Choosing How to Work: The Horse Race That’s No Longer a Horse Race
Hybrid work (blue silks) is dominating in-office work (white silks) in the current race, but remote work (green silks) may beat then both in future competition (Photo by Pietro Mattia, via Unsplash)
If the battle over where US employees work could be seen as a three-horse race, here’s where it stands.
· FULTOW (full-time office work) entered the decade as the clear favorite, with 95% of employee time in the US spent working in the office.
· REMWO (all remote work) took the lead in dramatic fashion at the start of the pandemic, with 62% of employees working full time from home.
· HYBRIWO (hybrid work) came off the rails in late 2021 and is maintaining a huge lead now. The average employee is working 69% of the time in the office; 31% from home.
The new work “normal”: 2/3 of Amercians’ work time takes place in an office; 1/3 at home (note this is an average; slightly over half of Americans still work in the office full-time).
There’s a lot of variation in those numbers by age (older adults are more likely to work from home), by industry (folks in IT are more likely to work from home; hospitality and fields like insurance are much more workspace based) and by geography (urban workers are more likely to work from home), but the trends are clear: in the future the average US worker will be hybrid (for more on the impact of this on office space, see my previous post “Showdown at the Virtual Office Corral”; for differences between the US and other countries, see “Back to Work Around the World”).
So… is this change to more work at home a good thing or a bad thing?
On the negative side, there’s a good deal of evidence that when some managers don’t see their employees as often, they treat them differently:
· A Microsoft study found that 85% of CEO’s and 49% of managers aren’t confident that hybrid workers are being productive.
· Another study by Citrix found that half of business leaders believed that when employees are working “out of sight,” they don’t work as hard.
· Other studies show that these attitudes are resulting in managers giving smaller raises and fewer promotions to remote and hybrid workers than people they see every day.
The attitude of older managers is probably best typified by Elon Musk, who has said he believes that remote workers “only pretend to work” and are “phoning it in.”
A Future Forum survey last year, though, teased out some important nuance: the deepest skepticism of remote work among employers comes from managers in their 50’s and 60’s; younger managers are more likely to accept hybrid workers; some 75% of startups offer employees flexible work locations.
On the positive side of hybrid work, it is easy to see why it is crowding out full-time, in the office work:
· Flexible work arrangements increase employee happiness and retention. 98% of employees now say they want to be able to work at least sometimes from home.
· They save companies huge amounts on office space; remote employees don’t need space; hybrid employees can flex.
· They broaden the geography of the labor pool, making it possible for companies to recruit talent from all over the country or all over the world.
· They may enable companies to save on employee pay; one study by the Survey of Working Arrangements and Attitudes suggests that employees hate their commutes enough to take 8% less in pay to avoid having to go in 2-3 days a week.
When it comes to the question of whether workers are more productive working in the office or at home, studies are all over the place, ranging from one that shows productivity declines of up to 19% (among IT professionals) to another that shows productivity gains of 24% (among fully remote highly-educated researchers) with all sorts of other in-between.
Managers overall believe folks are more productive in the office; employees believe they are more productive at home.
The best study I have seen disentangles productivity (work produced per hour) from output (total work produced) and finds that, on average, people work more efficiently in an office setting, but they work longer hours at home (on average they are commuting 65 fewer minutes each week and are using one third of that extra time to work extra hours). My conclusion after reading the various studies is that, on average, about as much work is getting done by hybrid workers as those working fully in the office.
One final note on the horse race: I know the headline says it is over, but that’s not quite right: there’s still time for one further development. A survey last year by the Society for Human Resources finds that 48% of respondents will “definitely” seek a full-time remote position for their next job. For them to go to a new hybrid job with a 30-minute commute, they say, an employer would have to pay them 10% more; for a new full-time in the office job with a 30-minute commute, they would be looking for a 20% raise. If employees are truly serious about that, the economics of going fully-remote may make it too attractive for businesses to pass up: one estimate projects that by 2025, 22% of all employees will be fully remote. That’s about double our current number — how high could that go?
“And coming up on the outside, it’s REMWO….!!!!!”
-Leslie
References:
NBER on latest work from home data: https://www.nber.org/system/files/working_papers/w31686/w31686.pdf
Survey of Working Arrangements and Attitudes (2021) on worker valuation put on greater flexibility:
https://wfhresearch.com/wp-content/uploads/2021/04/w28731-3-May-2021.pdf
Employer attitudes toward remote work: https://www.forbes.com/sites/glebtsipursky/2022/11/03/workers-are-less-productive-working-remotely-at-least-thats-what-their-bosses-think/?sh=1c105840286a
The Five Day Office Week is Dead: https://www.nytimes.com/2023/10/16/opinion/office-work-home-remote.html#:~:text=A%20telling%20data%20point%20is,office%20compared%20with%20prepandemic%20times.
Work in the office is more productive than work from home: https://www.anthonydiercks.com/presentation_WFH_2023_Stanford.pdf
…Or maybe not: https://bfi.uchicago.edu/wp-content/uploads/2021/05/BFI_WP_2021-56.pdf
Future desires for work arrangements: https://blog.shrm.org/blog/the-four-horsemen-of-the-mandated-return-to-office