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Here’s the proof culture still comes first in the age of remote work

January 27, 2022, 12:40 PM UTC

Many companies have announced plans to transition their workforce to a fully, or at least hybrid, remote structure, hoping to raise employee engagement and attract new recruits. However, these working-from-home perks might not be a panacea for deeper, more structural reforms.

Empirical research has long highlighted corporate culture–specifically managers–as the most important determinant of employee engagement and turnover. So, does culture still matter–or has the pandemic shifted underlying employee-employer dynamics?

Working with Professor Jason Schloetzer at Georgetown, we just released the first comprehensive analysis linking remote work with job satisfaction and turnover, drawing on unique data from PayScale.com. We found that hybrid work is associated with higher levels of job satisfaction but has no effect on turnover. However, fully remote work is not linked with an increase in job satisfaction, but with higher levels of intent to leave the organization.

Measures of corporate culture matter significantly more. Suppose, for instance, that an organization could help its employees feel appreciated for the work they do. That matters 10 to 20 times as much as the ability to work remotely on some days. Although other measures of corporate culture vary in their gravity, all matter substantially more than hybrid work availability.

However, there is no doubt now that remote work is here to stay and will provide an added degree of flexibility over the location where employees perform their work. While the percentage of workers who perform their work exclusively from home has declined from 54% to 25% between April 2020 and September 2021, the share of workers who perform at least some work from home has grown from 15% to 20%, according to the latest data from Gallup.

The availability of remote work will not be “a game-changer” for organizations’ ability to raise employee engagement, but it is a complementary tool in their arsenal. Each organization will have to decide how much remote work to allow–and whether different sets of employees should have different options when choosing how and when to do their work. Our research suggests that tasks requiring lower degrees of coordination are much easier to perform remotely and the employees who do so exhibit greater degrees of job satisfaction.

Unlike traditional statistical analyses, ours is the first to control for employees’ perception of their organization’s corporate culture, ranging from managerial quality to the degree of development and training opportunities.

Controlling for these factors, in addition to demographics, is hugely important because the people who can work remotely because of the nature of their job also tend to work in companies that have a higher quality of life and stronger corporate culture. Failing to control for these factors will lead researchers to infer that fully remote arrangements causally affect employee engagement when really, it’s a function of the broader cultural environment.

These results highlight that remote work is not a strategy in and of itself: Corporate culture and managerial quality remain quintessential drivers of employee engagement. Nonetheless, remote work will feed into a broader strategy aimed at improving employee engagement by raising the degree of flexibility in the workplace, particularly with intermediate work options.

Instead of commuting and general slack time in the workplace, employees can allocate that time towards career development and learning activities. Many began taking online courses. Using data from Datacamp, a premier online education platform focused on imparting data science and programming skills, I found that state quarantine policies in the U.S. led to an uptick in online learning.

As companies continue to strategize and implement new plans for 2022, let’s remember that remote work arrangements are not a quick fix for broken or ineffective organizational strategies. By focusing on creating a culture of excellence, appreciation, clear communication, and learning, companies can use remote work as a complementary tool to enable the sort of flexibility that helps organizations to flourish and generate value.

Christos A. Makridis is a research affiliate at Stanford University’s Digital Economy Lab and Columbia Business School’s Chazen Institute and a senior adviser at Gallup. He holds dual doctorates in economics and management science & engineering from Stanford University.

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