Why Jamie Dimon is right to ask people to go back to the office

A decade ago, long before a new virus left China to throw the world in turmoil, two Stanford professors carried out a study, in China, on working from home. At the time, just one in 10 Americans worked from home, so the idea of remote working was often frowned at – or referred to as “shirking from home.”

The study, conducted on employees at 16,000 employee NASDAQ listed Chinese travel agency CTrip allowed call center employees to volunteer to work from home. Early results were good – WFH saw a 13% performance increase – 9% from working more minutes in every shift (less sick time) and 4% from making more calls per minute (quieter at home than in a noisy call center environment).

CTrip was so pleased with the results that it allowed any worker the option of WFH – which saw an improvement of up to 22%.

COVID-19, of course, upended everything. What had been an interesting experiment turned into an imperative as workers no longer had the option to work.

In 2020, research by ex-Harvard University doctoral students Natalia Emanuel and Emma Harrington backed up the earlier Stanford study. Their paper focused on a Fortune 500 online retailer that initially found an 8% increase in the number of calls handled per hour by employees.

As the pandemic has waned, so some senior business figures have started to push for a return to the old ways. Jamie Dimon, Tim Cook and Mark Zuckerberg have all been pushing with increasing fervor to get their staff back to the office.

Workers may have roundly criticized the pressure to go back to the office as old fashioned and inefficient – but a revised version of Emanuel and Harrington’s paper, published in May by the Federal Reserve Bank of New York, revealed that the original study actually showed a 4% decline in efficiency instead.

The revision was based on more precise data, including detailed work schedules. It was discovered that not only did employees handle fewer calls while working remotely, but the quality of their interactions also suffered. Customers were placed on hold for longer periods, and there was an increase in the number of callbacks, indicating unresolved issues.

And there’s more. These findings align with other studies that have reached similar conclusions. For example, David Atkin and Antoinette Schoar from the Massachusetts Institute of Technology, along with Sumit Shinde from the University of California, Los Angeles, conducted a study in which they randomly assigned data-entry workers in India to either work from home or the office. They found that those working from home were 18% less productive than their office-based peers. Michael Gibbs from the University of Chicago, along with Friederike Mengel and Christoph Siemroth from the University of Essex, observed a productivity shortfall of up to 19% among remote employees of a large Asian IT firm compared to their in-office performance. Another study revealed that even professional chess players performed worse in online matches compared to face-to-face games. Additionally, a laboratory experiment showed that video conferences hindered creative thinking.

The reasons behind these findings are likely familiar to those who have spent extensive time working from home over the past few years. Collaboration is more challenging in a remote work setup, and workers in the Federal Reserve study expressed missing the ability to turn to nearby colleagues for assistance. Other researchers who examined the communication records of nearly 62,000 Microsoft employees found that professional networks within the company became more static and isolated. Virtual water cooler initiatives, often implemented by companies during the pandemic, were found to encroach on busy schedules without providing significant benefits. These problems, in the words of economist Ronald Coase, represent an increase in coordination costs, making collective work more unwieldy.

While some coordination costs of remote work may decrease as people become accustomed to it, other costs may rise over time, particularly the underdevelopment of human capital. A study published in April, focusing on software engineers, revealed a sharp drop in feedback exchanged between colleagues after the shift to remote work. Similarly, the study conducted by Drs. Atkin, Schoar, and Shinde documented a relative decline in learning among remote workers compared to their office-based counterparts, with those in the office acquiring skills more quickly.

One final note from the recent Emanuel and Harrington paper? Staff who choose to work from home tend to be less productive (and they get promoted less).