How Companies Benefit When Employees Work Remotely

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    Companies that let their workers decide where and when to do their jobs—whether in another city or in the middle of the night—increase employee productivity, reduce turnover, and lower organizational costs, new research suggests.

    Prithwiraj Choudhury, an associate professor in the Technology and Operations Management Unit at Harvard Business School, and fellow researchers compared the outcomes of flexible work arrangements at the US Patent and Trademark Office (USPTO). The team found that employees with liberal “work from anywhere” arrangements, similar to those offered at Akamai, NASA, and Github, among others, were 4.4 percent more productive than those following a more traditional “work-from-home” policy that gives schedule flexibility but requires workers to live near the office.

    “While prior academic research has studied productivity effects of ‘working from home’ that gives workers temporal flexibility, ‘work from anywhere’ goes a step further and provides both temporal and geographic flexibility,” says Choudhury, who co-authored the paper, (Live and) Work from Anywhere: Geographic Flexibility and Productivity Effects at the United States Patent Office (pdf), with HBS doctoral student Cirrus Foroughi and Barbara Larson, executive professor of management at Northeastern University.

    While digital technology has made workers more efficient and accessible than ever before, many companies have been slow to let employees work from home regularly, let alone from anywhere at any time. The study’s findings can help firms understand the effects of various flex-work options, and support certain types of employees as they negotiate with employers. Choudhury says the results have important implications for workers, who could potentially move to lower-cost areas, reduce commuting costs, and live closer to family and friends.

    Isolating the benefits of remote work

    To study the productivity effects of work-from-anywhere policies, Choudhury looked for a setting that would allow the researchers to isolate productivity changes among workers with similar job functions under different remote-work conditions. The USPTO provided the perfect opportunity.

    Seeking to increase efficiency, the agency implemented the Telework Enhancement Act Pilot Program (TEAPP) in 2012. The program transitioned patent examiners to a work-from-anywhere policy over 24 months, shifting new examiners each month based on union-negotiated quotas. This implementation process enabled Choudhury and his co-authors to avoid what is known as the selection problem in social science research.

    “The concern is that there is some underlying characteristic of people that is driving whether one wants to become a remote worker, and that characteristic is also correlated to productivity,” explains Choudhury.

    Prior to TEAPP, examiners could work from home as long as they were within 50 miles of the USPTO headquarters in Alexandria, Virginia, but they had to report to the office once a week. The agency eventually allowed them to work beyond 50 miles away, but still required weekly trips to the office. TEAPP provided full autonomy.

    Choudhury and his coauthors compared 600 examiners’ productivity under these various conditions. While working remotely, productivity increased among all examiners and continued to rise with each step toward the full work-from-anywhere policy, the researchers found. Productivity increased 4.4 percent when employees moved from working at home on a limited basis to the location of their choice. Based on a patent’s average value, this productivity gain could add $1.3 billion of value to the US economy each year, the researchers estimate.

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