Remote work productivity: The verdict is in and it’s surprising

Remote work productivity: Does working from home hinder productivity?

It’s a question the professional world has been trying to answer since the pandemic made remote work ‘the new normal’ for many companies.

According to data gathered in August 2023, 12.2% of U.S. employees work remotely full-time, while 4.7 million employees work from home at least some of the time (hybrid work).

If things stay the way they are now, it’s estimated that approximately 32.6 million Americans will be remote workers by 2025.

However, remote work productivity has become a genuine concern, especially in light of some recent studies.

While employees enjoy their freedom and the lack of a commute, managers and C-suite executives aren’t fans of remote work and are clamoring for a mass return to the office (RTO) in 2024.

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They claim that home office environments negatively affect productive working due to distractions (social media, TV, and the like) and a lack of direct management, but is this true?

Let’s take an in-depth look at what the research and employees have to say. Stay tuned to learn if there truly is an issue with remote work productivity or if organizations actually benefit from remote work arrangements.

What does the research say?

As stated in the intro, some recent studies have set the professional world ablaze with discussion over the effectiveness of remote work. The research has been conflicting.

In particular, this study from Stanford University states that fully remote work leads to a 10% loss in productivity. It claims the loss in productivity stems from:

  • Challenges with communication between remote teams and managers
  • Barriers to mentoring (since employees aren’t physically present in the office)
  • A lack of company culture (and people around to build it)
  • Issues with self-motivation due to distractions and a lack of accountability to managers

However, the same study also found that hybrid schedules, which combine in-office work with remote work, had no impact on productivity, neither negative nor positive.

Another study from the IZA Institute of Labor Economics analyzed data from 10,000+ professionals working at a large Asian IT Services company before and after the COVID-19 pandemic.

Their research discovered a whopping 20% drop in productivity due to the transition to remote work. According to the data, remote employees:

  • Spent less time networking with colleagues and team members
  • Received less coaching
  • Didn’t have as many 1:1s with supervisors

It’s important to note that this study took place during the initial transition to remote work during the pandemic at this company, which was bound to be chaotic due to how urgent and unexpected the situation was.

Yet, other studies claim remote work actually boosts productivity.

One famous example tracked over 60,000 Microsoft workers during the first half of 2020 and discovered a 10% boost in weekly working hours.

Yet another study claims remote workers are more productive due to the lack of a daily commute. On average, the employees in the study saved 72 minutes per day and spent at least a half hour of that time working on company projects.

Microsoft itself also provided some insightful research on the subject in 2022. They found that:

  • 85% of leaders claim hybrid work has made it challenging to have confidence in the productivity of their employees
  • 42% of remote employees multitask during Zoom meetings, which may lead to a lack of engagement
  • 73% of employees state they need a better reason to show up at the office in person than just meeting company expectations.

CEOs want a national return to the office (RTO)

It’s also no secret that CEOs aren’t fans of employees working from home; there’s research to back it up. A study by KPMG found that 64% of CEOs believe everyone will return to traditional office settings by 2026.

87% of CEOs also said they were likelier to hand out bonuses, raises, promotions, and favorable assignments to in-person workers than remote team members.

The supposed lack of accountability that remote work provides is rubbing C-suite executives and managers the wrong way.

Also, many managers and supervisors lack the skills and know-how to manage their remote teams properly. As a result, they struggle with things like communication, coaching, and employee development.

WFH or RTO? Which is better for employees and organizations?

While executives insist on a return to on-site work, employees aren’t exactly eager to throw away their newly found freedom.

Many employees enjoy working from home at least occasionally, and it’s clear that hybrid work schedules provide the best work-life balance.

The proof?

Research shows that 83% of employees worldwide prefer the hybrid work model above all others. This means most employees would enjoy a mix between working from home and working in an office space with colleagues. Statistics show that it’s preferable over full-time remote work, which some employees find isolating and stressful.

That’s not to say there aren’t roles that work better being remote full-time or that all full-time remote workers don’t enjoy it – it’s just that hybrid schedules achieve the best of both worlds.

Hybrid arrangements also provide a compromise for the whole WFH vs. RTO battle going on right now. On the days workers are in the office, they’ll get to interact with their managers, executives, and coworkers – providing the direct accountability executives are desperate to maintain.

On an employee’s remote days, they’ll enjoy more freedom and flexibility, granting them better mental health.

Despite this, many CEOs still favor a widespread return to traditional working arrangements, where employees work at the office full-time.

Employees aren’t eager to return to the office anytime soon

Many employees who got a taste of remote/hybrid work during the pandemic are set to continue working from home, at least on certain days.

For these employees, receiving an RTO mandate is worth quitting over.

This isn’t an exaggeration, either. As this article from The Washington Post outlines, workers are quitting in response to RTO mandates.

They think they’d rather find another job that offers hybrid and remote work to retain their preferred working arrangements.

In other words, delivering staunch RTO mandates to employees isn’t the wisest move for employers right now, as there will likely be plenty of backlash through resignations.

This survey found that one in three developers would quit their jobs if they could no longer work from home.

Also, according to Workable’s Great Discontent Survey, job flexibility ranks as one of the most important job factors for 58.2% of employees.

These statistics make it clear that the workspace forever changed after the pandemic and that employers need to jump on board with hybrid work schedules to attract top talent. It’s also crucial for better retention rates, especially in light of employees quitting over RTO mandates.

Are remote workers truly less productive?

The recent Stanford study has been raising many eyebrows, and many executives are using it as evidence for forcing RTO mandates.

But is the study genuinely accurate? Are remote workers 10 – 20% less productive than they are in the office?

The study hasn’t gone without its criticism, most notably in the way the research team measured productivity.

Why is that?

It’s because productivity isn’t a straightforward metric. It requires many other factors to define, such as measuring the total number of hours an employee works.

However, hours worked aren’t a great way to measure productivity. After all, an employee can put in a 12-hour workday and get next to nothing done.

The Stanford study also noted that it didn’t factor in cost-saving perks organizations enjoy from remote workers, such as not having to invest in as much on-site equipment. More on this in a bit.

Also, the study mentioned that hybrid work schedules don’t hurt productivity and lead to happier employees and better retention rates.

Targeting profitability over remote work productivity

Since productivity is ambiguous and challenging to measure, organizations will have an easier time measuring profitability instead.

Here’s what Nicholas Bloom, one of the researchers from the Stanford study, has to say on the matter:

Firms shouldn’t care about productivity; they should care about profitability. There is no longer a pandemic, and millions of firms in a capitalist economy are consistently sticking to remote work. I can only conclude it’s profitable.”

Therefore, if you continue to show a profit each quarter, and if your remote workers are happy with their work environment, is a 10% drop in productivity that big of a deal?

As we’ll explore in a moment, organizations can recover what they lose in productivity with cost savings related to office expenses.

Benefits of remote/hybrid work for organizations

Now that you’re familiar with the argument that remote work negatively affects productivity let’s look at some of the benefits that organizations will enjoy from hiring remotely.

It saves money

Having at least a partly remote staff is an excellent way for organizations to save money in many areas.

For example, you’ll save on expenses for providing and maintaining office equipment. As long as your remote employees have desktop PCs and fast internet connections (and their work doesn’t require additional equipment like VoIP hardware), you’ll save big in this area.

Also, having remote workers means you won’t need as much office space, saving you money on real estate.

Transitioning an employee to full-time remote work can save you over $10,000 in overhead costs.

Let’s say you decide to transition your IT department to be 100% remote, which is an increasingly common decision. If your IT team consists of 10 individuals, you saved your company $100,000.

In today’s age, IT professionals can provide support remotely, cutting travel costs and hardware upkeep.

Another way remote/hybrid work can save organizations money is through the sheer demand for it.

As stated before, many employees were willing to quit jobs that required them to return to the office in favor of finding another remote position.

The demand is so great that 52% of employees worldwide would accept a 20% pay cut for a better work-life balance.

Flexible work arrangements widen your talent pool. This helps attract qualified candidates, even if salaries aren’t top-tier.

No more commute times

Remote workers enjoy no commute, saving 72 minutes daily. That’s half an hour more work time.

This provides a boost in productivity and working time during the day.

Commuting is stressful for many employees. They value workdays without the office drive.

More importantly, reducing commute times will positively contribute to employee morale and well-being, boosting engagement levels.

Happier employees and better retention rates

You can’t expect depressed, stressed-out employees to complete a large amount of work. That’s why it’s crucial for companies to prioritize their team’s mental health.

Flexible working schedules are so popular because they improve mental health and reduce burnout, which is becoming out of control.

Research shows that hybrid employees are nearly twice as likely to feel energized by their work than their full-time colleagues.

Refreshed employees will work harder, get more done, and ultimately add to your bottom line.

Offering hybrid schedules will make hiring and recruiting easier, and you’ll retain your employees longer.

Not only that, but hiring for full-time remote positions will significantly increase the size of your talent pool.

Instead of sticking to candidates who live within driving distance of your office, you’ll be able to consider qualified prospects from around the globe – providing you with plenty of stellar candidates to choose from.

The verdict: Remote work productivity

If the recent study proves anything, it’s that hybrid schedules are more effective than full-time office work and full-time remote work.

Stanford researchers found hybrid work doesn’t harm productivity. It matches the output of employees working full-time on-site.

Also, hybrid work saves money, attracts top talent, and balances employee freedom and direct accountability.

So, if you’re looking for a way to distinguish yourself from the competition (and get top candidates applying to your organization like mad) – try adopting hybrid work schedules.