New research from Stanford shows 42% of US workers are working from home full-time. After a successful transition for COVID-19, more and more tech companies are allowing their employees to work remotely for the foreseeable future. Twitter recently announced that most of their employees may continue working remotely as long as they want to. And 4,000 Nationwide Insurance employees recently became permanent telecommuters.
The benefits of an all-remote workforce are considerable and fairly easy to measure. But are we losing something equally important by ditching the office and in-person work?
The four benefits of all-remote work
When real estate startup Culdesac announced they were giving up their San Francisco headquarters, co-founder Ryan Johnson tweeted: “Remote work is going great for us.” Google, Facebook, and Zillow recently told their employees that they could continue to work from home until 2021. Google recently abandoned more than two million square feet of planned office space. “Our bias against working from home has been completely exploded,” Dan Spaulding, Zillow’s chief people officer, said. Zillow is “not seeing any discernible drop in productivity.”
Here are four reasons companies are ditching their offices for all-remote workforces.
1. Offices are expensive
According to commercial real estate firm Cushman and Wakefield, companies have been pushing more workers into less office space for years. Packing everyone in came at the cost of minimizing distractions, which is consistently the top driver of employees’ ability to focus on their work.
Not only that, but until there’s an effective treatment and/or vaccine, these uber-dense offices aren’t going to cut it. Spacious offices with thermometers, hand-sanitizer stations, phone sanitizer stations, new HVAC systems, touchless systems, and more they need to be safe are going to cost even more.
As we enter a COVID-led recession, Kate Lister, president of consulting firm Global Workplace Analytics, predicts that investors are going to insist that firms cut costs. Letting go of office space accomplishes this without cutting headcount.
2. Offices are distracting
Going all-remote not only saves companies money on office space, but also can lead to fewer distractions and more focus for workers.
A few stats:
–The average company sees a 10% to 43% increase in productivity after going all-remote.
–In a recent survey, 54% of workers said their productivity had improved since working from home full-time.
–64% of workers said their work quality has improved.
3. Commutes are terrible
Americans spend 30 billion hours commuting every year. Long commutes are one of the main reasons workers say they want to work from home. Research shows longer commutes are associated with obesity, high cholesterol, high blood pressure, back and neck pain, divorce, depression, death, political disengagement, poverty, absenteeism, lower productivity, and even pregnancy complications. Long commutes also exacerbate pollution and climate change.
4. Talent is distributed
Firms that hire remotely can access far more talent and may be able to offer lower salaries. Currently, Facebook is paying employees based on their geography’s cost of living. It may also make it easier for teams to meet their Diversity, Equity, and Inclusion goals. For example, it’s easier to employ people with disabilities when you don’t have to worry about office accessibility. Companies with greater gender diversity are 15% more likely to be high performers, according to one study. Companies with greater ethnic diversity are 35% more likely.
Drawbacks to all-remote
Remote work isn’t without its drawbacks, including loneliness and boredom. In addition, we found that many workers are having more meetings and working longer hours after going remote. There’s evidence that full-time remote workers have a harder time problem solving and being creative than their in-office peers. Many contend that it’s easy to overlook the value of the spontaneous ideas and networking that in-person coworking facilitates.
“Many companies are jumping into ‘remote-first’ too head-on,” said Can Duruk, Product Manager and co-writer of The Margins newsletter. “Once people burn through the accrued social capital you will see productivity drop as relationships decay, new hires not gelling well, etc.”
Futurists have long predicted that as telecommuting became technically feasible, firms and workers would abandon high-cost cities. Research shows that physical co-location is still valuable enough to justify the rents.
One interesting criticism of all-remote teams is that trust and social capital are hard to establish and maintain over distance. As trust and social capital are measurably associated with higher performance, will we see performance dip as they erode?
“We are operating under the assumption things won’t deteriorate and we are making these sweeping changes without much data,” Can said.
More broadly, some fear that widespread adoption of the all-remote model will finally lead to the long-predicted de-urbanization. A move away from large cities would have negative impacts on the environment. Urbanites use less electricity, drive less, and spend about $200-$400 less on electricity each year compared with suburban dwellers.
Plus, people who live in cities have more access to health care, employment, and education.
Alternative models to all-on-site and all-remote work
Workers tend to be happiest and most productive when they have the freedom to live where they want and choose how to organize their time.
This is in line with a Gallup poll showing that just 40% of Americans who are currently working from home are excited to go back to working in their office full-time. Nearly 60% would prefer to work remotely “as much as possible” going forward.
Within a couple of years, Kate Lister from Global Workforce Analytics predicts that 30% of workers will work from home a few days per week.
“I’m partial to what Stripe is doing,” Can from The Margins said. “Treat remote as a hub to position it to succeed, ensure people are available in the same time zone. Seems gradual enough to be low-risk, discrete enough to measure and tangible enough to support.”
The major downside to the split-office model happens when some workers are working from home full-time. Those workers are going to have a different experience than workers who come into the office, even occasionally. Remote workers may have trouble establishing relationships, getting put on the right projects, and getting promoted.
“It’s important that we are conscious of this situation if we want our high performers, wherever they may be, to be recognized for their excellent work,” writes CIO Contributor Dan Mangot. “Similarly, we need to make sure that those who are struggling, get the support they need so they can continue to be valuable members of our organizations.”
While the benefits of going all-in on remote work are considerable, it’s also worth considering the drawbacks. For many workers and many companies, a staggered or split-office approach may work best.
To learn how to transition some workers back into office work, check out 6 tips for transitioning into a split office setup.