Working from home reduces productivity by 20%

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Last week I shared a podcast clip from The Diary of a CEO. It’s hosted by Stephen Bartlett and in this episode, he interviews retail consultant and broadcaster, Mary Portas. The clip I shared (25.30) is the part of the conversation where they discuss remote work and the importance of the office – I agree with this sentiment and the need for connection and community. Mary says:

“We have two days where we say we want everybody in… Even when I go in, and I will see them all, and we all have laugh, and we’ll talk about stuff that’s not even in the work world. But those nuggets, those little messages, those little nuances that happen are what makes us human…”

When I posted that clip, I wasn’t expecting the comments from people who seem quite angry about the prospect of returning to the office. This led me to want to find out more, so I’ve done a LinkedIn poll to find out if people are being forced back to the office or if they are being given a choice – I’d love to know what you are experiencing and I’ll be featuring more on this in my Perspective newsletter later this month.

The comments and discussion made me want to find data into the impact of working from home on productivity. Lots of the comments around returning to the office stem from a belief that we get more done without a commute, or from sitting at home at our screens. I talk a lot about being productive and I have been running productivity workshops for a few years now – they are designed to help individuals and teams set boundaries, work smarter, and have more balance.

So, I read this report from the IZA Institute of Labor Economics called Work from Home & Productivity: Evidence from Personnel & Analytics Data on IT Professionals, which was published in May 2021 with interest.

The research was carried out using data and metrics from computer usage and work time rather than people’s opinions – an important distinction because we always think we are doing more or doing better than we are. It also compared data from before we were working from home (WFH) so we can see the change that happened.

The paper includes insights from other research from their literature review, which helps us understand the need for more research in this area – but also supports some of the findings of this paper too:

“The UK Household Longitudinal Survey indicated that employees who work from home believe that they are about as productive as they were in the office (Etheridge et al., 2020). Those who did perceive declines in productivity also experienced lower levels of well-being from WFH. Bellmann and Hübler (2020) find that working remotely has no long-run effect on work-life balance, and that a switch to WFH increases job satisfaction only temporarily.”

This discussion paper is based on research that was carried out with 10,000 skilled workers. They were IT professionals, all with degrees and all based in an Asian country. This is important to note as the researcher discusses some cultural nuances in the findings when it comes to gender.

There is a lot in the findings but I’m going to share the highlights here – and spoiler alert – working from home reduces productivity:

  • This evidence indicates that employees worked longer but less productively, with output remaining about the same. People are less productive because they still aim to reach the same output or goals, they just work longer to be able to achieve that level of output.
  • Employees spend more time in meetings or calls and have less “focus time” (i.e., time uninterrupted by meetings or calls to focus on completing tasks). The increased time spent in meetings, and its persistence after the initial WFH transition phase, suggest substantial and ongoing coordination costs with WFH. This negatively impacts time available to work in a productive manner.
  • Understanding changes in networking and collaboration tell us something about the value of additional time spent in meetings. Shifts in networking patterns can also impact productivity in different ways, for example, by affecting the exchange of ideas and knowledge.
  • The patterns highlight a detrimental impact of WFH on networking. Employees have fewer contacts with different individuals and organisational units both inside and outside the company. They also have fewer 1:1 meetings with superiors, and receive less coaching. These lost opportunities to network may help explain why WFH lowers productivity. It is also likely that they slowed employee development, though that is beyond the research paper.
  • Working after hours and attending many meetings does not seem to contribute substantially to productivity, nor does spending time on MS Teams calls. The set of selected variables is quite consistent before and during WFH, with focus hours and the networking measures crucial indicators of productivity.
  • WFH induced a significant shift in working patterns. Employees work more, including after regular office hours, but have less uninterrupted time to focus on task completion as they spend more time in meetings. They network less and spend less time being evaluated, trained and coached. It further showed that these reductions, especially in focus hours and networking, are detrimental to productivity.
  • WFH has a detrimental impact on communication, collaboration and innovation.

Ultimately – this is part of the conclusion in the report and nicely summarises why it is a risk for communication, innovation, and collaboration:

It is likely that working from home resulted in a decline in intangibles that are valuable to the employee and company. Increased coordination costs may mean that teams and other working relationships suffered. Employees spent less time networking with each other and people outside the company. That would lead to a loss of social capital if this continued. More subtly, when people work in the same location, they experience unplanned interactions. That can lead to new working relationships and “productive accidents” that spur innovation.

What does that mean for leaders and organisations today? If productivity is impacted by working from home, focus your time on bringing back these three essential things:

  • informal networking
  • less meetings to allow for more focused work
  • more 1:1/coaching time for individuals.

As Mary Portas says if we take away these unscheduled opportunities to connect, “we take what it is to be human.”

Please get in touch if you have any questions about these issues, I’d be happy to chat. You can email me at info@redefiningcomms.com.

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