Why your bad boss will probably lose the remote-work wars

My good friend has a bad boss (for obvious reasons, my friend asked me to keep both of them anonymous). His boss is an older Gen Xer who had an illustrious career in the nonprofit world and climbed the ranks to a managerial position. He's hard-working, sharp, and exceptional at the parts of his job that don't involve managing people. But management, unfortunately for my friend, is just not his forte.

I could get into the gory details about why this boss is so bad. His self-absorption, his lack of mentorship, his passive aggressiveness, his calls, texts, and emails during vacation and time off, as if he's actively protesting any semblance of a work-life balance.

But the real issue is how this boss has handled his organization's shift to remote work. He was never cool with it, even during the height of the pandemic. He's had a hard time letting go, trusting his employees, and giving them autonomy. He's the type that checks to see whether your Slack work-status dot is green from 9 to 6. Even though my friend often works nights and weekends and has a solid record of getting results for his team, it doesn't seem to matter. His boss really cares about the theater of productivity, not just actual productivity. It's kind of weird because his office is full of go-getters, who went to good schools, have solid resumes, work long hours and have clearly joined this organization in the first place because they're dedicated to its mission. They don't need a babysitter.

Recently, as the pandemic has become less of a societal concern, this boss has been agitating for the team to ditch their hybrid work arrangement and return to the office full-time. The organization's leadership now seems poised to do just that, reverting their office back to how it operated before the pandemic. And my friend and his team are kind of freaking out. Many are considering quitting.

They're not alone. In a new study, economists Cevat Giray Aksoy, Jose Maria Barrero, Nicholas Bloom, Steven J. Davis, Mathias Dolls, and Pablo Zarate surveyed tens of thousands of workers across 27 countries. They found that more than a quarter of all workers who currently work from home at least one day per week say they will quit or seek a new remote-friendly job if their employers mandate a full-time return to the office.

The remote wars

Nicholas Bloom, one of the co-authors of this new study, is an economist at Stanford University. Over the last few years, Bloom has been a machine, pumping out some of the best research we have on remote work to date.

The biggest battle in the remote wars between bosses and office workers, Bloom says, was fought back in 2020. "Everyone wanted more days than their employers were committing to after the pandemic," Bloom says. "That battle was just decisively won by employees. The employees routed employers. Employers basically had to shift."

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For the most part, Bloom says, the American office world has settled into a new equilibrium where most office workers are getting what they want when it comes to their ability to work remotely. Bloom and his team have found that roughly half of Americans can logistically do their jobs from home. On average, he says, these office workers want to work remotely about two and half days per week. And that — again, on average — is exactly what they're getting.

But, just as the Battle of Gettysburg forever changed the trajectory of the Civil War yet did not decisively end it, the battle of 2020 did not bring the remote wars to an armistice either. The skirmishes continue. One prominent general in the anti-remote army has been Larry Fink, the CEO of BlackRock. Earlier this month, General Fink sent in the cavalry, arguing on Fox Business that remote work was so bad for worker productivity that forcing employees back into the office would result in "rising productivity that will offset some of the inflationary pressures" we're seeing in the economy.

Bloom's research shows the exact opposite. In July, he and his colleagues released a remarkable study that showed that remote work actually increased productivity, while also resulting in a host of other benefits. They did a randomized controlled trial — the gold standard of empirical research — at a real-world tech company called Trip.com. They randomly divided more than 1,600 employees of the company's coders, marketers, and finance folks into two groups based on whether their birthdays fell on even or odd days. One group was given the option to work on Wednesdays and Fridays at home. The control group had to work in the office full time (ouch).

Bloom and his colleagues found that the group that was allowed to work from home two days a week was more productive. The coders who could work remotely wrote 8% more lines of code than the coders forced to work in the office. The marketers and the finance types, meanwhile, saw better qualitative assessments. Even more, the group that was allowed to work remotely had a 35% lower attrition rate than those forced to work in the office. Suffice to say, Trip.com ended up rolling out hybrid-remote work to the entire company after the experiment ended.

Of course, the particulars of what sort of remote work policy is optimal will vary according to industry, type of job, the need for in-person interaction or collaboration, and so forth. But Bloom's recent study is just one of a slew that show that, generally speaking, allowing remote work has more benefits than costs, not just for employees, but for their companies.

And, far from increasing inflation, Bloom's research suggests that remote work has materially decreased it. In another study, Bloom and his colleagues find that workers value remote work so much that they're willing to accept lower pay to have it. They surveyed more than 500 companies, and they found that 38% of them expanded opportunities for remote work over the last year "to keep employees happy and to moderate wage-growth pressures."

In short, many American bosses have seen the writing on the wall, recognized the ample benefits of allowing remote work, and have given their employees what they want. Call them the good bosses.

But, of course, there are still many holdouts. My friend's boss, for one.

The behavioral economics of bad bosses

In the 1970s and 1980s, many economists, influenced by a model that portrays humans as completely rational, came to assume that managers make optimal decisions for their companies. How could they not? They represent the best and brightest. They get paid big bucks to do their jobs well. If anyone made rational decisions, they had to.

But, in the decades since, a slew of research has found that there are many bad bosses out there, and their flawed decisions can really hurt their organizations. In a recent study, for example, economists Mitchell Hoffman and Steven Tadelis used employee reviews of managers at a large tech firm to measure their people-management skills. They then tracked these managers to see what happened over time.

Interestingly, the economists found that the good and bad bosses had similar results when it came to how productive their teams were. What really differentiated them was something else: the rate at which their employees quit.

"We show that that measure of manager social skills is a very robust predictor of worker attrition — and particularly attrition that the firm says is regretted: high-performer attrition," Hoffman says. "It actually has a big impact on labor costs for the firm."

Over the last couple years, in what's been dubbed the Great Resignation — aka the Great Renegotiation — America has seen record rates of quitting. There are many reasons for this, including a super-tight labor market with lots of job options for people. But one contributor has likely been bad managers failing to read the tea leaves and refusing to accept employee demands for remote work. Bloom, backed by some research, sees a generational divide in all of this.

"I think most of the firms pushing for a full return to the office are the result of mistakes or kind of outdated thinking," Bloom says. "There are a number of people, particularly in their fifties and sixties, that have had, what, like 40 years in the workplace? They have done very well. They're running big organizations. There's this 'mini-me' phenomena: 'I did this for 40 years. I want everybody else to do the same thing.'"

Another theory for why managers might be stubbornly fighting the rising tide for remote work in industries where it's completely feasible is that maybe some of them are control freaks. After all, freeing workers to work remotely is about more than simply having to chat with them via Zoom. It can also be about giving them the freedom, trust, and respect to do their work how they see fit. Some bosses apparently have angst about not being able to constantly look over their employees' shoulders and monitor exactly what they're doing and how many hours they're doing it.

Social scientists sometimes call this kind of supervising "input management," as in managers are monitoring the inputs that workers put into their work: the number of hours they're at their desk, how and where they do their work, and so on.

But productivity is not fundamentally about inputs. It's really, in the end, about output: how much you produce and at what quality. Bloom says "output management" — setting clear targets and goals and assessing overall performance — has always been a superior way of motivating and monitoring professionals, even back when we were all in the office. Nonetheless, many managers continued to focus incessantly on inputs. Then, suddenly, when office workers were forced to work remotely, output management became "the only game in town," Bloom says.

"Tons of firms I've spoken to have discovered you have to use output management to manage remote workers, which means beefing up HR systems, which means more training, more 360 reviews, performance reviews," Bloom says. "If you're an employee, that's good news for you because it means your boss, rather than saying you gotta be chained to your desk 50 hours a week at these strict times, they just say, 'Get your report done, make your sales figures, achieve your targets, and kind of manage yourself.'"

Back in the 2020 battle over remote work, those in the pro-remote army often highlighted the obvious benefit of remote work: no more time-sucking commutes. That still is a huge gain for efficiency. But, Bloom says, it's since become clear that another huge gain from remote work has been forcing more companies to adopt output management. That gives workers more flexibility to do their work where, when, and how they believe they're most productive. Bloom says you can see that in his latest randomized controlled trial, with remote workers sometimes slightly reducing their time worked during normal business hours, but then making up for that on other days, nights, and weekends.

The remote battles may not be over, but Bloom believes, employees — and good bosses — are destined to win the war.