The dictates haven’t been popular. Farmers Group insurance CEO Raul Vargas recently made waves when he reversed the company’s work-from-home policy, requiring many formerly remote workers to come back into the office at least three days a week, infuriating hundreds of them. Other high-profile employers including Amazon, Disney, and Starbucks have also gotten tougher on returning workers to offices this year.
Companies across the U.S. are grappling with intense employee pushback, but a study published earlier this year, which has not yet been peer reviewed, finds just what many CEOs have suspected: Generous work-from-home policies may save money and please employees in the near term, but in the long term they’re likely to damage the business and stunt careers, especially for women and younger workers. The findings are notable enough to earn a spot for discussion at a National Bureau of Economic Research conference next month.
In a working paper titled “The Power of Proximity to Coworkers: Training for Tomorrow or Productivity Today?” researchers at Harvard, the New York Federal Reserve Bank, and the University of Iowa, examined software engineers at an unnamed Fortune 500 company, using data from before the pandemic, when offices were open, and during the pandemic, when engineers worked remotely. They also studied teams that were entirely in one building before the pandemic, and others spread across two buildings.
Researchers chose to study software jobs in part because they are especially amenable to remote work—the output is purely digital, and the industry follows a long-established practice of communicating and posting work online. Yet even in this intensely digital occupation, the study found that software engineers’ in-person presence significantly improved their training, especially for women and young people, though at a cost of near-term productivity. These are the study’s main takeaways:
Physical proximity leads to more extensive and deeper digital conversations, as well as more in-person contact
Before the pandemic, when an engineer’s team was all in one building, digital feedback on an engineer’s code was quicker, longer, and more detailed than when the team was spread out over two buildings. Face-to-face interactions, which were more numerous when team members were all in one building, also encouraged dialogue that “may be especially useful in engineers’ learning,” the authors write.
Proximity increases on-the-job training
Pre-pandemic, younger engineers received more comments on their programs than older engineers did—but only if teams sat together in the office. Those comments are important elements in how engineers learn the job.
Proximity is especially valuable for female engineers
They received 38% more comments when they sat with all their teammates versus when they were on a dispersed team before the pandemic. While male engineers also got more comments when physically with all their teammates, the increase was less than half of what the female engineers received. Comments to female engineers came from male and female commenters—suggesting that “the additional comments are not solely driven by male colleagues mansplaining nor female colleagues taking other female engineers under their wing.”
Human capital development seems to pay off
Early in their time at the company, engineers whose team members were in one building were less likely than engineers on distributed teams to be promoted—but in the long run, after more than 16 months of experience, they were more likely to be promoted. The authors hypothesize that “as engineers gain experience, the initial investments in their human capital may start to pay dividends in the quality of their code.”
Proximity means senior engineers turned in less code
The study found that when workers sat together, junior engineers got more training while senior engineers got less done. Researchers theorize that’s because the senior engineers are spending more time mentoring the junior engineers. Thus, “proximity creates a tradeoff between long-run human capital development and short-run output.” The tradeoff is neither good nor bad; it’s a choice that company leaders must make.
When a team had even one remote team member, the members who sat physically together received less on-the-job training
Researchers think that to accommodate the remote team member, teams shifted from in-person meetings to online meetings, canceling many of the advantages of proximity. As a result, “it may be more efficient to have firms or teams sort into being fully in-person or fully remote than to have hybrid teams where a few remote workers affect their in-person colleagues.”
This new study leaves readers—and the researchers—wanting to learn more about the magic of in-person interaction. Decades of research have shown that people build trust and collaborate more productively when physically together, but studies on how proximity affects overall organizational performance is still sparse. Eventually, the authors hope, we’ll be able “to diagnose whether digital interactions will ever be able to substitute for in-person ones.”
