No shirking from home, please!
Working from home massively increases productivity:
Over 10% of US employees now regularly work from home (WFH), but there is widespread skepticism over its impact and worries about “shirking from home”. We report the results of a WFH experiment at CTrip, a 16,000 employee NASDAQ-listed Chinese multinational. Call center employees who volunteered to WFH were randomly assigned to work from home or in the office for 9 months. Working from home led to a 13% performance increase, of which about 8.6% is from working more minutes per shift (fewer breaks and sick-days) and 4% from more calls per minute (attributed to a quieter working environment). Home workers also reported improved work satisfaction and their job attrition rate fell by 50%. After the experiment, the firm rolled the program out to all employees, letting them choose home or office working. Interestingly, only half of the treatment group decided to work at home, with the other half reallocating in favor of office working. After employees were allowed to choose where to work, the performance impact of WFH almost doubled, highlighting the benefits of choice when adopting modern management practices like home working.
The return of the putting-out system, a little history. Lamoreaux, Raff and Temin (2003) note that the putting-out system in US cotton-spinning came under pressure, in part, because of principal-agent problems between the manufacturers and home based weavers.
Lamoreaux, Raff andTemin (2003: 412-3) write,
“[h]owever, the enormous coordination problems that this system entailed (for ex-
ample, unsupervised weavers working in their homes turning out fabrics of vastly
varying qualities) spurred manufacturers to reconcentrate production in factories as
soon as technological innovation in the form of the power loom enabled them to
expand capacity sufficiently.”
In other words, one size does not fit all and productivity gains will occur only in some industries. The nature of the work and the ability to measure “effort” and thus control for moral hazard will be a factor in determining the success of putting-out.
Still, the manufacturing wave has waned as an employment tool and the knowledge industries are upon us. That fits in quite well with working from home. Journalism works well this way, particularly for women with children. The other thing working for this type is the much more relaxed employment conditions that allow flexibility.
An example of an exciting new potential home industry is 3D printing.. that could take care of the quality issues and give us a lot of innovative work.
JC
Yes, of course you have to consider the usual difficulties with regard to contracting. Call centres are clearly an industry where it is easy to measure output but the result still surprised me with its magnitude.