The increasing number of jobs that can be done remotely opens up a lot of possibilities for how (and where) employees are hired and managed. Some studies have found that workers who are allowed some flexibility and autonomy in terms of when and where they work are happier with their jobs and suffer less stress. Flexible work arrangements have also been proposed as a way to remedy gender inequality and close pay gaps. Skeptics, however, argue that remote workers are harder to manage and lose out on the intangible benefits of working with teammates in an office.
At Technology | Academics | Policy, Stanford economics professor Nicholas Bloom discusses an experiment he and some other researchers conducted on the effects of working from home, which offers lots of good news for proponents of remote work. Ctrip, China’s largest travel agency, had Bloom and his colleagues help design a nine-month randomized controlled trial to compare the performance of call center employees working from home four days a week against those who worked exclusively in the office—with no other differences in the employees’ tasks, workflow, or pay system:
We found several striking results. First, the performance of the home workers went up dramatically, increasing by 13% over the nine months of the experiment. This improvement came mainly from a 9% increase in the time worked during their shifts, due to reductions in breaks, time off and sick days. The remaining 4% improvement came from an increase in productivity per minute. The wages of the WFH group also rose by 9.9%, equivalent to about ¥250 ($40) extra a month from higher bonus payments. …
Second, there were no negative effects on the employees left working in the office. Comparing the control group to similar workers in Ctrip’s other call center in the city of Nan Tong, which was not involved in the experiment, we see no performance drop despite the control group’s having lost the treatment lottery. (The group winning the treatment lottery saved themselves nine months of commuting time and costs, worth about 17% of their salary.)
Third, rates of staff turnover fell sharply among the home workers, dropping by almost 50%. (For policy evaluation we would ideally adjust for the fact that no other Shanghai call centers offered WFH – if all firms introduced WFH the reduction in quit rates would presumably not be as dramatic.) Home workers also reported substantially higher work satisfaction and less ‘work exhaustion’ in a psychological attitudes survey.
The study did identify one downside to working from home, which is that “conditional on performance, it was associated with reduced rates of promotion of about 50 percent”:
We found that employees performed substantially better at home but did not get promoted any faster, suggesting some offsetting negative impact of being at home. One story that is consistent with this is that home-based employees are “out of sight, out of mind” – the perception of promotion ‘discrimination’ led some employees to return to the office. Another possibility is that WFH employees lack opportunities to develop interpersonal skills and therefore are less likely to be promoted. A third explanation is WHF employees do not apply for consideration for promotion because they do not want to return to the office. This might be especially the case among more productive, better paid home workers, who have less to gain from promotion.
These findings are pretty suggestive, and this study will hopefully spur more research into this practice. One interesting question to be explored is how working from home compares to working from a flexible workplace or coworking space, which is becoming increasingly popular in many cities.