- Half of all business leaders believe that when employees are working “out of sight,” they don’t work as hard.
- Stanford University researchers doing a longitudinal study comparing productivity at different time periods found that remote workers were 5% more efficient than office-based ones in the summer of 2020. But this number improved to 9% by summer 2022.
- To succeed in our increasingly hybrid and remote future will require retraining managers in evaluating performance and addressing proximity bias. Companies will have to teach them to trust the data over their own gut reactions.
Do bosses trust employees to be productive when working out of the office?
Microsoft released a new study, where it found that 85% of leaders say that the “shift to hybrid work has made it challenging to have confidence that employees are being productive.” More concretely, 49% of managers of hybrid workers “struggle to trust their employees to do their best work.” This lack of trust in worker productivity has led to what Microsoft researchers termed productivity paranoia: “where leaders fear that lost productivity is due to employees not working, even though hours worked, number of meetings, and other activity metrics have increased.”
That data aligns with a new report by Citrix based on a global survey of 900 business leaders and 1,800 knowledge workers — those who can do their job remotely. Half of all business leaders believe that when employees are working “out of sight,” they don’t work as hard. And 48% of the business leaders installed monitoring software on the computers of their employees to check on their work. No wonder only 49% of employees say that they trust their employer.
The perspective of this traditionalist half of business leaders align with Elon Musk’s demand that all Tesla and SpaceX employees be “visible” in the office and work full-time in-person — including knowledge workers. That’s based on Musk’s belief that remote workers are “phoning it in” and only “pretend to work.”
Musk’s demand for improving productivity via full-time in-office work for knowledge workers is something to which other traditionalist leaders aspire. Indeed, a survey done by Microsoft shows that 50% of the bosses of knowledge workers intend to force them into the office by Spring 2023.
According to a Future Forum survey, this skepticism toward work from home tends to come from older leaders in their 50s and 60s. Leaders under 50 are much more accepting of hybrid and remote work and focus on how to do it well.
Is the belief of this traditionalist, older half of the business leadership that workers are more productive in the office based on the facts? Not at all.
Already before COVID, we had peer-reviewed research demonstrating that remote work improved productivity. A NASDAQ-listed company randomly assigned call center employees to work from home or the office for 9 months. Work from home resulted in a 13% performance increase, due to a combination of fewer sick days, and a quieter and more convenient work environment. Those working from home had improved work satisfaction and a 50% lower attrition rate.
A more recent study with random assignment of programmers, marketing, and finance staff found that hybrid work, similarly to remote work, reduces attrition by 35% and resulted in 8% more code written.
COVID resulted in the proliferation of studies of remote work productivity. For example, a survey by Mercer of 800 HR leaders in August 2020 reported that 94% found that the staff at their companies were more or equally productive working remotely compared to working in the office prior to the pandemic shutdowns. A two-year survey by Great Place to Work of more than 800,000 employees showed that the shift to working remotely in the pandemic boosted worker productivity by 6% on average.
A study using employee monitoring software confirmed that the shift to remote work during COVID improved productivity by 5%. In a University of Chicago research paper, scientists found that nearly six in ten of their survey respondents reported higher productivity when working remotely, while only 14% proved less productive. On average, remote work productivity was over 7% higher than in-office productivity.
That shouldn’t be surprising. A major benefit from remote work comes from doing away with the daily commute. Workers on average devote approximately 35% of their saved time from not commuting to their primary job, according to research at the University of Chicago. Given that people spend an average of nearly an hour per day on commute travel alone, and additional time on other commute-related tasks, this adds up to substantial additional time worked.
Indeed, a research study from Harvard University published in the National Bureau of Economic Research finds a large increase in the amount of time worked by remote workers compared to in-office workers. Evaluating the impact of the lockdowns in 16 large cities in North America, Europe, and the Middle East on knowledge workers, the researchers found an increase in the average workday of 8.2%, or 48.5 minutes.
Another benefit stems from greater flexibility to do work tasks at times that work for us. We know from research that all of us have different levels of energy throughout the day when we are best suited for various activities that don’t necessarily match the typical rhythms of a 9-5 schedule. By doing specific work tasks at various times, we can get more done.
And more recent research showed that remote work productivity actually increased throughout the pandemic. Stanford University researchers doing a longitudinal study comparing productivity at different time periods found that remote workers were 5% more efficient than office-based ones in the summer of 2020. But this number improved to 9% by summer 2022. Why? Because all of us learned how to be better at remote work.
And really, are workers all that productive in the office? Studies show that in-office employees only work between 36% and 39% of the time. What about the rest of their time in the office? They’re shopping on Amazon, checking social media, and may even be searching for new positions — especially if their bosses are forcing them to come to the office full-time.
This extensive evidence is widely available to anyone who Googles “remote work productivity” and looks at all the results on the first page. Leaders are taught to make data-driven decisions.
So why do so many leaders continue to ignore the data and stubbornly deny the facts? The key lies in how leaders evaluate performance: based on what they can see.
As the Harvard Business Review points out, leaders are trained to evaluate employees based on “facetime.” Those who come early and leave late are perceived and assessed as more productive.
According to the MIT Sloan Management Review, even before the pandemic, the focus on presence in the office undermined effective remote work arrangements. Thus, researchers found that remote employees who work just as hard and just as long as those in the office in similar jobs end up getting lower performance evaluations, decreased raises, and fewer promotions.
This tendency did not change much in the pandemic for the older managers who learned how to lead long before the era of remote work. That’s because of the anchoring bias, a dangerous mental blind spot — a cognitive bias — that comes from our tendency to be anchored to our initial information about a topic.
Thus, if leaders are taught to evaluate productivity based on simple presence in the office, they will tend to stick to that information. They’ll do so even when presented with new evidence about higher productivity among remote workers.
A related mental blind spot, the confirmation bias, caused these traditionalist leaders to ignore information that goes against the beliefs to which they’re anchored, and seek information that confirms their anchors.
For example, they’ll seek out evidence that in-office workers are more productive, even when there’s much stronger evidence that remote workers exhibit higher productivity. In other words, these leaders trust their own gut reactions, internal impressions, and intuitions over the facts, thus failing to develop self-awareness of how their mental processes might steer them to make bad decisions.
The consequence of this trust in false impressions of which type of work is more productive is leading to the unnecessary drama of forcing workers back to the office. And those older, traditionalist bosses who do so will continue to lose workers as part of the Great Resignation.
A Society for Human Resources survey in June 2022 found that 48% of respondents will “definitely” seek a full-time remote position for their next job. To get them to stay at a hybrid job with a 30-minute commute, employers would have to give a 10% pay raise, and for a full-time job with the same commute, a 20% pay raise.
Given the significant likelihood of a recession in the near future, which will limit the ability of employers to offer pay raises and lead to a focus on actual productivity over false gut-based intuitions, we can expect a greater shift to more hybrid and remote work going forward.
Another problem of this false belief is proximity bias. That term describes how managers have an unfair preference for and higher ratings of employees who come to the office, compared to those who work remotely, even if the remote workers show higher productivity.
The face-to-face interactions between managers and employees lead to managers having more positive impressions of these employees due to cognitive biases such as the mere-exposure effect. This mental blind spot describes our predilection to have more favorable attitudes toward whatever we see more often, whether people or things, without any basis for this favorable attitude other than mere exposure.
To succeed in our increasingly hybrid and remote future will require retraining managers in evaluating performance and addressing proximity bias. Companies will have to teach them to trust the data over their own gut reactions. They’ll also have to learn a new approach to performance evaluations, one customized to hybrid and remote work.
Instead of observing presence in the office and giving an annual performance evaluation informed by proximity bias, leaders will have to measure deliverables at much more frequent intervals. Ironically, even before the pandemic, we had extensive research that demonstrated the importance of transitioning away from large-scale annual performance reviews. Now, leaders who want to successfully navigate the disruption caused by hybrid and remote work will need to provide brief performance evaluations at their regular weekly one-on-one meetings with their team members.
What will that involve? Leaders would ask each of their team members to determine three to five SMART (Specific, Measurable, Achievable, Relevant, Time-Bound) goals for each week.
Prior to the upcoming one-on-one each week, the employee would send a brief report of a paragraph or two on how they did on the goals for that week, what kind of problems they had and how they solved them, and a brief self-evaluation. Then, at the one-on-one meeting, the leader and team member discuss the report and determine goals for next week. The leader also coaches the team member on solving problems and approves or revises the self-evaluation, which gets fed into a continuous performance evaluation system.
This approach helps leaders accept and appreciate the reality of which of their team members is more productive while addressing the pitfalls of proximity bias. It also helps team members know where they stand and addresses their fears around lack of career mobility due to proximity bias from their supervisor. And most importantly, it builds up trust between leaders and their employees. A Gallup survey showed that 75% of employees leave to a significant extent due to a poor relationship with their boss.
In short, by aligning performance evaluations with best practices for hybrid and remote work, companies will boost productivity, improve retention, and address proximity bias, while building trust between bosses and staff. My clients have already reaped substantial benefits from doing so.
For example, the Fortune 200 high-tech manufacturer Applied Materials has developed a culture of “Excellence from Anywhere” to address proximity bias and focus on the outcomes rather than where work is done. Another client is the University of Southern California’s Information Sciences Institute, which carries out basic and applied research in machine learning and artificial intelligence, networks and cybersecurity, high-performance computing, microelectronics, and quantum information systems. It has taken a leadership position in hybrid and remote work by offering flexibility and focusing on building trust through a transparent and collaborative process of determining the future of work.
In both organizations, leaders had to overcome their personal discomfort and push back against their intuitions to help themselves grow as leaders well-positioned to lead their teams in hybrid and remote settings. Any leaders who want to survive and thrive in the post-pandemic environment will need to do the same, or they will be eclipsed by more fit competitors in the future of work.