Are Remote Companies Less Productive?

5 minutes, 5 links


Updated March 23, 2023

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Concerns about productivity used to be one of the foremost roadblocks for companies considering supporting remote work. Anecdotally, we’re seeing this decrease somewhat in the list of worries for companies; but for many it’s still not a foregone conclusion that remote work means individuals or teams will be more productive.* Despite that, improved productivity (typically expressed as a lack of interruptions) continues to be one of the main reasons remote employees prefer working outside an office.*

cautionBut despite what a quick Google search will tell you, there’s not a lot of concrete data on whether remote work is really a win-win situation for employees and companies. There’s an endless supply of blog posts telling you that “remote workers are more productive,” but if you dig in, nearly all of them are either:

  1. Reciting results from surveys of remote employees, who are providing anecdotal, self-reported estimates of whether they are more productive when working outside an office.

  2. Referring to one of two academic, objective studies of remote worker productivity.*

On the first point, let’s be clear: there’s nothing inherently wrong with self-reported measures in surveys. The overwhelming directional nature of those results clearly suggests that individual remote workers feel, and likely are, individually more productive. But when it comes to a company’s perspective, there’s a difference between individual productivity and team or organizational productivity. And the latter matters.

Those two academic studies did find that companies were more productive when they started letting people work remotely: A 2013 study on a 16,000-person Chinese travel agency found a 22% increase in productivity when employees could choose to work from home.* But a closer look at the results uncovers a key contributor of that apparent productivity increase: on average, the at-home travel bookers worked more hours overall compared to their in-office colleagues.

…the performance of the home workers went up dramatically, increasing by 13% over the nine months of the experiment. This improvement came mainly from a 9% increase in the number of minutes they worked during their shifts (i.e. the time they were logged in to take calls). This was due to a reduction in breaks and sick-days taken by the home workers. The remaining 4% improvement came from home workers increasing the number of calls per minute worked.*

importantDoing more over the course of more hours isn’t necessarily better productivity: it’s just working more. And in the case of the at-home travel bookers, this happened at the expense of taking breaks or sick days (it’s not reported if people worked through sick days due to being home or not). A true increase in productivity would be doing more in the same amount of time (or even better, in less time)—the study above found this to be the case for only 4% of the reported productivity improvement.

A 2018 study of flexible work arrangements at the U.S. Patent Office found a 3.9% increase in productivity.* While these numbers are promising, they don’t necessarily tell us much about what to expect from companies primarily employing remote knowledge workers who are tackling complex problems. Booking travel and approving patents are both tasks that can largely be done independently and without a lot of collaboration with colleagues. They’re well scoped, with clear, measurable outcomes (for example, number of bookings made per hour or patents processed per day/week/month). This also made them ideal processes for study via more traditional research methods, whereas it might be harder to define “productivity” for a technology company trying to invent a completely new product.

It’s also worth noting that the patent office study found a drop-off in productivity gains for less experienced employees, likely due to not having direct access to more experienced colleagues. This has organizational implications we discuss in Hiring Junior Remote Employees.

importantThe bottom line is: we really don’t know enough about remote team productivity. The commonly cited studies are barely applicable to collaborative work amongst teams of knowledge workers, and everything else is anecdotal. Remote companies that depend on knowledge work haven’t been around long enough to draw productivity comparisons, and it is difficult to measure productivity in knowledge work on the whole. We only know that these teams face challenges in communication, collaboration, and management that could impact productivity if not taken seriously and tackled with intention.

When it comes to productivity, you need double the process for half the team size. So for ten people, a company needs twenty people’s worth of process. You need a significant amount of investment in process and documentation. I suspect there’s about an overall 30% productivity hit for remote companies.Hiten Shah, co-founder and CEO, FYI*

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