Monday, January 24

The hybrid work revolution is already transforming economies


Even in the 19th century, workers were beginning to resent the routine of office life.

“You do not know how boring it is to breathe the air from four walls repressed without relief, day after day,” wrote the British essayist Charles Lamb in a letter to the poet William Wordsworth in 1822, criticizing his work in East India. Company office in Leadenhall Street, London.

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Yet for the past 17 months, Lamb’s modern successors have worked primarily from home, released from what he called “official lockdown.” Today’s clerical staff is undergoing a radical transformation of professional life, economists say, is already beginning to drive economic productivity and accelerate innovation.

The pandemic has weakened the gravitational pull of city centers, with new forces now reshaping knowledge-based economies. Public transit trips to cities have declined, as have coffee shop sales, while demand for real estate in leafy suburbs has increased. Americans spent more time on leisure and household activities in 2020, replacing everyday life with real life.

While a more permanent transformation of work life will have painful consequences for many inner-city businesses, economists see a recalibration underway that may revitalize smaller towns and suburbs. New digital tools mean that retail and hospitality, as well as knowledge-intensive industries, are already undergoing far-reaching changes.

Working from home about one day a week will increase productivity by 4.8% as the post-Covid economy takes shape, according to a recent study of more than 30,000 American employees co-authored with José María Barrero of the Instituto Tecnológico Autónomo de México. and others. Much of this exceptional increase is expected to be due to reduced travel time, a factor that economists often fail to grasp.

The transformation will deliver lasting benefits, according to Stephen J. Davis of the University of Chicago, who studies workplace evolution and was one of the authors of the productivity study. The “positive consequences will be there indefinitely,” Davis said.

Speaking on August 17, Federal Reserve Chairman Jerome Powell alluded to a fundamental change: “I think we know that we will not just go back to the economy we had before the pandemic, but it will take time to see exactly what the trouble. the changes will be “.

“It seems almost certain that there will be a lot more remote work in the future. So that’s going to change the nature of work and the way it’s done, ”Powell said.

The clues were there before Covid-19 hit. In 2013, a landmark study by Nicholas Bloom of Stanford University found that working from home increased productivity by 13%. A 2019 Oxford University research article revealed that happy staff closed more sales.

Countries with stagnant productivity records will be paying close attention. In 2019, Britain fell 15% below its pre-crisis trend for total factor productivity, according to Bloomberg Economics. It’s a depression unparalleled since the time of Charles Lamb, exacerbated by Brexit, an aging population and the pandemic. European pairs have struggled, while the US has found it difficult to break away from the pack.

Despite all the optimism surrounding these tectonic shifts, some economists strike a note of caution. While recent research by the Federal Reserve Bank of San Francisco acknowledges that radical changes in the way people do business could boost efficiency, it cautions against reading recent gains in productivity figures as due to more. I work from home, citing data distortions.

Even the Bank of England accepts that hybrid meetings “can be more challenging.” Most managers are concerned about the impact of home work on collaboration, company culture and well-being, according to the OECD, which also cited employers’ concerns about their reduced ability to observe employees in the workplace. job.

A study led by Michael Gibbs of the University of Chicago found that workers worked longer hours at home to perform the same task, as the concentrated time was divided by domestic distractions such as babysitting and online meetings. The report also noted that people who work from home may exaggerate their productivity in surveys to encourage adoption of the practice.

Former UK government adviser Giles Wilkes is more optimistic. “The ability to deliver products to different locations, make more efficient uses of property, etc., is the innovation that drives productivity,” said Wilkes, who recently published a report on Britain’s productivity woes.

“Hybrid work represents a change in the patterns of both demand and supply in a way that moves the economy forward.”

Yuri Suzuki doesn’t miss his 70-minute commutes twice a day. Suzuki, a partner at the international design company Pentagram, used to ride the “toxic” Central Line, a tube route that bisects London.

“After returning home, I felt exhausted, I couldn’t really think or create anything,” Suzuki said in a Zoom call from his home in the coastal town of Margate, Kent, where he has lived since the pandemic began.

Freed from the grind of travel, Suzuki discovers that he can “invest” time in creative thinking long after formal work hours. That has boosted productivity, with his team taking on twice as many projects as before the pandemic. To socialize with his team, Suzuki plans to return to the office once a week.

Yuri Suzuki in this home studio in Margate, UK, on ​​August 11. Photographer: Jason Alden / Bloomberg

At this point, with the delta variant spreading rapidly around the world, many corporate back-to-office plans are on hold. But evidence from nearly 18 months of the pandemic is helping inform executives’ decisions.

A glut of companies, new and old, want to combine the benefits of remote working with the efficiency of face-to-face meetings. Alphabet Inc.’s Google will allow employees to spend two days “where they work best.” Lazard Ltd., a 171-year-old financial advisory firm, is following suit on the staff. Asset manager State Street Corp. will close its two Manhattan offices, it said Aug. 16. Even the titans of banking will allow some flexibility: Morgan Stanley CEO James Gorman considers office work “not 100%, but not zero percent” of total hours.

“Both workers and managers tend to say that the ideal is to work two or three days a week from home,” said Chiara Criscuolo, who researches productivity for the OECD. Communication and professional relationships can suffer after that, he says.

While hybrid work is taking hold among educated and well-paid employees, less than half the workforce has that option, according to the McKinsey Global Institute. In the UK, only 36% of people worked from home during 2020, even during closings.

Still, as more work is produced outside of traditional offices, workers will infuse a broader range of communities with their wealth and entrepreneurial knowledge, distributing economic gains more equitably, according to Abigail Adams-Prassl, an economist at the Oxford University.

That will have some painful consequences. Downtown cafes, shops and hair salons catering to professionals are the most exposed, and Bloom, Davis and Barrero estimate that a shift to part-time work from home will affect annual spending in major US city centers. In relation to pre-pandemic levels. Manhattan would only see a 13% drop, they projected.

Wilkes admits that “a lot of people” will be hurt by the change process. However, he says that “the changes we have been forced to make are generally going to be beneficial.”

Hybrid work also has the potential to encourage a more diverse range of people to enter the workforce, Davis believes, reducing long-standing productivity problems “by making use of the skills of people who would otherwise they would not work or they would not work very much. ” That includes mothers and people who live outside the big cities.

With the vast majority of the City of London’s 500,000 office workers working from home, the once bustling streets have been largely deserted. Photographer: Tom Skipp / Bloomberg

The US arm of consultancy PricewaterhouseCoopers LLP began improving some aspects of hybrid work, including flexibility on where and when to work and remote work technology training, in 2017, says director of personnel Michael Fenlon. In 2018, the University of Southern California found that teams performed better and retention improved. The focus has sharpened since Covid-19 arrived.

“Before the pandemic, we learned that a culture of trust was essential for well-being and flexibility. Teams that embraced this reported stronger relationships, stronger collaboration, better teamwork, and stronger customer relationships, ”Fenlon said. “We have used the pandemic to become even more intentional and explicit.”

Employers around the world are now grappling with that change as they try to balance productivity growth with keeping staff creative and happy.

It’s a riddle 199 years late for Charles Lamb. “My theory is to enjoy life, but my practice is against it,” he wrote to Wordsworth in 1822, lamenting the years he spent in smoky offices.

Lamb’s successors, and their managers, will soon find out if they can put their own theories into practice.

© 2021 Bloomberg


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