In July, the Organization for Economic Co-Operation and Development (OECD) published a policy brief with some tremendous evidence-based information on potential productivity gains from teleworking in the post-COVID-19 era.

TL;DR: Worker efficiency improves with low levels of telework but decreases with ‘excessive telework’, implying a ‘sweet spot’ where worker efficiency—and thus productivity—is maximized at intermediate levels of telework.

2 Channels Shaping Remote Work Productivity

Remote work may be a permanent fixture after COVID-19. It varies substantially across countries, sectors, occupations, and firms. In the long run, remote work has the potential to improve productivity and worker well-being but carries some ambiguity and risk in its overall impact. To minimize the risk of harming long-term innovation and worker well-being, remote work should be a choice and not “overdone”.

Remote Work Affects Productivity in These 2 Main Channels

Telework can improve or hamper firm performance, with its overall effect depending importantly on two main channels:

• Direct Channel: Affects firm performance through changing the efficiency, motivation, and knowledge creation of the workforce.
• Indirect Channel: Facilitates cost reductions that free up resources for productivity-enhancing innovation and reorganization.

Worker Satisfaction: The Double-Edged Sword

Telework can improve firm performance by raising worker satisfaction and thus worker efficiency, e.g., through better work-life balance, less commuting, or fewer distractions leading to more focused work or less absenteeism. However, worker satisfaction can also decrease with telework due to solitude, hidden overtime, and a fusing of private and work life, or an inappropriate working environment at home. Thus, it is important to give workers the choice to work remotely and offer a flexible work environment.

Cost Reductions: A Potential Benefit

Telework can improve firm performance through facilitating cost reductions:

• Lower capital costs by reducing office space and equipment required by the company.
• Labor costs can be reduced as telework enlarges the pool of workers firms can choose from.
• Hiring costs may decrease if higher worker satisfaction reduces voluntary quits and turnover.
• Potentially attract workers at lower wages than would otherwise be the case, especially if combined with other measures that improve work-life balance such as flexible hours.

Communication: Maintaining Connection Remotely

The reduction in in-person interactions and communication quality can hamper productivity. Personal meetings allow for more effective communication than remote forms such as emails, chat, or phone calls. Disruptive forms of communication may surge to compensate for the lack of personal communication, e.g., increased email traffic or virtual meetings. Incorporating communication tools like Slack, Microsoft Teams, and others can help, but firms need to beware of shoddy implementations that ignore ramifications for information security and governance.

Knowledge Flow: Keeping Your Team Informed

The lack of personal interaction can decrease knowledge flows among employees. At M-Files, a few cornerstones of our information management solution are:

• The ability to share information easily with colleagues.
• Improving the discoverability of critical, helpful information.
• The flow of information between individuals, departments, business units, and external parties.

Workers learn from in-person encounters with colleagues—water cooler chats, dropping by a teammate’s office—and that interaction cannot be understated. To compensate in a remote work environment, firms should realign their digitization efforts to promote knowledge sharing in the absence of interpersonal engagement. Information management tools like M-Files are critical to ensure a healthy knowledge flow.

The Sweet Spot of Remote Work

There is indeed a point of diminishing returns with teleworking. Worker satisfaction increases in a remote work environment—enough to offset potentially negative effects on communication, knowledge flows, and managerial oversight. However, the negative effect due to the lack of personal interactions likely becomes stronger with telework intensity, while worker satisfaction improves with low levels of telework but may suffer from ‘excessive’ teleworking.

Thus, there is a sweet spot for maximizing productivity. Not offering remote work is bad. Too much remote work is bad, also. Firms must ascertain for themselves where that point of diminishing returns is and aim to create a more flexible workplace where employees have the option to choose whichever volume of remote work suits them best. To maintain productivity, they need to be equipped with digital solutions like communication, collaboration, and information management—at the very minimum.

Ready to empower your remote team and unlock peak productivity? Schedule a free demo or start your free trial today!