Will Remote Work Trend Change Dramatically, After Covid?

One of the biggest cautions in investing is to be wary of claims that “it is different this time” when an un-historic or atypical valuation trend happens in equity markets. A good example was the valuation of firms with no revenue in the leadup to the internet bubble around 2000. 

To extend the argument just a bit, we are going to be hearing all sorts of predictions that the Covid-19 pandemic is going to substantially or radically reshape business, government, education and consumer behavior on a permanent basis.

That is perhaps a different argument than saying some underlying trends might get a boost. More bandwidth, diversified supply chains,  more remote work capabilities, more use of collaboration tools, better security, network resilience, use of food or meal delivery services, online shopping and more work from home are examples. 

It is logical to suppose that, having become more acquainted with doing things a different way, there will be a lower threshold to maintaining some of those behaviors, post-pandemic. 

But we might maintain some skepticism about how much behavior will change on a permanent basis. Consider the obvious case of remote work. Some of us have heard about the obvious value of telework or remote work for our entire professional careers. 

And yet the percentage of U.S. employees working at home 50 percent of the time or more in 2020 is estimated at five million, representing 3.6 percent of the workforce, according to Global Workplace Analytics. And that is after 40 years of evangelization that some of us are personally aware of. 

Predictions about the extent of telecommuting have routinely been far in excess of those figures. Definitions are likely an issue. In the past, “telecommuting” has generally been thought of as employees working “at home” sometimes--or full time--instead of at the office, campus or plant. 

But some analysts might consider employees taking work home at the end of the day as “telecommuting.” That probably is not what most people have in mind when they think of remote work on a substantial basis. 

Others say remote work includes any employees routinely working at home one day a week. That is telecommuting, to be sure. But it might not be what many have in mind when they think of remote work: working from home 50 percent to 100 percent of the time. 

Another caveat is that those figures do not include the self-employed. 

Still, it is undeniable that remote work is growing. Regular work-at-home has grown 173 percent since 2005, 11 percent faster than the rest of the workforce, which grew 15 percent, according to  Global Workplace Analytics. 

Remote work also grew almost 47 times faster than the self-employed population, which increased by four percent. 

The point is that remote work trends--aside from people taking some work home from the office--have been in place for some time; were growing before the pandemic and will grow after the pandemic. 

So the relevant issue might be whether the rate of change increases in a non-linear way. At least some believe that will happen. "We believe the COVID-19 pandemic has accelerated society's transition to broadband and digitization by at least a decade,” say analysts at MKM Partners. 

But it is reasonable to expect that the gap between employee desire to work at home and the low percentage doing so has other explanations. 

Global Workplace Analytics argues that 56 percent of employees have a job where at least some of what they do could be done remotely; 62 percent of employees say they could work remotely and desks are vacant 50 percent to 60 percent of the time. At yet only 3.6 percent of employees presently do so. 

That suggests--as often is the case with new technology--that some major retooling of business processes or organizational culture or both are holding back much-higher rates of remote work. Only seven percent of U.S. firms make remote work available to most or all of their employees, Global Workplace Analytics says. 

In makes sense that remote work happens most often when there are clear benefits for employers or employees, when the work tasks are amenable to remote work and when the relative isolation fits the emotional needs of the workers. 

Sales, customer service,marketing, programming, health claims analysis and radiology are use cases where remote work is possible. Not all roles are that amenable.  

But one also has to keep in mind that what most would consider routine “remote work,” happening 50 percent to 100 percent of the time, remains relatively rare. With the caveat that rates of change can hit inflection points, and that the pandemic might trigger an inflection point, remote work is not a technology issue. 

Work processes and work cultures apparently have to change in significant ways before substantial remote work makes sense, and works. 

Beyond that, the assumption that remote work always improves productivity is questionable. The productivity paradox (also the Solow computer paradox) is the counterintuitive observation that, as more investment is made in information technology, worker productivity may go down instead of up. 

The existence of the productivity paradox has been noted since the 1970s. Before investment in information technology became widespread, the expected return on investment in terms of productivity was three percent to four percent.

Instead, we have tended to see improvements that are undetectable to perhaps one percent, in the 1970s to 1990s. Nor is there much evidence that matters in the United States, for example, have changed between 2000 and 2018, either. 

source: Conference Board

Likewise, in the 20th century, gross domestic product growth was mainly driven by total factor productivity growth. Since the mid-2000s, however, productivity growth has been in decline, according to one analysis by researchers working with the Centre for Economic Policy Research. 

source: CEPR

None of that means a dramatic change in remote work is impossible. But it does seem unlikely.

Work-From-Home at a Massive Level Might Reduce Productivity, Early Evidence Suggests

The massive shift to work-at-home caused by policies related to the Covid-19 pandemic have inadvertently provided a remote-work statistical base we will be analyzing for years, especially regarding the productivity impact of massive work-from-home changes. 

Most past studies of work-at-home productivity arguably involved smaller sets of workers in functions that arguably are best suited to remote work (sales, coding, marketing, accounting, legal work and so forth). 

What the global pandemic stay-at-home orders have done is push the bulk of enterprise workforces to either work at home or not work. The early data from the change is not encouraging for productivity impact, suggesting that the tools we have are not so much the problem as human ability to adjust to remote work environments and use the tools fully. 

If it is the case that only a third of jobs can be done remotely, forcing everyone to do so will not be universally productive. say professors  Jonathan Dingel and Brent Neiman of the University of Chicago Booth School of Business, who conducted a recent study on the subject.

The study suggests 34 percent of U.S. jobs can plausibly be performed at home. Assuming all occupations involve the same hours of work, these jobs account for 44 percent of all wages. The converse is that 66 percent of jobs cannot plausibly be shifted to “at home” mode. 

As you might guess, some jobs and some areas are more amenable to remote work. The top five U.S. metro areas feature many jobs in government or technology that could be done from home. On the other hand, some areas involve manufacturing, agriculture, raw materials extraction of other major industries that are not amenable to remote work. 

source: Dingel and Neiman

“More than 40 percent of jobs in San Francisco, San Jose, and Washington, DC could be performed at home, whereas this is the case for fewer than 30 percent of jobs in Fort Myers, Grand Rapids, or Las Vegas,” they say. 

Professional, scientific and technical services, management jobs, education, finance, insurance and information jobs are easiest to shift to remote work. Transportation, warehouse operations, construction, retail, agriculture, food services and lodging are among the hardest to shift to remote work. 

The new conventional wisdom is that more remote work is coming, as a permanent change after all the stay-at-home rules put into place to deal with the Covid-19 pandemic. But there is some debate about whether remote work is less productive or not. And if remote work turns out to be less productive or more productive than face-to-face work, there will be consequences for its extension and use. 

Looking only at the impact of the massive stay-at-home orders to counter the Covid-19 pandemic, there is at least some evidence that productivity has suffered, in some countries, because of remote work from home. 

Aternity, for example,  has aggregated from millions of employee devices from over 500 Global 2000 companies, reveals that the United States has become less productive due to remote work because of the pandemic. The metric is hours of work, captured because Aternity hosts a cloud-based analytics application that captures work-related application usage. 

At the end of March, 77 percent of work has been moved to be performed remotely in North America, the largest amount of any continent. The North America trends were bifurcated. U.S. enterprise worker productivity actually dropped 7.2 percent, Aternity reports, though Canadian productivity increased about 23 percent. 

“Overall productivity (as measured by hours of work computing time) in Europe declined by 8.2 percent,” according to Aternity. 

source: Aternity

Another study of worker attitudes suggests that about half of workers 18 to 24 believe their productivity is lower when working from home, according to a study by National Research Group. Half also believe they are distracted at home. That does not necessarily mean productivity is lower, but the workers feel their productivity is lower. 

Some believe remote work, in some cases, is wildly less productive. A study by Scikey MindMatch that estimates only 0.2 percent of the Indian IT workforce actually is capable of working from home at high levels of productivity.

That finding might run counter to what many observers would expect for remote work productivity, but Scikey describes itself as a firm supporting firm efforts to attract personnel that drive “high-performing teams.” 

Since talent, skills, intelligence and ability to perform work at a high level remotely  are bell-shaped curves (a normal distribution), people who might be described as “high performing” would be expected to be a minority of all workers. 

The Scikey study seems to be operating out at three standard deviations, which would represent 0.3 percent of people. 

source: Researchgate

Reports about the study indicate that  99.8 percent of the workforce in the information technology sector is incapable of working from home, at least with very-high productivity arguably matching what happens at the workplace, the study claims. 

The reason so many are “incapable” of working from home is that they lack at least one quality deemed essential for success, including resistance to learning and exploring (95 percent), lack in practical communication skills (65 percent) and lack in planning and execution (71 percent).

Some 17 percent of the employees are instruction-driven and therefore they need clear and direct instructions to work their best. about 12.7 percent of the employees are very much dependent on their social interactions, and working from home comes as a real challenge for them. Work is not difficult for them, but social interactions are necessary for them to function, Scikey suggests. 

What the study likely indicates is simply that the human characteristics Mind Match associates with the highest-performing individuals in a remote work setting are three standards deviations from the mean. 

You can make your own assessment of whether that is a functionally valid test of worker suitability for remote work. 

Extrapolating Remote Work Trends from Immediate Circumstances is Likely Not Wise

Some of us have been hearing predictions about the growth of remote work (it used to be called telecommuting) for four decades or so. And while there have been secular changes, it is difficult to make a case that anything really has changed the adoption curve of full remote work, even if lots of people take some work home from the office, routinely. The underlying trends are what they are, and might get something of a boost, but that might be hard to detect.

A Gartner survey of 229 human resources leaders finds execs now believe more remote work will be done by their employees, post pandemic. “While 30 percent of employees surveyed worked remotely at least part of the time before the pandemic, Gartner analysis reveals that post-pandemic, 41 percent of employees are likely to work remotely at least some of the time,” said Brian Kropp, Gartner HR practice chief of research. 

What all that means is not yet clear, as the definitions of remote work vary widely. Some of us might consider remote work to be “employees who are based full time at remote or home locations.” 

Others might include employees who work remotely at least half the time. That is a very small number of people, at the moment, perhaps as few as 3.6 percent of the entire workforce, by some estimates. 

The number of U.S. employees working at home 50 percent of the time or more in 2020 is estimated at five million, representing 3.6 percent of the workforce, according to Global Workplace Analytics. And that is after 40 years of evangelization that some of us are personally aware of. 

But most people likely take a broader view of remote work, including some work from home days each week or month. 

In the past, “telecommuting” has generally been thought of as employees working “at home” sometimes--or full time--instead of at the office, campus or plant. That sort of thing might not differ much from workers occasionally or even routinely bringing some work home from the office. 

One way of setting a reasonable universe of potential remote work is to evaluate the total number of jobs that conceivably could be done entirely remotely. By some estimates, only a third of jobs can be done remotely, according to a study conducted by professors Jonathan Dingel and Brent Neiman of the University of Chicago Booth School of Business. 

The study suggests 34 percent of U.S. jobs can plausibly be performed at home. Assuming all occupations involve the same hours of work, these jobs account for 44 percent of all wages. The converse is that 66 percent of jobs cannot plausibly be shifted to “at home” mode. 

If we assume that most people will consider “working from home” sometimes as a valid case of remote work, the universe of jobs appears to be close to 34 percent, looking at jobs that can be completely remote, full time. Using less stringent definitions would produce a higher number, but the value of such estimates might be questionable. 

It is not clear that the actual requirements of remote work, done on a casual or occasional basis, actually include much more than having a smartphone, a PC and adequate internet access at home, plus the standard cloud computing apps typically used in an office. 

More specific computing tasks, requiring sophisticated equipment (robots or industrial or process machinery) are not the sort to be done at home on a casual basis. 

To be sure, some executives will look to reduce spending on office facilities by shifting some work to full remote status, while allowing others to work substantially from home. But technology is not the only issue. Managers must trust that worker productivity remains substantially the same when work moves remotely. 

But recall that similar predictions were made in 2009 when the HiN1 virus outbreak happened. It is by no means clear that some non-linear acceleration of remote work trends happened after that, and was sustainable. 

Long-Term Implications of Extensive Remote Work are Not Yet Clear

The long-term implications of social distancing for the connectivity business are not clear, though arguably better guesses might be made about travel-related industries. The short-term consequences of policies to combat Covid arguably also are far clearer: a significant percentage of small businesses will cease to exist, depressing sales of products to that segment of the market. 

The longer-term impact on connectivity provider revenues might hinge on the perceived advantages or disadvantages of remote work. If employers see no downside--or minimal downside--from remote work, such policies could lead to less connectivity spending at work sites.

That could be balanced by greater spending on remote work products and services of all types, with a shift of usage away from urban centers and towards suburban and exurban areas. 

That redistribution of usage patterns could then also reorient the pace and location of network capacity upgrades, both fixed and mobile, consumer and business. 

The issue is that the long-run productivity of work-from-home policies is yet to be determined, even if the hope is that productivity remains the same as when information workers are based “in the office.” 

Nor can we yet measure the impact of extensive remote work on social capital, "the networks of relationships among people who live and work in a particular society, enabling that society to function effectively".

Social capital matters for firms and societies because it enables the effective functioning of social groups through interpersonal relationships, a shared sense of identity, a shared understanding, shared norms, shared values, trust, cooperation, and reciprocity.  

The point is that we can burn through some social capital for short periods of time, likely without ill effect. Long term if another matter. Social capital has to be recreated, produced or replenished over time. To the extent that full-time remote work does so less well than regular face-to-face relationships, social capital stocks will fall, and so should organizational effectiveness. 

So far, many employers say publicly that productivity has not suffered. Many surveys indicate remote workers believe their productivity has not suffered. But the longer enforced remote work goes on, and the more surveys are taken, it appears productivity in many cases is suffering. 

It is not too early to note at least some differences between groups of workers. Younger workers are more likely to say they have had a hard time feeling motivated to do their work since the coronavirus outbreak started, according to a December 2020 survey by Pew Research. That suggests there is some productivity risk to full-time remote work by significant portions of nearly the entire information worker base. 

source: Pew Research 

Most adults who are teleworking all or most of the time say it has been at least somewhat easy for them to feel motivated to do their work since the pandemic started, Pew notes. But there is a distinct age gap.

About 42 percent of workers ages 18 to 49 say motivation has been difficult for them, compared with only 20 percent of workers 50 and older. The youngest workers are among the most likely to say a lack of motivation has been an impediment for them. About 53 percent of those ages 18 to 29 say it’s been difficult for them to feel motivated to do their work, Pew reports. 

More than 60 percent of remote workers say it has been very easy or somewhat easy for them to feel motivated to do their work. Still, more than 30 percent say this has been difficult. 

To be sure, motivation is not the same thing as productivity. And we might question whether we can accurately measure productivity of information workers. 

source: Pew Research

Also, productivity arguably is different for workers without children. Half of parents with children younger than 18 who are working at home all or most of the time say it’s been difficult for them to be able to get their work done without interruptions since the coronavirus outbreak started. Only 20 percent of workers who don’t have children under 18 say the same.

We do not--at present--fully understand the implications of permanent remote work for connectivity provider business models, much less long-run productivity.

Remote Workers Like It, C Suite Tends to Have Doubts

The general end of remote work at Twitter will be controversial in some quarters, for reasons related to differences of role between the C suite generally and employees generally. By now, mostly everyone who is an “employee” knows why they prefer remote work. Anecdotal evidence suggests that many workers can get “their work” done in far less time than seemingly was required in the past, allowing them more free time for “non-work” activities.

As welcome as “work-life balance” is for employees, C suite executives instinctively question the productivity implications. Leaving aside “control freak bosses who do not trust their employees,” there still is a growing body of evidence suggesting that, in fact, happier at-home workers are not “more productive.” They are just happier. 

Though is is counterintuitive, “happy workers” are not always “more productive.” Unhappy workers can be more productive; happy workers can be less productive or both can be equally productive. The nature of the work often dictates outcomes, not perceived happiness. 

Looking only at engineering output, for example, some studies suggest remote workers are less productive than similar workers “in the office.” 

“A study conducted in 2012 shows those office workers who were assigned boring tasks performed better and faster in the regular office setting. Home-life distractions are more likely to prevent productive work when you don’t enjoy the work,” notes Apollo Technical. 

On the other hand, the same study also found the reverse. More-creative work often were completed faster than “in the office.” 

But what many workers do with the extra time is the issue. Some will argue that if workers complete the minimum-required quantitative outputs, there is no harm. The same amount of work gets done and employees can simply use the extra time as they choose. 

But the same “group norms” hold for remote workers as for workers “in the office.” In other words (those of you who have worked union jobs know this well), there are disincentives for workers to outperform others, as it “makes the others look bad” and also tends to raise output expectations for the entire class of workers.

In other words, expected output levels will rise generally if enough workers in the class start producing at higher levels. That sort of behavior will be peer group discouraged. That will happen in both in office and remote settings. 

Another more recent study states that the more hours an individual works from home, the less productive they become, for the perhaps-obvious reasons that there are more distractions at home: pets, children, housework, household chores and entertainment options.

“Those who worked full time (eight  hours per day) at home are 70 percent less productive than those who don’t work from home,” says Apollo Technical. 

Leaving aside other issues, including the ability to structure self-supervised work effort, productivity, in principle, for some jobs, could be higher when knowledge work that can be conducted individually is performed. 

As a long-timer journalist, analyst and researcher who has worked remotely for 30 years, monitoring work is unnecessary when output can be quantified: so many stories per day, week or month; a major report delivered in three months’ time; a white paper produced by deadline. 

But not all jobs can be evaluated purely quantitatively. How does one measure the “quality” of computer instructions; a painting; a report; a story? But those intangibles exist no matter where the output is produced. 

Since it is nearly impossible--if not completely impossible--to measure knowledge worker and office worker productivity, much of what we think we know consists of opinion. So we really cannot say whether remote work “always” leads to higher productivity. It might just as often lead to lower productivity or equivalent output. 

What we might observe anecdotally is that lots of remote workers like remote work because it leads to “more free time.” They can use that free time to do other things than work. Whether employers have a “right” to expect more is a matter of debate. 

But it already seems clear enough that C-level executives question the productivity impact of widespread remote work. I suspect we would not be having discussions about quiet quitting, and much anecdotal evidence that remote workers get their work done faster, but then use their free time for non-work pursuits, if this were not the case.

How Much of What We See in Remote Work is "Hawthorne Effect?"

 We still actually know very little for certain about how productivity changed because of enforced remote work for knowledge and office workers. The problem is that we cannot measure the productivity of such workers easily, if at all.

Also, there are measurement effects, to the extent that enforced remote work is a bit of an experiment. The Hawthorne Effect is that subjects in an experiment tend to perform better. 

There also are demand characteristics. In experiments, researchers sometimes display subtle clues that let participants know what they are hoping to find. As a result, subjects will alter their behavior to help confirm the experimenter’s hypothesis.

Then there are novelty effects: The novelty can lead to an initial increase in performance and productivity that may eventually level off as an experiment continues.

Performance feedback is similar to the Hawthorne Effect. Increased attention from experimenters tends to boost performance. In the short term, that could lead to an improvement in productivity.

That assumes we can measure knowledge worker or office worker productivity, however. 

The problem with all studies of officer worker or knowledge worker productivity is measurement. What can be counted so we know whether inputs have changed. And how do we measure the output of knowledge work? 

Presumably a call center operation has quantifiable metrics, but most office or knowledge work does not have any obvious and convenient measurement criteria. We commonly measure “time working” with the assumption that additional time worked is better. Maybe. But hours worked is an input metric, not an output metric. It is the denominator, not the numerator. 

Logically, increasing input (denominator) can work to reduce productivity (output) unless output measures also increase faster than inputs increase. 

The other common issue is that we equate worker attitudes with outcomes. Happier workers might, or might not, be more productive. All we can measure is a subjective attitude. More happy or less happy does not necessarily correlate with outcomes. 

In principle, one could have happier but less productive workers; less happy but more productive workers. One would need a way to correlate output and outcomes with feelings in ways that outlive simple Hawthorne effects (people work better when they know they are part of an experiment). 

Work team collaboration might have fared better under full remote work conditions, but there is some evidence that firm-wide collaboration has decreased, though the amount of time spent collaborating (meetings, emails, messaging) has grown.  

Actual output is different from input or collaboration time and effort. It might be difficult to measure “creativity,” but there is some belief that has not done better under conditions of remote work.  

Meetings are inputs, not outputs. Having more meetings, or spending more time in meetings, does not make firms or organizations more productive. A Microsoft survey of 182 senior managers in a range of industries found support for that thesis. 

We might say the same for collaboration during the enforced remote work period. It is common to hear technology business or policy leaders argue that remote work has not harmed productivity. 

Leaving aside the issue of whether remote work productivity changes can be measured, collaboration--deemed by most to be vital for knowledge workers--might have gotten far worse because of Covid. 

People like the freedom to work from home, no question.  

That might have happened despite reports that suggest information, knowledge and office workers now are spending more time with electronic forms of communication. But “communication” is not necessarily “collaboration.”

If collaboration is defined as “people working in teams or with others,” then collaboration seemingly has suffered. 

According to Gensler, “high-performing people at top companies tend to do individual work and collaborative work in equal measures—45 percent each, according to our research--with the remaining 10 percent made up of learning and social time.” 

For better or worse, those balances were changed during the period of enforced work from home policies. “While at home during the pandemic, people reported working in individual focus mode 62 percent of the time and 27 percent in collaboration, a disparity that negatively impacts company creativity and productivity,” Gensler argues. 

Before the pandemic, U.S. workers spent an average of 43 percent of their work weeks collaborating either virtually or in person. That number fell to 27 percent for workers who worked from home in 2020, for example. 

“At the onset of the pandemic, our analysis shows that interactions with our close networks at work increased, while interactions with our distant networks diminished,” say Microsoft research. “This suggests that, as we shifted into lockdowns, we clung to our immediate teams for support and let our broader network fall to the wayside.”

There is a downside: similar companies almost certainly became more siloed than they were before the pandemic. 

“And while interactions with our close networks are still more frequent than they were before the pandemic, the trend shows even these close team interactions have started to diminish over time,” Microsoft researchers say. 

Younger workers (25 or younger) also reported more difficulty feeling engaged or excited about work, getting a word in during meetings, and bringing new ideas to the table when compared to other generations.

“Bumping into people in the office and grabbing lunch together may seem unrelated to the success of the organization, but they’re actually important moments where people get to know one another and build social capital,” says Dr. Nancy Baym, Microsoft senior principal researcher “They build trust, they discover common interests they didn’t know they had, and they spark ideas and conversations.”

Microsoft researchers noticed that “at the office: worker instant messages slowed  25 percent during lunchtime, but remote workers at home reduced IMs by 10 percent. Also, IMs grew by 52 percent between 6 p.m. and midnight, suggesting that at-home remote workers might have been working more total hours than employees in the office.

At-home workers also spent about 10 percent more time in meetings. Those results might be interpreted as either good or bad effects of collaboration. 

Microsoft research also suggests that while collaboration within work teams increased, collaboration outside of the teams, with the rest of Microsoft personnel, decreased.  

The point is that we actually know quite little about potential changes in productivity, especially longer-term impact. In the short term, there is a Hawthorne Effect at work, which would “boost productivity” in the short term.