The Reasons Why a Downturn is Good for Remote Work.
- Wednesday, 17 Aug, 2022
U.S. firms created more positions than expected in July, putting the lie to the idea that a softening labour market provides managers greater leverage to coerce workers into doing what they want.
Many news articles have recently speculated that the impending recession may spell the end of telecommuting. And yet, studies suggest that most managers would rather have their staff present in the office for most or all of the working day, rather than at home.
Regrettably, they miss the boat on the main reasons why a recession will actually increase the prevalence of remote employment. The truth is that when times are tough, businesses may exert greater control over their employees. What the headline writers don't realize is that in a recession, it's more important than ever to maximize the return on investment you receive from your workforce.
Traditionalist CEOs have a lot of liberty to follow their own personal and selfish tastes and intuitions when it comes to office work while the economy is doing well. Recently, one such CEO said in an opinion piece, "There's a very emotional reason why I want to go back to the workplace. The fact that it's selfish doesn't bother me in the slightest. During the epidemic, I felt like a part of me died. If I have to work from home for the rest of my life, I'm afraid I'll never rediscover who I am.
The benefits of remote employment may be increased by prioritizing revenues above individual preferences. A greater degree of self-control from CEOs is required once a recession sets in. They can't go with their guts anymore; they need to look at the numbers to see what's best for business.
Extensive research has shown that working away from the office really increases productivity. Researchers at Stanford University revealed that, in the summer of 2020, remote employees were 5 percent more productive than their in-office counterparts. Businesses improved their remote work practices and made investments in remote-friendly technology, leading to a 9% increase in remote employees' productivity by the spring of 2022. Using software to track employees' activities, researchers found that remote workers are much more productive than their in-office counterparts.
Is there anything to be concerned about when comparing the productivity of an individual to that of a team, especially when it comes to cooperation and new ideas Indeed, collaboration and innovation can be weakened in remote settings; however, this is only the case if leaders attempt to shoehorn traditional office-centric methods into remote work, as opposed to employing best practices for collaboration and innovation in remote settings, such as virtual asynchronous brainstorming.
When I used some of these methods with one of my customers, Applied Materials, a Fortune 200 technology and manufacturing company, I saw a dramatic improvement in their capacity for teamwork and new product development. An increase in teamwork has been related to well-designed remote work, according to a recent research that was peer-reviewed. Employees who have more freedom and independence at work are more likely to come up with creative solutions, according to a survey of 307 businesses.
When considering both individual and group output, remote workers tend to be more productive. According to a recent report by the National Bureau of Economic Research (NBER), industries like IT and banking, which depend heavily on remote workers, have seen productivity growth of 3.3% since the outbreak began, up from 1.1% between 2010 and 2019. Industries including transportation, eating, and hospitality, which depend heavily on human interaction, have seen a 2.6% decline in output since the epidemic began in 2010.
Workers who are able to do their jobs from a distance not only produce more, but also accept lower pay. Although remote work is seen as an advantage by workers, another NBER research showed that it slowed pay growth by 2% in the first two years of the epidemic. One study of 3,000 employees at major tech firms like Google, Amazon, and Microsoft revealed that 64 percent of respondents would choose down an increase in salary of $30,000 in favour of a permanent change in work arrangements that would allow them to work from home.
In order to get the most bang for their buck, companies that allow their employees to work remotely are increasingly looking to fill positions in regions of the United States and the world where the cost of living is cheaper. That's why one of my customers, a SaaS company in its late stages, is hiring exclusively remotely.
The capacity of businesses to attract and retain top talent is enhanced by the flexibility and cost savings that come with remote employment. Sixty-one percent or more of people in a Morning Consult study said they would be more inclined to apply for a job if it allowed them to work remotely.
Working from home has been shown to boost productivity and employee loyalty. Almost two-thirds of those polled by the ADP Institute said they may search for a new job if they were required to show up to work full time. Of them, 71% are between the ages of 18 and 24. According to a poll by the Future Forum, workplace flexibility is second only to salary in terms of its impact on employee happiness. Since more than 85% of the Jaeb Center for Health Research's staff chose full-time remote work, the organization opted for a home-centric approach to boost employee retention, one of my primary areas of expertise.
The current government, led by former vice president Joe Biden, has come around to this realization as well. Biden urged the majority of government employees to report for duty in March. By July, his administration was supporting telecommuting for federal workers on the grounds that it helped attract, retain, and motivate workers. These findings are consistent with those of a Cisco poll of government workers, which found that 66% preferred working remotely for more than half of the work week, and 85% said that the ability to work from home had a very positive impact on their job satisfaction.
It is common knowledge that a more diverse workforce makes better business decisions. In line with the research, which shows that underrepresented individuals like remote work more than the typical employee, this is an encouraging sign. The existence of microaggressions and prejudice in the actual world gives rise to such wishes. The following effects are already being felt in business: As a result of allowing employees to work from home, Meta was able to meet and surpass its diversity targets two years early.
When fewer employees are needed to staff an office, overhead costs like rent, utilities, and security are reduced. The NBER found that commercial real estate demand and rents fell the most in areas where more people worked from home. As a matter of fact, both Amazon and Meta have lately announced delays in office building projects due to the fact that a large percentage of their workforces are now able to work remotely.
Organizations that are really ahead of the curve will still make an investment in office space for their workers, but now that space may be located wherever the worker chooses: their own home. The Information Sciences Institute at the University of Southern California, which is one of my customers, outfitted its employees with a variety of remote working tools and furnishings to boost their efficiency. This is a good investment regardless of the economic climate.
More and more traditionalist CEOs will embrace their staff working remotely as a consequence of the cost savings and productivity advantages connected with remote work, as well as less flexibility for personal preferences owing to the discipline imposed by the recession. To succeed, they will need to overcome cognitive dissonance, the uncomfortable feeling one gets when one's instincts run counter to the cold, hard facts of one's financial situation.
The most effective leaders are those that are willing to adjust their strategies in light of new information. Confirmation bias is the inclination to seek out information that supports one's opinions, and it is a trap for weak leaders. Moreover, they exhibit symptoms of the ostrich effect by ignoring unfavourable information about the world.
These weaker leaders will strive to hold on to their favourite policies even while the economy tanks. Leaders who refuse to acknowledge the realities of the modern workplace will be replaced by those who support remote work, whose firms will suffer as a result. That's why a downturn will benefit the remote workforce.