Despite a few high-profile retreats from remote work policies in recent years, data on the U.S. workforce suggests that remote work is increasing. A 2017 Gallup poll reported that 43% of employed Americans had spent at least some time working remotely, and US Census data released in 2018 reported 5.2% of U.S. workers being based entirely at home.
Even as working from home (WFH) becomes relatively commonplace, a new form of remote work is emerging: working from anywhere (WFA), in which employees can live and work where they choose, typically within a specific country, but in some cases, anywhere in the world with a reliable internet connection. While many companies are just starting to consider allowing employees to work from anywhere, developed WFA programs can be found at firms such as Akamai and SAP.
Employees value the option to work remotely. A 2017 study even found that the average worker was willing to accept 8% less pay for the option to work from home. This indicates that workers assign monetary value to the flexibility provided by a WFH policy. And with a work-from-anywhere policy, employers add even more value to employees by granting geographic flexibility. It’s a significant difference: while a WFH employee can choose to pick the kids up from school or spend lunch hour walking the dog, a WFA employee can do all of those and also relocate closer to aging parents or to a location with a lower cost of living.
In our experience, however, managers often worry about remote employees working less, or multitasking, mixing personal responsibilities with work. There are also concerns that allowing employees to work from anywhere could decrease communication and collaboration among coworkers and might constrain the informal learning that typically happens in the office.
But one 2015 study based in a Chinese travel agency found that when call-center employees were shifted to working from home, their productivity increased by an average of 13%, apparently due to a reduction in break time and sick days combined with a more comfortable work environment. This finding raises the question: Could employees in a work-from-anywhere program also benefit from similar productivity increases?
In a working paper currently under review, we studied the effects of a work-from-anywhere program initiated in 2012 among patent examiners at the U.S. Patent & Trade Office (USPTO). We analyzed productivity data for patent examiners (highly educated and specialized professionals) who switched from work-from-home work conditions to the WFA program.
Our results indicate that examiners’ work output increased by 4.4% after transition to WFA, with no significant increase in rework (re-writing of patent decisions upon appeal from inventors). Supplemental analysis also showed that patent quality (as measured by examiner-added citations) did not deteriorate . The 4.4% productivity increase represents up to $1.3 billion of annual value added to the U.S. economy, based on the average economic activity generated per additional patent granted. (While not the focus of our study, we also found a correlation between working from home and increased productivity relative to working in the office, consistent with the findings of the earlier study.)
In supplementary analyses, we also found that examiners transitioning to WFA relocated, on average, to locations with significantly lower costs of living, representing an effective increase in real salary for these employees, with no increased cost to the organization.
Interestingly, examiners who had been on the job longer (that is, those closer to retirement) were more likely to move to the “retirement-friendly” coastal areas of Florida than their lower-tenured peers. While this correlational finding is not predictive, it suggests that granting employees the ability to work from anywhere could yield some career-extending benefits to both employees and the organization, by encouraging valued senior employees to remain in the productive workforce longer.
We observed that WFA examiner productivity increased more if they were located within 25 miles of other WFA examiners, but only if the clustered examiners worked in the same technological unit. Clustered examiners from different units experienced no additional gains in productivity. This finding suggests that geographically clustered WFA workers whose job content is similar may learn from each other informally, similar to the way that co-workers learn from each other through informal interactions in the office.
So, what should managers consider as they set WFA policies, and remote-work policies more generally? Here are a few recommendations:
- Employers who allow employees to work remotely should grant these employees true autonomy and flexibility, rather than trying to micromanage their remote work. Our results comparing WFH and WFA employees indicate that granting greater autonomy can actually enhance employee productivity.
- Managers of WFA employees should mandate use of a common set of technology tools. Our study found that when the USPTO began to mandate the use of the agency’s common IT tools (e.g., VPN and messaging) by examiners, early-career WFA examiners who needed more approvals from their supervisors realized an additional 3% increase in productivity.
- WFA employers should leverage any geographic clusters of WFA employees that emerge, especially among employees doing similar types of work. Providing funding for periodic informal meet-ups is a small investment for a potentially significant amount of employee learning. Managers can also rotate team off-site meetings among locations with significant clusters of WFA employees, so that the WFA employees can connect with in-office employees as hosts, introducing them to their corner of the world.
- Based on our research – which focused on already-experienced employees – it seems best to keep newly hired employees co-located in the office with experienced peers long enough to benefit from the informal learning that happens organically in a face-to-face environment. Additional research is needed to determine whether or not newly hired employees could experience the same productivity benefits on WFA as the experienced employees we studied.
- Finally, consider the type of work itself. We found that if a job is very independent – that is, the employee can carry out most job duties with little or no coordination with co-workers (as can a patent examiner) – the transition to WFA is more likely to result in productivity increases. More research is needed to identify the productivity effects of WFA for jobs with lower levels of independence.
A key takeaway from our research is that if a work setting is ripe for remote work – that is, the job is fairly independent and the employee knows how to do their job well – implementing WFA can benefit both the company and the employee. What jobs in your company might be well suited to a WFA policy?
Prithwiraj (Raj) Choudhury is the Lumry Family Associate Professor at the Harvard Business School. His research focuses on the Geography of Work: how geography mobility and location affect the productivity and career outcomes of knowledge workers. He also studies how firms can create value from mobility frictions via strategies such as migration arbitrage and work from anywhere policies. He has a Doctorate from the Harvard Business School, degrees from the Indian Institute of Technology and Indian Institute of Management and was on the faculty of Wharton. Prior to academia, he was an Engagement Manager at McKinsey, a Regional Business Manager at Microsoft and an AI programmer at IBM.
Barbara Z. Larson is executive professor of management at Northeastern’s D’Amore-McKim School of Business. Her research focuses on the personal and interpersonal skills that people need to work effectively in virtual environments, and she works with collaborators in both academia and industry to develop training methods and materials to enable more productive virtual work. Prior to her academic career, Professor Larson worked for 15 years in international finance and operations leadership, most recently as Director of International Finance at R.R. Donnelley.
Cirrus Foroughi is a doctoral candidate in the Strategy Unit at Harvard Business School. His research focuses on IT and the future of work, namely how IT facilitates alternative work arrangements, and whether and how IT complements or substitutes workers of different skill levels. Prior to HBS, Cirrus held research assistantships at the National Bureau of Economic Research and the Federal Reserve Bank of Philadelphia, and is a graduate of Dartmouth College.