Nick Bloom | What Workers Want | Summary and Q&A

TL;DR

Economics professor Nicholas Bloom shares insights on the future of hybrid work, including the benefits and challenges, and predicts a shift towards a more distributed workforce.

Key Insights

• 😤 Hybrid work has become the preferred choice for firms, but the challenges of managing choice and disparities among team members remain.
• 💦 Effective performance management and output-based evaluation is crucial to the success of hybrid work.
• 💦 The future of work technology is rapidly advancing, and innovations in remote work tools and processes can be expected.
• 🥺 The pandemic has led to a "donut effect," with city centers experiencing outflows of households and businesses while suburbs see increased demand.

Transcript

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Questions & Answers

Q: What is the most common approach to hybrid work adopted by firms?

Most firms are opting for a hybrid approach where employees work in the office for a few days a week and work remotely for the remaining days.

Q: What are the main concerns and issues that leaders and managers have about implementing hybrid work?

Leaders and managers are concerned about ensuring equitable opportunities and promotion pathways for employees working remotely, as well as managing the challenges of mixed-mode meetings and maintaining culture and cohesion within teams.

Q: How will the shift towards hybrid work impact office spaces and real estate?

Office spaces are likely to be redesigned to prioritize collaborative spaces and open areas, with a reduced emphasis on individual workstations. There may also be a shift towards smaller satellite offices in suburban areas rather than large downtown office buildings.

Q: Will the move towards remote work lead to a significant migration of companies to secondary cities?

While there has been some movement from city centers to suburbs, the data does not support a significant migration of companies to secondary cities. The focus remains on large metropolitan areas, where tech and finance industries are concentrated.

Summary

In this episode, Sarah Guo interviews Nicholas Bloom, an economics and management professor at Stanford, about the future of hybrid work. They discuss the current trends in workplace strategies and the challenges and benefits of hybrid work models. They also touch on the importance of effective management and performance evaluation in a remote work environment. Bloom also shares insights on the impact of remote work on office space, geographic variation in remote work adoption, and the "donut effect" in real estate markets.

Questions & Answers

Q: Can you introduce yourself and share a bit about your research areas?

I'm Nicholas Bloom, a professor of economics at Stanford University. I have a background in management practices and have been researching remote work for over a decade. I am currently focused on studying the impact of remote work, collecting data, and advising firms on hybrid work models.

Q: What are the current workplace strategies being adopted by companies?

Most firms, particularly in the tech industry, have chosen the hybrid work model, where employees split their time between the office and remote work. This typically involves coming into the office for three days a week and working from home for the remaining days. Some firms, such as investment banks, prefer a full return to the office, while others, like Quora, have decided to stay fully remote. However, the majority of companies are opting for hybrid work arrangements.

Q: What are the challenges and concerns for leaders implementing hybrid work models?

Hybrid work models present a trade-off between the benefits of in-person interaction for innovation and culture-building and the advantages of remote work, such as saving commute time and individual productivity. One challenge is ensuring equal participation in meetings and avoiding a "curse of mixed mode" where some employees are in the office while others are remote. Another concern is the potential inequality in career progression and promotions for employees who choose to work from home more frequently. Research has shown that remote workers may face a promotion penalty compared to their in-office counterparts.

Q: How can companies address the issue of choice in hybrid work models?

There is a wide range of preferences when it comes to the number of days employees want to work from home. Some individuals prefer to never work from home, while others want to work remotely full-time. The majority falls in between, wanting to come into the office for one to four days a week. While giving employees the choice may seem ideal, it poses several challenges. The "curse of mixed mode" and the potential promotion penalty for remote workers are major concerns. It's important for companies to strike a balance and consider team-level choices that align with their overall hybrid work model.

Q: How can managers effectively lead hybrid teams?

Performance management and output-based evaluation are crucial in a remote work setting. Managers should focus on outcome-oriented measures rather than micromanaging the daily activities of remote employees. Data collection and analysis can help ensure that remote workers are not overlooked and are considered for promotions. Building a culture of trust and accountability is also key, allowing employees to work flexibly while ensuring they meet their goals and deadlines.

Q: What advice do you have for companies in terms of office space and design in a hybrid work model?

Office space should be designed to support collaborative work, as most of the time spent in the office will involve team activities. Open spaces, meeting rooms, and collaborative areas are essential. However, individual work areas, such as cubicles, will be less in demand as employees will focus on individual tasks during their remote work days. Companies should also consider short-term leases and be cautious about signing long leases due to the uncertain nature of hybrid work arrangements. High-rise buildings in city centers may face challenges as employees prioritize less dense locations with easier commutes.

Q: How has remote work impacted real estate markets and geographic variation in work-from-home adoption?

The pandemic has caused a "donut effect" in real estate markets. Central business districts in major cities have seen outflows of households and businesses, resulting in lower rental rates and decreased retail sales. Suburbs, on the other hand, have experienced increased demand and rising prices as people opt for larger homes and home offices. The impact is more significant in developed countries with better infrastructure and jobs that are conducive to remote work. However, cultural factors and preferences for face-to-face interaction may limit work-from-home adoption in some regions.

Q: Are secondary cities experiencing a rise in remote work and business opportunities?

The data does not support a significant rise in remote work and business opportunities in secondary cities. The movement out of major cities is relatively shallow, and most employees are choosing to live in suburbs rather than smaller towns. The decision to open offices in secondary cities is driven by factors such as the availability of talent and the preferences of employees. Until large companies start establishing a presence in these cities, the shift in remote work patterns will likely be limited.

Q: What changes do you predict for the future of work and office spaces?

The future of work is likely to be more distributed, with hybrid work models becoming the norm. Companies will continue to invest in tools and processes to support remote collaboration. Office spaces will evolve to focus on collaboration rather than individual work, with a greater emphasis on open spaces and meeting rooms. High-rise buildings in city centers may face challenges, while suburbs may become more attractive due to increased demand and improved amenities. The tight labor market will also lead to increased demand for remote work options and potential offshoring or outsourcing of certain job functions.

Takeaways

The shift towards hybrid work models is becoming increasingly common, with tech companies leading the way in adopting this approach. Hybrid work provides a balance between the benefits of in-person collaboration and the advantages of remote work, such as saving commute time and individual productivity. However, implementing hybrid work models comes with challenges, such as ensuring equal participation in meetings and avoiding inequality in career progression for remote workers. Effective management, emphasis on output-based evaluation, and thoughtful office space design are crucial for success in a hybrid work environment. The real estate market is experiencing a "donut effect," with central business districts seeing outflows of households and businesses while suburbs are seeing increased demand and rising prices. The future of work will likely be more distributed, with companies investing in tools and processes to support remote collaboration.

Summary & Key Takeaways

• Hybrid work, where employees split their time between the office and remote work, has become the dominant choice for firms, especially in the tech sector.

• The main benefit of hybrid work is the trade-off between in-person collaboration for innovation and culture-building and the time and commuting savings of remote work.

• The key challenge of hybrid work is managing choice and potential disparities among team members, as well as the need for effective performance management and connectivity.