting major increases in productivity.
The main factor to blame for this seems to be that it is hard to measure changes in productivity caused by remote work when jobs, industries, and company policies are all different.
For example, one study done on patent examiners found promising results, but those results can only be relevant for autonomous jobs like patent examining. Furthermore, for every study with a positive result like that, there is another study that shows results on the other side of the spectrum.
Despite this dissonance, Nicholas Bloom estimates from various randomized control trials and a plethora of research that there is a small increase in productivity, at around 3-5%, attributed to working from home. The main reasons he cites are time saved on commuting and benefits from working in a quiet environment.
However, it's important to keep in mind that this depends heavily on how well-organized and executed a company's working from home policy is.
The Office Divide
Another study done by McKinsey looked at how the potential to work from home varies across jobs and industries. They found that "more than 20 percent of the workforce could work remotely three to five days a week." However, over 50% don't have the ability to work from home at all due to external factors like the need to use equipment or to be face-to-face with customers.
The potential to work from home, either fully remotely or hybrid, is concentrated towards highly skilled, highly educated, and highly paid workers. Even among this demographic, the ability to work from home is limited to just "a handful of industries, occupations, and geographies." This mostly includes finance, management, professional services, and computer-oriented jobs like IT.
To develop this idea even further, remote work varies across countries as well. More advanced economies, like the UK, rely more heavily on tertiary sector activities and therefore have more highly skilled, highly educated workers in jobs that typically work from home. On the other hand, economies in emerging countries rely more heavily on activities like agriculture and manufacturing, which need workers in person.
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Interested in joining the conversation about work reimagined? We'll be discussing all this and more at VivaTech 2025!