Business
Remote workers actually aren't more productive. Will bosses finally call them back in this year?
These days, it looks like the bloom is coming off the rose for remote work: Many employers are talking tougher. New research shows employees are actually less productive when they work from home full-time. And, with the tight job market starting to slacken, some predict 2024 will be the year employers finally clamp down.
But don’t be too quick to conclude things are going back to the days of 9 to 5 in the old cubicle.
It’s true that widespread studies based on standard measures of efficiency have found that fully remote employees are 10% to 20% less productive than those working on company premises. Challenges related to communications, coordination and self-motivation may be factors in the decline.
And some employers have been warning that those who fail to meet new standards for being in the office may find adverse effects on their performance evaluations and incomes.
But the new research that showed lower productivity by full-time remote workers also found that those on a hybrid schedule — some days at home and some on site — were about as productive as those in the office full-time. And there’s some evidence that companies offering greater flexibility to workers may achieve better financial results.
Potentially even more important than abstract data are the surprisingly deep feelings of a great many workers about holding on to at least some degree of flexibility. And those personal feelings, which involve such cut-to-the-bone issues as commuting and the cost of child care, are being reinforced by gains in communications technology and the persistent shortage of qualified workers.
Since the pandemic, John Sturr, a 58-year-old social worker for Sonoma County, has been working two to three days a week from his desk in his bedroom. On days in the office he confers with colleagues and responds to walk-ins. He’s come to love the arrangement.
“The commute is beautiful, through vineyards” along the Russian River Valley, he says, “but it’s an hour out of your day.” The time that Sturr saves he uses to put dinner on early and run errands.
“I’ve never been able to telework my whole career. Previous managers were always suspicious. This is kind of amazing.”
Productivity vs. profitability
Today, about 30% of all full-time employees are on a hybrid schedule, according to WFH Research, which monitors remote work trends by surveying thousands of workers every month. Deborah Lovich, who leads Boston Consulting Group’s work on “people strategy,” sees more employers adopting hybrid work as they see the financial and nonfinancial benefits. “I do think people will come around,” she said.
The outlook for fully remote workers, who currently make up about 10% of all employment, appears more cloudy. Those job openings have been shrinking faster in recent months as the job market has slowed.
Many people working full-time from home are in high-paying tech and information industries, which explains why San Francisco and Los Angeles metro areas are No. 1 and 2 when it comes to the share of all full-time workdays done at home, at 46% and 40% as of November.
At the other end of the pay scale are fully remote workers in administrative and more routine functions, like customer service reps at call centers, where many jobs may be further eroded by artificial intelligence.
But even fully remote work has things going for it. For many employers, what may be lost in productivity can at least partly be made up in cost savings from cutting back on office and related expenses. Plus, these companies can hire workers more cheaply anywhere in the world. All told, Nicholas Bloom of Stanford University estimates that those savings may average 10% of a company’s operating costs.
“Firms shouldn’t care about productivity, they should care about profitability,” said Bloom, who is part of the WFH Research group.
Whatever the productivity studies may show, Bloom says, what’s happening is intuitive. “Look at their actions,” he said. “This is no longer a pandemic, and millions of firms in a capitalist economy are doing something consistently [in sticking with remote work]. I can only conclude it’s profitable.”
Santa Monica-based TrueCar decided to go fully remote after the pandemic. “It gives us full access to talent,” said Jill Angel, chief people officer at the firm, which operates a digital platform helping consumers shop and price cars.
TrueCar already has cut back about two-thirds of its office space and eventually plans to get down to just 4,000 square feet, enough for client meetings and team-building events.
The company currently has about 325 employees across the country. And over the last three years, 48 employees have moved out of California to other states, with Texas and Washington as the most popular destinations.
Workers are happier when they have control and certainty over their work schedules, said Angel, and the firm is betting that over time that will help make it both more productive and more profitable.
“I do know we’re not going back,” she said.
Flex Index, which tracks employers’ remote-work practices, and Boston Consulting Group recently teamed up to study the finances of more than 500 public companies. Their key finding: Revenues at fully flexible firms grew on average by 21% from 2020 to 2022 — four times greater than at less flexible firms.
Rob Sadow, a Flex Index co-founder, expects more such data to emerge highlighting differences in financial results as well as in employee retention rates. He says his research shows smaller and younger firms are more likely to adopt flexible work policies, so as more businesses get started, and more office leases roll off, the share of employers offering remote work should grow.
“In early 2023, 50%-plus of companies were still sitting on the sidelines with no formal policy or specific work-from-home strategy,” he said. “What’s happened through 2023 is that more and more companies decided to put a stake in the ground — and that’s hybrid.”
Still, a lot of bosses remain wary of even partial remote work, fearing it’ll weaken their company’s culture, mentoring traditions and timely decision-making.
“We’re constantly looking at it,” a top executive at a San Diego media firm said of remote work. He didn’t want to be identified, worrying that anything he said publicly could make it harder to change work-from-home policies later. His firm currently requires everyone to come in two days a week, including one set day.
“We felt value in having everyone in the office at least one day a week because it brought younger team members to intermingle and collaborate with seasoned members,” he said.
But a lot of employees want to be 100% remote, he added. “This is one of the most sensitive subject matters I’ve dealt with.”
Teams know best
Right now, it’s pretty much anybody’s guess which of the many possible models will prevail when it comes to balancing management’s desire for an on-site workforce and employees’ desire for more flexibility.
Clearly, a lot of workers like the hybrid model but want about one day more of working from home than bosses prefer, which now averages two days a week, according to WFH Research.
At many firms, the conflict is only heightened because CEOs have dictated rules and norms for the company as a whole, according to Robert Pozen, a senior lecturer at MIT Sloan School of Management who has written books on productivity.
“Let the team decide what’s best for the team,” he recommended, noting that what’s functional and productive will be different if you’re in IT, customer service, sales or financial analysis.
“Bosses want accountability and they used to get it by counting hours in the office. Hopefully they realize it’s what results they get. We should be focused on what we want to achieve,” Pozen said. “Let’s figure out the goals and let’s customize the success metrics that would best measure productivity.”
That’s pretty much the playbook at Chicago-based law firm Chapman and Cutler. Sarah Andeen heads the firm’s library and research services for attorneys working in several states. The firm’s basic policy on remote work isn’t a one-size-fits-all but rather is based on the department’s and clients’ needs and expectations.
For Andeen and her two research staffers, it worked out to two to three days on site, with at least one of them in the office each workday to open the library and address any in-person requests from attorneys.
“I think it depends on the person, the work they do and stage of career,” Andeen, 54, said of how best to structure hybrid work.
She said the older of her two staff librarians is in her 60s, lives in a Chicago suburb and uses the time saved from the 45-minute commute to get in a little more gardening and other personal projects. Andeen’s other librarian is in her late 20s, lives in an apartment in the city and really likes coming in three days a week to the firm’s new downtown office, designed to be more collaborative.
“I know my staff. I know they’re being productive,” Andeen said, adding that her team has clear goals and productivity measurements. “Are we getting research questions answered in a timely manner? Are the bills getting billed, the research cataloged? Is our web page up and operational? Are our attorneys happy?… I can see the results.”
Dear Mr. Pelley:
I meant what I said in my letter last week to the 60 Minutes team: joining 60 Minutes is the honor of my career and I am grateful to be working alongside the people who have contributed to the most important television journalism brand this country has ever produced. While I’m new to 60 Minutes, I’ve devoted my career to investigative journalism and storytelling. I started this job excited to collaborate and to benefit from the wisdom and experience of the 60 Minutes veterans, with you among them. For that reason, one of the first things I did in my new role was call you to talk and invite you to dinner. It is a profound disappointment that you rejected that overture and chose ambush instead. Yesterday, you hijacked my first meeting with staff to disparage me, my qualifications, and my intentions with remarkable incivility and contempt. I welcome a diversity of viewpoints and respectful debate among the team, but this was nothing of the sort. Yesterday’s performative display of hostility enacted in front of the staff instead of in a civil, private conversation-demonstrated that you have no interest in contributing to the future success of the show, or approaching my new tenure with a mind open to collaboration and progress. I am here to deliver first-in-class news programming, not to make headlines about newsroom drama. I am eager to work alongside those who share this goal.
Despite yesterday’s misconduct, I had hoped that in sitting down with you today we could find a path forward together. You made clear that you are not interested in such a path.
Your antipathy to the future of the show has come through loud and clear. And I have heard you. I therefore write on behalf of CBS News, Inc. (“CBS”) to inform you that your employment with CBS is terminated for cause effective immediately. Enclosed is your formal termination letter.
Sincerely,
Nick Bilton
Executive Producer, 60 Minutes
The co-founder of Aspiration, Joseph Sanberg, was sentenced to 14 years in prison on Monday after defrauding investors and lenders of over $248 million.
The startup, an eco-friendly digital banking company boasting fossil fuel-free investments, carbon offsets for gas purchases, and a debit card with cash-back benefits for shopping at clean companies, was founded by Sanberg and Andrei Cherny. Cherny left the company in 2022 and has not been charged.
Sanberg, an Orange County native, pleaded guilty to wire fraud in October after being arrested in March last year. Aspiration subsequently filed for bankruptcy and liquidated all of its assets by July.
Sanberg and venture capitalist Ibrahim AlHusseini, who also faces charges, together forged a series of bank statements in order to obtain loans. From 2020 to 2021, the pair forged AlHusseini’s bank statements to show millions of dollars in assets in order to obtain millions of dollars from lenders.
Additionally, they forged a letter from their audit committee stating that $250 million in funds were available, when in reality Aspiration had less than $1 million. The amount of loans defrauded exceeded $248 million.
In 2021, Sanberg artificially inflated Aspiration’s 2021 revenue by $44 million by recruiting 27 fake customers to sign letters of intent pledging tens of thousands of dollars per month for tree planting services. Sanberg himself funded the contracts and used the inflated revenue numbers to obtain more loans.
The charges sparked an NBA investigation into salary cap allegations due to Aspiration’s connections with Clippers owner Steve Ballmer.
Ballmer personally invested $60 million in Aspiration, all of which was lost. He is now the target of a civil lawsuit alleging his participation in the scheme. Ballmer denies the allegations.
The team announced a $300-million sponsorship deal with Aspiration, and Clippers player Kawhi Leonard signed a four-year, $28-million marketing contract with the company, which reportedly performed no duties. The issue has raised concerns about how players are circumventing the NBA’s salary cap.
The team lost the $300-million sponsorship deal and an additional $20 million paid for carbon offset purchases.
Residents in the city of Monterey Park will be the first in the nation to vote on a permanent ban on data centers Tuesday.
If approved, Measure NDC would prohibit data centers within the city limits and could only be overturned by another vote.
Yard signs saying “No Data Center” in English and Chinese with images of dragons line sidewalks in the San Gabriel Valley city.
As a wave of data center opposition sweeps the country, numerous towns and counties across the U.S. have instituted temporary moratoria and other restrictions on the facilities. But only a handful have instituted indefinite bans, and just four other towns have sent related matters to the ballot.
Supporters are hoping the vote will set a precedent for the rest of the region, where residents are fighting proposals in Vernon and City of Industry.
“This is about as permanent a ban as we can get,” said Steven Kung, co-founder of the group No Data Center Monterey Park. “Winning Measure NDC would send a huge message to the rest of the San Gabriel Valley about how residents don’t want data centers.”
The ballot measure emerged from the fight against a 247,000-square-foot center proposed in 2024 by the Australian-owned investment firm HMC StratCap for a residential area in Monterey Park.
The facility would have sat less than 500 feet away from the nearest home and used three times the electricity of the 60,000-person, predominantly Asian American city.
While the developer touted the potential for jobs and tax revenue, residents expressed concerns about noise and air pollution, rising electricity rates and a potential to lower property values.
The company pulled its plans in late March following public outcry and a March 4 city council vote to extend a temporary data center moratorium and place a ban on Tuesday’s ballot.
In a letter to the city council, HMC StratCap said it would pursue a different use for the land and would not engage in a ballot measure fight.
The city council later banned data centers indefinitely, the first in California to do so, said Mayor Elizabeth Yang. But she’s still been out campaigning for the measure with all four other council members.
“If a council puts in an ordinance, a future council can reverse it too,” said Yang. “With the ballot measure, unbanning it is a lot harder because you need the entire city to vote on it.”
The measure proposes the ban “to protect air quality, drinking water resources, and public health” and “prevent impacts to electricity and water rates.”
While California places third in the country for existing data centers with about 300 facilities, it hasn’t been a hot spot in the recent AI-driven data center boom. High electricity rates, expensive land and regulatory hurdles mean that fewer, and smaller, facilities are currently planned than in Virginia, Texas, Georgia, Illinois or Arizona.
“Most of California’s data centers are small by today’s standards,” said Shaolei Ren, an engineering professor at UC Riverside who studies how to reduce the environmental impacts of data centers. “Ten years ago, they would be medium-sized, but the power demand for new AI data centers has increased a lot.”
The average operating data center demands 45 megawatts, according to the Washington Post, while the average planned one would draw 430 MW. The one proposed for Monterey Park would have required about 50 MW at peak demand.
As proposals crop up in SoCal, they’re met with fierce opposition. Montebello, El Monte and Baldwin Park have all enacted temporary moratoria, and Alhambra recently banned data centers as part of a zoning code update. City of Industry, Vernon, City of Commerce and Santa Fe Springs are moving in the other direction, trying to court developers and streamline data center approvals. Community groups are fighting that.
Outside the San Gabriel Valley, residents of Coachella and Imperial County are showing up in droves to protest local proposals.
Matthew Shaw, a volunteer with the Coalition for Responsible Data Center Development, who recently published a report on opposition to AI data centers, said a vote to ban them in Monterey Park “would lead to copycats, partially because so many groups are just opposed to any data center development at all.”
While there is no formal opposition to Measure NDC, some building trades like Ironworker Local 433 supported the Monterey Park data center when it was still live before city council. Those in the data center industry are lamenting the state of public opinion.
“These are multi-billion-dollar assets that are built by multi-trillion-dollar companies. These things will get done,” said Mehdi Paryavi, chairman of the International Data Center Authority. “My biggest problem is that our industry does not invest enough in community engagement.”
Paryavi said towns that seek to limit data centers are missing out on thousands of jobs generated by data center construction, operations and customers, as well as faster artificial intelligence speeds and better performance.
Kung said local community organizers are “looking at the empirical evidence” and seeing a ban as a win.
“We’ve never seen a city that embraces a data center and is like, ‘Look how our quality of life has increased, look how all the revenue has gone into citywide improvements,’” he said. “That just doesn’t exist.”
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