Will Working From Home Become the New Standard?
By Jaye Cabreros*
Eight months into the pandemic the novelty of working from home has worn off. Some companies are now contemplating a permanent shift to WFH while others can't wait to bring their people back to the office. Jaye Cabreros is a research consultant for Jenoir® International and has analyzed the costs and benefits of working from home.
With the current global health pandemic underway, many companies worldwide have opted towards a work-at-home model for non-essential employees. The consensus of this model, while mostly positive, has been mixed. While proponents argue it offers a better work-life balance, countless debate an overall drop in productivity since the beginning of the pandemic.
As with any relatively new operational model brought to scale, there will, inevitably, be numerous costs and benefits associated with such a model. Additionally, many factors are involved when calculating returns, such as the industry type, employee function, and project security.
In this review, we aim to objectively look at the benefits and costs between working at home versus working in a more traditional office setting.
Working from home is a relatively new concept globally, owing its adoption primarily to the rise of high-speed internet infrastructure. Still, however, before 2020, remote work was an exception and not the norm.
Even though remote work saw a 91% increase from 2010 to the beginning of 2020, only 3.2% of the US workforce worked from home at the end of 2019. Thus, it is safe to say that remote work was not the valuable asset necessary for business continuity prior to the pandemic’s crippling effect on the economy.
As Netflix CEO Reed Hastings states:
Hastings is not alone in sharing these views; several CEOs have expressed dissenting opinions on remote work, arguing it limits the workforce’s quality of work and overall productivity.
Limitations of working from home
Although remote work may play a key role in keeping the global workforce afloat, industry leaders’ critiques hold some validity.
Distractions unique to a home-based environment
A home environment is vastly different from that of an office or workplace, particularly for those new to remote work. There are unavoidable distractions in a home environment which are practically non-existent in an office.
Working from home, we bear the added burden of tending to the distractions of this home environment: doorbells ringing, pets wanting extra attention, even answering trivial questions from our spouses.
While these distractions may seem minor, they interrupt project flow and continuity, making it more challenging to get back to a particular task.
Lack of direct supervision
Perhaps the biggest downfall of working from a home environment is a lack of direct supervision. Not everyone is an honest worker when it comes to completing work in a distraction-free environment.
While there are numerous studies on why micromanaging employees is unproductive, the fear of management alone is enough to keep most workers on task. If the TV is running in the background, it would inevitably cause a drop in productivity. Research on the subject has proven that multitasking is not an efficient means of task completion and productivity enhancement.
Furthermore, there is no direct incentive for a worker to stay on task in a home environment, particularly for hourly employees. If one’s compensation is solely based on the number of hours worked and not the amount of work completed, we will naturally see a decline in work quantity.
The burden of the bedroom
Convenient as it may be to rise out of bed and jump on the computer to work remotely, there is a significant downside: the bedroom.
As humans, we rely on unconscious heuristics to get us through the day as it pertains to trivial tasks: waking up, showering, getting dressed, and so on. These background tasks prepare us for a productive workday, and without these psychological cues, it may be challenging to convince ourselves that we are, in fact, going to work.
When working from home, we are less likely to:
- Dress in the appropriate business attire
- Stick to a regular morning routine
- Mentally prepare for a day at the office
In fact, we are even more likely to take “short” naps or tend to extraneous chores such as cleaning and doing the dishes.
Lacking these seemingly trivial yet crucial heuristics can result in a significant decline in productivity, particularly when paired with the reasons mentioned above.
Limitations of the office
While we have covered why working from home is not the ideal environment for maximum productivity, we must ask ourselves how we measure productivity and whether we want to look at a micro or macro level scale.
The US Census Bureau estimates that the average worker will spend 4.35 hours per week commuting to the office. For more densely populated cities, that number can easily be tripled.
Countless organizational management studies have proven that happy workers are productive workers, and commute time is inversely correlated with job satisfaction and overall happiness. Allowing those workers to save that time can significantly add to their overall happiness and job satisfaction, which, in turn, can lead to a significant increase in productivity.
The benefits of time saved for salaried employees can be even more instrumental in increasing productivity rates. Burnout is a real observed phenomenon in the modern workforce, and the added burden of commute time only exacerbates the problem.
The “morning person” paradox
Considering that workers who live in a densely populated area can spend upwards of three hours per day commuting to work, they would need to wake up significantly earlier to arrive at the office on time. This scenario then would adversely affect self-described “night owls” who tend to stay up later than the average person.
The scientific consensus is clear that a lack of or low-quality sleep has significant adverse effects on productivity. Allowing workers to go straight from the bed to work ensures more time to rest, and subsequently, a more productive workday.
Sleep studies corroborate that while early risers, AKA “morning people,” are generally deemed more productive, it is the amount of sleep that determines one’s productivity during the day. This signifies that while these benefits won’t dramatically change things for the natural early riser, they will significantly increase productivity in self-proclaimed “night owls” who have a routine 9-5 job simply because they can capture one extra sleep cycle in the morning.
Let us assume the average early riser goes to bed at 10:00 PM and wakes up at 6:30 AM, giving them 8.5 hours of sleep. The average “night owl” then goes to bed after midnight, and assuming they follow the 9-5 model, they will also likely wake up at 6:30 AM, albeit forcibly, reducing their relative sleep time by two hours. Since we know it is the amount of sleep and not necessarily the wake time which determines productivity, these night owls can now enjoy the productivity benefits of the early risers.
Further studies suggest that the ideal wake time for adults may be closer to 10:00 AM; thus a wake time for working adults closer to this benchmark would be preferred.
If a company is not adequately set up for remote work, it will inevitably hinder its ability to continue work between shifts and at the end of business hours.
Take, for example, a company whose technical infrastructure relies heavily on employee presence. Such a company will undoubtedly be at a competitive disadvantage compared to one who has the proper remote infrastructure and technology in place. If an employee ends their shift and heads home but is recalled to finish a project a few hours later, the burden falls on the employer to cover commute time, in addition to the overtime, that the worker is entitled. This adds significant costs to the employer, in addition to paying for time when no work was performed.
On a more practical level, if an employee can cover small aspects of a job from home, it will reduce the burden both on the employee and the employer, particularly for trivial or informational assignments.
The Best of Both Worlds
After analyzing both models’ limitations, we can extrapolate each model’s benefits as an inverse to its cost. Furthermore, each model has unique elements that allow for exciting synergies to form when a hybrid model is adopted.
Benefits of remote work
We already know that offering workers the option to work from home can lead to:
- Well-rested and, subsequently, more productive workers
- Optimized schedules and efficient time management
- A more resilient work environment
In addition to the above, there are key benefits of incorporating a remote model beyond direct operational benefits.
Perhaps the most significant limiting factor for on-site work is the geographical element: companies can only hire workers within a limited geographical range. Offering remote work positions allows companies to expand the talent pool and select better-qualified workers from a larger geographic area.
Based on statistical measures alone, this increased candidate pool adds meaningful value to a company, as it dramatically increases the chances of finding an ideal candidate for a position.
Optimized technological infrastructure
Whether a company wants to roll out full scope remote-work infrastructure permanently or only as a means of adaptation, this capital expenditure will be a valuable future asset, regardless.
Suppose we ignore the concept of remote work for a moment and focus on the competitive advantage of holding upgraded infrastructure. In that case, those who adapt to an evolving technological climate will always be at the forefront of emerging business opportunities that rely on this investment. This investment in upgraded infrastructure allows employees to work from home more efficiently while simultaneously allowing companies to expand on operational efficiencies within reach through these improved assets.
Fewer inevitable interruptions
While we have previously argued that working at home comes with its distractions, it may pale compared to the inevitable distractions present in an office environment. Morning huddles, inter-department chit-chat may enhance office culture, but they also cause interruptions in workflow to an arguably greater extent than those found within a home environment.
When set up correctly, a home office can provide a more focused environment, allowing the worker to concentrate more on their work-related tasks. This setup assumes the worker took the preemptive measures to minimize the home-based distractions previously mentioned. Because of this, research has shown that remote workers tend to log more “work hours” than their on-site counterparts. That is, remote employees spend more of the workday getting work done.
Benefits of on-site work
Using the same train of thought, we can interpret the benefits of on-site work to include:
- Psychological heuristics
- Increased supervision
- Clear boundaries between work and leisure
Beyond these benefits, companies may also see fewer tangible benefits that are fostered within an office environment. An office garners more facetime between employees and management, which allows for better coaching and real-time feedback.
Additionally, companies may see marginal cost savings from consolidating office equipment and supplies, as home offices have the added cost of relinquishing two offices for each eligible employee. These costs can add up quickly, as employees would need to set up satellite offices, including the purchase of furniture, printers, additional software, and other expected costs associated with setting up a remote office.
Adopting a hybrid model
While we understand the limitations of both models, it is critical to understand that not every industry will ascribe to these models entirely. There are specific jobs where remote work is not only impractical but also dangerous.
However, aside from a few industries where remote work would be completely impractical, most enterprises can adopt a hybrid model, allowing critical employees to remain on-site, while non-essential employees can enjoy working remotely.
When paired with the technology and infrastructure upgrades mentioned before, most home environments can reap on-site work benefits through better communication setups and real-time collaboration.
As Mark Benioff, CEO of Salesforce, states:
A hybrid model would allow the employees who need to be on-site more flexibility and freedom that comes from a reduction in on-site density. Additionally, those who can work remotely will experience fewer external stressors, which inevitably contribute to a lack of productivity.
In the current climate where the global workforce has gotten a feel for remote work, it may be difficult to revert to the old on-site model. Companies see the benefits of having certain employees work remotely, and those employees are experiencing better job satisfaction and work-life balance.
Company leaders increasingly see how allowing remote work can lead to better dynamics for their companies as a whole. Although this is undoubtedly the case for many businesses, some insinuate we are merely replacing one problem for another.
As Microsoft CEO Satya Nadella states,
As with any novel change, some problems are fixed, while new problems arise. These novel issues then require new methods to measure performance, which will unavoidably take time to develop.
What does the future hold?
While it seems the consensus among leaders is mixed, these opinions may have more to do with their industry and employee functions than strict opinion alone.
Many companies have seen significant gains in productivity arising from the reduction of physical infrastructure and maintenance and choose to adopt a remote work model moving forward. On the other hand, many companies see remote work as a short-term solution to a proximate problem and plan to return to the traditional model once the pandemic is over.
Overall, based on recent studies of productivity since the beginning of the COVID-19 pandemic, it seems most companies can benefit significantly from the hybrid model discussed. A hybrid model gives more resources to the essential employees needing to be on-site while allowing remote workers the freedom and flexibility to do their jobs from home.
As of right now, it is not easy to forecast how this operational shift will impact companies long-term. Traditional adaptations of new business models generally go through scrutinous planning phases and are implemented in graded patterns of trial and error.
While the pandemic may have forced the hands of many companies to rapidly adopt a remote-work model, it will undoubtedly be a test case for how we do business in the future. To pave the way forward, allow us to impress upon you fundamental and insightful questions. How has the new work-at-home model shifted team dynamics within your workplace? Are you satisfied with the contributions made by your organization to ensure business continuity? What hurdles has your corporation overcome to maintain the vital connections once commonplace before the covid-19 pandemic?
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*The author, Jaye Cabreros, is a research consultant for Jenoir® International Leveraging his expertise trading metal commodities and analyzing metal markets, he currently consults and develops the marketing and sales strategies for Canadian and international SMBs.
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