2023-08-31 19:18:36
The treasured resource of CEOs, data drives pricing decisions, strategy and expansion into new markets. However, when it comes to remote work, conversations with senior management often seem more opinion-based than fact-based. And many of these executives long to return to the office.
Last September, BlackRock CEO Larry Fink mentioned in an interview about reducing inflation that “if we had more people magically coming back to the office, we would see an increase in productivity.” For his part, Disney CEO Bob Iger urged employees to return to the office four days a week, arguing that “nothing can replace the ability to connect, observe and create with colleagues when we are physically together.” Jamie Dimon, CEO of JPMorgan Chase, has been emphatic in his rejection of fully remote work, stating that it “doesn’t work for younger people, it doesn’t work for spontaneous idea generation and it doesn’t work for culture.”
They are right? The reality is that it is still not completely clear. Labor standards are rapidly evolving and collaborative software tools are constantly being refined.
While fully remote work may be an obvious solution for some jobs and employees, it can negatively affect others. Productivity is difficult to measure. Much data comes from self-reported surveys by employees or from academic research that focuses on specific job niches. According to Brian Elliott, former director of Slack’s Future Forum and current adviser to executive teams on flexible working, many CEOs remain stuck with a model that worked for them years ago due to a lack of conclusive evidence.
Positions have turned acrimonious and almost spiritual on both sides of the debate. Jonathan Levav, a professor at the Stanford Graduate School of Business and co-author of a paper on how video conferencing affects idea generation, was surprised by the strong reactions from advocates of remote work. “It has become more of a religious belief than a thoughtful debate,” he says.
To shed light on this topic, Forbes consulted academic researchers, corporate advisers, and business executives to determine what current data—and their own tests—say about how remote work really works.
Productivity
At the start of the pandemic, CEOs were impressed by the productivity of employees working from home. Three years later, they sound a different alarm, claiming that productivity is declining.
So who is right? Research can be selective to support any of the arguments. A recent study by Stanford economist Nicholas Bloom, which reviewed existing research, sparked controversy by noting that fully remote workforces seemed to experience an average 10% reduction in productivity. However, the study also found that “for well-organized hybrid work, which has been overlooked by many studies, the impact appears to be neutral or even positive,” according to Bloom.
However, before CEOs take Bloom’s study as irrefutable proof and demand that everyone return to full-time work, it’s important to consider the many subtleties behind these numbers. The studies reviewed often focus on lower-paid employees performing objectively measurable repetitive tasks, which may not be applicable to the workforce as a whole. In addition, these studies analyzed a variety of management styles and atypical conditions of 2020, such as the virtual schooling of children or the lack of availability of vaccines.
Bloom also suggests that fully remote companies could benefit from real estate savings and other inherent advantages, such as lower turnover and access to global talent. Balancing potential declines against benefits could make fully remote work, albeit 10% less productive, still profitable.
On the other hand, even a little bit of in-person time could lead to different results.
Creativity
As with productivity, innovation has emerged as a common argument from top management to promote a return to the office, suggesting that chance encounters in hallways or in the cafeteria spur creativity. However, experts question the extent to which these chance encounters actually foster innovation. Research has long shown that people don’t regularly interact with colleagues who sit more than 10 meters away, even if the opportunity exists. Research reviews have also shown that the most original ideas often emerge outside of group brainstorming sessions.
Paradoxically, open-plan offices, designed to encourage interaction between workers, can have the opposite effect. Studies have shown that open office implementation can decrease face-to-face interactions by up to 70%, as employees wear headsets, avoid eye contact, and follow their colleagues’ body language cues. Standards in this context tend to expand rapidly, which can lead to avoidance of outages.
On the other hand, research also indicates that working in person can promote creativity. Analysis of anonymous phone data revealed that face-to-face meetings between workers from different companies increased patent citations, indicating that innovation “ecosystems” like Silicon Valley’s do make a difference. Additionally, an experiment conducted by Levav found that completely remote teams working on new product design via video conferencing tools were less effective than their in-person counterparts.
Tutorships
One of the most common concerns around remote work, and a reason for a return to the office, is its impact on new or young employees. In this regard, Ken Griffin, founder and CEO of Citadel, expressed
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