Does Telecommuting Work?

The search for better economic policy.
Nov. 9 2011 7:00 AM

Is Telecommuting a Good Idea?

A new study finds that working from home makes sense. Sometimes.

Working from home.
Do the benefits of working from home outweigh the distractions?

Photograph by Digital Vision.

Last year, NPR put together a serial on the mobile-office revolution. The second of the three-part series was titled “The End of 9-to-5,” a profile of workplaces that had adopted what’s called a Results-Only Work Environment—or ROWE—which “gives everyone in a company the freedom to do their job when and where they want, as long as the work gets done.” Employees worked from their kitchen tables at midnight; they telecommuted from coffee shops; and they could manage their work lives to fit in with the daily routines of school drop-off and cooking dinner.

Is there a workers’ paradise on the horizon for the cubicle dwellers of the world, or is it just another utopian vision that will join the cubicle and other office innovations as the object of ridicule in Dilbert cartoons and derision by those on the receiving end of ROWE’s good intentions? Is the mobile office one of those rare free lunches that boost productivity and let employees lead happier lives?

For at least some of those with soul-destroying morning commutes, liberation may indeed be at hand. A preliminary presentation posted by Stanford University researchers describes the effects of allowing customer service employees at a billion-dollar Chinese company to work from home: Productivity went up, as did hours worked, and employees seemed happier for it.

If it sounds like a no-brainer that everyone is better off when employees are empowered to get things done on their own time, that's because people tend to think only of the benefits of telecommuting rather than the costs. A Google image search of "working from home" certainly gives one pause, with pictures of Homer Simpson lazing about in a muumuu, moms and dads struggling to type while managing babies and toddlers, and cartoons describing the decay of sanity and social skills after too much time alone.  The modern office, for all its shortcomings, remains an effective way of making sure work gets done, and keeping employees engaged with their employer and also each other.

Precisely because of this uncertainty over whether the benefits outweighed the distractions and other downsides of providing the work-at-home option, the chairman of a Chinese online travel agency (and Stanford economics Ph.D. student) sought out collaborators to assess whether it made sense for his thousands of customer service agents.

The company chose to run the experiment at its airfare and ticketing office in Shanghai, where more than a thousand employees spent an average of 80 minutes—and nearly 10 percent of their salaries—commuting to endless rows of identical gray cubicles in two hangar-sized call centers. All employees who had their own room at home and at least six months’ experience with the company were given the option of enrolling in the study, which gave them a 50 percent shot at working from the house for four of their five weekly shifts over an eight-month span starting near the end of 2010. The study enrollees who didn't get to stay at home would serve as a control group to ensure that any changes in the productivity of the telecommuters could be attributed to their new arrangement, rather than other random changes to the company’s environment. Two-hundred-fifty-five employees—a little more than one-half of those who were eligible—chose to participate; those with even-numbered birthdays were given home-office setups courtesy of the company, while those with odd-numbered birthdays stayed on with their daily commutes.

Within a few weeks, the performance of the telecommuting group started to pull away from their cubicle-bound counterparts. Over the duration of the experiment, home workers answered 15 percent more calls, partly because each hour was 4 percent more productive, and partly because home office employees spent 11 percent more time answering phone calls. (Home workers took fewer breaks and sick days, rarely arrived late to their desks, and had fewer distractions.) While answering more calls, the distractions of home life had no impact on the quality of service: The home-work group converted phone calls into sales at exactly the same rate as those in the office. And employees themselves liked the arrangement better, making it look like a win-win for the company. The home-work group reported less “work exhaustion,” a more positive attitude towards their jobs, and were nearly 50 percent less likely to say they were planning to quit at the end of the eight months. (In fact the quit rate among home-office workers during the experiment was about one-half of what it was for those making the commute.)

Before concluding that the end of 9-to-5 is really here, it’s worth considering the postscript to the Chinese telecommuting experiment. Given its smashing success, the company decided to roll out the home-office setup to the entire company. Surprisingly, only about one-half of the employees agreed to the deal, and many of those involved in the original experiment decided that they’d had enough, preferring the hours in commute in exchange for the human interaction of office life and a fixed beginning and end to each work day. The home office isn’t for everyone.

Not every task is particularly well-suited to the home office. A Results-Only Work Environment only makes sense for the subset of relatively solitary tasks where results can easily be tracked and measured—like answering customer calls at a Chinese travel agency—and those where stuff can get done with relatively little face-to-face interaction.

Yet for the right job—one that can be done in fits and starts, and the results easily monitored and evaluated from afar—the advent of mobile computing does have the power to transform the workplace. The NPR story profiles a Minnesota public service agency that reduced its response time from two-and-a-half weeks to just five days. One of the Chinese telecommuting study’s co-author’s, Stanford professor Nick Bloom, tells of his discussions with flex-time employees at JetBlue, which has been able to put highly-educated moms back to work by offering them the flexibility to work between child-care obligations, logging in and out as necessary. Without the flex-time option, JetBlue could never have attracted the same caliber of employee.

Perhaps we’re not witnessing the end of 9-to-5. But the age of flex-time may indeed be at hand.

Ray Fisman is a professor of economics at the Columbia Business School and co-author of The Org: The Underlying Logic of the Office. Follow him on Twitter.

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