October marks the first anniversary of the 1 Million for Work Flexibility movement. Throughout the month on our blog, we are pleased to highlight a variety of perspectives from thought leaders in the work flexibility field. Today’s post features Nicholas Bloom, professor of economics at Stanford University.
In 2010-11, Nick and his team conducted the first-ever randomized experiment on working from home, run over nine months in a NASDAQ-listed Chinese firm called CTrip which has 16,000 employees. The results of their study include:
- Home working led to a 13% increase in productivity
- Home workers reported higher work satisfaction
- Attrition among the home workers dropped by 50% compared to the control group
- CTrip estimated it saved about $2,000 per year per employee working at home.
1MFWF: What sparked your commitment to/interest in flexibility in the workplace–what is your personal “aha” moment about the importance of work flex?
Nick: I have been working for many years on the impact of better management practices–like Lean, Six-Sigma and modern HR–on firm performance. In this work what was becoming clear is that most advanced U.S. firms were already adopting these practices–they get modern management.
But the real dividing line between good and great firms was their adoption of “being nice to employee”-type practices: practices like working from home, part-time working, maternity and paternity leave. This is the real battle ground on modern management practices–and based on the controversy over Yahoo’s ban on working-from-home you can see this is a hot issue.
1MFWF: What are the most effective ways employees have successfully requested work flex?
Nick: I studied one firm–Ctrip which is China’s largest travel agent–and found that in a large randomized control experiment they ran with Stanford University that work-from-home (WFH) employees were 13% more productive and 50% less likely to quit.
So I would take these findings and use them to argue for at least a pilot trial scheme for WFH. Maybe using a time when traffic will be bad—horrible weather (think the Big Freeze), sports events (Olympics in London), road-works, or maybe the summer—so the firm can make an excuse for this being a temporary pilot. That way if it works they can easily roll it out, and if not it is also easy for management to move on. My evidence suggests after they have temporarily tried it, they will want to adopt the practice.
1MFWF: At this summer’s White House Summit on Working Families, we heard from numerous CEOs that flexibility is good for their bottom lines, and we heard from the President’s Council of Economic Advisers that flexibility is good for the U.S. economy at large. As a featured panelist at the event, you agreed that there’s plenty of data (including your own research!) to show that flex is a win/win for workers and employers. When you were asked why, with all the information showing that flexibility has such great benefits, more companies aren’t yet embracing it is a business strategy, you drew an analogy to the story of Moneyball. Would you explain more for our readers what you meant by that?
Nick: Moneyball is the great story—and now film with Brad Pitt—of how the Oakland Athletics outperformed other baseball teams by using more advanced and clever player recruitment tools. It’s an inspirational David-vs-Goliath story, in that by being smart, the Oakland A’s could outperform teams that had much more money. But what struck me what how all the firms before the Oakland A’s started using these practices were getting it wrong, and even after the Oakland A’s started winning like this the other teams took almost 10 years to copy them. So firms definitely do make mistakes, and these are often slow to be corrected.
In the case of WFH, I think it is a new practice, and it has been aided a lot by modern computing and telecommunications, and as such is something unfamiliar to firms. Many of them are scared of or unaware of these types of practices, and so are systematically making mistakes.
I think if corporate America tried these types of “being nice to people” practices more generally it would help a lot with improved performance. Not every practice will fit with every firm, but certainly right now experimentation is low and that is holding back adoption.
1MFWF: Do you think much more research is needed in the area of work flexibility? Is your group planning more studies on this topic, perhaps with organizations within the United States?
Nick: Yes—this is a very under-researched area, especially in terms of large-scale, scientific randomized studies. There is a massive abundance of case-studies and small surveys, but as we know from the Yahoo experience these can be very misleading. That is, I would use Yahoo as an example of the benefits of banning WFH.
Our group is hoping to run more research on this, and I would love any firms thinking of experimenting seriously on working-from-home or other modern management practice to get in touch!
1MFWF: If a manager reading this post is convinced that work flexibility is good for business but isn’t sure where to start, what are the first steps you’d suggest he/she take?
Nick: Pilot—try it out on small scale. It is low risk and easy to do, and firms typically learn a huge amount. In the case of the firms I have been involved in, many have been amazed by the benefits of WFH and other pro-employee practices that piloting generated.
Read more about Nick’s findings: Does Working from Home Work? Evidence from a Chinese Experiment [PDF].
Watch Nick at the White House Summit:
Hear more from Nick about his research on telecommuting:
To learn more about the evolution of telecommuting, watch our webinar The Growth of High Quality Telecommuting Jobs featuring Chuck Wilsker, president and co-founder of the Telework Coalition, and Josh Billington, general manager of Telework Advocacy.
photo credit: Nicholas Bloom