Many white collar workers seem to be enthusiastic about the work from home trend, now freed of time-eating commutes, office politics, and hovering bosses. It’s hardly a secret that Covid-induced fear of commuter trains, busses and elevators has led CEOs to revamp operations and allow employees who can to work remotely. It has already radically reshaped the residential real estate market, with professionals who have extra cash hoovering up houses in exurbs or other states with lower costs of living but reasonable amenities.
But is this shift a lasting development? Remote work is hardly a new concept, as outsourcing and offshoring of lots of tasks, such as coding, call centers, and legal research attests. Despite the press and broker enthusiasm for this shift, it’s likely to wind up being rolled back significantly post-Covid. Some of the reasons why:
CEOs overwhelmingly dislike work from home. A Wall Street Journal survey late last year found that by more than a 2:1 margin, CEOs thought the costs and risks of working from home outweighed the benefit. And the minority camp consisted of CEOs who said they’d made it work, or were willing to have work at home continue post-Covid on a limited basis.
“There’s sort of an emerging sense behind the scenes of executives saying, ‘This is not going to be sustainable.’” —Laszlo Bock, chief executive of human-resources startup Humu and former HR chief at Google
“I don’t see any positives. Not being able to get together in person, particularly internationally, is a pure negative.” —Reed Hastings, co-chief executive of Netflix Inc., on working from home
“We tried it…It’s just not the same. You just cannot get the same quality of work.” –Rajat Bhageria, CEO of robotics startup Chef Robotics, on what the company learned in attempting to work remotely
The overwhelming majority of studies on work from home have found those employees are less productive. The only exception was one in the US from the employees themselves, who have incentives to score themselves well if they enjoy their new freedom. But their perception isn’t the one that counts. It’s that of the higher ups.
“Productive” isn’t just the worker’s perception that he is executing his tasks more efficiently at home; his bosses and co-workers may incur frictions in defining his tasks, coordinating them, and reviewing his output that can considerably or more than offset any perceived increase of his efficiency in isolation. A survey of small and medium-sized US firms found that working from home reduced productivity by 20% on average; a Japanese study found a decline of 30% to 40%. Some of the reasons why:
The problems with remote work will become more pronounced over time. Those of you old enough to remember the dot-com era may recall predictions that traditional companies would become largely passe because the Internet make it possible for free-lancers to team up and collaborate and outmaneuver the dinosaurs. That didn’t happen, even at the margins. The reason was obvious to me at the time: the considerable cost of negotiating and contracting.
At a decently-managed company, the whole is greater than the sum of the parts. People learn from each other, not just in the formal sense, but also how to get along with and get the best out of their peers and bosses.
That all comes under stress save for roles where the employee regularly works autonomously on well-defined tasks. Zoom meetings are a poor substitute for the much freer give-and-take you have in live sessions (and mind you, I hate meetings). You don’t have good approximations of the informal corridor or lunch line or bathroom chat where you exchange some information that might be consequential. And it’s very difficult to train and acculturate new employees remotely.
A colleague argued that a big reason that work at home was viable was that organizations were essentially frozen during Covid. Workers wouldn’t be changing jobs due most employers having to get their footing in the new normal and not being in expansion mode, plus the difficulty of getting in-person interviews. The reduction in turnover means that established relationships continue even though the teams and managers have to work out new routines.
The longer this continues, the more the interpersonal networks start to fray. Some will retire and need to be replaced or have their duties redistributed. So managers in companies where a fair amount of the tasks require collaboration or close oversight are likely to find work at home performing less well the longer it goes on.