#30 Remote Work: Does Working from Home Work? with Nick Bloom

In this episode, Senthil sits with Professor Nick Bloom of Stanford University to discuss the evolution, research, and future of remote, hybrid, and in-person work. Drawing from global data and his landmark Trip.com study, Nick explains why hybrid models now dominate professional work, how work-from-home trends differ across countries and industries, and their impacts on productivity, innovation, and employee wellbeing. The conversation highlights the importance of coordinated hybrid schedules and the shifting nature of workplace equity, while offering a data-driven perspective for business leaders and policymakers navigating the changing world of work.

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Transcript

Senthil (00:04)
Welcome to the Business and Society Podcast. I am your host, Senthil. Every fortnight, I sit down with leading thinkers and practitioners to explore the big issues shaping business and society. Today, we are talking about remote work, a topic that continues to divide opinion. Some companies see clear benefits while others are pushing for a return to the office. To help us make sense of it,

I am joined by Professor Nick Bloom of Stanford University. Nick is one of the world's foremost experts on remote and hybrid work. influencing how leaders think about productivity, innovation, and the future of work. I hope you find this conversation both insightful and enriching.

Senthil (00:51)
Nick, very warm welcome to the show.

NICHOLAS A Bloom (00:54)
Yeah, thanks very much for having me on.

Senthil (00:57)
Well,

story. This was like one and a half years back, I was speaking to one of my mentors about starting a podcast. So he was asking me, okay, what are the kind of guests you want to invite? What do you have in mind? So I said, look, there are professors like Nick Bloom in Stanford who do such compelling research on issues like work from home. My goal is to invite such people. So one and a half year down the line,

I see this interview as a high point in my podcast career.

NICHOLAS A Bloom (01:23)
You're making me

blush even though this is a podcast. Thank you very much.

Senthil (01:27)
He will be listening to

this, such a delight, Nick, and I've been an admirer of your work since COVID. ⁓ Thank you so much for joining me today.

NICHOLAS A Bloom (01:31)
Thank you.

Thanks so much for having me on.

Senthil (01:39)
Well, in preparation for this interview, I went to your Google Scholar page and I seriously didn't know you're such a prolific scholar and researcher. There are like hundreds and hundreds of papers touching across multiple domains of economics.

But reflecting on our understanding of you, you are considered as one of the world's foremost experts on work from home, hybrid work. When did you get into this specific domain

NICHOLAS A Bloom (02:07)
I was kind of lucky in that I started looking into this in, I think I collected my first data in 2004, why I was living in London with my wife. She had two kids, took maternity leave twice, but from different employers. they were, one of them gave her kind of the statutory minimum, which I think was like six weeks at the time, and the other gave her six months full paid.

I remember being hugely interested as to why there was such variation. And if you look at management research, it tends to think, look, there's generally a good way to run companies for management practices. Things like have good performance reviews, measure stuff, use big data, be strategic, et cetera. But on practices or HR practices of things like maternity, paternity leave, job sharing, work from home, it was like all over the place. So I kind of thought, well, what is the best practice? And started to collect data.

And I have to say it was a very quiet area of research. I did get to meet President Obama in 2014. There was some media after Marissa Mayer banned work from home in Yahoo in 2013, but no one was that interested in work from home until the pandemic in 2020. And since then, you know, for more than five years now, I've kind of focused on it pretty much full time. A lot of it, I mean, as I talk about today, a large amount is talking to companies, organizations, governments, a lot of data collection and research. In fact, my last call was just...

on an ongoing research project on work from home

Senthil (03:29)
Nick, tell us a little bit about this idea of work from home. How old is this idea?

NICHOLAS A Bloom (03:35)
Well, if you look at the big sweep of history, we used to all work from home and live at home. So if you go back to 1000 AD, a thousand years ago, everyone lived in their hut and we probably worked on the fields and that was it. And we probably never went very far. People started to seriously commute en masse when we had the first factories. So that really started with the industrial revolution of kind 1750, 1800. And for a long time, offices and factory workers would all commute.

So in cities around the world, you commute half an hour and an hour, if not more. I think the idea, or at least the word telecommuting, in the kind of modern terms, started in 1973. So I remember that day, because I was born in 1973, so it's now 52 years old. And Jack Nillas did a project. He was at USC, University of Southern California, and did a project for AT &T, where he looked at what happens if employees phone stuff in.

He found it worked very well. And he published the paper, but no one really seemed to pay any attention. And so it kind of died. mean, you know, people sporadically work from home and it was growing over time, but it really wasn't a big thing. then obviously in, in March, 2020, the pandemic and the lockdown went meant work from home went in the U S from about 5 % of days to about 50%. So just a 10 X increase. that when it, that's when it became mainstream.

Senthil (05:02)
Got it, I just want to get the basics right before we get into some of the technical aspects of work from home. Help us understand, when we read things about work from home on media, you get to see a lot of terminologies like remote work, telework, hybrid work. Are there differences between these items or it's all about a combination of coming to office and working from home?

NICHOLAS A Bloom (05:25)
Yeah, mean, partly the language has changed over time. So it used to be called telecommuting and now it's called remote work or some people call it distributed work. For me, are really, there's only, there's kind of rather than two differences, there's kind of three versions. One is fully in person, which would mean you come in for a five day job, typically, you know, five days a week. The second version is hybrid and hybrid is quite common amongst managers and professionals. Actually, it's the most common form of working now, at least.

in Fortune 500 companies. And that means say you come in Tuesday, Wednesday, Thursday, work from home Monday, Friday. And then the third version is fully remote. And that will be say Airbnb, and you work fully remotely. And typically even fully remote workers are meeting up once every other month, but there's certainly no regular cadence coming to an office and you probably don't even have an office, you just, you know, there is no seat or desk allocated to you. So that's actually a three part split. And

You know, my big struggle often when I talk to people is they confuse two and three. So when you hear people like Jamie Dimon or Elon Musk or David Solomon, they're often beating up on work from home and they're attacking fully remote and using it as a reason to get rid of hybrid. And they're just kind of different things. So there's really three versions, fully in-person, hybrid and fully remote.

Senthil (06:40)
Right. So reading some of your research papers, It is the hybrid model that's most efficient. Is that correct? so, tell us a bit about your research.

NICHOLAS A Bloom (06:49)
Yes,

it depends who you are. So why don't I use an example, Stanford University, my employer. So we have 20,000 employees, believe it or not. So Stanford University is not just a university, it has two hospitals, an adults and a children's hospital. And it also has this weird thing with American universities, this huge sports complex. We have like an American football team, know, football team, etc. So of our 20,000 employees, about 10,000 are hybrid. So who are they?

Folks like me, so academics, we need to be in person to teach and research seminars and a bunch of meetings are best in person. But also, I'm right now at home talking to collaborators and other universities, doing data work readings best at home. So there's about 10,000 of us, academics and a bunch of senior staff that are hybrid. There's then about 7,000 employees that are fully in person. So who are they? They're like janitorial, food service, security.

cleaning, transportation, they just cannot do their jobs remotely. And so they have to come in every day. And then there's a third group, which for us is about 3000 employees that are fully remote. And who are they? They do yet another task. They are folks like back office HR. Like the other day I was processing a grant and I've been emailing back and forth with someone that's helping me on the admin. And I emailed him and said, where are you by the way?

And he said in Illinois, which is, a thousand miles from here. And I was like, okay, so you must be remote. And he was like, yes. So typically what you see in large organizations at any companies above about, you know, a thousand employees upwards, you actually have all three versions. So probably your listeners are mostly managers and professionals. And for those types of jobs, people with university degrees, they are typically hybrid. For people that left school at 16, they have kind of low paid jobs, jobs paid by the hour. They are typically fully in person.

Senthil (08:37)
let's keep to this three classifications that makes it crystal clear. If you look at a country, let's say United States for example, what percentage of employees fall into these three buckets?

NICHOLAS A Bloom (08:49)
So if you look at the US, there are roughly 60 % of people have to come in every day. So this data is all, you you're in Australia, but this is true across Northern Europe, Australia, you know, we have one project that's collecting global data, so we have data for Australia, New Zealand, UK, right across Europe into Africa, Asia, South America. So what you generally see is around 60, 70 % of people, depends on the level of, know, but for Australia, the US have to come in every day.

There's around 30 % that are hybrid. So that's most managers, professionals. If you think of someone has a university degree, is working in a kind of graduate job, they're probably on a hybrid schedule, most commonly working from home one or two days a week. And then there's around 10 % of people that are fully remote. Who are they? tend to be folks in back office, some support, a lot of call centers. So most call centers now are mostly remote, payroll, et cetera.

Senthil (09:47)
Interesting. Are there differences between countries Nick? Say Australia evolves differently in terms of work from home versus the United States or a developing economy say in South Asia or it's all the same because the pandemic was global?

NICHOLAS A Bloom (10:01)
No, so they're very big. So we have a paper we just put out, we surveyed 40 countries. To give you a rough overview, what you see is, oddly enough, English speaking countries. well, the ones we surveyed, at least the US, Canada, Australia, New Zealand, England, Ireland, they tend to have the highest levels of work from home. It's pretty high in Northern Europe, think Germany, Sweden, France, it then lower in kind of Southern Europe, Portugal, Greece, a bit lower in South America and Africa, and it's lowest of all in Asia.

certainly, you know, China, Japan, South Korea, etc. So question is, why is that there that massive variation? And there are various reasons. One is industrial structure level of development connects connections of broadband city size, etc. It looks like probably the largest factor we could see that explains it across countries oddly is kind of cultural factors. So just kind of at its essence, and I've talked to I don't know a couple of hundred multinationals, you hear this a lot.

In the US, there is more of a push towards if you get your job done. I want you to come in three days a week, but I'll let you work from home for two. So as long as you're performing fine, American companies tend to be pretty aggressive, evaluating and measuring performance, same in the UK, same in Australia, they generally will let you work from home typically a couple of days a week. If you look at say Asia, India, China, South Korea, Japan, the countries have data from actually Malaysia, a bunch of Asian countries.

there is more emphasis on FaceTime. So there's more of a sense we want you to come into the office. It's not that work from home is never allowed. But in our data, say Japan, we have pretty good data on it. It's concentrated much more multinationals, particularly Europe and US multinationals. Domestic firms are relatively reluctant to allow folks to work from home. Oddly, I think that's a huge mistake. And one of the reasons if you look at Japan or South Korea, they have really congested cities, horrible commutes.

It's exactly, know, but great connectivity. So it's the kind of place that work from home potentially could work out pretty well. And they also have very low fertility rates. And one of the things we find in research is allowing one or both in particular, both members of a couple to work from home one or more days a week is associated with much higher birth rates. So if you're say South Korea, and you're really worried about very low birth rates, one, you know, policy to address that is to make it easier for people to look after kids.

And therefore not surprising right now, the government is trying to encourage actually firms to let employees work from home one, two days a week, which is odd because you know, that's what the South Koreans are doing. If you look at what the U S is currently doing under the Trump administration is trying to get everyone back into the office. Bizarrely at the same time as it's trying to increase birth rates and they kind of push in the opposite direction. But yeah, there are international differences and Asia tends to be lowest and North America tends to be highest.

Senthil (12:52)
That's interesting. There seems to be a subtle message about gender there. You talked about childcare, which research shows many women do Did you see any correlation between work from home and women feel much more satisfied with their job or bringing more women into labor force?

NICHOLAS A Bloom (13:10)
It varies again massively by country. So I take one extreme in the US. So in the US, if you look in survey data, you are right. So the biggest predictor actually of wanting to or working from home is actually children under the age of 12. So both men and women with young children tend to have much higher levels of work from home. It is true that it's slightly increased even more for women versus men, but those differences aren't actually very big in the US.

If you just give you a sense, I think in the most recent data, something like 28 % of days for work from home by women and maybe 27 or 26 and half by men. So those are very, very similar numbers. There are countries where this is really quite different. So I have a student called Sahani Jalota. In fact, she's now graduated, but she did an amazing, randomized control trial in India. And she randomized offering both men and women work from home options in this company and discovered

Men were pretty indifferent. They basically would choose the job that paid the most. But women in India had an enormous preference to be able to work from home. And she found a massive differences. So like the double the rate of employment if you let them work from home. And she attributed it to partly just safety, know, the safety commuting and, you know, harassment in the workplace and also cultural norms around women not working in the way that, you know, she said it was basically often the husbands wouldn't want their wives to be seen working.

I, you know, more extreme talk to a field worker for an NGO out in Afghanistan. And he said, if we employ women in Afghanistan, the only way we can do it is fully remotely because the Taliban bans women working. So we can only really do it basically secretly. We have them work from home. So you're right. There is a gender divide. It's just not there in every country. The other divide I should mention that comes out a lot in the data is actually by disability. So

If you look at folks that have like a disability, which is actually in the U S is quite common. If you look at folks of age 50 or above them, have back issues or walking issues or some slight, you know, hearing or sight issues. They also have a huge preference to work from home massive. So another group that if you let them work from home, tend to work a lot folks with a disability, but if you don't don't tend. So it depends over in India, gender is the biggest divider. If you're saying the U S or Australia is probably disability.

Senthil (15:28)
Huh so it varies from one country to another. I think we are also touching on this idea of equity. So the thing we hear, common folks like us who are not deep into researching this area is this entire idea of work from home or hybrid work is meant for top executives. frontline workers or people who are paid less. They are not given this.

luxury of hybrid work or work from home. What does the research say?

NICHOLAS A Bloom (15:56)
So you're totally right. So that is absolutely true. So if you look in 2025, being able to work from home is a strong predictor of earnings. So folks that work from home in our data earn on average about twice as much as those that don't. So if you to tell me something has to go into the office, in fact, not the office, has to go to work five days a week.

versus some other person that gets to work from home two days a week without knowing anything else. I'd say the second person probably is earning twice as much as the first. And you can guess why. If you're working at McDonald's or KFC, you're gonna go in every day. Whereas if you're working in investment bank, typically you can work from home a couple of days a week. So that is true. Interestingly, that was not true prior to 2020. So one of the big things that was a revolution about the pandemic is if you go back to 2018 or 2010 or 2000, I have data from that.

you see that working from home was associated with lower pay. So normally back in 2000, when you look in the data, it was pretty rare. And to the extent it happened, it was often actually folks with kids, particularly women that would do it, had a big pay cut, but it's the only way they could be able to work and work from home. And suddenly post 2020, it totally flipped. Now it's kind of execs. And you're right, it's kind of seen as a status symbol and something people show off about almost versus before the pandemic, was...

something that was, you you do it as a compromise in order to keep your job. So that's true. And that is also an issue. So when I've talked to companies, it comes up a lot. There's the kind of them and us. It is hard to deal with it. I mean, there is inequality already. There's inequality in pay and there's inequality in health benefits and there's inequality, you know, hours, et cetera. And this is yet another one. There are some solutions to that. was talking to a company, interestingly, you know, about a week back called Mosaic.

So you probably never heard of Mosaic. They're a massive Fortune 500 company that make fertilizer and chemicals. They're not a household name, but they're an enormous company that I think has like 50, 60, 70,000 employees. And they were saying, yes, their office employees can work from home a couple of days a week, but in order to try and improve things for frontline workers out in production sites and quarries, et cetera, they now allow them to have every other Friday off and shift their hours around a little bit.

So basically you have to work 80 hours over the two weeks, but you can take a Friday off if you do your hours. So if you like, what you can now do is work slightly more Monday to Thursday, not come in on Friday. And so there are ways that hourly paid workers can get some greater job flexibility, much like kind of more graduate hybrid workers can, but it's harder and it requires a bit more innovation.

Senthil (18:34)
Nick, I think it's also a good way to talk about your paper on nature about the study you did with trip.com. you give a comprehensive view of what that study about, what are the key findings you got?

NICHOLAS A Bloom (18:47)
Yes, exactly. So we published a paper in Nature in 2024, so June 2024. What it did was it ran an A-B test on hybrid. So to step back, anyone listening, all of us, know, Senthil, you, me, we've all been involved in hundreds, probably thousands of A-B tests without even realizing it. So if you've ever used Google or Amazon or Facebook or, you know, Instagram or any of dozens and dozens, hundreds of computer websites,

you're probably not aware of, they're always randomizing. So when you go to Amazon, they're endlessly randomizing over what ads you're shown and the font and the size and the movement and the slight subtle location or changes on the screen. And what they do is they're randomized and they test this thing and find out which one leads consumers to buy more and spend more money, et cetera. So this totally standard in tech, but interestingly, they never do A-B tests, ever on other things like management practices. So we finally managed to persuade one company, trip.com.

which is a big NASDAQ listed travel agent. They are worth about $50 billion. They have 40,000 employees. They're huge. I know them because their founding CEO, James Liang, was in my class about almost 20 years ago in Stanford so I have a connection to him, who's now the chairman, and Jane Sun. She's the CEO. And what they agreed to do was, and they executed, was an A-B test and work from her. So they took 1,600 people in two divisions.

They were all graduates. So these are all folks with a university degree. A third are actually post-grads at MBAs, masters, JDs, et cetera. So super educated. They're in marketing, finance, accounting, and computer engineering. So these are very elite jobs. And they randomized by even or odd birthday as to whether you got to work hybrid. So if you had an even birthday, so you worked on the second, fourth, sixth, eighth of the month, you had to come in all five days as normal. That was the standard practice.

And if you were born on the odd day, so I'm 5th of May, that's an odd, the five is a fifth, an odd day, you got to now work from home on Wednesday and Friday. And they ran this for six months. And then they collected data for up to another 18 months, so making 24 months in total of data. So what did we find? Two things. The first thing was a null result. It's very interesting. There was no effect on productivity. So we looked at performance reviews, we looked at...

promotions, leadership scores, innovation scores, lines of code written, a ton of different productivity metrics. And we just didn't find any impact at six months, 12 months, 18 or 24 months. And it wasn't positive, wasn't negative. And the sample is really big. This is 1,600 people. So it's a very tight zero. And when you interviewed people, it kind of became obvious what was going on. They said, look, there's a real benefit for coming to the office. It's great for mentoring.

great for innovating, for building culture, but we get three days a week already. get Monday, Tuesday, Thursday. So those extra last two days, you know, they're helpful, but they're not, you know, they're not so important because we've already got three days a week to have our mentoring and meetings, et cetera. And if we work from home on those final two days, the benefit is A, it's quieter. So you can do deep work and concentrate without noise in the background and B, you have to commute, which is saving us over, you know, typically an hour and 20 minutes.

day and some of that they spend on working and then more relaxed, etc. So finding one that says no effect on productivity is not better, it is not worse. Finding two was employees really liked it, you surveyed them and most importantly, their quit rates fell by a third. And the company looked at it and said, look, every person that quits cost the business about $50,000. Now, why is that? They said, well, if somebody quits, so essentially, if you know, you're working for me and you quit, I've got to go out re advertise.

I then got to go interview a bunch of candidates, whoever I pick, I've got to onboard them. I then got to spend six months, maybe even a year training them, getting up to speed. You know, I have the lost production or lost, you know, while you're at these. It said it's an incredibly expensive process and they reckon it costs them $50,000. And so they said, look, the C-suite, the executive, the CEO looked at the data and said, this is a total no brainer. It's massively profitable having hybrid because it doesn't affect.

revenue because it doesn't affect productivity, but it costs our costs by about $20 million a year. So as a result, they just rolled it out to the whole business. And that in a nutshell is why hybrid is now adopted by 70 % of Fortune 500 companies. It's just very profitable. So when I talk to managers and execs, you know, there are lots of social reasons, you know, saving on climate and keeping families together, reasons, et cetera, to promote hybrid, but ultimately for managers, they answer to the board and to the CEO.

So they're under pressure. And the best reason is honestly, it helps improve business performance and profitability.

Senthil (23:36)
why do we hear from some top CEOs of highly respected Jamie Dimon for example, who are critical about productivity and remote work.

NICHOLAS A Bloom (23:46)
Well, there are kind of four reasons going on. One is that, you know, take Amazon, that's a high profile example, you know, or the US federal government. One reason is this is really a way to reduce headcount. So if you look at Andrew Jassy's memo, when Amazon announced the full return to the office in the same memo, he talked about the company was too big, they needed to delay, reduce headcount, etc. And so one way is the thinking, look, I'm Amazon, I got to cut headcount by 10%. In fact, they have been shrinking. If you look at their

SEC filings, their number of employees has been falling. And one view is, look, I just fire a bunch of people, but it's expensive. I got to pay severance pay and you know, that's a costly thing to do. So why don't instead I ban work from home and just hope five to 10 % of employees will quit. And that's what the federal government's been doing in the US with part of DOGE So, you know, in some ways that sounds great, but there's an obvious downside to this, which is you don't choose who gets to leave, your employees choose. And often it turns out the best employees that walk out the door and not.

you know, not the ones you might choose. And so what you tend to see is yes, you can cheaply reduce headcount, but it comes at a real cost because your best performers tend to exit. in fact, Amazon right now is now struggling a bit with cloud and AI, probably in part because of that, because some of their top talent walked out the door after September, 2024. That's reason one reason two there's a great study out of Pittsburgh by this guy, Mark Maher and coauthors where they studied the fortune 1500, 1500 companies.

and looked at when they made return to office announcements and looked at what predicted that and what happens afterwards. Turns out the biggest predictor of an RTO announcement is a drop in stock price in the few months running up to it. So the interpretation is, look, I'm a CEO of a company. The stock price is doing badly. I'm under pressure from my board. I may honestly be under risk of getting kicked out of the firm. And I come up with a plan. I say, you know what? It's work from home.

And if only I can ban work from home, which I'm now going to do, things are going to be better. So I think the second reason is it's a blame game in his data, by the way, after they ban work from home. they are to interestingly performance doesn't get better, but doesn't get worse either. Stock price doesn't go up. doesn't go down. So I wouldn't say it goes in either direction. So it's kind of a nowhere. What you do see is glass door ratings. So the company plummet. So the employees are really angry. There's tons of comments and annoyance, know, but you know, it's a

Number two is an excuse. Number three is for some particularly older CEOs having talked to them and having looked at statements. think, you know, I'm 52, so I'm kind of roughly in this age group, but if you look at people, certainly 55 plus, maybe 60 CEOs, current CEOs, to be a CEO for a start off, they've done incredibly well. So these are incredibly highly able, super successful, very smart, very driven individuals.

But when they look at themselves, they think, look, I started my working life probably in the mid-80s. I've been in person for the first 25, 30 years, and that was when my career really took off. And so their view is that's the way the world should be. And so they tend to kind of self-project that. And so you tend to see also the companies that are the most aggressive returns tend to have very powerful, typically older male CEOs that are pushing everyone back. So that's reason three.

Reason four, I think is there's a lot of confusion linking back to what I said at the beginning between fully remote and hybrid. And so often the statements in the media are not so much these execs hate hybrid, they just don't like fully remote. And I have some sympathy for that. Fully remote can damage productivity, mentoring and culture building. But they tend to say, I mean, like Elon Musk is kind of, know, pin up for this. He beats up on...

working from home, but what he was complaining about when you look at it was like April, May, June, 2020, when everyone was fully remote. You know, is that the same as hybrid? No, it's like kind of criticizing beer because you don't like wine. I mean, they're related, but they're not that related. And so, you know, there are a variety of reasons why execs have been calling people back to the office. Some are correct and some are kind of misunderstandings and some are just cheap headcount reduction.

Senthil (27:55)
Is it something to do with the industry Nick? I'm not sure whether you did research on multiple industries, trip.com I booked, ticket I've been a user of their platform, versus Amazon a very different operating model. Same goes for banking. Did your research cover all these sectors

NICHOLAS A Bloom (28:13)
There is huge industry variation. You may be surprised, possibly given your examples for what's top and bottom. Probably the best data on this is the US Census Bureau in the US has surveyed 150,000 firms to collect data. This is an enormous data set and they did this at the end of 2024, beginning of 2025. What they find is top of the charts, most work from home days is actually technology information, which is kind of like tech firms. On average, that's 2.7 days a week.

So, you Amazon's a bit of an outlier, but if you look at most tech firms, Google's, Microsoft's, know, Facebook's, Upwork, Dropbox, et cetera, they're a mix, but on average, they are only in the office half the time and working from them half the time. Finance is pretty high too. I'm aware that Goldman Sachs and JP Morgan are trying to get people back five days a week, but they're not doing it for all their employees. And that's definitely not all firms. Finance is pretty high mainly because it's a desk job using a computer. And that's the kind of thing can be done at home.

So you go all the way to the other end, the lowest industry at point one day a week. So hardly anything is accommodation. So if accommodation think of hotels, you really can't run hotels from home. Food service is just above it. So yes, industry shows huge variation. It's mainly, if you want to look at high work from home industries, it's places that have graduates using a computer. You're going to look at low work from home industries. It's people with loads of frontline workers serving food, serving customers using equipment like manufacturing.

Senthil (29:41)
Right, suppose if you want to look at the productivity, that cannot be binary answer you have to factor in the sector. Is that a fair observation?

NICHOLAS A Bloom (29:49)
Yeah, the ultimately is really the occupation. So I'll give you three different occupations to have an example. One is burger flipper. It's like almost impossible to flip burgers from home. So productivity working at McDonald's from home, if you're supposed to cook burgers is zero. I mean, just can't do that. Second case, maybe someone like me, I could teach over Zoom. did it in the pandemic, but I'd say it's pretty horrible.

So it's my sense of how much I could teach in an hour is about 50 % of what I could teach in a classroom in person. students were not paying attention. don't, you know, I'm not surprised. I would find it very hard to be on, you know, being taught on zoom. So it's possible, but it's much less productive. And then example three would be call centers. So I have now three different papers looking at call centers and all three of them, you find people are more productive working at home. So why is that? Well, the reason is if you've ever worked in a call center or visited them,

The way you manage them is not watching what people do, is you just know how many calls they're answering per hour. And somebody distantly is randomly listening to 1 % to give you a quality assurance check and other metrics. So nobody's watching whether somebody's working. It's all done by, know, distant monitoring. So you don't need to be in the office. And if you let those employees work from home, it's a lot quieter. So call centers are really noisy. It's a low wage jobs. tend to pack them into these rooms.

And so if you ever run up someone in the call center, they've asked you to repeat, they don't seem to understand what you say. One explanation that's quite common is they didn't actually hear you because the person next door to them is shouting or laughing or something's going on. So we find that call center employees are typically about 10 % more productive at home and quality is unchanged. So it depends critically on what you do. It can go from a disaster as in burger flipper to actually more productive, fully remote as in

Senthil (31:34)
What does your research say about the impact of work from home on innovation and collaboration? one of the most compelling narrative I heard that leaders say when people meet you get ideas remote remote work or work from home basically does not give opportunities for that.

NICHOLAS A Bloom (31:51)
Yes, so there's definitely a lot of truth in it. And I kind of refine what I've taken it. So first off, my job is around innovate. I teach, but my primary role at Stanford as a professor is writing papers, doing research. so I live this every day. My own experience is research seminars and talks are definitely best in person. And there's other kind of meetings that work well.

But there are different types of meetings with people I meet, you know, know, wow, that I'm going over something we've discussed eight times before getting the updated results that actually totally fine on zoom. I actually personally prefer them on zoom because we can all look at the screen and fiddle around. If I was to be scientific about it. I think the best thing to do is some mix. So the proceedings and National Academy of Sciences actually has a really nice paper on

evaluating this. So they randomized groups that were asked to solve something called the traveling salesman problem. So the traveling salesman problem is a classic problem going back to the 50s. That is about working out the best route for a salesperson has to go around 10 cities selling stuff and you've to map it out. And it turns out it's computation. It's a very hard problem. You know, you can do trial and error and it's hard. It's hard to get a lot better. Anyway, so they ask they in this experiment, they got groups and they randomized the groups into one of three treatments group one, they were in person for all six hours.

So to six for six hours together, they discussed it in the end, they came up with an answer. Group two, they're all separate for six hours. They then briefly met at the last minute, figured out whose answer they go with and ended that. And group three, they did what's called bursting. So they met for an hour. They went off again for an hour and sat and quietly thought and then met up again for an hour and off and ended that three times. It turns out group three had the best answer. Why is that? Well, it looks like in innovation, you really want a combination of kind of in person time to

Can you put post-it notes on whiteboards and bounce ideas off each other and chat next to the water cooler. But also some quiet time to read, think, reflect. Maybe not be so ram-railed into the one person that talks all the time in those meetings and overrules everything. And so that kind of looks a lot like hybrid. So actually think hybrid, if it's well designed and well organized, probably is best for innovation. Now to be clear, what does well organized hybrid means? It means people all come in on the same day. So.

I'll give you an example of two different organizations. won't name them because it's a bit embarrassing to the bad one, but the good one had worked from home two days a week. Everyone came in Tuesday, Thursday. You were made to come in. If you didn't, you're in trouble and you know, get sanctioned by your manager. When I talked to the employees, they were basically very happy. They said, look, you know, we don't want to commute, but on the days we do commute and it feels like it's worth it. We come in and there's people in the office is busy. We have a lot of in-person events, lunches, trainings.

⁓ It feels like you get a return on a commute and you feel connected up to your coworkers and they can always see them. Organization two, the mandate was to come in four days a week, but no one was telling you which days and it was patchily enforced. When I spoke to employees there, they said, it's not great. I come in, the office is half empty. Some people are coming in, others aren't. I don't know if I'm to get in trouble. I'm not really certain. So I'm coming in two, three days a week, but you know, I'm not coming in all four. Nobody's doing that.

But when I come in, it's half empty. And when I'm in the office, I'm mostly just on Zoom. Because whenever I'm meeting a three or four people, there's always one of them not here. And so I just Zoom it. And that latter is like a disaster. So that's a way to kill innovation, kill culture, annoy employees. So my advice is for hybrid, A, coordinate. So at the team level or the whatever level, the group level or the office level, people work, have the same days in. And B, I mean, it's kind of like TUSK.

tough love, but I would make sure it's enforced because, you know, Senthil if its you and me. And let's say two others. don't know, Sarah and Bob. And we come in and I say, Hey guys, you know, it's England playing today in the euros. I really want to watch it and stay home because I don't want to miss the start of the games. starts at four. It then means if I'm working from home that day, the three of you, then, you know, we have a meeting involving me. You have to, you know, get on zoom and join me in. It's kind of irritating. And you'll think, why did we come in and Nick is, you know, a home. So

Enforcement is important because it's a collective experience and if one person knocked out it's kind of like the weakest link in the chain

Senthil (36:02)
Great, that relates to my own example, like in my job, this was like one and a half years back. We decided that we'll go all remote. So I announced this to our team, both in Australia and New Zealand. But right after one or one and a half months, the team got back and saying that, sorry, this is making us very lonely. We want some office time. So we again brought this hybrid model. thought, okay, weekly, each number of days, we all come to office and.

It's working so far. So yes, we made the days constant. So we said, say for example, Thursday, everyone must be in office. So the other days you work.

NICHOLAS A Bloom (36:33)
Do coordinate on the days?

No, works.

mean, days, you know, coordinating on days is a great example. had a friend of mine. She's in London. And I was talking to the other day and I was saying, she said, I have to come in two days a week. And I was like, Oh, which days you choose? And she said, Oh, Monday, Friday. I was like, that's kind of unusual days. Friday particularly is really an empty office day. And she said, Yeah, yeah. But the reason is I don't like my, I don't like my colleagues. So it was like, okay, well, that tells you, you

Senthil (37:10)
Right.

NICHOLAS A Bloom (37:12)
there's an issue with, you know, choice often is problematic. So yes, I would coordinate. also generally think it's good to do on a weekly basis as you're doing. You know, I've been asked this a few times, somebody say our company has people just come in, you know, for one week each month. So the first week of the month we come in and they say, it's great because people can live far away and they just have to come in for one week. That definitely has some appeal. So I know a few organizations that do that. There are a couple of downsides. One is,

If you have kids, you know, I have kids, if you have kids, that's a nightmare in childcare. Like, you know, you can't organize creche or, you know, childcare on a, on a monthly basis like that. And if I had to go away for one month, one week a month is, you know, it's going to cause chaos with my wife. So it's really hard for people that have kids actually. And secondly, or maybe pets as well. And secondly, um, the other issue is if you've got to deal with something at a high speed, if we just finished our week in person, I'm not going to see you for almost another month.

And so, you know, there are lots of different flavors, but generally my advice is I would probably use the same days on a weekly basis. That seems to what works best. know, Thursdays, Tuesdays, Thursday, Tuesday, Wednesday, Thursdays, these are all very common models.

Senthil (38:26)
Great to know. Nick, I'm sure you're noticing there is an increasing interest among policymakers about workplaces and stuff. So as we speak in Victoria, the state I'm from in Australia, that's the talk about four-day work week and stuff. I know there are differences between remote work and four-day work week, but I want you to tell us, for a policymaker who's listening to this, what are the benefits

for the society by embracing hybrid work models.

NICHOLAS A Bloom (38:56)
Benefits for society. There are some benefits or a couple of costs, but why don't I go through it. So benefit one, biggest benefit, employees are much happier. Ultimately, society is about people. And if people meaning employees are happier, that's an enormous gain. So we estimate that the typical employee values the ability to work from home two or three days a week, the same as about five to 8 % pay increase. So that's enormous. That's absolutely enormous. So that is, you know, by far the biggest game.

Benefit two is on average, actually firms seem to be more profitable because you reduce turnover and that's a big benefit to firms. So it looks like firms actually gain as well. And then finally, what about society more generally? Well, there are some costs and benefits. I go through a couple of benefits and a couple of costs. So a couple of benefits, one is less commuting. So that reduces transit pollution. I think it's something like

driving and transit, something like 20 % of all pollution. So it's material, it's not massive. You're not going to end climate change, but you couldn't make a dent. And secondly, it means that parents have more time to their kids. So if you look at the American time you sow it, for example, you see people on hybrid, both men and women are spending, I think it was a one and a half to two hours more a week with their children, which in the long run is a big benefit. It means they have more space, you can live a bit further out. What are the downsides? I mean, one obvious downside is,

big cities, particularly big city centers, a big quarter. It's not obvious to me that's an enormous issue, actually. So if I look at San Francisco, there are huge protests in Sydney, I know it's definitely the same in Melbourne, about it's so expensive to live in the center of these cities and people complaining about that they've been priced out. And so if some techies and bankers and people with financial services move out to the suburbs and aren't in city centers quite as much, that's maybe good. mean, it reduces property prices, means some other people can...

live in there. I think the bigger thing that's a problem, and it may not be in Australia, isn't the US, is tax. So it turns out, due to a of a quirk of history, American cities are very small. So take San Francisco, my local city, it's actually only 50 square miles. It doesn't even include the Golden Gate Bridge or the airport. So believe it or not, San Francisco airport and the Golden Gate Bridge are not even in the city of San Francisco. Why is that relevant? Well, it means if a bunch of employees go to hybrid and some firms move out,

or in the city less and employees are living out. They're not paying as much, they're not paying taxes to the city anymore. They're paying out to the suburbs roundabout. And that leaves cities with a real kind of fiscal hole and transit organizations and trains and subways are the real problem. And so that is ended up also being a bit of an issue. Now it isn't a national issue. That tax is going somewhere, but it's going out to the suburbs. So in London, where I'm from originally, the city is enormous. So if you move out to the suburb, you're still in London.

But in America, and I don't know what it is in Australia, it depends how big these cities are, but American cities are just far too small. They're like the center of, know, Sydney is what's called San Francisco. And so that is a problem. That's why you're seeing mayors of big US cities complaining about this wanting people back. It's because their cities are tiny. So if you move five, 10 miles out, because you're now a hybrid, you're no longer paying them tax, not losing it.

Senthil (42:06)
What is the future of this entire remote work, hybrid work? I really admire your column on The Economist, where you talked about the Nike Swoosh of WFH, work from home. Could you talk a little about this idea before we move to the final section?

NICHOLAS A Bloom (42:21)
Yeah, I mean, the future is increased level of work from home, just technology is improving all the time. So audio, visual, I mean, there's a company I'm, you know, I know up in SF that's producing 12 by 12 foot screens. So you can have full body things. They have cameras throughout the screens. They kind of use AI to splice it together. the technology is getting better. And that just means in the long run, work from home rates are going to be up even if right now. So they're dropping a bit. They're kind of flat lined out about now, but in the long run, it's going to rise.

Senthil (42:51)
Well, Nick, we moving to the last section. There three standard questions I ask all my guests, How do you handle differences of opinion at your work

NICHOLAS A Bloom (43:01)
Well, my guess, gosh, I'm an academic, so you can't imagine how many differences opinions there are. In academia, generally, you know, there's good and bad sides of academia. This is one of the areas where I think is good. There is open discussion. So there are different opinions all the time. Professors, you know, are not bashful about making their opinions felt, but at least in economics, I don't know how it varies, but particularly in research seminars and meetings, people kind of logically debate it.

Thankfully, there's no real boss character. mean, I'm a professor, there's some what's called a head of department, but he or she is not really my boss exactly. So you're not shy. I have also worked in the UK government and I worked in consulting and McKinsey and in those two environments, I was less certain I could speak up. There was one incident and one of those organizations I spoke up and spoke the truth, but you I regretted speaking truth to power, put it that way. So, um,

I would say if you're in the corporate world or in government is less obvious. want to, you know, if there's a difference of opinion, sometimes I hate to say it, but your best advice, I tell this to my kids is just to bite your lip and move on. So, you know, you do not want to cross a minister across across a partner in McKinsey, even if you're right and they're wrong. So, you know, those organizations have great positives. They're fantastic on training and mentoring, et cetera. And they're very prestigious, but that bit of them, the ability to discuss ideas openly and without recourse was not.

as strong as it is in academia.

Senthil (44:27)
That's very pragmatic, Nick. What are one or two key skills that the business leaders today must have?

NICHOLAS A Bloom (44:34)
I mean, I'm not a business. I'm involved in some startups, I mean, maybe analyzing data. I to the extent that I, you know, I talked to lot of folks in executive classrooms. I do talk to a lot of CEOs, CHROs, etcetra The folks I'm most impressed with tend to be pretty data focused. So measuring stuff, I mean, that's kind of obvious, but collection of data, analysis of data. If I look at companies, oddly enough, I think they made a mistake on work from home, but otherwise they're very well run, which is Amazon.

So I know Amazon well and they collect and measure data on everything and tend to be really efficient. Interestingly, on their decision to cancel work from home, they did not do any analysis. I know somebody called Senior and they said that was an executive decision probably pushed on them by Bezos, but no one's quite sure. So generally you want to make data-driven decisions. As a leader, think that would be the advice I could give people that's most obvious.

Senthil (45:26)
And I'm gonna ask you about some book recommendations, but I also wanted to ask you why there is no book from you. I'm looking at the depth of your, you're right, lovely, okay.

NICHOLAS A Bloom (45:33)
I'm writing a book. I'm writing a book. You know what?

I didn't write a book on work from home because this topic was changing so fast. Most people haven't written the book so you wouldn't know this, but if you were today to say, want to write a book, it would take you at least 18 months to get it out. I that is the fastest possible. Doing it in 18 months is almost impossibly fast. So the reason is I right now have a draft manuscript. I just signed a contract with a publisher.

they told me it's going to take about 18 months from now to get it out because of what, know, I don't know the process of being through it yet, but you know, so that's what I've already have a book. So if you overnight hadn't, you know, an epiphany, it write a book in the space of one day, it'd still take you 18 months then add on the time it takes to write it. So because of that, I was aware it takes, you know, two years from start to finish. Typically I was like, well, this topic is changing. You know, I didn't want to write a book in 20, why is it kind of in 23 and 23 look, as you know, look very different.

21 and the same in 2223. So finally, in about 2025, spring 25, decide to write a book, but it's gonna not going to come out to spring of 27. It's insane. It's so slow. So and what books I you know, I'm not a big book reader of like adult books. I read the FT, the Wall Street Journal, The Economist, the BBC, I read a lot of news. Probably the most recent book weirdly I've read read was probably to my youngest daughter was gangster granny.

But you know, it's not a serious adult book. It's a book about a granny that the kid thinks is boring and turns out to be a gangster in disguise. You can kind of guess the rest of it. So yeah, I just read a lot of kind of nerdy stuff online rather than books in particular.

Senthil (47:14)
Nick, such a pleasure talking to you today. the kind of impact your work is making among practitioners is huge, particularly on a timely topic where the society or leaders don't have much direction about, right? We all just hear and say things, but your work is so thorough in its research and such a guiding light. I truly admire your work and very much look forward to that book and such an honor talking to you today.

NICHOLAS A Bloom (47:38)
Thanks for your, you're so kind. Thank you so much. It's sweet. It was great to catch up and I look forward to talking again soon.

Senthil (47:44)
Thank you so much, Nick.