How would you feel about getting a say on stopping your daily commute to work during nine entire months? This is the question that Ctrip, a NASDAQ-listed Chinese travel agency asked to its call-center employees in 2010, giving those who matched the criteria the opportunity to work from home. This pregnancy-long experiment took place in Shanghai, where home working is far less frequent than in Western countries. Then again, it was an experiment, and it rose a lot of questions such as « will the employees be as productive even though they don’t have a hierarchy behind them? » or « won’t it keep the employees from getting a promotion? » Let’s see what came up from this experiment, and who really did enjoy its benefits.

The « win-win » situation

On the economic level, the research pointed out that working from home turns out to be a terrific solution for both the company and the employees. In the case of Ctrip, employees, who earned around $ 425 a month, got an average of 9.9% of wage increase (given that almost 50% of their earnings were performance-related pay), and a gain worth about 17% of their salary by saving commuting costs.
Meanwhile, the company after the trial estimated a value-increase worth as much as $ 2.000 per year per employee working at home. Such savings were generated by the dropping number of turnover that spared the cost of training new employees, and the gain of space in the offices. Last but not least, employee’s productivity was improved by 13%, thanks to fewer breaks during the day and more call per minute worked.

Interactions before wages…

Surprisingly, when they were asked whether they wanted to go on with working from home at the end of the trial, about 50% of the employees decided to go back to the office, despite the comfort of being at home and the extra money. A majority of them explained that they severely lacked the social interaction, which means that they were willing to go back to their old routine, and its bunch of inconvenient, rather than spending four of the five weekdays at home, the fifth one being the day when they met with their team leader.

…Or clout before comfort?

According to the paper, social activity is not the only aspect that influenced the employees to go back to their office. As a matter of fact, it appears that working from home might prevent one from getting promoted. They found it out when they compared the number of promoted employees who worked in the office with those who did not. A first explanation for that is that working from home may damage long-run careers because the employees are much less likely to get an opportunity when they are at home. Networking becomes a lot more difficult. Also, as the idiom “out of sight, out of mind” illustrates, the supervisors may have noticed less the skills and performance of the employees that they only saw once a week. Therefore, they had to wait longer to obtain a promotion. The paper also suggests that some of them where so comfortable staying at home, that they did not want to be promoted anyway.

About individual responsibility

Interestingly, the experiment lead to a self-selection from employees: those who were less productive from home naturally chose to go back to the office. This was even noticed amongst the employees who did not take part in the experiment on the first stage: two-third of the employees who initially volunteered to work from home but were randomly affected to the control group had changed their mind 10 months later and finally decided to keep working from the office. This positive sorting effect resulted in a final productivity increase of 22% from home-working, almost doubled compared to the 13% increase from a random selection amongst volunteers.

It is true that this research took place in Asia where it was in 2010 a real innovation in terms of management strategy. This experiment turned out to be very promising for Ctrip, and the company decided to go on with the working from home option. As we are writing this, companies are getting more and more familiar with this practice. What about you? Are you considering working home as an option? How does it work in your field? We would love to hear about you opinions and experiences, feel free to share with us!

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“DOES WORKING FROM HOME WORK? EVIDENCE FROM A CHINESE EXPERIMENT” published on November 6, 2014 by Nicholas Bloom, James Liang, John Roberts and Zhichun Jenny Ying