Are We Really More Productive in the Office?

An in-depth look at the surprising science

Hi,

I just finished my speaking tour and now I’m looking at a period of thinking and writing. I have some topics I want to explore for my new presentations after the summer: Equal Pay, Web3 for HR, and HR Tech Trends including generative AI. What about you?

Today’s newsletter was inspired by CEOs who are mandating workers back to the office. I want to know why: what do they know that we don’t? Are people more productive in the office? More innovative and collaborative? And what do scientific studies conclude? Anyway, I hope you enjoy this week’s deep dive into productivity, work and location.

Before I forget, the new Sapient Insights HR Systems Survey has started. Don't forget to participate by signing up here.

Thank you to Krista, Jaco, Miriam, Paul, Cheryl, Jack, James, Pearl, Klaas, Maya Elise and Ruud for generously sharing links to relevant research.

---

I’ve been a remote worker for the best part of my career. As a consultant, I would travel to a customer site and work there. Later, when I worked for an international company, I traveled a lot and worked from hotels, airports, planes, cafes, in short, anywhere where I could connect my laptop to wifi. I never thought I could be more productive in an office. In fact, when I worked in an office, I went in at 7am so I could get things done before the employees showed up.

In the 2010s I was the exception. Since 2020, most office workers have become familiar with remote work, simply because they had to. I find it so interesting that we had the technology, but we just didn’t use it until a virus forced us to change our working behavior. Just imagine what would have happened had we not been able to pick up our computers and work from home. Companies would not have been able to do business and workers would not continue to receive their salaries or wages. The economy would look very different.

But let’s not forget, we’re talking about roughly 20% of the workforce. Only desk-based workers have the potential to work remotely. The other 80% are deskless and location-based and for them, the pandemic work experience was different. They could not work from home. They still can’t. And some CEOs are using that argument to call everyone back to the office by making it a moral issue: if your colleagues must work in a location, so do you.

I can come up with a million arguments against that, but the real question I started to wonder about is: why are CEOs so eager to get people back in the office? What do they know that we don’t? Are people really more productive in an office? In the summer of 2021, when we naively thought the pandemic was over, we had the exact same debate.

Back then, I wrote about the ‘Why Work Must Change’ Manifesto of the Future Forum, a Future of Work research organization funded by Salesforce. The purpose of the Forum was to “enable leaders to reimagine work through data and dialogue, to create a people-centric and digital-first future of work”. One of their goals was to make hybrid work work.

Since then, the CEO of Salesforce has shuttered the Forum and the Manifesto is offline. Salesforce employees were called back into the office. That was an unexpected development, considering the Forum stated that companies needed to listen to employees to win the war for talent:

• 76% of employees want flexibility in where the work gets done

• Only 20% of employees surveyed said they see the office as a place for focused, solo work

• More than 80% of knowledge workers say they want access to an office for in-person collaboration and team building.

And the Forum concluded that: “reverting back to “the old way” of working (=in an office, AL) will put your business at a competitive disadvantage.” 

Apparently, those conclusions are no longer true. CEOs want people back in the office five days a week. But why when workers have different ideas? And what does science say: is there any research that supports that people are more productive in an office? Before we investigate that question, let’s start with an obvious one and explore what productivity actually is.

What is productivity?

In economics, productivity is the ratio of what is produced to what is required to produce it. Many national statistics include a measure of labor productivity and employment. Labor productivity is then seen as the ratio of output related to persons engaged in production or to labor hours.

Employee productivity can be measured as the efficiency of a worker, or a group of workers, when delivering output. E.g., the number of calls per hour that a service agent completes. Or the number of cars that roll off the assembly line every day. Or the number of lines of code a software engineer produces. But this way of measuring ignores the quality aspect: what if those calls leave clients unhappy? Or the cars have problems and the code doesn’t work?

Labor productivity isn’t an exact science. As example: how should we measure daily interruptions? Someone walks in with a question that only you can answer. But by interrupting you, that colleague achieves a higher output. Or you get a call from a client or must read and answer emails. You engage in small talk at the coffee machine or participate in meetings and town halls. Interestingly, a study found that interruptions by themselves do not lower productivity, but people compensate for interruptions by working faster and that comes at a price: more stress and higher frustration.

What productivity means can vary by job, industry, and even person. Some companies are very skilled in setting goals and improving employee productivity by measuring the process and the outcomes. Others resort to technology: they monitor productivity by tracking an employee’s every move while away from the office. Some people don’t mind (or are not aware of) surveillance tools, while others find nifty ways to fool the system. Too often, we assume we measure productivity, but we are actually measuring attendance.

I think we can conclude that productivity has some aspects that are not so easy to measure, especially for knowledge workers. While goals can be quantified, some of them are obvious, others not so much. But what is important, especially when leading remote workers, is the capability to define the exact output over time.

What do employees want?

Before we turn to the science, let’s examine why people want to work from home:

• autonomy

• flexibility (time, location, role)

• better work/life balance

• no commute (save time and costs)

• a safe environment (from bullying, harassment, discrimination)

• wanting to work but not being able to work in an office (disabilities, impairments)

But working from home can also come with a penalty:

• working more hours

• fewer network opportunities

• loneliness

• less feedback from other (senior) colleagues

• fewer one-on-ones with the boss

• more surveillance

• fewer promotions and career opportunities

Back in 2019, I led a research project called “HR2025”. We ran a global survey to discover what workers wanted, so we could help HR prepare for a new decade. You are probably not surprised to discover that the overarching theme was “flexibility”. Workers wanted flexibility in their careers, in time and location and in how they got paid, especially in benefits. And this was before the pandemic. Working from home answered this need for flexibility and workers do not want to go back. In fact, most of them are fully aware of the “penalty” or the downsides but will accept them in exchange for the benefits working from home offers them.

Because let’s be clear about one mistake many companies make: they turn working from home vs the office into an either/or proposition. And while there undoubtedly are workers who want to work from home all the time, most workers are looking for more balance: they want to work on a three/two-day rotation. And in such a schedule, the downsides are less influential.

What do employers want?

Earlier this month, the WHO declared the end of the covid-19 pandemic, the main reason why so many employees worked from home. In the second half of 2022, companies already started to ask workers to come back to the office. Earlier this year, CEOs started to mandate people to return to the office for a variety of reasons:

• new employees do better when they are onboarded in an office

• it’s important for organizational culture and continuity

• office work encourages mentoring and development by others

• it increases collaboration and innovation

• creativity and spontaneity from talking to teammates face-to-face

• healthier work schedules resulting in lower stress

In the last months, more reasons made the rounds:

• when companies pay workers, the employer gets to decide the location

• it’s morally wrong that some people can work at home while their colleagues can’t

• a way to downsize the workforce: employees who won’t report for work in the office will be dismissed

• the available real estate must be used

• the need to revive city centers

• “it worked for me and thus it will work for you”

In addition, many organizations are struggling to foster strong communication, collaboration, and team bonding in hybrid environments. Their leadership isn’t ready for it and want people back in the office. Which leads us to the following question:

How important is time in the office?

For two centuries, we spent time in an office because we did not have the means to do the work elsewhere. And even when technology allowed us to work from anywhere, we did not do that. Until everything changed in 2020. Which means that we are only beginning to understand what the role of the office actually is. We must also realize that virtual meetings are a recent development. Just as it took us time to understand how to run productive in-person meetings (and some companies still struggle with that), it will take time to learn what works best virtually and develop the best approach. In other words, we have only just begun to learn how productivity can be maintained, or even benefit from a virtual approach.

Gallup found that nearly all forms of social time boosted mood, but social time through technology had thresholds - the mood dropped after about 25% of time spent socializing via technology. In-person social time had the largest impact on mood, but the total amount of time mattered less than the event itself. Exercising or eating/drinking together showed the strongest impact on mood. Videoconferencing had a weaker relationship to mood.

Thirty-two percent of hybrid employees indicate that virtual meetings are less effective than in-person meetings compared with 17% who say virtual meetings are more effective. More than half (51%) say there was no difference. The researchers also performed a bonding exercise and discovered that as long as both parties agreed on the medium (in person vs virtual tools) the potential for bonding is greater.

They also looked at engagement: depending on the preferred work style of the employee, engagement seems to peak at around two to three days in the office. Interestingly, full-time on-site employees were no more likely to say they feel as though they are part of their organization’s culture as hybrid workers. I might carefully point out that it isn’t about the amount of time in the office, it’s about the quality of that time.

What does the research tell us?

When I started to research this article, I went online and searched for scientific research on the topic of productivity, while comparing the office with remote environments. I know that you have probably read dozens of articles claiming they have the answer, including data and percentages. The problem is that most of them are vendor surveys. That are opinion polls: the sample is typically not representative and not independently analyzed. Even if the research is sound, vendors want to sell you something. They would not necessarily include findings that do not support their goals.

I wanted to find scientific studies, and ideally, research that tracked productivity at a group of companies, not just one. Can you believe that they are hard to find? I found dozens of studies on the best methods to support employee well-being when working remotely to improve productivity. Or how to help employees during Covid-19 while working from anywhere. Or measure the productivity of workers at one company who started to work from home. But they all looked at the problem a little differently and it was impossible to find a common trend: most studies find some positive outcomes but also point at some negative results.

A few of the research studies that I found especially applicable were:

• Does Working from Home Work? This is one of the earliest - and most quoted - studies about productivity when working from home. A Chinese travel company experimented with working from home for call center agents. The study noted that this approach led to a 13% performance increase compared to their in office colleagues. About 9% was because home-based agents worked more minutes per shift (fewer breaks and sick-days) and 4% from handling more calls per minute (attributed to a quieter working environment).

• Work-from-anywhere: The productivity effects of geographic flexibility looked at the effects of work from anywhere on the productivity at the United States Patent and Trademark Office (USPTO). The program resulted in a 4.4% increase in output without affecting the incidence of rework as well as real estate savings.

• From forced Working-From-Home to voluntary working-from-anywhere: Two revolutions in telework concludes that there are positive and negative effects on productivity while working from home. Software engineers can work from home and quickly adjust their tactical approaches. Working from home has benefits, including better work-life balance, improved flow, and improved quality of distributed meetings and events. But it also comes with challenges: not everybody feels equally productive working from home, work hours for many increased, while physical activity, socialization, pairing and opportunities to connect to colleagues decreased. The study concludes that these changes will persist: only 9% of engineers will return to the office full-time.

• Flexible Work Arrangements and Productivity of Sales Representatives of Book Publishing Companies in Nigeria This study examined the effect of flexible work arrangements on the productivity of sales reps of book publishing companies in Nigeria. The study examined the relationship between flexitime, job sharing, part time and telecommuting and employee effectiveness and employee efficiency. The study finds that the book publishing sector organizations in Nigeria could significantly enhance productivity of their sales representatives by making time and location flexible for employees.

• Work-from-Home and the Risk of Securities Misconduct Turns out, bankers are better behaved when they work from home. Traders who worked from home had an annualized 7.3% chance of triggering a misconduct alert, while that number rose to 37.6% when working in the office. And while that does not explicitly lead to increased productivity, it does materially influence the economic outcome for these banks.

• Does working from home have a future? is a presentation by Nick Bloom, a Stanford Economics Professor. Slides can be downloaded here. Bloom has published extensively about productivity and working from home. He is also the co-founder of wfhresearch, where you can find a large amount of research papers on the topic.

Maybe I was a bit too eager and it’s too early to expect to find many studies that compare productivity of people working at home to those in an office setting. I’ll take another look in a year or so.

What’s next?

Some workers complain about feeling "unproductive" when they have returned to the office. They feel the constant interruptions are wasting their time. It’s important to explain that that is not the case - it's just a different kind of productivity. It might be helpful to reframe productivity:

• time spent at home, which can be focused on handling emails, reading research, having update calls, etc.

• time spent at the office is then focused on in-person collaboration, building relationships with co-workers, coaching others, socializing, and fostering culture.

Where Managers and Employees Disagree About Remote Work points out that managers and employees have different perceptions of productivity. E.g., managers believe that working remotely reduces productivity, while employees think it increases it. They interpret the same data in a different way, and that leads to misunderstandings. It stresses the need for some clear guidance and policies in companies on the topic of remote work and what being productive actually means.

Accept that people are wired differently

Remote work is not a one-size fits all approach. Some people don’t have the luxury of a home office. Some people excel while working in an office because they thrive in that fast-paced environment. Others consider the office a drain on their energy and want to avoid it all costs. And many are frustrated to be called back into the office, only to participate in virtual calls. The mistake that is often made in this debate, is to look at it as an either/or conversation. In reality, most workers value a hybrid work model, with days in the office.

I have written about the importance of deliberately defining where work should happen. MIT Sloan released research where they proposed the Organizational Network Analysis – a methodology that maps employees’ working relationships — as approach for guiding return-to-office decisions.

In this approach, you ask three critical questions:

• Who should be brought together in a (weekly) cadence of in-person and virtual interactions?

• What work should be prioritized in the now scarcer in-person time?

• How do leaders manage the transition to this new model with the least resistance?

The importance of defining which activity gets done and where should not be underestimated. It provides clear guidance and policies on behalf of the company and takes away the debate between managers and employees.

Wanted: Hybrid leaders

During the pandemic, we focused all our attention on helping employees and our companies get through the crisis. From one day to another, everything changed. And while managers did an awesome job focusing on employees, what we did not do is rethink our leadership approach for a time when not everyone is in the office. From my experience in leading remote teams, I know that it’s different and it’s hard. It’s not something they teach you in school. And it’s the one thing many companies haven’t yet done: define what leadership means in a hybrid world.

The research I found is full of behavioral studies: I read dozens of studies that looked at the consequences of leading remote teams and the effects on employees and their well-being. What’s next is redefining leadership characteristics: what does it take to be an effective leader in a hybrid environment? What traits lead to success? What behavior must be further developed and what is ineffective?

I think this is the most important challenge of the next years: rewrite our leadership programs to ensure leaders are equipped to manage people in the office and remotely within the same team. Allowing them to not rely on watching people work, but on setting clear goals, and helping employees achieve them, no matter where they work. By setting goals and measuring output, you can start to get a handle on productivity: watching people perform their work simply doesn’t cut it anymore. Leaders should have weekly conversations with their team members about goals, well-being, and recognition to keep them engaged. That might not come easy to every leader, but it allows you to build hybrid, high-performing teams. But you must be deliberate about it and be willing to acquire new skills, including soft skills.

There is nothing wrong with calling people back to an office, and the research shows that most workers are willing to come back for two or three days. Considering the labor shortages and the war for skills, you must carefully think this through. Do the workers you need want to come back to the office? Are you prepared to deal with the consequences when they won’t? That you might get a less skilled or qualified workforce because of your mandate? Will you make allowances for expert skilled staff? Or is it the other way round and can you attract more qualified workers because of your office requirement? The point is: if you don’t know the answer to those questions, you might be better off investigating this first before you issue your back-to-the-office mandate.

We are only beginning to understand how and what kind of virtual work can increase our productivity. I think it’s fair to say that we should accept that hybrid is the way forward. Our leadership development programs must be focused on developing leaders who can deal with modern employee requirements and feel comfortable leading hybrid teams. And if you’re not convinced: just as you have a business continuity planning for disasters, like fires and earthquakes, why not consider this business continuity planning for the next pandemic? Or for the skills shortage? While developing a modern work environment at the same time? Think about it - but not too long!

This is not the end

When I started to prepare for this article, my assumption was that I could look at research that compared worker productivity in the office to productivity when working remotely. Unfortunately, that was not the case. I found a few, but most articles look at one but not the other. Maybe I’m too early, or maybe there is just no good way to perform this type of research with a control group, as someone wrote to me.

At the moment, productivity is declining in many economies. Companies are laying off staff and we might be headed into a recession. Some company leaders think that this will bring people back to the office. But so far, people prefer the work/life balance and the flexibility and autonomy that comes with working remotely. They are not willing to give that up and the continuing labor shortage allows them to take that position. So, what can we do to increase productivity? Maybe new technologies, like AI can help?

Look at this interesting study: Generative AI at Work. The authors found that AI increased the productivity of service agents by 14% on average. But the fascinating finding was that while AI increased the productivity of less experienced and less skilled workers dramatically, by 35%, there was no increase for highest skilled workers. The opposite was true: these high skilled workers showed some small but statistically significant decreases in resolution rates and customer satisfaction. Which may lead to the conclusion that for them, AI is a distraction, and not a productivity enhancement.

We are barely scratching the surface when it comes to productivity. And that means there are more articles on this topic in my - and your - future.

Have a great day, Anita

PS: I had finished writing this newsletter, when I saw this insightful article on Linkedin: Is this the real reason why productivity is falling? The author points at research that states when turnover is high (as it is today), productivity falls for the simple reason that there is a period of unproductivity when people leave or start a new job. Food for thought!