The fierce debate over where employees should work has now dragged on for three years. What do the latest figures on the
pros and cons show?
By Russell Pearlman | Photo Collage By Tim Ames
The Problem
Three years after the pandemic started,
firms and employees are still at odds over where the workplace should be.
Why it Matters
Firms that can keep up productivity
and better retain workers will jump
ahead of competitors.
THE SOLUTION
The focus should be less on broad
numbers and sweeping issues and more
on the needs of a specific company.
Who’s working remote varies wildly by occupation, from less than 6 percent in construction jobs to nearly
70 percent in tech-related roles, but around the world,
millions of employees are arguing that they can be
every bit as productive working from home—if
not more so.
Many corporate leaders couldn’t disagree more.
Managers declare that they often have no idea
where their workers are. Workers are taking more
time off than ever during the day to attend to
family needs or have fun (week-day golf outings
have shot up by an astounding 272 percent since
2019, according to one Stanford study), but they
say they’re pouring in hours at night and on
weekends to ensure they’re getting a “full” day
of work done.
About the only thing everyone can agree on is that
few people seem particularly happy with what once
seemed like an ideal solution: hybrid work.
For Lilian Chen, remote work has been a fabulous development—in some ways. Before the pandemic, the “morning rush” for the cofounder and COO of virtual team-building company Bar None Games entailed scrambling from shower to doggy daycare to the subway. If she was running late, she would apply her makeup in a cab (and shell out $30 for the privilege). These days, she says, her morning rush has been transformed into a “morning routine.” She awakens an hour later, makes coffee, and walks her dog. Sometimes she works out, takes a quick shower, then hops onto her laptop.
But she has been less than thrilled with certain features of remote work. Her biggest pet peeve? Zoom meetings. “Everyone multitasks, and it’s just less productive,” she says. She also knows less than she used to about the lives of the people in those meetings. As co-head of a company, she tries to compensate for all of this in various ways—by devoting portions of daily team meetings to catching up; by designing just one agenda item for meetings whenever possible; and, yes, asking attendees not to answer their darn email or texts. “I do have to be pretty explicit,” she says.
For nearly 300 years, just about everyone
thought of a business as a physical place in
which employees all worked together on the
same schedule, more or less. To some degree,
the concept goes back to London, site of the
world’s first two office buildings: the Old
Admiralty, built in 1726 as the head-quarters
of the Royal Navy, and the India House,
erected three years later for the East India
Trading Company. In both buildings, leaders
and workers gathered to make key decisions
and oversee staff and operations.
Today, a new dynamic has emerged where
remote workers perform their jobs and take part
in key business decisions in an entirely different
surrounding: their home.
In major US cities, office occupancy hovers at about
50 percent. That figure is somewhat higher in Europe and Asia, but it’s still no-where near 2019 levels.
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Employees delightedly point out how much they save in gas
or transit fares by not commuting. The dollar figures are easy
to determine, and they can be pretty dramatic. On average, a
US worker who formerly commuted to the office and is now working remotely saves between $3,000 and $15,000, depending on whether they customarily take public transportation or drive
a long distance to work in their own car. It’s typically the top reason individuals cite to explain why they don’t want to go
back to the office.
Above and beyond that, though, some economists assign substantial value to the greater personal autonomy individual employees now enjoy, including the end of commuting and
its attendant stresses. The savings here, according to a
2021 working paper from the National Bureau of Economic
Research, could amount to as much as 7.3 percent of an employee’s earnings. There is value in this autonomy for companies as well, economists observe, at least on a
macro level: it entails dramatic real estate savings,
decreased absenteeism, and, on some projects, better
productivity. If all offices were remote, says a 2020 study
by Global Workplace Analytics, the savings for companies
would come to an incredible $700 billion a year.
Companies, for their part, find that remote workers tend to quit less (a significant benefit of remote work, given that 22 percent more people are quitting each month than did before the pandemic, according to job-posting site ZipRecruiter). What’s more, those who do quit could be cheaper to replace. Indeed,
41 percent of leaders in one survey by the National Bureau of Economic Research said hiring remote workers kept a lid on
rising salaries. The survey authors calculated that remote work helped firms dampen wage growth by 2 percent over two years,
a timeframe where wages across the country, on average, grew
by more than 10 percent.
On the other side of the ledger, remote work incurs costs,
some of them not immediately obvious, for both individuals
and organizations. For instance, employees working from home not only absorb higher utility bills, but also experience myriad distractions that can substantially hinder their upward mobility
(a single job promotion, various studies show, typically involves
a 5 to 20 percent pay hike).
And there’s an additional cost to companies, says Eikenberry: “Proximity gives us an edge when it comes to collaborating and communicating.” Recent research out of Stanford shows that
The Cost
CONundrum
teams produce about 15 percent more ideas when they meet in person. It’s true that some roles, like customer service, don’t urgently require teamwork, but others clearly do. Imagine, for instance, a pod of engineers and marketerstasked with coming up with new products. If a company division needs people with different work functions to generate a steady stream of new ideas, it should account for the expenses of assembling them in teams—in the same place and at the same time.
As it turns out, the obstacles to bringing people back to the office have less to do with scheduling and more to do with the underlying mission. It’s not that employees don’t want to come back (only 19 percent of workers say they never want to work in an office again); it’s that they don’t see how doing so helps them or the company. To make their case to employees, experts say leaders should be transparent about the power and efficiency of a team-based approach. “This is showing employees why they need to do the commute,” says Gustavo Razzetti, author of Remote Not Distant: Design a Company Culture That Will Help You Thrive in a Hybrid Workplace.
Leaders increasingly recognize that corporate culture is critical to organizational performance. In 2022, when Korn Ferry surveyed more than 15,000 executives worldwide as part of its World’s Most Admired Companies Research, two-thirds said they felt culture accounted for more than 30 percent of the market value of their respective organizations. “What we’re seeing is an evolution from culture as an afterthought, or a ‘nice to have,’ to culture as a real value creator for the business,” says Sarah Jensen Clayton, Korn Ferry’s global leader of culture and change.
At the macro level, it’s true: The stronger the culture, the more engaged its employees. And it’s also true that more engaged employees develop more innovative ideas and achieve higher productivity.
communication, and sense of community. The evidence suggests that the majority of workers value proximity and a good work culture, too: fewer than 20 percent want to say goodbye to the office forever, according to Global Workplace Analytics. Nearly nine out of 10 employees say that a distinct workplace culture is important to business success.
But over the last three years, many employees have altered their priorities. Technology, they argue, helps them remain connected to their peers and managers, regardless of where they are located. Work culture evolved during the pandemic, they say, and some of this evolution was positive—managers grew more empathetic, for instance, and employees in video meetings felt
How many American workers
are fully remote?
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Source: US Bureau of Labor Statistics
FOR WHAT?
BACK TO
WORK
...
Productive or
Distracted?
A lot of leaders think, ‘It’s a
battle I have to win.’ But there shouldn’t be a war.”
Culture vs.
Flexibility
If they’re not in the office,
how am I supposed to know
if they’re working?’’
Remote Math
Three years after many workers left behind their offices, there is
a lot of data on how productive—or not—remote work has been.
WHERE WE STAND
HOW WE FEEL
27%
6%
TODAY
2019
Source: US Bureau of Labor Statistics
2022
2020
4.4%
Productivity Changes
(since remote work started)
2.2%
-1.6%
2021
Source: US Bureau of Labor Statistics
Construction
14.1%
Remote Work by Industry
Arts and entertainment
Finance
Healthcare
Information/Technology
Mining
Professional services
Retail
9.2%
45%
18.3%
68%
5.6%
46.3%
6.7%
Sources: JLL, Kastle, Metrikus
San
Francisco
Office Occupancy Rates
Around the World
London
Washington,
DC
New
York
Houston
Dubai
Paris
Tokyo
Seoul
Sydney
100%
75%
50%
25%
Source: Gallup
of want employees
back full-time
50
Come Back vs. Stay at Home
PERCENT
PERCENT
12
leaders
of want to
work in the office full-time
employees
Source: Source: Global Workplace Analytics 2022 survey
would remain in their current role, but be less willing to go the extra mile
would remain in their current role, but would be less happy
45%
If workers were no longer allowed to work remotely part- or full-time...
would expect a pay increase to make up for additional costs
46%
67%
Source: Gallup
37%
More flexibility
52%
Avoid commuting
44%
Better for well-being
Top 3 Reasons Why Remote
Employees Like Their Setup
Sources: Zoom, survey; numbers represent respondents citing issues as challenge / KPMG 2022 CEO Outlook
Decreased
collaboration:
CEOs’ Top 3
Worries About
All-Remote Work
The CEO’s Ideal Working Environment by 2025
Decreased company productivity:
Difficulty maintaining company culture:
48%
48%
44%
65%
Full-time in office
28%
Hybrid
7%
Full-time remote
A Harvard Business Review study found that companies with strong cultures saw revenues increase over a 10-year period by four times as much as those with weaker cultures. Another study found that companies with engaged employees surpassed the profitability of those with disengaged employees by 21 percent. Another survey, by Great Place to Work, found that companies on their “Best Workplaces” list outperformed the S&P 500 index by a factor of three.
Many leaders believe that they can only establish and maintain a strong culture if everyone is—at least some
of the time—occupying the same workplace. Leaders don’t set up ping-pong tables just because they love
the sport; they believe, with good reason, that physical proximity
fosters greater collaboration,
more empowered and included. Above all, they value the flexibility of working remotely. Flexibility is the third-most important reason an employee seeks a new job (after more pay and better career opportunities). According to a summer 2022 survey, 87 percent of all US workers would, if offered, adopt a more flexible schedule.
But the only way to know how important flexibility is to any particular workforce, Eikenberry says, is to ask. By finding out what specific employees really value, leaders can determine a system in which workers and organizations both have what they consider essential. That could even mean that most of a firm’s workers want to be in the office full-time. “A lot of leaders think, ‘It’s a battle I have to win,’” Eikenberry says. “There shouldn’t be a war.”
Companies have repeatedly revised their return-to-office plans, only to end up with scattered attendance that demoralizes those who do come in. The situation has hardened the resolve of leaders and employees alike that the future of work should lean either more in-office or more remote. Leaders in response are ordering more people back to the office, while employees continue to quit at alarming rates.
Ultimately, experts say, the question of where people should work boils down to three major issues: what working at the office really “costs” employees and companies; how much productivity an office really generates; and how much flexibility remote work really creates. The numbers for each will vary widely by company. More importantly, they will vary widely within a company—because even if firms save hundreds of billions of dollars on real estate by letting all
of their office-based workers go remote full-time, the savings could be swamped by lost revenues from future products and services better in office. “There’s
no single right answer,” says Kevin Eikenberry, a consultant and coauthor
of The Long-Distance Team: Designing Your Team for Everyone’s Success. But most experts agree there are numbers now offering a good starting point
to deal with a once-simple and unquestioned way of doing business.
“
Productivity in many ways is at the heart of the “where
to work” tug-of-war. Employees say that working from home enables them to skip commuting and schedule an unprece-dented range of client meetings, Zoom calls, and one-on-ones. They can plow through tasks without being interrupted.
Leaders see it differently—noting, for instance, how much longer it takes them to arrange meetings or to contact employees when once they could simply tap them on
the shoulder.
The statistics give both arguments plenty of fuel. Back in 2020, when so many people were working out of the office, the nation’s rate of productivity—which correlates the amount of goods and services created with the number of hours worked to produce them—actually increased 4.4 percent. In 2021, as vaccines became readily available and some remote workers made their way back to the office, productivity continued to rise, by 2.2 percent. But in 2022, as additional workers filed into office buildings, productivity decreased 1.6 percent.
Many leaders are cherry-picking last year’s
productivity statistics, plus the specter of a broader
economic slowdown, to urge people to return to the office.
There’s a problem with these broad stats, experts say: they’re too broad. What might be true for productivity at one e-commerce firm might be very different at another e-commerce firm, let alone at a professional-services organization.
For instance, Razzetti points out, “number of hours worked” might be an effective metric for someone on a production line, but not for someone on a multi-disciplinary team tasked with multiple responsibilities.
Productivity should measure what is accomplished—whether it’s the number of ideas generated, customer-service calls made, audits completed, or any other task that, up until 2020, typically occurred within the confines of an office. Top-line sales and profitability remain critical—“otherwise the company collapses,” Razzetti says—but at levels below them, leaders should build up indicators based on output and accomplishment, not inputs. One-size-fits-all organization-wide policies could end up satisfying no one, Eikenberry says.
More accurate measures of productivity could help leaders answer a question Eikenberry says he often hears from top-level leaders: “If they’re not in the office, how am I supposed to know if they’re working?’’ If they had better data, leaders might find out that their marketing team works best when everyone is in the same room at the same time; but that their finance group can actually do more work if its members work separately. By experimenting, they might discover that a multi-disciplinary group is at its best when its members are all in the office for two weeks straight, then work from home for a month focusing on individual tasks.
“
/
Work at Home
Work at Office:
The Personnel
Files
A supervisor saving 60 percent on childcare costs. A CEO struggling
to boost collaborations. Here’s the expected—and unexpected—tales
we heard from five remote workers
and leaders.
By Arianne Cohen
In the end, the fierce debate about whether the corporate world should go more in-office, or more remote, or more hybrid, may come down to this: experience. The actual experience that workers and company leaders have had, three years into the work-at-home versus work-at-the-office experiment.
For Ciara Kennedy, a supervisor and training specialist for a defense contractor, working remotely has significantly improved her personal time off and cut her childcare costs. Unexpectedly, it has reduced her time for listening to audiobooks—because she no longer commutes. Angela Thomas, a vice president in the medical field, is no longer putting in countless hours of traffic stress driving from meeting to meeting, a core part of her job. But talk to Matthew Meadows, the CEO of a software company, and you will learn about the challenges of tracking how the “group cohesion” so critical to his business is going.
We reached out to five people in the field, from middle management to the C-suite, and heard both expected—and unexpected—experiences.
Goodbye 4 AM Wake-ups,
Hello Extra Meeting Work
Thomas’ job has always revolved around many meetings, typically at hospitals or healthcare settings, and frequently scheduled months in advance. She would spend most of her day in the car driving from one to the next. Now those gatherings happen on Zoom, and can be pulled together in a few days, which has substantially sped up the pace of business.
The downside is that she’s currently logging seven or more meetings every day. “A lot of these meetings generate work,” she says, “and I need time to do it.” She has adapted by creating a standing block of time on Fridays to address those commitments. She also blocks the availabilities on her calendar at the beginning of each week, so that others in her organization can’t book her back-to-back.
Her previous life of 4 am wake-ups and workouts now seems like a bad dream. She used to be out the door by 6 am to avoid the brutal traffic of Washington, DC, which could turn an hourlong commute into 2.5 hours. Now she gets an additional 90 minutes of sleep and starts her workday at home at 8 am, with no worries about rush hour. At around 5:30 pm, her day ends and she drives over to her local church, 15 minutes away, where she has been involved for 15 years.
Angela Thomas, VP of healthcare
delivery research, MedStar Health
For years, Dar regularly took a 7 am bus from New Jersey into the Port Authority of Manhattan, from there either walking to
his office or hopping on a subway. He made the opposite trip each afternoon.
“Commute fatigue is real,” he says. “You’re waking up earlier to catch the bus, so you’re more tired, and then rubbing shoulders with people on a bus and Subway. By the time you get to the office or your home, you feel drained.” The net effect for him was less energy for both work and family.
When the pandemic hit, Dar kept his job, but moved his family to Atlanta, Georgia. He says that he now has oceans of extra time to spend with his daughters before and after school. He gets them ready for the day and picks them up in the afternoon—things he never could have done in his previous life.
But as someone who loves his work, he has found that work and home life are difficult to separate, so much so that he and his wife have had to create a family calendar. “Family time” begins, non-negotiable, at 7 pm. “There’s a little bleeding of boundaries, especially at the end of the day,” he says. “Usually, my wife pulls me away from the computer.”
Saad Dar, head of business development and partnerships, Baselane
Time, But Blurry
Boundaries
Remote work has allowed Kennedy to bank much more money and paid time off. The financial savings comes from a 60 percent drop in her childcare costs: her kids are now in daycare two days a week, from 7 am to 4:30 pm, and with their grandmother the rest of the time (previously, Kennedy paid for five days a week of care from 6 am to 4 pm). She also has extra PTO: her medical appointments only eat up an hour or two, so she no longer loses entire days. That means extra PTO days for trips and relaxing. “It’s such a huge improvement,” she says.
One perk of commuting she has not replaced is audiobooks, which she listened to voraciously while driving. “It was the time that I didn’t have obligated to anything,” she says. “I’d listen to book after book, or call friends to catch up.” But the flexibility she has now more than makes up for it; recently, she was able to nurse her mother through knee surgery. “Now my boss is like, ‘It’s okay if you want to work at night tonight.’” When she was asked to return to the office, she negotiated a mostly remote schedule. These days she heads into the office once a quarter, “just for laptop upgrades.”
Ciara Kennedy, supervisor and training specialist for a defense contractor
Swapping Audiobooks
for PTO and Savings
Eight hours. For Hawker, that’s what the shift to remote work has meant: a full workday back in his pocket each week, because he’s no longer driving 30 to 40 minutes to an office near Dayton, Ohio. Working at home has been tremendously efficient for him, not just because of that extra time, but also because he can now schedule his day in 30-minute blocks. “In the office there was no way—too many meetings and distractions. A thousand things happen in the office that don’t happen in my home.”
His primary challenge has been to maintain employee productivity now that the company has gone remote. “We realized that quite a few people were skating by. But I’d seen them perform in the office, so I know they were good people and good workers.” Hawker ultimately overhauled his management style. Rather than hiring employees for roles, he began hiring them for three to four primary tasks—such as search optimization or acquisitions—and providing a firm structure for those tasks. It’s working. His staffers are now more productive than they were prepandemic, and many of them log around 30 hours per week, which he’s fine with, as long as they complete their tasks. “I will never have people go back into an office,” he declares.
Ryan Hawker, CEO,
H3 Homebuyers
A Happy but Still
Challenged CEO
In his role as a remote manager, it’s keeping track of team interactions that Matt Meadows finds challenging. He runs a performance review software company, and needs to know whether his team members are collaborating. “I have a lack of insight into group cohesion,” he says. He finds that in practice,
he can easily reach out to speak to a member of the team, but that doesn’t keep him apprised hour-to-hour of their level
of collaboration.
He also initially found the time zone juggle to be more of an adversary than he expected. Like many CEOs, Meadows has found himself with employees across different time zones. He
at first asked some team members to work the same hours,
but found that for workers in other time zones, that cut down
on their productivity. He has ultimately found it helpful for the company to have a broader span of operational hours, due to team members working in different regions. “It’s a delicate balance that we’re having to work with and learn from as
we go."
Matthew Meadows, CEO and cofounder
of WorkStory
A Loss in Group
Cohesion
Portrait Illustrations by Astrid Nippoldt
100%
75%
50%
25%
See the
podcast