Is Working From Home Still the Future?

Depending on who you listen to working from home is either proof of a declining work ethic – evidence of and contributor to a global malaise that is hampering productivity, decimating work culture and amplifying isolation and laziness – or it’s a much-needed break from overzealous corporate control, finally giving workers the autonomy to do their jobs when, where and how they want to, with some added benefits to well-being, job satisfaction and quality of work baked in.

Three years on from the pandemic that made WFH models ubiquitous, the practice’s status is oddly divisive. CEOs malign it. Workers love it. Like most statements around WFH, that analysis is over simplistic. So what’s the actual truth: is WFH good, bad or somewhere in between?

The numbers

Before the pandemic Americans spent 5% of their working time at home. By spring 2020 the figure was 60% [1]. Over the following year, it declined to 35% and is currently stabilised at just over 25% [2]. A 2022 McKinsey survey found that 58% of employed respondents have the option to work from home for all or part of the week [3].

In the UK, according to data released by the Office for National Statistics in February, between September 2022 and January 2023, 16% of the workforce still worked solely from home, while 28% were hybrid workers who split their time between home and the office [4]. Meanwhile, back in 1981, only 1.5% of those in employment reported working mainly from home [5].

The trend is clear. Over the latter part of the 20th century and earliest part of the 21st, homeworking increased – not surprising given the advancements to technology over this period – but the increase wasn’t drastic. With Covid, it surged, necessarily, and proved itself functional and convenient enough that there was limited appetite to put it back in the box once the worst of the crisis was over.

The sceptics

Working from home “does not work for younger people, it doesn’t work for those who want to hustle, it doesn’t work in terms of spontaneous idea generation” and “it doesn’t work for culture.” That’s according to JPMorgan Chase CEO Jamie Dimon [6]. People who work from home are “phoning it in” according to Elon Musk [7]. In-person engineers “get more done,” says Mark Zuckerberg, and “nothing can replace the ability to connect, observe, and create with peers that comes from being physically together,” says Disney CEO Bob Iger [8].

Meanwhile, 85% of employees who were working from home in 2021 said they wanted a hybrid approach of both home and office working in future [9]. It seems there’s a clash, then, between the wants of workers and the wants of their employers.

Brian Elliott, who previously led Slack’s Future Forum research consortium and now advises executive teams on flexible work arrangements, puts the disdain for WFH from major CEOs down to “executive nostalgia” [10].

Whatever the cause, and whether merited or not, feelings are strong – on both sides. Jonathan Levav, a Stanford Graduate School of Business professor who co-authored a widely cited paper finding that videoconferencing hampers idea generation, received furious responses from advocates of remote-work. “It’s become a religious belief rather than a thoughtful discussion,” he says [11].

In polarised times, it seems every issue becomes black or white and we must each choose a side to buy into dogmatically. Given the divide seems to exist between those at the upper end of the corporate ladder and those below, it’s especially easy for the WFH debate to fall into a form of tribal class warfare.

Part of the issue is that each side can point to studies showing the evident benefits of their point of view and the evident issues with their opponents. It’s the echo-chamber effect. Some studies show working from home to be more productive. Others show it to be less. Each tribe naturally gravitates to the evidence that best suits their argument. Nuance lies dead on the roadside.

Does WFH benefit productivity?

The jury is still out.

An Owl Labs report on the state of remote work in 2021 found that of those working from home during 2021, 90% of respondents said they were at least at the same productivity level working from home compared to the office and 55% said they worked more hours remotely than they did at the office [12].

On the other end of the spectrum, a paper from Stanford economist Nicholas Bloom, which reviewed existing studies on the topic, found that fully remote workforces on average had a reduced productivity of around 10% [13].

Harvard Business School professor Raj Choudhury, looking into government patent officers who could work from anywhere but gathered in-person several times a year, championed a hybrid approach. He found that teams who worked together between 25% and 40% of the time had the most novel work output – better results than those who spent less or more time in the office. Though he said that the in-person gatherings didn’t have to be once a week. Even just a few days each month saw a positive effect [14].

It’s not just about productivity though. Working from home can have a negative impact on career prospects if bosses maintain an executive nostalgia for the old ways of working. Studies show that proximity bias – the idea that being physically near your colleagues is an advantage – persists. A survey of 800 supervisors by the Society for Human Resource Management in 2021 found that 42% percent said that when assigning tasks, they sometimes forget about remote workers [15].

Similarly, a 2010 study by UC Davis professor Kimberly Elsbach found that when people are seen in the office, even when nothing is known about the quality of their work, they are perceived as more reliable and dependable – and if they are seen off-hours, more committed and dedicated [16].

Other considerations

It’s worth noting other factors outside of productivity that can contribute to the bottom line. As Bloom states, only focusing on productivity is “like saying I’ll never buy a Toyota because a Ferrari will go faster. Well, yes, but it’s a third the price. Fully remote work may be 10% less productive, but if it’s 15% cheaper, it’s actually a very profitable thing to do” [17].

Other cost-saving benefits of a WFH or hybrid work model include potentially allowing businesses to downsize their office space and save on real estate. The United States Patent and Trademark Office (USPTO) estimated that increases in remote work in 2015 saved it $38.2 million [18].

Minimising the need for commuting also helps ecologically. The USPTO estimates that in 2015 its remote workers drove 84 million fewer miles than if they had been travelling to headquarters, reducing carbon emissions by more than 44,000 tons [19].

A hybrid model

Most businesses now tend to favour a hybrid model. Productivity studies, including Bloom’s that found the 10% productivity drop from fully remote working, tend to concede there’s little to no difference in productivity between full-time office staff and hybrid workers. 47% of American workers prefer to work in a hybrid model [20]. In the UK, it’s 58% [21]. McKinsey’s American Opportunity Survey found that when given the chance to work flexibly, 87% of people take it [22].

However, as Annie Dean, whose title is “head of team anywhere” at software firm Atlassian, notes: “For whatever reason, we keep making where we work the lightning rod, when how we work is the thing that is in crisis” [23].

Choudhary backs this up, saying, “There’s good hybrid – and there’s terrible hybrid” [24]. It’s not so much about the model as the method. Institutions that put the time and effort into ensuring their home and hybrid work systems are well-defined and there’s still room for discussion, training and brainstorming – all the things that naysayers say are lost to remote working – are likely to thrive.

That said, New Yorker writer Cal Newport points out that firms that have good models in place (what he calls “agile management”) are few and far between. Putting such structures in place is beyond the capability of most organisations. “For those not benefiting from good (“Agile”) management,” he writes, “the physical office is a necessary second-best crutch to help firms get by, because they haven’t gotten around to practising good management [25].”

The future

Major CEOs may want a return to full-time office structures, but a change seems unlikely. You can’t put the genie back in the bottle. Home and hybrid working is popular with employees, especially millennials and Gen Z. As of 2022 millennials were the largest generation in the workforce [26]; their needs matter.

The train is only moving in one direction – no amount of executive nostalgia is going to get it to turn back. It seems a hybrid model is the future, and a healthy enough compromise.

References

About the author

Shay Dalton

Partner

Shay has placed over 200 successful C-level candidates and is one of the best known and respected executive recruiters in the market.