Does working from home actually work?

On one hand, if Richard Branson can do it, it can’t be all bad; he once said, “Yours truly has never worked out of an office, and never will.” Amazon’s best engineer works from a boat in Hawaii, and Craig Newmark (Craiglist’s Craig) stays at home and occasionally photographs birds.

On the other hand, a recent study showed that lots of people don’t actually do what they claim to do at home. Researchers found that 43 percent of workers reported watching TV while “working” remotely, 35 percent reported doing household chores, and 28 percent reported cooking dinner.

So as an employer, which do you choose?

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Homer Simpson working hard.

The Harvard Business Review ran a study to test the effectiveness of working at home, using the company Ctrip, a large travel agency in China, as its guinea pig. Before the study, Ctrip predicted that the benefits of working from home would include a lower turnover rate (which at the time was around 50 percent) and lower office costs for its expensive Shanghai base. The downsides were thought to include lower performance.

Researchers picked a subset of Ctrip volunteers to work from home, with the only change in the their job being the location in which they worked. The results? Their performance zoomed up by 13 percent over nine months (equivalent to working an extra day every week) and the amount of time they worked rose by 9.5 percent, stemming from fewer sick days and breaks.

Ctrip’s work-from-home employees experienced an increase in productivity per minute (due to the quiet environment) and staff turnover dropped by 50 percent compared to those still in the office. Work satisfaction increased, and “work exhaustion” lowered. A contributing factor, it seems, was the sense of control given to employees, who suddenly had a choice of where to work. Ctrip itself saved $1,900 per employee on furniture and office space.

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Photo Credit: Simpson Crazy

The problems, too, were unexpected. The biggest setback of working from home was not lower productivity, as feared—rather, it was loneliness. Half of work-at-home employees changed their minds and returned to the office.

So what’s the solution? According to Nicholas Bloom, Professor of Economics at Stanford University (who works from home):

“…the evidence still suggests that with most jobs, a good rule of thumb is to let employees have one to two days a week at home. It’s hugely beneficial to their well-being, helps you attract talent, and lowers attrition.”

The right balance of working of home lies in the Goldilocks approach: not too much, and not too little. Otherwise, as author Matthew Yglesias notes: “it’s a surprisingly efficient way to drive yourself insane.”