Will working from home become the new normal after the pandemic?

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By Professor Stan Siebert
Department of Management, University of Birmingham

The University of Birmingham has a beautiful campus. A few months ago, another gleaming building opened, the £18 million extension to the Business School. This provides 120 new offices for the School. But the pandemic hit soon after staff had moved in, and all have since been working from home.

One can now imagine our decision-makers’ quandary. If working from home has been a success, savings should be made on expensive office space. Do offices in the Business School and elsewhere need to be reworked to form lecture rooms or other facilities? The following points can be made.

First, office costs need to be kept in perspective. While our School’s £18 million investment works out at about £180,000 per office, the annual cost is only £5,000 per office when discounted over 50 years at 3% interest. This is much less than the Shard’s annual rates of about £12,000 per desk — where Warwick University rents space.

Offices must pay their way of course. Efficient organisations can be thought of as searching for an optimum use for office space, by locating only those people in offices that need them, and allocating the least space possible. Working in offices provides advantages in terms of teamwork and bottom-up communication to managers. “Management by walking around” is a celebrated way of getting things done, and it requires offices and factory floors to be open and available to walk about so managers can listen to their employees.

On this argument, before the virus, organisations were on average at their optimums, with those not needing close management working from home (e.g. workers sewing garments who are paid by the piece), and the rest working in office spaces. In this model, what we were doing before the pandemic provides a snapshot of what is best.

However, times change, and businesses can make mistakes. Working from home may indeed raise productivity, as shown in Nick Bloom’s fascinating study of Chinese call-centre workers. In the study, a group worked mostly at home for a 9-month period, with 4 days of the week at home and 1 day in the office for team building. Those working from home were able to focus better, and had 13% higher productivity — handling more calls per minute.

Although interesting, we cannot easily generalise from this. Call centre work is centrally computer controlled and easily measurable. Also, the experiment allowed an important 1 day per week in the office. Even at hyper-connected Google, the CFO once said he wanted “as few as possible” to telecommute, to prevent employees becoming isolated.

Universities are also different in that students want to socialise. About one-fifth of prospective students have said that they plan to defer university this autumn if it is not “operating as usual”.

Socialising indeed is a word that often occurs in Nick Blooms’ study. While those in the experiment said they were happier to work at home, the majority in fact returned to the office when permitted at the end of the long experiment. In the end, it seems only around 10% of the workforce decided to work from home, even though the company encouraged this after the experiment.

Overall, there is likely to be some increase in life online. Amazon’s doubling in market capitalisation over the past 3 years shows that the clever investors anticipate such a permanent shift in patterns of work. But this is more likely to be “remote working” with 2 or 3 days spent at home and the remainder in the office, as suggested by US data on business expectations. This is becoming the academic pattern in any case. Offices are no longer the mini-libraries they used to be. But we will still need our offices, so the university need not adjust much.

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the University of Birmingham.

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