Stanford Economist Nick Bloom shares WFH Trends and Predictions
More than two years into the pandemic, businesses are still wrestling with how to best navigate return to office (RTO). Firms that do it right stand to increase retention, equity, and business performance and forge a new culture of collaboration. But widely varying and evolving business and employee needs make it difficult to unravel the best course of action.
To help leaders move forward in this complex environment, Stanford economist Nick Bloom and Schwabe CEO Graciela Gomez Cowger explored return to office trends and insights in a recent webinar. They examined how work from home (WFH) has evolved, discussed predictions and implications for hybrid work planning, and examined how hybrid work is affecting offices and the REC industry. Here are three key insights from their conversation:
WFH and hybrid work are here to stay, and can be highly beneficial for your business.
Pre-pandemic, WFH was rare—but as of 2022, there’s been a six-fold increase in the number of fully or partially remote workers. From his studies with hundreds of organizations around the world, Bloom has discovered that WFH, especially a hybrid of working from home and the office, is sticking. Over the past two years, the average number of days employed by WFH has increased to about 2.3 each week. Some jobs, such as those in manufacturing and retail, are outliers in this trend as they cannot be performed remotely.
Hybrid work is becoming dominant for three main reasons:
- Employees are happier. The ability to WFH reduces quit rates by 35%.
- Productivity is increased. WFH provides an opportunity for deep work and saves commuting time.
- It supports diversity, equity, and inclusion. Employees from underrepresented groups have the strongest desire for flexibility and can feel more comfortable taking part in conversations.
Research indicates that employees value hybrid WFH about as much as an 8% pay increase. Only 24% of employees want to work fully remotely. Those in the 20-40 age range desire the most time in the office for mentoring and social interaction, while parents and more experienced professionals are more comfortable with working fully remotely. The shift to WFH is particularly advanced on the West Coast where firms in major metro areas have widely adapted hybrid work.
Key takeaway: People are happiest when working from home 2-3 days a week.
It takes careful consideration to operationalize hybrid work and avoid the “Great Resistance.”
As hybrid work has grown more widespread, management teams have struggled with two main challenges: how many days to work from home and which days to work from home. Much conversation has also been had around whether it’s best to let employees choose their days to WFH or if they should coordinate with coworkers.
Letting employees choose can be tricky. There’s a lot of variation in which days employees want to be in-office. And there’s added complications:
- Young employees desire mentorship from experienced co-workers, yet older employees desire more WFH days.
- There is a group of employees, about 18%, who strongly oppose coming into the office as many days as employers demand. This is being termed the “Great Resistance.” It’s a huge issue for companies forcing a full 5-day return to office.
- Creativity can be hard to encourage on teams that don’t have face-time with each other.
The biggest factor driving overall demand for in-office time is eagerness for face-time with colleagues and face-to-face collaboration. When viewed from this perspective, it becomes clear that shared in-office days are the best route both for companies and employees. Even if some people may not wish to be in the office on the selected days, the desire to support the team will encourage top performers to adjust.
When teams are together, they have time to be creative and solve problems, and they gain back much of the creativity loss associated with fully remote work. To make hybrid work successful, Bloom recommends using office days for individual team meetings, culture building, lunches, and events; having new hires work an extra day each week in the office for mentoring; and leveraging WFH days for reading, writing, data, and cross-office virtual meetings.
Key takeaway: Organize effectively to get the most out of both WFH and in-office days, and plan for social and mentoring time to avoid the Great Resistance.
Hybrid work doesn’t signal doom and gloom for office spaces.
Most US firms are not currently planning on cutting office space. Overall, office space is only down about 1%-6%, depending on the metric measured, and potentially 10%-15% in the long term—nothing like the extremes predicted at the outset of the pandemic. Although hybrid work is becoming increasingly common, the extreme complexity of coordinating in-office time in smaller spaces means that businesses are largely holding on to their offices.
The reason? Navigating return to office and hybrid work is complicated enough, and determining next steps with the added challenge of staggering employee in-office days is very frustrating for managers. Companies want employees in-office on the same days and managing schedules when there aren’t enough desks is just too hard.
It’s important to keep in mind, though, that there is a group of employees who are nervous about the density of people in the office. Bloom’s recent research shows that about 13% of people have not returned to their pre-COVID activities and 16% have only partially returned. Those who are “long social distancing” must be carefully communicated with and managed to align with a business’s expectations for in-office work.
In residential real estate, the transition to hybrid work has created a “donut effect” with more people leaving city centers and moving to the suburbs. Companies are largely not moving their offices, however, as they desire a central location with an easy commute for their employees.
To encourage employees to come back to the office, firms are now focusing on high-quality space that’s convenient. Individual desk corridors are out, while open plan seating, virtual meeting cubicles, and safety measures (such as air filtration or extra cleaning) are becoming increasingly common.
Key takeaway: Office spaces are adapting to hybrid work needs and will continue to be critical for business.
As business leaders continue to optimize their RTO plans, careful consideration of scheduling, office space updates, and alignment with company culture is needed.