I recently read an incredibly insightful interview with Stanford Economics Professor, and hybrid work researcher, Nicholas Bloom conducted by Time magazine. Bloom not only brilliantly explained what’s driving the current state of hybrid work, but also described its likely future.
This interview is such a valuable, must-read look at hybrid work that I wanted to spend this time giving you Bloom’s 6 most important takeaways. Feel free to read the entire interview when you get the chance – it’s well worth your time.
1. “Hybrid has worked really well,” says Bloom. “The fact that most firms are adopting it tells you that. As an economist, there’s something called ‘revealed preference.’ If people are always choosing product A over product B, product A has to be, for the price, just a better deal. You don’t need surveys if everyone’s voting with their feet.”
2. Biggest hybrid challenge: not enough people in the office. “Most people, apart from introverts, have complaints about coming in and it being quiet and dead and people shouting into laptops,” says Bloom, “and what’s the point of coming in to be on Zoom all day?” The office needs to have a purpose that’s not available at home, and that purpose, Bloom makes clear, is other p-e-o-p-l-e.
“If you look at the surveys, the key reason by far that people come into work is to see colleagues and work with colleagues,” says Bloom. Solving this big challenge requires scheduling coordination, so people know who they’ll see when they come into the office. Technology, like Robin, exists for that purpose.
3. The biggest business impacts of hybrid work. Bloom described 4 massive impacts of hybrid work for businesses:
- “It keeps employees happier.” Bloom’s research finds that “quit rates are down 35%” when hybrid options exist. In survey after survey, he finds that people “value [hybrid work] at somewhere like 7% or 8% of a pay increase.” To repeat: that means offering a hybrid work option is the equivalent of giving employees a 7-8% pay increase.
- “Hybrid improves productivity by about 3% to 4%,” says Bloom. “If you are working from home two days a week, on average, you are saving 70 minutes a day commuting. As an employer, if you have people working from home two days a week, they work about an hour more for you over a 40-hour week. That’s 2% more hours.” Bloom also explains that the other 1% comes from the fact that “people are typically more efficient” working from home.
- More support for diversity, equity, and inclusion. “There’s a slightly stronger preference for [hybrid work] for people with kids, for women, for minorities. And what that means is if you are tough and force a full return to the office,” explains Bloom, “you’re going to see a higher attrition of diverse employees. That’s a real DEI cost.”
- “Saving on [office] space.” With people coming into the office less, Bloom notes that employers have less need for office space, which is typically their second biggest cost (after payroll).
4. Hybrid pushes profits up by 10-20%. “All else being equal,” concludes Bloom, “if people count hybrid [work] as a 7% to 8% pay increase, [employers] can basically not push their pay up by as much and have them not quit on you. So that probably is like a 5% net addition to the bottom line. Productivity is up 3% to 4%.” Bloom notes that “it’s harder to cost DEI and [office] , but you could easily see pushing up profits by 10%, 20% versus a full return [to the office]. It’s such a no-brainer to increase profit.”
5. The post-Labor Day hybrid work “showdown” is a media creation. “I really see Labor Day as a kind of a make-believe deadline that is going to come and go as it has in the past,” says Bloom, “like multiple RTO dates that have come and gone” in the last two years Hybrid work will continue to prevail simply because employees demand it and because it benefits employers too (see points #3 and 4 above).
6. Technology enabling hybrid work is increasingly essential. “The big issue in the longer run is technology,” says Bloom. “The pandemic has led to a sixfold increase in work-from-home days, which has led to an enormous increase in the rate of technological progress in hardware and software to support it “ Hybrid work just won’t work without more investments in enabling technologies such as Robin.
To learn even more about hybrid work trends like those described by Stanford’s Nicholas Bloom, we hope you’ll attend our October 3 to 5 Hybrid Work Conference. Hope to see you there to continue the conversation!