Working from home makes that employee FREE!

by Wendy Soon on August 3, 2013

There has been a long debate on the efficacy of working from home. Professor John Roberts and his team explored whether working from home benefits the company and the employee. The team conducted a study over a 10-month period at CTrip.com, a billion-dollar NASDAQ-listed company in Shanghai. He discovered that having employees work from home generates a win-win situation.

For the individual:

  1. Employees were happier

  2. Employees saved time commuting

For the company:

  1. Saved on real estate

  2. Employees worked 9% more

  3. Employees worked 4% more efficiently → total 13% gain.

  4. Fewer employees quit

For the society:

  1. People can choose where they live

  2. City congestion eased with fewer commuters and fewer people having to live in busy cities just for their work

  3. Better family and community life

To further the net 13% gain for the companies with employees working from home, if the employees chose to work from home (i.e. decided to work from home knowing the negative sides of it, such as lack of social interaction), the number jumps to 22% gain in productivity. The net savings per employee who worked from home was estimated to be approximately the annual salary of the employee! This is highly significant from the company’s point of view!

So, given the great benefits of remote work, why doesn’t everyone jump to it? There are, of course, negative sides of working from home. For one, as mentioned above, working from home removes a large part, if not all social interaction from colleagues. Some individuals feel more lonely as a result, while others who are working in more creative sectors become less innovative due to the reduced chance to bounce ideas off colleagues. As such, the huge benefits of working from home are only applicable for a selected group of individuals, and these are the people who should strive hard to get their companies to let them work from home, if they haven’t yet done so (more on this at a later date).

For more information of the study, watch this short video by Professor John Roberts from the Stanford Graduate School of Business, where he talks about how his groundbreaking study of call center workers in China provides the first scientific evidence that working from home can produce big gains in employee productivity. He conducted the study in collaboration with Stanford economics professor Nicholas Bloom, and Stanford GSB graduate students James Liang and Zhichun Jenny Ying.

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John Roberts is the Emeritus John H. Scully Professor of Economics at the Stanford GSB. His teaching and research involve the application of economic and strategic (game-theoretic) analysis to management problems. His specific areas of current interest involve international business, the organization of the firm, and the connection between strategy and organization. He also has published extensively on industrial competition, emphasizing how informational differences among various parties affect strategic behavior, and on complementarities as a driving force in organizational design and strategic choice. As well, he has helped develop new techniques for deriving robust conclusions from economic models. Most recently, he has undertaken controlled randomized experiments in large firms to investigate the effects of changing management practices.

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