As working from shared offices is becoming safer, employers across the country are requesting or, in the case of Elon Musk’s recent email to Tesla employees, demanding that employees return to in-person work. At the same time, many similar companies have gone in the opposite direction and made remote work permanent. Employee demands for remote and hybrid work options, particularly in the tightest labor market since World War II, and managers’ anxieties about how to manage these new work arrangements may explain these divergent responses. However, despite the hubris of company leaders like Musk, the traditional 40-hour workweek in the office is unlikely to endure as an organizational norm and the sooner firms learn this, the more successful they will be.
It is clear from our research and experience working with employers at the HR company we founded in 2020 that non-managers value remote work more than those in management. This is not surprising; managing without the benefit of in person interactions and observations requires different practices and skills than those used in more traditional management. It is easier to build trust, an essential component of successful teamwork, through in-person interactions. Musk’s email suggests that without his consistent physical presence to provide an example and motivation for his SpaceX workforce, the company would have failed. This statement is consistent with what we have heard many times – managers worry about how to motivate and incentivize their remote workforces. This partly reflects very valid concerns that that traditional management tools may work less well in this new workplace environment. It is no small irony that the lack of managerial imagination conveyed in the email to Tesla employees came from the captain of innovation himself.
While forcing workers to come into the office allows managers to revert to their pre-March 2020 management norms, it also significantly reduces job satisfaction among employees who value remote work, hindering performance and in many cases retention. Tesla may be able to enforce a return to office in the short run, but it’s unclear how sustainable this will be in the longer run. One only needs to look to recent experience at Apple to see how risky Musk’s inflexibility is.
The insights from our data and analytic tools underscore two salient lessons that can help employers successfully attract, manage, and retain talent. First, the hysteria about the demand for remote work is exaggerated. We find that many workers, and women in particular, value flexible hours as much as they value fully remote work. In other words, many workers are as happy to show up to the office at times that work with their personal schedule as they are to never have to show up to the office at all. In most cases, flex schedules result in workers performing some of their work from home, but they still allow for frequent in-person interactions. Relatedly, for employers who want to benefit from offering remote work options, we find that workers value three remote days per week as much as they do four and not much more than they do two.
Workers consistently receive job satisfaction gains from non-traditional, flexible work arrangements and most prefer a hybrid work arrangement that is less disruptive than the stark all-or-nothing caricature of remote work that unsettles CEOs like Musk and generates lots of media attention.
Second, while many managers worry that their employees are less productive when they are not in the office, that is frequently untrue. The majority of remote workers, particularly those who prefer flexible work arrangements, are productive even without maintaining the same work schedules that they would in the office. And while it is generally harder to monitor remote workers than those in the office, monitoring in the workplace has always been too input focused with an effectiveness that is often illusory. In this new era, managers must increasingly turn to output-based metrics for gauging performance that are better connected to firm productivity and profitability.
We have found the most important risk of remote work is a lack of connection between teammates and relatedly, with the organization. Lack of connection can reduce the effectiveness of teams and increase the likelihood that workers resign. At the same time, employer inflexibility around work schedules in this highly digitized economy runs the very same risks. There are trade-offs in any mode of work, and managers must learn how to reduce the downsides of remote and hybrid work just as they learned to reduce the downsides of in-person work.
There is no doubt that learning new ways of managing and coordinating takes time and introduces organizational uncertainty. However, ignoring the realities of the current labor market that necessitate new approaches to management is, in our opinion, far riskier. The genie is never going back in the bottle. Successful workforce management in the post-COVID world requires new tools and new science, in the same way that technological advances require firms to learn and adapt. The organizations that respond to workforce changes by embracing new management practices will hold unique competitive advantages over the coming decades. Those, like Musk, who resist change may soon discover the challenges of applying old world thinking to a new world order.
Joshua Graff Zivin is a professor of economics at the UC San Diego School of Global Policy & Strategy, and a cofounder of human resources company, Amplisal.
Elizabeth Lyons is an associate professor of management at the UC San Diego School of Global Policy & Strategy, and another cofounder of Amplisal.