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. 

Size of Remote Work Markets Depends on How You Define It

More people are working at home, and have been since 1980. Some believe those trends will accelerate in the wake of the Covid-19 pandemic. But it is hard to pinpoint the lasting impact of episodic events when the underlying trends already were in motion. One substantial driver is the number of home-based businesses (the self employed). 

The other figure is the number of employees of firms who work remotely, full time, half time or only episodically. Both have grown since 1980, but it is not always clear whether a home-based business qualifies as remote work, when we try and quantify the impact of employees working from their homes. 

One study found that there are 6.6 million home-based businesses in the United States, employing more than 13 million people nationwide, in 2008. If there were 120 million full-time employees in 2008, then the self-employed and working from home workforce was itself about 11 percent of the total base of full-time employed people. 

So one to two percent of remote workers would not at all be surprising. One has to exclude all home-based businesses from the statistics to get a picture of what amount of employees actually work from home, full time. 

In 2017, three percent of full-time U.S. workers answered that they primarily “worked at home,” according to the Federal Reserve Bank. More casual work from home--a few days a month--also increased. Self-employed people were quite commonly working full time from home. 

The Federal Highway Administration’s 2017 National Household Travel Survey (NHTS), found that an additional seven percent of full-time workers telecommuted four days or more per month.

source: Federal Reserve Bank

Over time, the number of people working from home has slowly grown. The percentage of all workers who worked at least one day at home each week increased from seven percent in 1997 to 9.5 percent in 2010, according to the U.S. Census. That is growth of 2.5 percent over about 13 years. 

During this same time period, the population working exclusively from home increased from 4.8 percent of all workers to 6.6 percent. Keep in mind, though, that “nearly half of home-based workers were self-employed, the Census Bureau reported. 

Adjusting for that fact, the percentage of employees working full time at home was 3.3 percent. 

The population working both at home and at another location increased from 2.2 percent in 1997 to 2.8 percent of all workers, in 2010. That is 0.6 percent over a 13-year period. 

The percentage of workers who worked the majority of the workweek at home increased from 3.6 percent to 4.3 percent of the population between 2005 and 2010.

About one-fourth of home-based workers were in management, business, and financial occupations, while home-based work in computer, engineering, and science occupations increased by 69 percent between 2000 and 2010.

source: U.S. Census

As always, definitions and assumptions matter when making predictions. One can cite big number for remote work, if one includes people who work from home once a week or a few days a month. One gets smaller numbers if only counting people who do so half time or full time. 

And one almost has to eliminate home-based businesses run by the self-employed entirely. They absolutely matter when looking at markets and activities related to work from home. They might not count for remote work conducted away from a home office or other company site.

No "New Normal" for 5G Searches

One frequently hears these days that a “new normal” has been created by the Covid-19 pandemic; that “nothing will be the same” afterwards. That is not to deny either a “temporary” change in behavior nor a step change in many aspects of life and business, where it comes to underlying trends. 

We incontestably are behaving in different ways, partly the result of government mandates which are expected to be temporary. What happens after the pandemic is the issue. We should certainly expect a reversion to mean. Whatever trends were in place before the pandemic will reassert themselves, albeit from a higher level in many cases.

But that might not mean the rate of change changes very much. In fact, one might argue we already have seen this. This is a graph of Google searches for “5G.” Note the spike. That happened in March 2020 as many U.S. locations went into work-from-home and stay-home-from-school rules. 

We have to guess at why the surge in searches happened, then so quickly receded, but a reasonable guess is that people were looking for remote work support solutions. But the spike only lasted from the end of March to mid-April. Then interest backed off to levels higher than before, but on the prior trend line. 

As hard as it might be to envision, that is likely to happen with many business, economic and personal trends, post-pandemic, and after a few years. Consider “remote work.”

In the midst of the Covid-19 pandemic, statistics on remote work are impressive enough to convince many observers that a fundamental and permanent shift has been made. We will know in five years whether that is an accurate assessment, but we also have to remember that “remote work” includes many disparate activities, many of which do not substantially affect the amount of time people actually spend at work places. 

Work from home statistics often include actions such as “taking home some work from the office” (ranging from reading documents to correspondence management), working while traveling on business, unscheduled and episodic work from home, routine and planned work from home as well as permanent, full-time remote office or at-home workspaces.

Long-term trends in office space requirements, for example, typically depend on the amount of full-time, permanent basing at home locations, as well as permanent work-at-home for days per week or month. 

One issue is how many jobs theoretically could be done entirely from home. “We estimate that 56 percent of the U.S. workforce holds a job that is compatible (at least partially) with remote work,” say researchers at Global Workplace Analytics. That noted, pre-Covid-19, “only 3.6 percent of the employee workforce works at home half-time or more, the firm notes. 

Using every definition of work from home, including casual “take work home with you,” Gallup data from 2016 shows that 43 percent of the workforce works at home at least some of the time. So much hinges on the shift of the workforce to work from home at least 50 percent of the time.

 source: Global Workplace Analytics

Will We Really See a Change in Growth Rate for Work from Home?

Most observers seem certain that work from home trends will get a permanent boost from Covid-19 experiences. The only real question is how big a change might occur, as WFH has slowly been growing for decades. As with other trends, the pandemic might accelerate an ongoing trend. The magnitude is the issue. 

Remote work is  distinct from “work from home full time,” has a few meanings. It can refer to those full-time employees of a company who telecommute, rather than work on site.  It includes organization employees who work from home at least some of the time, travel for work or bring work home. 

But it also includes home-based workers. Those are very different use cases. 

By some estimates, as much as 17 percent of workers  essentially are full time WFH. In other cases, including those who telecommute a few times a month, the percentage of workers doing WFH is as low as five to six percent. 

But if you count traveling employees who sometimes work outside the office, possibly 63 percent of all workers sometimes work from outside the office. 

source: SlideModel

But many jobs cannot be performed at home, and that might include as much as 63 percent of all U.S. jobs, for example. To that one might add work done by home-based businesses. 

“According to the 2018 American Time Use Survey, less than a quarter of all full-time workers work at all from home on an average day, and even those workers typically spend well less than half of their working hours at home,” say economists Jonathan Dingel and Brent Nieman. 

Doubtless all the types of remote work, telecommuting and work from home will get an extra boost after the pandemic. The issue is whether the growth curve changes enough to notice. Many suppliers who benefit from WFH hope so.

But lots of changes are fairly short lived, as business and consumer behavior might suggest after the internet bubble burst and Great Recession of 2008. Lasting impact can be hard to spot, as prior trends simply reasserted themselves.

Productivity Likely is Lower as Huge Numbers of Employees Work from Home

About 34 percent of work-from-home employees report they are getting less done while working from home, while 25 percent said they were getting more done, a survey by Waveform finds. 

source: Waveform

Those are self-reported outcomes, and might not be entirely accurate, but the reports are congruent with at least some other reports of lower productivity as huge numbers of workers are forced to work from home. 

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. 

source: Aternity

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. 

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.

Is Remote Work Really "As Productive as in the Office?"

Microsoft CEO Satya Nadella might be among business leaders who are not so convinced work from home is as productive as in-office work. "Thirty minutes into your first video meeting in the morning, because of the concentration one needs to have in video, you are fatigued."

Granted, knowledge worker or information worker productivity is tough--perhaps nearly impossible-- to measure. But at least some believe mandatory work from home rules have hurt information worker productivity.

Aternity, for example, has aggregated usage details from millions of employee devices from over 500 Global 2000 companies, tracking use of business applications from home. Aternity analysis suggests that the United States has become less productive due to remote work because of the pandemic. 

At the end of March, 77 percent of work had been moved to be performed remotely in North America, the largest amount of any continent. 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. 

Those same trends continued through July 2020, Aternity says. “The main takeaway from Aternity’s latest data is that a ‘productivity tax’ is affecting enterprises deploying long-term remote work strategies,” Aternity says. “In countries where the remote work share remains at peak levels, including the United States and parts of Europe, employee productivity continues to fall.”

source: Aternity 

“In comparison, overall productivity is rising in European countries where the share of in-office work is increasing, showing that returns to the office are benefiting companies from an overall productivity standpoint,” Aternity says. 

The early data from the work-from-home change is not encouraging for productivity, say professors  Jonathan Dingel and Brent Neiman of the University of Chicago Booth School of Business. They suggest 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.

Also, 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. 

Nadella also notes that fully remote work is harder on new employees, as it is harder to form new work relationships and learn the new company culture when working fully remotely. As others have noted, all the issues about learning from mentors and acquiring new skills is a huge issue as well in a work-from-home environment. 

To be sure, many employees like working from home part of the time, and report that they believe their productivity is higher. Still, significant percentages already report that they believe they are less productive working from home. 

The conventional wisdom is that work patterns will be more flexible after the pandemic. What also seems clear is that the value of being in the office will re-emerge, as it seems clear that mode offers advantages for firms in terms of random and unplanned interactions, new employee onboarding and career development. 

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. 

How Much Work from Home is Permanent? What is Productivity Impact?

Virtually everyone seems to believe that work patterns will be more varied, once the Covid-19 pandemic has passed. What is somewhat unclear is how much the patterns will change, on a permanent basis. Complicating matters, it is not clear how remote work affects productivity. 

Some 15 percent of executives surveyed by McKinsey believe at least one-tenth of their employees could work remotely two or more days a week going forward, almost double the eight percent of respondents who expressed that intention before COVID-19. 

That includes 20 percent of executives surveyed in the United Kingdom and Germany. But only only four percent of respondents in China thought that would be the case. Only seven percent of respondents believed at least one-tenth of their employees could work three or more days a week remotely, McKinsey reports. 

Also, potential for remote work is highly concentrated in a handful of sectors, such as information and technology, finance, insurance and management, McKinsey notes. Some 34 percent of respondents from the information and technology sector said they expect to have at least 10 percent of their employees working remotely for at least two days a week after COVID-19, compared with 22 percent of executives from that sector surveyed before the pandemic, for example. 

There is some debate about whether remote work is less productive or not. Nor is it easy to figure out what and how to measure. Output is the logical metric, but output is a fuzzy concept for most information workers. That leaves us with input measures, which may or may not be relevant to output. 

Still, the long-term trend towards more flexible work patterns is likely to get a tangible and mostly sustainable boost from pandemic work-from-home experiences. That said, there are substantial differences between casual work from home, telecommuting and routine work from home, either full-time or part-time. 

Subjective employee impressions about their own productivity when working from home have to be taken cautiously. People might believe they are “more productive” when working from home, but that does not mean they actually are, even if we can agree on how to measure office worker or knowledge worker productivity. 

So far, results seem inconclusive. Aternity reports that "workers are getting less productive the longer the remote work shift continues." 

GitLab reports that many workers feel more productive working from home. "Employees find themselves to be overall more productive (52 per cent) and efficient (48 per cent)," GitLab says.

Is Work from Home Really "More" Productive, or "Less?" How Can We Even Tell?

Though many employees express a desire to continue working from home permanently, even after there is no Covid-19 reason to do so, it also seems clear that work from home fatigue is setting in. That might also be accompanied by the end of the initial period where firms claimed that productivity had not been affected.

A survey of 365 U.S. workers by The Manifest found that 30 percent of respondents think they are more productive working from home. Fully 45 percent believe they are more productive working in an office, and 24 percent say they’re equally productive working from home and in an office. Keep in mind those are examples of what people think about their productivity. It is not an actual measure of whether they are, or are not, more productive in home or office settings. 

source: Agility PR 

Some have argued that even if productivity can be sustained for a brief period, it might well not sustain itself over the long term. A survey of the heads of nearly 50 U.S. businesses employing 443,895 people in industries that include technology, legal services, advertising and the finance, insurance and real estate sector found that 40 percent of them have started to see decreases in productivity as staff work remotely. 

To be sure, Vocon is in the office design firm, with a vested interest in continued office work. But it should always have been clear that emergency, short term workarounds during the mandatory work from home period would eventually begin to test whether productivity actually could be sustained. 

Most of us can sustain productivity for short periods of time. What never is so clear is whether we can do so if a long-term disruption happens. 

J.P. Morgan also seems concerned that WFH productivity is slipping, while others note growing evidence of mental health issues caused by enforced WFH. 

At least, that might be true for the 25 percent of workers who can work from home.  

Also, there is a growing sense among professionals that WFH is hurting their career progression. Others might point out that WFH has positives and negatives, not including burn out or work-life balance, even if WFH once was viewed as a perk.   

“Effective leadership is all about presence and persuasion,” says Bob Fisch, Specialty apparel retailing pioneer. “The best mentoring happens close-up, with a senior executive encouraging a younger associate, and with the associate embracing the unique opportunity to offer the leader her own perspective.”

“It is that irreplaceable intimate element of mutual mentoring that is lost outside the office,” Fisch says. 

The percentage of those indicating they would like to continue to work remotely at least occasionally declined from more than 80 percent in July to 67 percent in August in the United States, according to the IBM Institute for Business Value. The percentage of respondents who say they would like this to be their primary way of working dropped from 65 percent in July 2020 to just 50 percent in August 2020.  

Information worker productivity is notoriously hard to measure, as output itself is intangible. So key performance indicators might not even be possible. Quantifiable measures such as “emails sent and received” might not measure anything of true importance. 

In fact, even outcome measurements might be more valid than output measures. A policy paper might be the output of a person or team. But its value comes if there is a policy outcome. It might therefore seem obvious that tracking qualitative inputs (subjects interviewed, hours spent interviewing, number of interviews and so forth might be nearly irrelevant. 

Output is what people do; outcome is what they achieve. In other words, for knowledge workers, input measures are generally unhelpful. But even output metrics might not be germane. Only outcomes might really matter.