Recession or not, remote work is here to stay
Many recent headlines claim that a coming recession will mean the end of remote work. It’s because of a cooling labor market, giving managers more power to force employees to comply with their demands. And while surveys show that the vast majority of employees prefer to spend most or all of their time working remotely, most executives want employees to be in the office.
However, what the forecast misses is that in times of economic growth, the comfortable results of most companies give traditionalist leaders significant leeway not to rely on their personal intuitions and selfish preferences. for office work. Once a recession hits, leaders will need to exercise more financial discipline. And there’s no doubt that emphasizing profits over personal preferences will benefit remote work.
Plenty of evidence shows that working remotely is more productive. A Stanford University study found that remote workers were 5% more productive than office workers in the summer of 2020. In the spring of 2022, remote workers became 9% more productive as companies learned to work better remotely and invested in more remote-friendly technology. A new study from the National Bureau of Economic Research (NBER) has found that productivity in companies that rely heavily on remote working has grown much faster than industries where in-person contact is required. Just one example: Applied Materials, a Fortune 200 technology and manufacturing company, has dramatically increased its team’s productivity in the form of collaboration and innovation through remote techniques such as virtual asynchronous brainstorming.
Remote workers are willing to work for less money. Another NBER study found that remote work reduced wage growth by 2% in the first two years of the pandemic, as employees perceive remote work as a significant benefit.
Likewise, remote work improves retention. Almost two-thirds of respondents (64%) to an ADP Institute survey said they would consider looking for a new job if they were forced to come full-time. And flexibility ranks only behind pay for job satisfaction in a Future Forum survey. So, because more than 85% of its employees preferred full-time remote work, the Jaeb Center for Health Research decided to adopt a home-centric model to improve retention.
Other financial benefits arise from the reduced need for office space and associated expenses such as utilities, cleaning and security. An NBER report found that areas with the most remote work have seen the biggest declines in demand for commercial real estate and resulting rents. Indeed, Amazon and Meta recently announced that they were halting office space construction projects because many of their employees were working remotely. Of course, the most forward-looking organizations will continue to invest in office space for their employees: namely, their home office. For example, the University of Southern California’s Institute of Information Science has provided a wide range of home office technology and furniture to its staff to improve their productivity. It’s a wise investment, even in a recession.
The cost savings and productivity improvements associated with remote working, combined with less leeway for personal preferences due to recession-imposed discipline, will result in more and more traditionalist executives supporting their employees. working remotely most or all of their time. The best leaders are brave enough to change their minds when the facts change. Shy, second-rate leaders fall into confirmation bias, the tendency to seek out information that confirms their personal beliefs. They also suffer from the ostrich effect, denying negative facts about reality. As a result, their companies will underperform compared to more flexible companies, and these leaders will eventually be kicked out for denying reality and replaced with wiser leaders who approve of remote working.
Gleb Tsipursky is CEO of Disaster Prevention Experts and author of “Leading Hybrid and Remote Teams: A Manual on Benchmarking to Best Practices for Competitive Advantage”.