COVID-19 and HR Practices: Does Working from Home Work? Evidence from Research
Updated: Mar 26, 2020
The Coronavirus pandemic has made many of us get first-hand experience with remote work. Are you more or less productive when working from home? As COVID-19 has simultaneously changed other aspects of the everyday life, we might find it now difficult to judge.
Yet, several years ago, economists from Stanford University conducted a field experiment to determine the causal impact of working from home on worker performance. The experiment took place in Shanghai, in China's largest travel agency Ctrip. The management was interested in allowing its call center employees to work from home to save on office rental costs and to reduce employees’ long commutes, but at the same time was concerned with possible adverse effects due to the lack of direct supervision. Therefore, before rolling out the policy, the management agreed to test its efficacy in a randomized controlled trial.
First, the company selected a group of employees who were interested in and technically prepared for working from home. Second, half of these employees were randomly selected in the treatment group and consequently worked from home for a period of nine months, while another half represented the control group and worked from the office. Importantly, employees from both groups faced the same tasks, workflow and compensation, the only difference between them being the location of work.
The performance of the home workers went up dramatically, increasing by 13% over the nine months of the experiment. This improvement came from a 9% increase in the number of minutes they worked during their shifts. Another 4% improvement came from home workers being more productive and increasing the number of calls per minute worked. At the same time, the researchers did not find evidence for lower work quality of home employees, nor for the drop in performance of the control group.
Attrition fell sharply among the home workers, dropping by 50% versus the control group. Home workers also reported substantially higher work satisfaction and expressed more positive attitudes towards work. Yet, conditional on performance, working from home was associated with reduced rates of promotion of about 50%.
The firm improved total factor productivity by between 20% to 30% and saved about $2,000 a year per employee working from home. This led Ctrip to offer the option to work from home to the entire firm. It also allowed members of the treatment and control groups to reselect their working arrangements. Surprisingly, half of the treatment group returned to the office—especially those who had performed relatively badly at home, but also ones who found the lack of social contact particularly costly.
Reference: Bloom et al. Does Working from Home Work? Evidence from a Chinese Experiment. The Quarterly Journal of Economics (2015), 165–218. doi:10.1093/qje/qju032.
See the summary of the paper "Why Working from Home Is a ‘Future-Looking Technology"
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