"Who Benefits?" Shapes Work-From-Home Debate

Debates about “work from home” often give the impression that “full time” WFH is rather widespread. In one sense, it is common. Up to 40 percent of the U.S. workforce (employed full-time) works at least part of the time from home, or out of the office. 

But “WFH” does not equate to “works full time from home.” That remains rather rare. When researchers study WFH, they need a functional definition: does it mean “100 percent from home or some percentage from home? As a practical matter, researchers tend to go with a definition that includes in the WFH number employees who, by company policy, can work two to three days from home, the balance in the office or at the job site. 

source: WFH Research 

Ignoring for the moment the issue of whether productivity is higher, the same, or lower, when WFH policies are in place; as well as subjective beliefs about the matter on the part of managers or employees, there are measurable outcomes not related to productivity. 

To the extent that employees require some amount of office space, WFH can reduce firm needs for real estate. WFH can lead to employee benefit and cost savings when WFH enables hiring of workers from anywhere in the world. 

If one believes that happier workers are more productive workers, when WFH, to the extent it leads to “happier” workers, might be valued irrespective of whether such policies can be shown to boost productivity for firms. 

WFH probably often boosts worker productivity, who then will divert extra time to non-firm activities. If one believes knowledge or office work can be measured, it is possible that WFH is more “productive,” in the sense that workers can get their expected workloads accomplished in less time. 

But the firm might not reap the rewards of “extra time,” as workers consume that time for their personal use, rather than using the time to produce more work for their employers. As with so much of life, “who benefits?” is the issue.

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 Winners and Losers?

Most technologies are complementary to others. We have a need for transportation, but many modes to fulfill that need. 

But one can always get a vigorous debate about the degree to which conferencing platforms can permanently replace face-to-face interactions. Nearly two thirds of all current jobs cannot be done remotely, a study by the U.S. National Bureau of Labor Statistics estimates. Other studies also estimate that about 34 percent of jobs could be done entirely from home. 

That probably is not the point. Most people seem to agree that information and office workers will continue to do some work from home, some of the time, and likely more in the future than they have in the past. A related issue for firms and organizations is the degree to which conferencing can permanently replace travel and face-to-face meetings.

It might be fair to note that “Zoom fatigue” reflects the preferred communications methods workers express. A study sponsored by Adobe found that in-person communications by far tops videoconferencing, by about a 28:1 margin. 

That arguably is most important in new business relationships, where establishing trust is essential, and less important for internal company or organization meetings where relationships are well established. 

source: Adobe

We do not know the answer to the question of how effective remote work will be, in the future, compared to older patterns.

Many are optimistic about permanently changed work patterns, where many people spend more time working from home; less in the office. As always, there are likely to be winners and losers, as there always are whenever decisions are made. 

Based on prior research, it might be argued that younger workers, earlier in their career, are at greater risk than more-established workers.  “We argue that face time helps employees to receive better work and leads to career advancement,” researchers said in a 2018 study. 

“When employees are geographically distributed from managers who control the assignment of work, they are often unable to display face time,” and that can inhibit career progress, researchers say. To be sure, some might argue that videoconferencing is a form of “face time.” 

“Employees who work remotely may end up getting lower performance evaluations, smaller raises and fewer promotions than their colleagues in the office, even if they work just as hard and just as long,” said researchers Kimberly Elsbach and Daniel Cable. 

“Companies rarely promote people into leadership roles who haven’t been consistently seen and measured,” Jack and Suzy Welch have argued. “It’s a familiarity thing, and it’s a trust thing.”

“We’re not saying that the people who get promoted are stars during every ‘crucible’ moment at the office, but at least they’re present and accounted for,” the Welches say. 

To the extent that work from home becomes a full-time pattern for many workers, we should expect to see winners and losers. Younger workers and new hires might fare less well than more-established or older workers.

How Much Post-Covid Change Will Businesses Achieve?

One often hears it said these days that one impact of Covid-19 on organizations and firms is that it will cause permanent changes in the ways businesses and organizations work. Most of those changes, though--agility, reaction speed, cost reduction, productivity changes, customer focus, innovation, operational resiliency, growth, financial performance, for example--were important organizational objectives before the Covid-19 pandemic. 

Even remote work on a full-time, part-time or episodic basis is a trend decades old, if many believe the difference is that a large percentage of information workers will shift to permanent remote work settings, and a larger number of observers might agree that many information workers will routinely work more often from home. 

One might note that very few of the key changes executives now say they have--because of their experience with the pandemic--can be addressed directly by better or more use of communications services. A recent survey by McKinsey found that “speed” was the driver of organizational changes related to Covid-19. 

source: McKinsey

What is not so clear is how much actual change has been accomplished, as organizational change normally is very difficult and also takes a long time. Consider the extensive changes needed to increase speed and agility.

Organizational silos, slow decision making, and lack of strategic clarity, for example, are impediments to speed. But do you really believe that big firms have been about to abolish silos, speed up decision  making and gain new strategic clarity in a few months' time?

Big barriers exist for real reasons. If they were easy problems they would have been fixed long ago. Few would doubt that executives say these long-standing issues are being addressed. But also, few of us might believe real progress is being made, fast. 

source: McKinsey

Rigid policies and formal hierarchy also are cited as impediments to speed. Have you heard of massive reductions of top level and mid-level management over the past few months?

Or consider the impressionistic claims some might make. “Higher meeting attendance and timeliness” resulted in faster decisions,” one survey respondent says. Do you really believe that? More people in meetings produced faster decisions? Much of the literature specifically argues that more people in meetings. reduces decision-making ability. 

It might be fair to hypothesize that meetings, as such, have had no discernible impact. Does anybody really believe holding more meetings improves output? In fact, there is evidence tot he contrary: more meetings mean less time for getting the actual work done. 

A team of researchers said this: “We surveyed 182 senior managers in a range of industries.  65 percent said meetings keep them from completing their own work. 71 percent said meetings are unproductive and inefficient. 64 percent said meetings come at the expense of deep thinking. 62 percent said meetings miss opportunities to bring the team closer together.”

Another leader notes that “communication between employees and executives has become more frequent and transparent, and as such, messages are traveling much more efficiently” through the organization. 

There already are signs of what might be called collaborative overload. “In most cases, 20 percent to 35 percent of value-added collaborations come from only three percent to five percent of employees. 

Colloquially, that proves the truth of the observation that “if you want something done, give it to a busy person.” The practical observation is that the highest performers are besieged with the greatest amount of demand for time spent in meetings and on work teams. At some point, the danger is that these high performers simply get asked to do too much, reducing their overall contributions and effectiveness. 

source: Harvard Business Review

Not to belabor the point, but value--assuming the insight is correct--can be gleaned by having many fewer people in meetings. 

Nor, for that matter, is it entirely clear how greater numbers of  team members working remotely actually addresses any of those aforementioned issues. Some changes could materially impact performance in a positive way. But the issue is how remote work, for example, materially abolishes silos, speeds up decision making, produces strategic clarity, abolishes rigid policies or reduces hierarchy. 

Some will argue that “employees like it.” The more accurate statement could be that “some employees prefer work from home, and some do not prefer it.” But productivity is not a matter of what people believe. It is a matter of fact, to the extent we can measure it. 

Productivity. is often hard to measure--perhaps almost impossible for information workers--and employees claiming they are productive does not make it so. Also, what we can measure might not actually correlate well with actual output. Quantity is not quality, in other words. Innovative ideas and creativity might not be measurable at all, except by reputation. 

Productivity measurements in non-industrial settings are difficult, as it often is difficult to come up with meaningful quantitative measurements that provide insight. We might all agree that not all tasks create the same value for any organization. Productivity can be described as the relationship between input and output, but “output” is tough to measure. 

And what can be measured might not be relevant. 

Even some who argue work from home productivity is just as high as “in the office” note that work from home productivity is only one percent lower than in the workplace.  

Some argue productivity now is higher or equal to productivity when most people were in offices. Some of us would argue we do not yet have enough data to evaluate such claims or evaluate the sustainable productivity gains. It is one thing when all competitors in a market are forced to have their work forces work from home.

It will be quite something else when WFH is a business choice, not an enforced requirement. As might be colloquially said, widespread WFH will last about as long as it takes for a key competitor not working that way begins to take market share. 

Not to deny that post-pandemic, some firms will find meaningful ways to restructure business processes to gain agility, productivity and speed, but the actual gains will be slower to realize than many expect, as organizational resistance to such changes will be significant. Resistance to change is a major fact of organizational life. 

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. 

74% Happy with Fiber to Home Access

Overall satisfaction among fiber-to-the-home (FTTH) subscribers reached a new high in 2011, with 74 percent stating they are "very satisfied" in a new study conducted by the FTTH Council. This compares favorably to customer satisfaction for cable users at 54 percent and 51 percent for DSL. Perhaps the only surprise is that "only" 74 percent were "very satisfied." Read more here.

The study also indicates that 54 percent of cable modem subscribers are "very satisfied," while 51 percent of digital subscriber line customers are "very satisfied." Read more.

The study further estimates there are about 162,500 U.S. subscribers buying broadband access at 50 Mbps, and about 69,700 buying services at 100 Mbps. One would suspect that most of those users are "business" users rather than consumer users. One possible hint about that pattern is that 67 percent of users with 50 Mbps connections say they "ever work from home." About 30 percent of all FTTH users say they "ever work from home." 

One might guess that 67 percent of 50 Mbps users say they "work from home" because they use connections subsidized by their employers. Only about

22 percent of users of 50 Mbps services (or higher) say they have "home-based" businesses. About 12 percent of all FTTH subscribers say they operate a home-based business. The take-away is that most at-home 50 Mbps connections are not supporting a home-based business.

The survey of more than 2,000 broadband subscribers, drawn randomly from a nationally balanced panel of more than 3.2 million consumers by the market research firm RVA LLC also found that overall satisfaction among FTTH users continues to lead that of other broadband subscribers, with those answering "very satisfied" at 74 percent - up from 71 percent a year ago - compared to 54 percent for cable users and 51 percent for DSL.

As of April 2011, fiber to the home services were available to more than 18 percent of North American homes and were connected to more than seven million of them. RVA estimates that there are now 170,000 North American households receiving FTTH service with connection speeds of at least 100 megabits per second, and a total of 347,000 receiving 50 Mbps service. Both of these figures were more than double those from last year's survey report.

With regard to cost of service relative to download connection speed, the RVA survey results showed FTTH subscribers paying $2.91 a month per megabit of bandwidth, compared to $3.83 for cable subscribers, $16.40 for DSL, and $49.38 per megabit for fixed wireless services.

Post-Pandemic Connectivity Revenue Assumptions Might Change

Many would note that the economic stress created by government shutdown of large portions of the economy, and other public health safety measures, have damaged small business and helped big business. To be sure, those trends were already in place, but were magnified by the government response to the pandemic. 

That impact should be seen in many areas of the communications business as well, where other pressures--especially the growth of competition--were in place even before the pandemic. 

Bharti Airtel, long one of India’s largest mobile service providers, says it has survived several near-death experiences. After three or four crises, Airtel now operates in a market with “2.5 providers.” Just several years ago, Airtel operated in a market with about 10 competitors. 

Big companies with scale are likely to emerge, post pandemic, with more market share than they had going into the crisis, while many smaller businesses will have ceased to exist. Consolidation, of course, is not new in the connectivity business. But the pandemic arguably has nudged the process a bit. 

None of that is going to stop researchers from predicting post-pandemic growth. But markets likely will have been reshaped. 

To look only at the hospitality segment, estimates of restaurant bankruptcies and closures ranging from 30 percent to 60 percent in some countries and areas, the base of potential customers for connectivity services is going to drop. 

Other small and independent retailers likely will face similar pressures, as more market share will shift to giant online retailers and chains. So we will have to be more nuanced in our reading of “growth” forecasts. A return to growth will happen, but on a base of establishments that might be permanently lower. 

source: Analysys Mason 

Unknown at this point is the effect on enterprise connectivity spending as hybrid work patterns are established. Most believe large enterprises will need less office space than in the past, as fewer people will be congregating at such sites. 

That might soften direct enterprise connectivity spending at sites. The impact on employees working from home is not clear, either. Most information workers pay for broadband and mobility service for other reasons than work, and those existing connections can be used for work-from-home purposes, generally with little increased cost, if any. 

So long-term impact on connectivity provider revenues is not clear. Direct demand might be lower in urban areas for a couple of reasons. Firms will downsize. Fewer people will work at offices full time, with ripple effects on other businesses in those areas. 

With fewer people commuting to urban areas, mobile-related behavior will change as well, generally in the direction of less usage while traveling. Less business travel is expected, slowing the growth of roaming revenue. 

Arguably, more international communications will use over-the-top apps and services that limit the growth of carrier revenues from international long distance or messaging. 

Though more people will be working from home, more of the time, the whole point of multi-purpose networks and internet-based services is that the additional work-related bandwidth or capacity might not be very relevant. 

Most consumer bandwidth supports entertainment video, so all work-related additional load will barely be noticed. 

Service providers will have to watch--and adjust--capacity investments. Less capital investment growth will be needed in urban cores, as demand will moderate. In suburban areas, there is likely to be more demand for upstream bandwidth, however. 

Perhaps oddly, in some markets suppliers are pushing “unlimited data usage” plans precisely at the point that work-from-home trends make the value less obvious. More WFH means less bandwidth consumption when out of the home. In the home mobility usage will shift to Wi-Fi instead. 

But bandwidth demand is largely driven by entertainment video, not WFH demands, which are relatively low bandwidth, in comparison. 

The point is that prior assumptions about revenue and growth might have to be revised in light of relatively important shifts in end user connectivity demand.