Productivity: remote work vs. the office

06.09.2023

Due in no small part to the COVID-19 pandemic, more people are working from home today than ever before. Many employees appreciate the flexibility and claim to be more productive at their home desks than in the office. A study from 2013 by Bloom showed that workers at a Chinese online travel agency had a 13% higher performance when working remotely. So, can it be proven that working from home leads to higher productivity? In short, no. One important aspect overlooked in this study is that two-thirds of those with higher performance in the home office simply work more. Therefore, attributing increased productivity solely to remote work would be problematic.

Another noteworthy aspect is that many well-known companies, such as Google and Meta, now require their employees to be in the office at least three days a week. The Economist has taken this as an opportunity to examine the current state of research. You can find the article here. The result is that the subjective feelings of many employees do not necessarily align.

Working from home doesn't necessarily lead to increased productivity

A study by Natalia Emanuel and Harrington in 2020 showed that an online retailer had 8% more calls per hour handled by employees who switched from the office to remote work. However, this study was revised and re-published in May 2023. It is worth noting that instead of a productivity increase, there was a 4% decrease in productivity. Employees' work records showed that they answered fewer calls, the quality of calls decreased, and customers were kept waiting longer in the queue. Due to unresolved issues, there were also more callbacks.

A series of other studies build on these results. Atkin, Schoar, and Shinde (2023) randomly assigned workers in the Data Entry sector in India to either work from home or in the office. The results show that the productivity of workers in the home office is 18% lower than those working from the office. But why does productivity decrease when working from home? One reason is that collaboration and communication with colleagues suffer. Less feedback is exchanged among teams working remotely, so employees learn less because they lack valuable contact with colleagues and supervisors.

Home Office and Increased Flexibility

Nevertheless, working from home offers many advantages, primarily the flexibility that many people appreciate. It saves time commuting to the office, makes it easier to coordinate childcare and doctor's appointments, and studies even show that some people are willing to accept salary cuts in exchange for the opportunity to work from home. This highlights the high value that home office holds for many people nowadays.

From the studies, it can be concluded that working from home doesn't necessarily result in increased productivity. There is no one-size-fits-all answer as to whether remote or on-site work is better. It depends on the specific circumstances because both work models have their pros and cons. The Economist predicts that the hybrid work model, which combines elements of remote work and office work, will become more prevalent in the future.

You can find more information in the following sources:

Emanuel and Harrington (2020)

Emanuel and Harrington (2023)

Atkin, Schoar and Shinde (2023)

Gibbs, Mengel and Siemroth (2022)

Künn, Seel and Zegners (2022)

Brucks and Levav (2022)

Yang et al (2022)

Choudhury et al (2023)

Emanuel, Harrington and Pallais (2023)

Bloom et al (2013)

Bloom, Han and Liang (2022)

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