Remote work has become increasingly common thanks to the COVID-19 pandemic and left its mark on the Australian workplace, with knowledge workers such as accountants, engineers and IT specialists the ones who can and do work from home the most.
But while some businesses such as Google and Tesla tell their employees to return to the office, others - most notably Atlassian - insist that working from home will not hurt their output. So, is working from home good or bad for productivity?
The answer depends on whether employees in a particular workplace compete with one another, or if they are collaborators sharing in the success of their team’s project.
To elaborate on this, very broadly we think that there are two types of work.
In some work environments employees are essentially pitted against each other, with the spoils going to the ‘winner’. Employees could be competing to make a sale, or to have their idea for a new project adopted. These situations can be thought of as a tournament, akin to a sporting competition, with the bonus, commission or promotion going to the employee who comes out on top.
When work is like a tournament, only the best worker or idea gets selected.
In other workplaces, the way output is produced is completely different. In these workplaces, output depends on the combined contributions of all team members, and employees share in the success of the team. Work can be thought of as collaborative, or as a ‘public good’, using the economics jargon. Typically, with public-good type work environments, the efforts of all workers combined produce the total (or team) output.
In a tournament, seeing their colleagues work hard can spur an employee to ramp up their own effort. Working in the office can increase the observability of others’ efforts. This means that working in the office can boost the total effort of employees, enhancing output.
In contrast, in collaborative workplaces where the spoils are shared among the employees, there is an incentive to free-ride, reducing the effort of those hoping to enjoy the labours of their team members. In such jobs, observing a hardworking colleague will dampen incentives to work hard yourself, reducing total effort and output.
The incentive to shirk can also be exaggerated upon observing a shirking colleague. Remote work helps by limiting employees’ ability to observe others shirking, which can enhance overall effort.
In other words, not knowing exactly what their colleagues are doing can mean remote workers put in more effort to ensure that a project gets done, just in case others don’t.
Herein lies the contradiction: While managers might suggest that the return to the office is about collaboration, in some cases it may well be about engendering rivalry and competition.
Businesses need to consider how working from home will affect how much of an effort employees put in, and this depends on whether they compete or collaborate.
No doubt there are other factors that will affect a company’s choice of working arrangements. For one thing, many jobs are complex, and potentially combine various tournament and public-good aspects of work.
To this end, hybrid work arrangements such as those at the Reserve Bank or Facebook’s parent company Meta might be the golden middle, encouraging workers to put in their best effort while balancing the costs and benefits of working from home.
Associate Professor Vladimir Smirnov and Professor Andrew Wait research workplace organisation, incentives, innovation and employee engagement at the University of Sydney’s School of Economics.
This article first appeared in The Sydney Morning Herald/The Age on 9 September 2023.
Hero image: Thomas Bonometti on Unsplash.