How to make WFH work for everyone

A conversation on the future of work with Stanford economist Nicholas Bloom

future of work

Few researchers know more about remote work than Stanford economist Nicholas Bloom. In 2014, his influential study of work-from-home employees at the Chinese travel company Ctrip produced insights about the future of work that nowadays are more relevant than ever. Remote employees, Bloom concluded, were 13% more productive at home than at the office and quit at half the rate of their office-bound colleagues.

Nicholas Bloom
Nicholas Bloom

Professor of economics
Stanford University

Last year, when the pandemic shunted millions of employees into makeshift work from home situations, Bloom set out to see how his earlier research squared with workers’ experiences during a global pandemic. Since May, Bloom and several other Stanford colleagues have been surveying a representative cohort of American workers between the ages of 25 and 64, accounting for different geographic regions, industries, and income levels. Four in 10 people in the survey work from home full-time.

What can companies learn from Bloom’s latest study as they consider return-to-work strategies this year? While WFH employees increased productivity at home, Bloom notes that they’re also more prone to experience loneliness, burnout, and other problems.

In a recent interview, Bloom explained why he thinks a hybrid model of remote work is best for many companies in the post-pandemic period, and why executives should adopt clear, uniform WFH policies to avoid unseen risks.

How do work-from-home employees feel about their new situation, now that we’re nearly a year into this?

If you ask people what they want, they say on average they want to work from home two days a week. If you ask them how valuable it is financially to be able to keep working from home, the average number is 8% of current pay.

That means they view working from home two days a week as a perk worth 8% of their salary. That’s on par with a pension plan or health care benefits. So for companies that don’t do this, the takeaway is that you’re going to have to pay people 8% more to keep them from leaving your company.

What has been the impact of remote work on well-being during the pandemic? Are employees experiencing job burnout?

I’ve been hearing stories recently of workers getting increasingly lonely after 10 months at home. Indeed, in my original study on Ctrip, after nine months of WFH, employees were getting very lonely. While few employees want to return to the office full-time, most do want to go back for a few days each week to reconnect with friends and colleagues.

From what you’ve seen in your own research, what WFH models work best?

If you look at productivity, working from home for two days a week and in the office three days a week appears to be the best formula. If everyone is in the office Monday, Tuesday, and Thursday, you reorganize your week so that all your meeting time, client events, and presentations happen on those days. You don’t lose any face-to-face time, you just reschedule it. And the two days a week tend to be quieter. This is why, broadly, employees are happier and productivity is up.

How do companies go about coordinating schedules like that?

Companies need to set uniform policies. Otherwise it’s total chaos. You need a hybrid model. The most common one is three days a week and WFH the other two days. If you’re going to set one policy, you go for the policy that’s in the middle that suits the most people.

Does this mean everyone in the company comes in on those days and works from home on the other days?

No. The most natural way to do it is to organize by teams, and assign each team to a different schedule—say, red or green. On week one, red teams come in Monday, Tuesday, and Thursday. For week two, they come in Wednesday and Friday. The key factor is that you remain with your team and you can plan. But it has to be the same days within the team and it has to be organized in advance.

What about just letting employees choose the schedule that best suits their preferences?

There are some serious downsides. In the Ctrip study, we followed workers for up to two years and compared the WFH group to the control group, to see what was the cause and effect of working from home. The promotion rate of the WFH group dropped nearly in half. Halving a promotion rate is not just a small thing. It’s hugely significant.

Many people who work from home won’t be promoted. It’s not just a diversity issue. You’re facing serious threat of lawsuits.

When you interview WFH employees, they often feel they are forgotten—you could call it discrimination. And senior managers will often say they’re not developing managerial skills because they’re not in the office. They’re taking their lunch breaks while watching TV with their kids, whereas the people in the office are taking their lunch breaks with their colleagues.

Either way, it comes back to this choice issue. If you let people choose, some people are going to go to the office five days a week, and some are going to never turn up.

What risks does that present?

The demographic split is not even. Imagine it’s women with young kids and religious minorities. You’re going to find that five years from now, they’re not being promoted. It’s not just a diversity issue, either. You’re facing serious threat of lawsuits. So when I talk to managers, it’s another reason why I say you should have a one-size-fits-all policy, because it’s becoming clear where it’s going to lead otherwise.