Are Remote Teams More Productive?

Productivity in Remote Teams: The Hype, Research, and Reality

In May 2020, amidst a global pandemic and economic transition, social media giant Twitter announced that any employee who wants to work remotely can do so – even once offices are allowed to reopen. The basis for their decision? “The past few months of having staff almost entirely remote, have proven we can make it work”.

Companies such as Microsoft and Zillow have also announced that they will be extending their work from home policies. Many other companies, non-profits, local governments and small start-ups, will soon be following in their steps. The big questions across sectors and teams are: 

• How will we optimize our productivity while operating remotely? 
• Will we be less productive and innovate as a remote team, or more? 
• How will the change to remote work affect our team members and stakeholders more broadly? 

Remote work is a contentious topic - it offers tremendous flexibility and opportunity, but depending on how it is implemented, can also be frustrating or isolating. In this article we discuss some current trends in and towards remote work, as of May 2020. We will draw on specific recent data and research to address the question of whether or in which cases remote teams can be more productive than located teams, and where possible, discuss best practices to ensure that productivity increases can be realized.  

Current Trends in Remote Work

Long before COVID-19, Remote Work was already a promising, emerging trend in the US. An analysis done by FlexJobs and Global Workplace Analytics in 2017 found that in the US, growth in Remote Work was up about 44% in the last 5 years, and 159% in the last 12 years. Keep in mind that this analysis is “pre-coronavirus”. 

To understand how COVID-19 and associated economic changes might be influencing these decadal trends, we can look to recent research done by researchers from MIT, Stanford, and NBER. In early April, 2020, they asked 25,000 respondents who had previously been employed about their previous and current employment status. 34.1% of previously-commuting workers responded that they had recently switched to working from home, and 14.6% reported that they were already working from home. This suggests nearly half the workforce in the US is now working remotely. 

​Figure 1: Answers to the question “Have you started to work from home in the last 4 weeks?”, conditional upon being in the labor force from a US sample (Brynjolfsson, Horton, et al. 2020).

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Is Remote Work Here to Stay?

And now, we are at a cross in the road. Companies across the US have invested in making their remote experiment a success, including buying new hardware, software, and creating new processes which may be unexpectedly efficient or effective. 

At the same time, some managers or executives may be fearful about staying remote any longer than necessary - and prefer the control and certainty that in-office work seems to provide. A critical question to help guide this decision is around the productivity of remote teams. Put simply, are remote teams more productive?

The research on productivity and Remote Work.

Case Study 1: Ctrip

One of the most complete studies on productivity on Remote Teams took place at Ctrip, and was published in the Quarterly Journal of Economics in 2015. Ctrip is China’s largest travel agency, with 16,000 employees, and a NASDAQ listing. Before their experiment, the company was dealing with high employee turnover, thought to be in part because of long commutes, and rapidly increasing office rent. The senior management at Ctrip decided to run a 9 month experiment where employees were screened and then randomly selected into two groups, one to work from home and one as a control. The experiment found that there was a 13% overall increase in productivity across the remote workers (Table 2, Page 191). 

The researchers attributed 9% of the increase in productivity to less breaks, time off, and sick days, and in interviews the workers attributed this to the greater convenience of being at home (easier to get lunch, tea, go to the bathroom, stretch). The remaining 4% was attributed to being more efficient per minute worked. In the interview process, the remote workers generally attributed this to having a relatively quiet and focused workplace at home. 

After the experiment, Ctrip decided to give the entire firm the option to work from home. Surprisingly, over half of the remote workers in the experiment decided to return to the office, citing lack of social contact or loneliness (Appendix Table B.2 Page 215). On the flip side, over half of the firm’s employees who originally had no interest in working from home, now decided they wanted to try. The learning and self-selection led to a longer-run impact on productivity increasing it by 22% - almost double the 13% in the original experiment. This is likely due to workers who performed badly at home returning to the office, and those who performed well at home deciding to continue working remotely. 

Keep in mind that the 22% percent increase is just productivity related. The firm also saved money on office space, and through decreasing turnover (by about 50%) due to their remote work experiment. Also note the nature of the tasks performed by these employees – providing support for phone calls, which can be done using technology present in worker’s homes. Specific consideration should be taken for teams that need to maximize communication efficacy, creative output, and stakeholder engagement. ​

Figure 2: Cumulative attrition (y axis) and weeks (x axis) for the control (no remote work) and treatment group (remote work) shows a nearly 50% decrease. Dashed lines represent 95% pointwise confidence intervals. Experiment started on week 1 and ended on week 38. (Bloom, et. al. Page 2010)

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Case Study 2: Yahoo 

In 2013, Yahoo CEO Marissa Mayer banned all 12,000 Yahoo employees from working from home – citing the need for in-person collaboration in their industry. While the decision was unpopular with most staff, some Yahoo employees came forward and admitted that remote work was not going well at Yahoo. An anonymous engineer remarked “I support the no working from home rule. There’s a ton of abuse of that at Yahoo. Something specific to the company”. The same source continued, sharing that Yahoo’s large remote workforce led to “people slacking off like crazy, not being available, spending a lot of time on non-Yahoo projects. It’s a great way to get Yahoo to pay you while you put in minimal work and do your side startup”. 

This is every manager’s greatest remote work fear. No idea what your workers are actually doing. No way to hold them accountable. A culture of slacking off and poor performance. At the time, some publications even pondered that this move by Yahoo could be the end of flexible working. Of course, they were wrong, but it became clear that Yahoo had some serious issues with remote work. What was wrong with Yahoo’s transition to remote work (and subsequent change of course)? How can you, as a manager and/or remote team member, make remote work effective, inclusive, healthy, and productive? 

The 4 Pillars of Healthy, Productive, Remote Teams

A 2013 article in the journal of Strategic Direction examined the case of Yahoo specifically, and discussed a few key errors in Yahoo’s work from home culture. From this paper we have distilled four steps that can be considered best practices, or beneficial approaches, for productive remote teams.

1. Clear and achievable goals must be decided
2. The goals must be translated into a comprehensive vision of how goals can be achieved
3. Roles and responsibilities must be defined and measured within the team
4. A culture of trust must permeate the team 

Out of these four steps, there is a common thread of placing responsibility and accountability for a project’s success on the employees and workers. In a remote setting, autocratic project leadership is inappropriate and counter-productive, and self regulation is far more effective than top-down management. Of course, the feelings of pride and ownership in a project require an inclusive remote culture and clear leadership and vision. Once goals have been decided and roles defined, people must be trusted to work hard and achieve measurable outcomes.

To learn more about healthy, productive remote teams, check out our course Communication for Remote Teams. It covers the foundations of clear, secure, professional communication, and shares research-backed best practices to help your remote team succeed.