Study Finds Hybrid Employees Are Happier, More Productive And Not About To Come In More Often

An academic study on the effects of hybrid work has found that staff who work from home two days a week are significantly happier than they were working in an office full time. They're quite a bit more productive, too.

The recent shift to more remote work has also assisted the creation of new business startups, according to Stanford University William D. Eberle professor of economics Nick Bloom, who spoke about his findings on the Freakonomics podcast this week.

Bloom has been studying the impacts of working from home on business for almost a decade. In 2014, he conducted an experiment at trip.com, an online Chinese travel agency that is the third biggest in the world. 

In a randomised trial, half of the company’s call centre workers were made to work from home full time, while half continued working in the office. It found the productivity of those working at home was 13% higher, and they were, on average, happier as well. 

Bloom worked with trip.com again in summer 2021, this time undertaking an experiment to assess the impact of hybrid work on a very different group — programmers, marketing executives and finance professionals, the kind of employees engaged in creative tasks that are seen as easier to accomplish face to face.

According to whether their birthdays fell on an odd-numbered date or an even-numbered date, 1,600 workers were split into two groups, one working from the office full time, the other working from home two days a week. 

Bloom said the biggest impact was on employee happiness. Not only were the survey responses of those working from home more positive, the company also saw a one-third drop in the quit rate.

The study also found that employees were about 8% more productive, as measured by the amount of code written by programmers and by survey responses indicating these employees felt more productive. 

Bloom also runs an ongoing survey into the attitudes of employees and bosses about remote work. He said that attitudes of staff toward work-from-home have been consistent since the beginning of the pandemic: From the start, they wanted to work at home about 2.5 days a week, a figure that has remained unchanged

Bosses, on the other hand, started out wanting people in the office four days a week, but have now come round to the fact that about 2.5 days a week is where the figure will settle. 

“I feel like by late fall 2022, we are in the new normal,” Bloom said. “Anyone out there that’s thinking suddenly everyone’s going to come back, cities are going to totally revive, you know, at this point, you’re dreaming.”

Even so, he said the attitude of bosses toward working from home was not surprising. The pace of change has been dramatic.

“Working from home was doubling roughly every 15 years before [the] pandemic, and it’s now gone up threefold in the space of two years,” he said. “That’s almost 50 years of change compressed into two years. So I’m not that surprised that it’s taken a number of managers 10, 15 months to get comfortable with it.”

If that leads to companies pulling back on office space, the impact on big cities, particularly in the U.S., could be dramatic, according to the podcast. 

U.S. office real estate values could ultimately fall by 39%, or about $400B, due to the impact of more working from home, New York University Stern School of Business associate professor of finance Arpit Gupta estimated.

That would lead to a big drop in property taxes for cities, meaning they would either have to raise taxes for individuals or cut back on services. 

“One thing that we’re concerned about is this possibility of an urban doom loop,” Gupta said. “So cities are going to have to make difficult choices about whether to cut back on those essential services or, on the other hand, raise taxes on residents.

"Whichever way you choose leads to the potential of some of these people leaving the city, thereby lowering the tax base further. We’ve seen some episodes of this historically. Cities like Detroit, cities like New York in the 1970s and ’80s, had a little bit of this destructive spiral going on.”

One upside for the real estate sector found by Bloom is that in the post-pandemic world of working from home, creation of new startup businesses has accelerated dramatically.

While that is likely because the cost of setting up a business has gone down and geographic boundaries are less of a hindrance than before, business creation numbers are a good indicator for office take-up. Though new startups might begin in a bedroom or kitchen, future growth means taking office space of some kind.