To be successful in navigating the future of work, teams need to be proactive in understanding the data behind their remote work experiment.
During the Great Recession, when companies looked to downsize their offices as a cost-saving measure, many employers allowed their employees to work from home. In the following years, even as the economy rebounded, some of that flexibility remained—especially in software development.
Less than a decade later, the onset of the Covid-19 pandemic further accelerated the adoption of work-from-home workplaces. While an estimated 7% of employees worked remotely before the pandemic, that number spiked to about two-thirds in the early months of lockdowns. The COVID-19 pandemic quickly altered decades-old traditions of working from the office and introduced a new set of challenges for companies to overcome.
As the world reopens, executives, managers, and workers are left to answer questions about the future of work at their company. What are the tradeoffs between remote, office, and hybrid work? How do companies decide which option is best for them?
Let’s first define the differences between remote, office, and hybrid work.
Office work means the physical colocation of employees. In the most broad sense, employees of a company share a physical space, interact in-person, and commute from their homes to the workplace.
Remote work means employees do not work from a shared physical space. Instead, they collaborate online using digital tools, rather than in-person collaboration, from workplaces outside the office.
Remote workers can choose to work from home (WFH) or work from anywhere (WFA). Work from home means employees predominantly work out of the same place where they live, sometimes in a dedicated home office. Work from anywhere means employees can work from any location—such as coworking spaces, coffee shops—in any city.
Remote work policies often differ greatly between companies. For example, some companies allow remote work, but require team members to be located in specific geographies—e.g. certain cities or regions near the company headquarters. Some remote employees may be required to be online at certain hours of the day to align team members and improve collaboration across time zones. Other companies are extremely flexible, allowing employees to work from a remote beach in the Bahamas or a coffee shop in the Czech Republic.
Hybrid work offers companies a combination of both remote and office workplaces. Employees can work from the office, home, or elsewhere.
With hybrid workplaces, some companies require employees to work from the office for a certain number of days. In the most flexible options, workers may only be required to work from the office once per week or a few times per month. In less flexible workplaces, workers may only be able to work a day or two from home—often on Fridays.
Other companies have decided to keep their offices open as a coworking space for employees who prefer them even if coming into the office is not required by company policies. These offices resemble flexible coworking spaces—areas for occasional collaboration, rather than assigned cubicles confining workers to their desks during long workdays. They are friendlier, more open places for employees that effectively blur the line between work from anywhere and office workplaces.
Hybrid workplaces are quickly becoming the default option for companies trying to balance the tradeoffs between remote and office work. Many technology leaders have instituted hybrid workplaces; Dropbox created Studios, office space that is restricted to collaborative work. Coinbase opted for a remote-first culture, but also left physical office spaces intact for employees who prefer them. According to CEO Brian Armstrong, “Over time, the vision is to have one floor of office space in ten cities, rather than ten floors of office space in one city.”
While many companies navigate through new ways of working, many are still undecided how they should work long-term. For companies deciding the future of work, it’s important to consider the many tradeoffs. The stakes are high: just a small change in productivity, turnover, or happiness could significantly affect business outcomes and competitiveness.
Factors to consider when deciding the future of your working model:
Companies must consider how remote and office work impact their employees’ ability to achieve both their personal and professional goals, while helping drive their business forward.
Finding the best workplace will require teams to weigh many factors at once, which can change over time as teams learn more about how to excel in each work environment. Most likely, companies will need to proactively experiment with their workplace environments, measuring and improving their office and remote initiatives. The effectiveness of office, remote, or hybrid work will be impacted by the practices they adopt; potentially negative tradeoffs can be counterbalanced by best practices and rituals, while perks can be abused or lead to workplace inefficiency.
Companies should consider the long-term impact of office and remote work on productivity. Unfortunately, much of the information and data available today about workplace productivity comes from surveys, which are prone to respondent biases and become stale quickly without ongoing research. Moreover, industries, job roles, and company size impact what productivity looks like and how companies measure it.
For many companies, remote work can be a boon for productivity. Workers create a quiet, productive space at home. Managers hold fewer meetings by encouraging asynchronous communication and giving employees more time for productive work. Company culture relies on employees to be self-disciplined and motivated.
Remote employees, however, may also face distractions at home, like children and family, that interfere with productive work. Managers may hold more meetings because of distrust, destroying employee productivity. They are more likely to resort to spyware to “manage harder,” breeding distrust.
Offices can be unproductive, too. Employees face more distractions, like disruptive coworkers and noisy environments. Managers hold more meetings because they are convenient. They are more likely to reward false productivity, where employees are valued simply by showing up. The company relies on managers to discipline and motivate employees.
In an ideal office workplace, managers hold fewer meetings because of greater employee visibility in the office. Workers find a place to work that matches their preferences, such as a cubicle, conference room, or lounge.
Hybrid work offers a potential balance between office and remote productivity. Employees can choose the right environment based on their schedule each day, maintaining flexibility that allows them to optimize their workplace. Managers can balance meetings and productive time by using remote and office time effectively—giving workers long periods of time for deep work and focus. For managers new to remote work, they may also get necessary face time without needing to micromanage in a hybrid workplace.
Like productivity, collaboration is difficult to measure, but important for a company’s long-term innovativeness.
In a remote work environment, employees lack the effectiveness and creativity of in-person collaboration. Communication is noticeably more difficult and distributed teams face communication challenges across time zones.
Microsoft’s Satya Nadella waded cautiously into the waters of remote work, warning other leaders about the risks of burnout, negatively impacted mental health, and depletion of social capital. Facebook’s Mark Zuckerberg argues that “social bond building, culture, creativity, white-boarding and brainstorming” need to happen at the office.
Many remote teams try to offset the inability to easily collaborate with new rituals and practices. Tools like FigJam and Miro help teams whiteboard digitally. Live Share helps developers pair program from anywhere in the world, while Codespaces can reduce the complexity of managing developer environments.
On the other hand, hybrid and office workers benefit greatly from in-person collaboration. They enable more serendipitous, creative moments—often in the form of water cooler talk. Because collaboration is hard to quantify, many companies hedge their bets on the future of work: through hybrid workplaces, they can maintain some of the benefits of collaborative office work, while giving employees the flexibility of remote work.
Remote companies pay no real estate expenses, while hybrid companies are able to mitigate their real estate costs. They also spend less on office upkeep, deferring some expenses to employees to set up home offices. The most flexible remote companies can also hire employees from around the world, potentially lowering the cost of salaries in areas with a lower cost of living.
Remote companies face new costs as well. They must spend more on retreats, conferences, and travel. They also need to set up new IT systems (e.g. WiFi, machines, videoconferencing, VPNs) for remote workers. Most often, costs for remote workplaces will be lower than office workplaces, but the tradeoff will change depending on industry and company size.
Although office-based companies need to pay for real estate and upkeep, they can continue to use their centralized IT systems. They also require less all-team travel.
At remote companies, employees are especially prone to loneliness and isolation. Remote companies find it more difficult to enforce work-life balance and employees can struggle to create boundaries between work and life, leading to burnout.
Office-based companies, employees are more likely to be engaged in a social office environment. Companies find it easier to enforce work-life balance and employees may find it easier to create boundaries between work and life.
However, remote and hybrid companies enable greater employee flexibility. Employees do not need to commute to work, reclaiming time for their personal life. They can also set flexible schedules that work best for their lifestyle—shifting their work hours around family, personal obligations, or hobbies.
Office employees must commute daily, losing hours of productive work or personal time, and must abide by office hours, regardless of lifestyle. Less flexibility and longer commute times can lead to worse work-life balance.
Generally, remote and hybrid companies have better access to talent with a geographically wider labor pool. As a result, they also have better access to a more diverse talent pool from a variety of cultural backgrounds. Workplace flexibility can also improve employee retention by allowing workers to choose where and how they work best. In today’s tightening labor market, many software developers now expect or demand remote or hybrid workplaces.
Companies that do not offer remote options—and are not big enough to open multiple offices across the world—can only access a geographically-constrained labor pool with limited access to talent. They also have access to a less diverse talent pool. In the long-term, they may experience higher turnover or dissatisfaction as employees move to remote and hybrid companies.
Teams should also consider two larger macroeconomic challenges: carbon footprint and black swan events.
Remote companies can lower their carbon footprint, with smaller offices and no commutes—although some of this is offset if employees buy larger homes. Office companies can have larger carbon footprints, with daily commutes and large office spaces.
Moreover, remote companies are better prepared for black swan events and unpredictable disasters, including inclement weather, crumbling infrastructure, or another global pandemic. They are more agile and adaptable to changing conditions around the world that may hinder workers’ ability to travel to or work in an office.
According to Buffer’s 2021 State of Remote Work, nearly 98% of workers would like to work remotely, at least some of the time, for the rest of their career.
Most employees believe that remote work improves their flexibility, but can be challenging for their mental health. According to respondents, the top benefits of remote work are the ability to have a flexible schedule, flexibility to work from anywhere, and not having to commute. The biggest struggles of remote work include not being able to unplug, difficulty with collaboration and communication, and loneliness.
Productivity results are more mixed. According to PwC, 52% of employers felt their company was more productive working from home, but only 34% of employees felt the same. About 83% of employers and 71% of employees say remote work has been a success during Covid-19 pandemic.
Most companies seem likely to adopt a hybrid workplace in the coming years. Over half of employees want to work remotely three days a week or more. Nearly 30% wish to be fully remote, working from home five days per week.
As lockdowns ease and offices reopen, leaders will make the crucial decision of how best to adapt their work cultures. Will your team switch to an all-remote workplace? Will your team mandate employees commute to offices again? Will your team find a new balance between the two?
Some will take advantage of this great remote work experiment to better understand how they work, collaborate, and innovate. Others will lose out—missing a valuable opportunity. To be successful in navigating the future of work, teams need to be proactive in understanding the data behind their remote work experiment.
Remote-skeptics will opt for a wait-and-see strategy before making any changes to their remote work policies. They still believe in office centricity—and that the company’s most important work will continue to take place at its offices.
Netflix’s Reed Hastings argues that remote work is a “pure negative.” JPMorgan, too, allegedly noticed productivity declines among its employees. CEO Jamie Dimon is wary of remote work, saying that “You lose a lot. …Culture, character, learning—you can’t do a lot of that remotely.”
On the other end of the spectrum, all-remote GitLab boasts more than 1,300 team members across more than 65 countries and over $200 billion in annualized revenue. The company is known for its Remote Manifesto, a collection of fundamental beliefs about remote work. GitLab believes remote work is a competitive advantage—rather than an obstacle to overcome. According to Sid Sijbrandij, CEO of GitLab:
Remote forces you to do the things you should be doing any way earlier and better.