Study shows 18 per cent lower productivity in remote employees, reignites WFH vs in-office work debate

By Sunita Iyer | First Published Aug 7, 2023, 12:02 PM IST

New research reveals lower productivity in remote work compared to in-office settings, sparking debates on the value of hybrid work models amid the changing landscape of work preferences and pandemic-induced flexibility.

A recent study by economists from the Massachusetts Institute of Technology and the University of California, Los Angeles has reignited the debate over the value of remote work versus in-office work. The research reveals that workers assigned to work from home full-time were found to be 18 per cent less productive compared to their in-office counterparts. The study focused on newly hired data entry workers in India, who were randomly assigned to either work from home or in the office. Interestingly, two-thirds of the productivity drop for remote workers was evident from their first day of work, while the remaining difference showed up over time as in-office workers learned more quickly.

Surprisingly, the study found that even remote workers who preferred to work from home were less productive than those who would have rather been in the office. This finding challenges the assumption that remote workers who enjoy the flexibility of working from home would naturally perform better in that setting.

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While the researchers emphasise that their findings are not prescriptive, they contribute to the ongoing debate about remote work that has been prominent in boardrooms, Slack chats, and academic circles since the pandemic brought remote work into the mainstream. The research provides ammunition for both sides of the argument, allowing proponents and critics of remote work to cite evidence that aligns with their views.

According to Jose Maria Barrero, an economist and co-founder of WFH Research, a group dedicated to the study of remote work arrangements, this latest paper is consistent with previous research that found fully remote work to be less productive than fully in-person or hybrid work models. However, he also notes that companies may find remote work worthwhile if substantial savings on real estate costs can be achieved.

The study highlights the challenges in conducting productivity research related to remote work. Since the workers in the trial were newly hired, their outcomes might differ from employees who transition to fully remote work after spending significant time working in the office. Factors like understanding the work well, adapting to the company's culture, and familiarity with colleagues can influence productivity outcomes.

The study does not provide all the answers for managers navigating the complexities of hybrid work, which remains the dominant model in the US. A separate analysis by consulting firm McKinsey & Co. of its own workforce found that spending about 50 per cent of time on-site was the sweet spot for hybrid work. Any increase beyond that threshold resulted in reduced flexibility and focus time without improving performance significantly. Other research with randomized control trials has shown that hybrid arrangements had no significant impact on productivity, but employees were notably happier and less likely to leave their positions.

Jose Maria Barrero emphasises that many studies critiquing remote work and demonstrating its lower productivity are often referring to fully remote work scenarios. For most employees who can work from home, hybrid work models are more relevant and practical. Considering the nuances and finding the right balance between remote and in-office work is crucial for organizations as they continue to explore the future of work.

MIT's David Atkin echoes this sentiment, noting that the current discussion revolves around finding the ideal point on the work-from-home spectrum. Striking the right balance between fully remote and fully in-office work may lead organisations to settle somewhere in between, embracing hybrid work arrangements that suit their specific needs and workforce preferences.

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