A Blog by Jonathan Low

 

May 6, 2021

Is Working From Home More Productive - Of Not?

Probably not. Research is showing that the intangible impact of adapting to new circumstances takes more time and effort than many superficial analyses suggest and that several millennia of practice in face to face communication have given humans an advantage with that mode which just makes them more effective. JL 

Claire Jones reports in FT Alphaville:

"Creative tasks without fixed outcomes” require a great deal of intensive communication. And while existing teams may enhance their productivity remotely, newcomers will struggle to integrate and “build up informal knowledge and establish informal networks”. It’s possible that — as the note suggests — we adapt and become better Zoomers, but we’re not convinced that it’ll ever be possible to have as effective communication on channels such as Slack as you can in person, where there is far more capacity to glean information from things like the tone of someone’s voice or their body language. Economist Robert Solow once quipped that the computer age could be seen “everywhere but in the productivity statistics.” Solow was talking about the productivity paradox uncovered in the 1980s, when the ramping up of spending on IT failed to show up in the numbers for economic output. A note out today from Deutsche Bank asks whether we’ll see a similar paradox emerge when it comes to working from home. It just so happens to have landed the same day Deutsche announced its own hybrid model, with Bloomberg reporting that the lender would allow remote working for up to three days a week. The blame for the computer productivity paradox came down to four main factors. From the Deutsche note: First, measurement errors; second, computers caused an increase in complexity and progress was therefore more limited than generally assumed; third, positive effects only occurred after some delay — often decades later; and fourth, a discrepancy between the productivity of the individual and that of the overall economy. In the then-new computer age, the fact that people had to adapt to the machines and new processes weighed on production. In the case of working from home, the authors note that “creative tasks without fixed outcomes” usually require a great deal of intensive communication. And while existing teams may enhance their productivity remotely, newcomers will struggle to integrate and “build up informal knowledge and establish informal networks”. It’s possible that — as the note suggests — we adapt and become better Zoomers, but we’re not convinced that it’ll ever be possible to have as effective communication on channels such as Slack as you can in person, where there is far more capacity to glean information from things like the tone of someone’s voice or their body language. If someone freezes up on Microsoft Teams, it’s probably down to their internet connection; if they do so in person, then you’ve probably said the wrong thing. One advantage digitisation and working from home do have in common is that they make it possible for companies to hire from a much broader labour pool, with far fewer geographical barriers. Yet, unless everyone is working from home all of the time, those barriers might be just as limiting for career-minded employees working away from head office, who are after a promotion but unable to impress their higher-ups in person. Overall, we’re not sure whether this comparison works as well as the note makes out, though it’s an intriguing idea. The argument that digitalisation benefits economic performance strikes us as far more compelling than the evidence that working from home raises productivity. Our own experience with working from our home office for the past year has been somewhat mixed, and the experience of most of our colleagues echoes that. What the note illustrates well, however, is that there are myriad factors to consider for both worker and firm when it comes to working out where and how we should be toiling. Our bet is that it’ll take a good while yet to get the balance right.

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