13% More Productive Working from Home: The Bloom Study

Written By Tyrone Yang

During the pandemic, the number of Americans working remotely skyrocketed from 7% to 40%.  Even with the anecdotal challenges of remote work and having 5 million less workers in the workforce, overall productivity nationwide actually increased by 5% (Orrel, 2021).  In this context, it is worth referring to a more controlled study on the impact of remote work.  Back in 2015, Stanford business professor Nicholas Bloom and his colleagues published a study showing a 13% increase in productivity with employees working from home.  Conducted with the Chinese travel agency Ctrip, this Bloom et al. (2015) study was likely the first experiment of its kind to compare participants randomly assigned to either work at the office or work from home (WFH).  As employers evolve their post-pandemic work arrangements, the findings and recommendations by Bloom and colleagues can inform how best to balance in person vs. remote work.

Conducted over 9 months, the study was motivated by the possible benefits of remote work:

  • Office space savings

  • Reduced commute times

  • Possible improved work/life balance

as well as some of the concerns:

  • Impacts on productivity and collaboration

  • Lack of supervision for junior staff

Remote Employees Were More Productive: 

The main findings from this study include:

  • Increased employee productivity: WFH employees were 13% more productive.

  • Increased retention: WFH employees resigned 50% less often.

  • Increased company profitability: The company saved about $2000 per WFH employee per year.

  • 9% of the increased productivity could be attributed to WFH employees working more (longer shifts, fewer breaks) and 4% to increased efficiency.  Certainly, saving on commute time helped.  In post-experiment interviews, the Ctrip WFH participants also mentioned that the convenience of taking meal and bathroom breaks and the quieter home environment contributed to their work.  Overall, the company increased total savings by 20 - 30%, two-thirds of which came from reduced office space and one-third from increased employee productivity and retention.

Choice to Work Remotely Further Increased Productivity:

In a follow-up study, when all Ctrip employees were given the choice to work from home or at the office, the relative productivity of WFH employees increased even more, to 22%.  This additional increase resulted primarily from self-selection: most of the workers who returned to the office were those who performed less well at home.  This result suggests that some degree of employee choice could improve company performance.

The Work-From-Home Penalty:

However, one downside of WFH is that in-person presence impacts how we view our work colleagues.  While the Ctrip WFH employees were more productive, their office counterparts were promoted 50% more often.

To compound this bias, certain demographics seem to favor working remotely (Bloom, 2021; Orrell, 2021):

  • The disabled.

  • Female college graduates with young children.

  • Black and Asians.

  • People with longer commutes.

Allowing employees to choose to work from home could exacerbate inequities, for instance, between men and women.

Recommendations for Post-Pandemic Hybrid Work:

As the pandemic recedes, many companies will likely continue hybrid work.  Having surveyed over 30,000 people throughout the pandemic, Barrero, Bloom and Davis (2021) project that about 20% of work will be conducted remotely after the pandemic.  

Understanding the benefits of remote and in-office work can help companies create a nuanced balance based on the specific needs of their organizations.  Here are some guidelines companies should consider for their post-pandemic work processes.

1.  Acknowledge Diversity or Personalities and Roles:

Different personalities and different roles benefit from different levels of in-person vs. remote work.  Remote work may not suit everyone.  As shown by the Ctrip follow-up study, having choice or flexibility that considers individual employee needs (e.g., family care responsibilities and commute), job responsibilities, working styles and personalities (e.g., introverts and extroverts) can improve productivity.

2.  Create a Dedicated Home Workspace to Enable Focused Work:

If employees are going to work remotely, they should have a dedicated space to facilitate their work.  During the pandemic, many working parents struggled to balance remote work with childcare/remote schooling from home.  Being required to have a dedicated, fully outfitted home workspace, free from interruptions, may help explain why the success of the Ctrip participants contrasts with the challenges of many pandemic remote workers.

3.  Use the Office to Facilitate Communication:

This flexibility should be balanced with policies to support communication.  Intuitively, we realize that unplanned communications are harder when everyone is remote.  But rather than allowing free choice, Bloom (2021) proposes that employers should set days for employees to work together in the office.  When teams are split between the office and home, virtual team members often miss out on side-bar discussions that follow formal meetings.  In a previous post, we discussed studies documenting how physical space—even the distance between workstations in an office—impacts communication, coordination and forming new ideas.  Having some people work from home and others in the office could further reduce this informal communication.

4.  Use the Office to Build Relationships:

In addition to supporting communication, the office can influence the relationships we form with our colleagues.  In the Bloom et al. study, the WFH employees (who worked 4 days remotely and 1 day in the office) were more satisfied with their jobs but also felt more isolated.  Separating people—even by a few feet—can impact the relationships we form (Festinger, L., Schachter, S., & Back, K. W., 1963; Bossard, 1932; Priest and Sawyer, 1967).

And these connections can impact professional advancement.  The fact that Bloom et al.’s in-office employees were promoted more often than those working from home suggests that we should be mindful of how in-person interactions influence subjective evaluations.

5.  Design the Office to Promote Employee Health:

The physical office also provides opportunities to improve that wellbeing.  Healthy building standards like WELL and Fitwel can help deliver preventative healthcare each day.  Like the old adage “apple a day“ that “keeps the doctor away,” a building that encourages small but consistent lifestyle interventions—by encouraging stair use to increase exercise, providing sufficient daylight to improve sleep, or supplying better air to reduce disease transmission—can enable people to work more effectively.  With consolidated resources, the workplace can provide health benefits lacking in individual homes.  These design interventions can support a company-wide wellness ethic that make the office a more appealing place to work and help attract new employees.

6.  Encourage Healthy Separation from Work:

Finally, whether working remotely or in the office, opportunities to rest and recharge can improve both wellbeing and the quality of work.  The traditional office, while requiring us to show up every morning, also allowed us to clock out at the end of the day and not think about work until the next morning.  

By contrast, working from home more easily blurs work and homelife.  While Bloom et al.’s WFH group worked more efficiently, they also worked more.  Without consciously disengaging from work at the end of the day, unresolved work problems loop in the back of our minds, preventing us from fully recuperating.  

Rather than operating in a muddle, we should work intently without distraction and then embrace undisturbed downtime.  Having a workspace separate from home can help: either the office, a dedicated home office or a library.  Behavioral separation can help too: if people opt to work from home, a way to distance oneself from work would be to adopt a daily shutdown routine at the end of the workday.

In many domains, operating effectively involves not only focusing intensely, but also planning sufficient rest.  Adequate recuperation is essential to athletic training.  Sleep enhances problem solving. Going for a walk improves divergent thinking and creative insight.  As companies figure out their remote work policies, giving their staff the space to rest, sleep and engage in other meaningful endeavors ultimately makes employees not only more effective at work but more fulfilled in a broader sense.

References:

Barrero, J. M., Bloom, N. A., & Davis, S. J. (April212021). Why Working from Home Will Stick. https://www.gsb.stanford.edu/faculty-research/working-papers/why-working-home-will-stick

Bloom, N., Liang, J., Roberts, J., & Ying, Z. J. (2015). Does Working from Home Work? Evidence from a Chinese Experiment. The Quarterly Journal of Economics, 130(1), 165–218. https://doi.org/10.1093/qje/qju032

Bloom, N. (2021, May 25). Don’t Let Employees Pick Their WFH Days. Harvard Business Review. https://hbr.org/2021/05/dont-let-employees-pick-their-wfh-days

Bossard, J. H. S. (1932). Residential Propinquity as a Factor in Marriage Selection. American Journal of Sociology, 38(2), 219–224.

Brent Orrel. (2021, October 14). The future of remote work: Highlights from my conversation with Nicholas Bloom [Interview]. https://www.aei.org/workforce/the-future-of-remote-work-highlights-from-my-conversation-with-nicholas-bloom/

Festinger, L., Schachter, S., & Back, K. W. (1963). Social pressures in informal groups: A study of human factors in housing. Stanford University Press; WorldCat.org.

Oppezzo, M., & Schwartz, D. L. (2014). Give your ideas some legs: The positive effect of walking on creative thinking. Journal of Experimental Psychology. Learning, Memory, and Cognition, 40(4), 1142–1152. WorldCat.org. https://doi.org/10.1037/a0036577

Robert F. Priest & Jack Sawyer. (1967). Proximity and Peership: Bases of Balance in Interpersonal Attraction. American Journal of Sociology, 72(6), 633–649. JSTOR.

Scott, C. (2011, November 21). Blog: Marathon Lessons for the Corporate World. CNBC. https://www.cnbc.com/2011/11/21/blog-marathon-lessons-for-the-corporate-world.html

Tyrone Yang. (n.d.). How Sleep Can Improve Creativity by 10x. Entegra + Architectural Health. Retrieved May 30, 2022, from https://www.entegra.health/research-blog/blog-post-title-two-2yngd

Tyrone Yang
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