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How Good is Remote Work for Businesses and Productivity?

by Alvaro Cruz   April 10, 2020


The data shows clear advantages and disadvantages of working from home.

As many organizations continue their digital migrations, an essential question for businesses, both large and small, is how remote working may impact operations and productivity. Working from home or remote work is not a new phenomenon. Yet, the current COVID-19 crisis has catalyzed existing work-from-home policies and jumpstarted those for whom it could be implemented.

According to the Bureau of Labor Statistics report from 2019 and looking back at 2017-2018 data, more than half had a flexible working situation, roughly 1 in 4 wage and salaried workers occasionally worked at home, and 15% only worked remotely. The same summary also found 29% of workers could work from home. The report has enough findings to warrant a second look, for example, how both gender and educational attainment plays into who can work remotely and how they may be additionally compensated (or not) for their labor from home. However, for simplicity, we will focus on worker productivity and operational stipulations that come with working remotely.

Advantages of Working From Home

A clear advantage of working remotely is the elimination of the commute. In 2018, the average commute was half an hour, and the data suggest a continued increase in commute times. An estimated 14 million people also commuted for more than an hour! When one in four workers reported having quit a job due to commute, no commute or the associated costs that come with, it is a definite advantage. The same study also found remote workers spent on average an additional of 25 minutes exercising per week compared to non-remote workers, something for organizations also to consider if promoting employee wellbeing is an organizational goal.

An exciting and quantitative approach to measuring worker productivity as determined by computing time, or employee time spent using work-related applications like Outlook, Excel, Salesforce, and others, was conducted by Aternity. Between February 24th through March 26th, they found North American workers on average increasing their productivity by 23% while those in Europe saw an 8% decrease. The results suggest other factors may be in play, as the severity of the COVID-19 crisis in Europe compared to North America, at least as the date ranges examined, are concerned. It is also important to note that spending time using work-related applications does not necessarily imply productivity either, as does correlation not necessarily imply causation. Still, the findings suggest no apparent decrease in productivity across developed economies if we take both European and North American results collectively.

Another study at Stanford examined a real-life company in Shanghai, China undergoing a restructuring of remote work due to high office rents and desire by some employees to work remotely. A thorough experimental design assigned workers into two groups, one at HQ and the other to work from home, with attributes of employees such as tenure also controlled for. The two-year study found that the remote workers put in the equivalent of an extra full day of work per week compared to their office peers! Attrition decreased by 50% among telecommuters, as did sick days, and requested time off. Regarding other operational benefits, the company spent less on rent per employee, and workers spent less money, time, and fossil fuels commuting. A vital study finding that cannot be overlooked is that about half of the remote employees ended up changing their minds about remote work. They felt too much isolation, and as a result, the researchers suggested a hybrid approach might be best, that is, work from home a few days out of the week instead of constancy one way or another.

Disadvantages of Working From Home

This brings us to one of the main drawbacks of remote working: a reduction in interpersonal communication between colleagues. On average, workers spent an average of 66 minutes per day discussing non-work-related topics, remote workers only spending 29 minutes doing the same. And there was also a difference with managerial workers, who spent an average of more than 70 minutes in the office, and 38 minutes remotely doing the same thing. There is something to be said about non-managerial workers having more time to work and be productive remotely as compared to their traditional office worker peers. Yet the issue is nuanced, as effective communication is necessary for most work teams and businesses. Thankfully, virtual communication is now more feasible and seamless with applications like Slack, Zoom, and traditional venues like email making remote connection less of a burden.  

Given the ample evidence generally in favor of remote working when applicable, it is up to companies now to map out and implement effective work-from-policies. Who knows, if they do so correctly, they may even raise their employee productivity and wellbeing while cutting their operational costs.
 

 
Alvaro Cruz  Data Scientist
Alvaro is a data scientist at Plat.ai and has in the past also worked as a researcher and instructor. His current main interests in data science relate to classification, Bayesian methods, deep learning, and behavioral statistics. Having also a formal background in psychology, Alvaro believes there is added responsibility for data science professionals to ensure algorithmic fairness, reliability, and validity, especially concerning outcomes with ramifications for customers and other individuals. When not working he enjoys traveling, hiking, and consuming copious amounts of sour candy and TV, not necessarily in that order.