Why Are Companies Ending Remote Work?

Research on the topic comes to differing conclusions

Dana Wilkie By Dana Wilkie May 7, 2019
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​With research suggesting that companies can save money, boost morale and attract top candidates by offering work-at-home options, why are some employers calling their telecommuters back into the main office?

The Bank of New York Mellon Corp. was the latest organization to make headlines when it told staff in November that it might reduce their ability to work from home. After the bank's employees expressed outrage, however, the company hit pause on its plan.

The bank's announcement followed decisions by other companies—IBM, Yahoo, Aetna and Best Buy among them—that they, too, would require those working from home to return to a main office or worksite.

There seem to be a few theories for this change of heart about remote work:

  • Employers allow people to work remotely without giving them the proper training or resources to do so productively.
  • Supervisors—untrained on how to properly manage and monitor remote workers—find it easier to manage someone face-to-face.
  • Some supervisors—perhaps because they feel they must be in control or don't trust their workers—are uncomfortable having employees work offsite.
  • Employers find that remote workers—and the teams with which they work—aren't as productive as when they're onsite.

Jeanne Meister, founding partner of Future Workplace, a New York City-based HR executive network and research firm, subscribes largely to the first and second theories.

For instance, remote workers often aren't taught how to set up a teleconference or video call. Or a remote worker may not know the best way to alert colleagues that he or she is in a meeting and can't be disturbed.

"Often, working at home is [allowed] because workers are demanding it, but, with no training for managers or employees, companies discontinue it and say it's not working for them," Meister said.

[SHRM members-only toolkit: Developing and Sustaining Employee Engagement]

Collaborating Remotely Can Be Hard

Judith Olson, a distance-work expert and professor at the University of California Irvine (UCI), subscribes in part to the first two theories. But her research and that of others seem to substantiate that proximity boosts productivity, especially in industries that rely on workers collaborating with one another.

In their research published in 2000, Olson and her husband and UCI colleague, Gary Olson, found that those most likely to succeed at working remotely are people who have worked with others at the main worksite before, have similar work styles, like one another, have access to high-end technology that helps them collaborate, and are skilled at using that technology.

But a situation in which all these factors are present is rare, the researchers found. And if some of these factors are missing, it creates "strain on the relationships among teammates and require[s] changes in the work or processes of collaboration." Often, teams do not succeed "because distance still matters."

"There is evidence that when working at home uninterrupted, you get a lot more solo work done," Judith Olson said in an interview. "It's the collaboration aspect that suffers. There is something called 'the attribution error' in psychology that plays out here: If someone local is unavailable or out of the office, you attribute it to the situation, that something must have come up. If someone remote is unavailable, you attribute it to the personality, that they are shirking, avoiding you or are incompetent. So, the decision-makers, who are likely in the office, attribute evil personal motivations" to remote workers with whom they can't connect easily.

Another psychological concept—which Judith Olson calls "social facilitation"—holds that people tend to work better when surrounded by others who are working hard.

But Ellen Galinsky, president of the Families and Work Institute and a senior research advisor for the Society for Human Resource Management, said people can work harder even when not around others doing so.

"If you don't have commuting time, if you don't have chit-chat time in the office, telecommuters can work longer and harder. It all comes down to organizational leaders," Galinsky said. "Do they inspire teamwork? Do they inspire respect and support for all, whether they work at home or not? That's what makes the difference."

Remote Work Can Save Money, But Higher Morale Is Questionable  

According to Gallup, 43 percent of U.S. employees work remotely all or some of the time.

The percentage of those in the finance, insurance and real estate industries who report working remotely at least some of the time rose 8 percentage points, to 47 percent, from 2012 to 2016. More than half of those in the transportation, computer, information systems and mathematics industries report working remotely at least some of the time.

Remote work is less common for those employed in community and social services, science, engineering and architecture, and in education and training.

There seems to be little question that companies save money—at least on the front end—when employees work remotely.

IBM realized that it could save a lot of money by allowing employees to work at home. The company shed more than 58 million square feet of office space, for a savings of nearly $2 billion. In 2009, the company noted that "40 percent of IBM's some 386,000 employees in 173 countries have no office at all."

According to Gallup's 2017 report, State of the American Workplace, and to research by 1 Million for Work Flexibility, a remote-work advocacy group:

  • Remote workers can be 20 percent to 25 percent more productive than their onsite colleagues.
  • Real estate costs for each onsite worker average $10,000 a year.
  • Companies that ban remote work after having allowed it have seen up to a 60 percent increase in absenteeism.
  • Millennials and Generation X members are more likely to sign on with companies that offer remote work.

But in March 2017, IBM announced that it wanted thousands of its workers back in physical offices again. At the time, the company's profits had fallen, and news reports suggested that company leadership felt workers would be more productive if they all worked onsite.

"I can guess that it was [IBM's] own experience with working with people remotely that said that this is not working," Judith Olson said. "[Managers] may have realized how blind and invisible remote workers are. [Managers] don't know what's going on at the remote location—what work that person is doing or what distractions they may have to deal with. And the remote worker doesn't know what's going on with [a manager]."

And it's not always the case that remote workers are more engaged, have higher morale and stay in their jobs longer than those who work onsite.

A November 2018 Workplace Trends and Virgin Pulse survey, whose findings were published in the Harvard Business Review, found that two-thirds of employees who work remotely always or very often aren't engaged. Only 5 percent see themselves working at their companies for their entire careers, compared to 28 percent who never work remotely. Among the frustrations these remote workers noted were the lack of face time and deep relationships with work colleagues.


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