New evaluation examines the connection between remote work policies and revenue growth.
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to meEmployees frustrated by CEOs’ mandates to return to the office have tried to argue that remote work is associated with greater productivity. That it helps the environment by reducing commutes and improves diversity by expanding the talent pool. Now they might have one other argument to get their CEOs’ attention: higher revenue growth.
New report published Tuesday by Scoop, a hybrid work management startup that also compiles the Flex Index dataset, includes an evaluation of remote work policies and revenue growth at 554 public firms conducted in partnership with Boston Consulting Group. It found that the typical public company that provides employees the alternative of whether to come back to the office also outperformed in terms of revenue growth over the past three years by 16 percentage points in comparison with firms with more restrictive policies.
“This difference was really surprising to us and bigger than we expected,” says Rob Sadow, CEO and co-founder of Scoop, which Elasticity index serves as an internet “repository” of remote work policies for roughly 7,500 firms. The evaluation tracked revenue growth from 2020 to 2022, first normalizing industry performance data to eliminate differences between high- and low-growth sectors.
Few studies have yet compared the connection between revenue growth and corporations’ remote work policies, says Nicholas Bloom, an economist and professor at Stanford University who also serves as an advisor to Scoop. He believes that is in part because most survey tools examine individuals’ experiences with remote work, not corporate policy. Combined with previous research that linked flexible work policies to job growth, “together they paint a pretty strong picture,” he says of the 2 Flex Index reports, even when the info does not imply that remote policies actually drive revenue growth.
But whether higher revenues force firms to rent faster and select flexible policies to accomplish that, or whether more flexible policies engage employees and make them better jobs, “in some sense it doesn’t really matter,” Bloom says . . “If I read it as a manager, the interpretation is quite similar. Flexible working practices will help support economic growth.”
As the talk over whether working from home helps or hurts productivity stays hot – and more CEOs cite productivity as a reason for ordering people to return to the office – a brand new evaluation could add fuel to the discussion. “There is far too little real data and analysis,” says Debbie Lovich, senior partner at Boston Consulting Group, which focuses on the long run of work. “There are many perceptions and opinions, but this is not the case [many] such real correlations.”
The report shows that the three-year industry-adjusted revenue growth rate for firms which have what Scoop calls “fully flexible” policies – meaning they permit employees or teams to decide on when and whether or not they come to offices or work completely remotely – is 21%. The evaluation shows that firms included in the info set with more restrictive policies – similar to those with corporate assignments for several days every week or those requiring full-time office work – saw only a 5% rate industry-adjusted revenue growth. Excluding the technology industry, public firms that were “fully flexible” outperformed by 13 percentage points over the identical period.
Lovich, whose firm collaborated with Scoop on the evaluation, says the report doesn’t yet show such a flexible policy cause higher revenue growth. Instead, she says, flexible policies are one likely “symptom” of a culture that trusts employees, offers other employee-friendly advantages and values forward-thinking strategies, technology and concepts. “If they are less restrictive [remote] labor policies are likely to be more pro-innovation, more purposeful and more engaging,” Lovich says, all of which may result in higher revenues. “I doubt these companies would take attendance and check IDs.”
Scoop’s Flex Index dataset covers policies from roughly 7,500 firms of all sizes; 554 listed firms were included in the evaluation. (Among publicly traded firms, 27% have “fully flexible” policies, 55% have a hybrid policy with various office work requirements, and 17% work full time.) Office policies in the dataset are generated by the filings of current employees in order that company managers can confirm or manually enter publicly available information, similar to company web sites or media reports.
The Flex Index categorizes remote work policies based on corporate-level policies, which implies some employees who fall into the “fully flexible” category could also be subject to team-level office requirements. However, this likely signifies that office hours are more aligned with the work of individual employees, which Lovich says is essential when fascinated by a hybrid policy.
“The more we empower those closest to the workplace, the better work will be,” he says. “For office employees [with mandates], suddenly you tell me when and where to point out up. He says you do not trust me.
Sadow believes that even when the outcomes don’t show causation, they assist counter an increasingly common argument. “Many executives and board members argue that they believe companies that offer flexibility will underperform because they are not together,” he says. “That they will not allow for more relaxed conversations and the development of relationships. The data suggests that not only is this not true in terms of underperformance, but you can actually outperform.”
Credit : www.forbes.com