Dan Richards is a serial founder and former public company CEO, and an award-winning member of the marketing faculty at the Rotman School of Management, where he oversees the credit course associated with MBA student internships.
One of the legacies of the pandemic was a shift to greater work from home in many workplaces. But recent events have raised a question of whether we’ll revert to prepandemic norms. Last week’s memo by Amazon’s chief executive officer Andy Jassy that it was mandating full-time return to office put work-from-home policy on the front pages. And a KPMG survey of 400 U.S. CEOs saw almost 80 per cent predict that they would be back to 100-per-cent work-from-office within three years.
Given that the great American and Canadian work-from-home experiment began four and a half years ago, it’s worth examining what we’ve learned about the impact of remote either all the time or most of the time, both to companies and employees. Note that Europe and Asia have typically been back to the office for a couple of years, because of shorter commutes and significantly smaller residences.
The benefits of work from home for companies
- Companies that have gone 100-per-cent virtual see significant savings on office space
- Founders of fully remote startups tell me they can tap into top talent regardless of geography, whether developers in India or additions to the management team from the United States or other parts of Canada
- Employees who value work-from-home flexibility are easier to attract and less likely to leave
- Company leadership can work from cottages and experience more flexibility in their own personal schedules
The benefits of work from home for employees
- Greater flexibility: The flexibility of working from home can be a big boon and not just in allowing working parents to better co-ordinate child care. A Forbes Advisor report showed that the top benefit of working from home is flexible hours and the greater work-life balance that results.
- Lower stress: For employees facing a long commute, work from home eliminates the highest stress part of the day and gives them the gift of hours that would have been spent on the road.
- Saving money on commuting and lunches: Some employees report savings of thousands of dollars a year in commuting and costly lunches. One former student described pushback at her company in response to a three-day-a-week return-to-office requirement. One message on the company Slack channel: “With work from home, the company gave me a 10-per-cent pay increase and I’m not going to let them take it back without a fight.”
- Moving to lower-cost cities: Finally, some employees were able to support aging parents or save money by moving to lower-cost cities. Note that in some cases these savings may not persist as tech firms like Google have implemented pay differentials of about 20 per cent for employees in high-cost cities compared to low-cost ones.
It is worth remembering that the demand for work-from-home flexibility is not new – it existed before the pandemic, but only became broadly possible when offices shut down.
Two things of note. First, not every employee is better off working from home. There is clear evidence that for some employees the isolation of remote work contributes to loneliness and mental wellness challenges.
Second, these benefits assume that employees don’t experience what happened to a former student. He works for a large telecom with multiple offices in Toronto that requires employees to work from the office three days a week. What it doesn’t do is stipulate which office to work from – so he drives 45 minutes to spend the day in the office on zoom with co-workers at other offices.
The benefits of in-office work for companies
Offsetting the upsides of a virtual work force for companies, there’s a growing concern about the trade-offs. Here’s an excerpt from the Amazon memo announcing a full return-to-office policy:
“We’ve observed that it’s easier for our teammates to learn, model, practice and strengthen our culture … Collaborating, brainstorming and inventing are simpler and more effective; teaching and learning from one another are more seamless; and teams tend to be better connected to one another.”
This memo captures the common view among many CEOs that if employees don’t meet in person a meaningful amount of time, companies will lose out on five success drivers:
- Building a cohesive culture
- Coaching and promoting learning
- Collaborating on important projects
- Fostering teamwork
- Innovating effectively
Innovation is an especially big concern. In 2022, Rotman Dean Susan Christoffersen spoke with Lululemon chief executive officer Calvin McDonald in a CEO Speaker Series. Mr. McDonald made the point that designing the right products was essential to Lululemon’s success. If their designers were able to collaborate in person, that gave them an advantage over competitors who didn’t have that ability.
The benefits of in-office work for employees
While working from home has clear benefits for most employees, it’s important not to overlook the costs, which can be significant.
- Ability to learn: A U.K. study found remote workers spent 25-per-cent less time focused on career development and learning.
- Deepening relationships: In most companies, relationships are the currency that lets you get things done. No matter how compelling your Zoom background, there’s no substitute for an in-person connection when it comes to building relationships. That’s especially true when it comes to getting sought-after assignments that can advance your career.
- The Coaching Penalty: A research study found that software engineers working remotely received 31-per-cent less feedback on their code, with female engineers paying an especially high price. Call this the Coaching Penalty. Similarly, In the fall of 2021 a New York Times article profiled a Chicago law firm’s struggles to persuade junior lawyers to come to the office – but it was exactly those lawyers who benefited the most from face-to-face coaching.
- The Proximity Effect on promotions: A growing body of research labelled as The Proximity Effect shows that staff who work primarily remotely are less likely to get promoted. Stanford University’s Nicholas Bloom is among the experts on remote work; his advice is that to improve your odds of promotion, you should be face-to-face with the people you work with at least three days a week.
- Work satisfaction: Not everyone likes to interact at work – even before the pandemic, there were employees who put in headphones when they arrived at work and didn’t look up for entire day. But those are outliers – most people draw satisfaction from interaction with coworkers and miss the chance to connect when they’re primarily remote.
These costs may not matter as much if you’re approaching retirement, but younger employees can pay a big price for remote work. A recent article argued that early in a career, the priority should be to absorb the culture, contribute, build relationships and learn. As a result, I encourage former students early in their careers to spend as much time in the office with colleagues as they can. In the long run, rising early, getting dressed and hitting the road is a small price to lay the foundation for your career.
This column is part of Globe Careers’ Leadership Lab series, where executives and experts share their views and advice about the world of work. Find all Leadership Lab stories at tgam.ca/leadershiplab and guidelines for how to contribute to the column here.