WHAT YOU’RE MISSING WHEN YOU WORK FROM HOME
Companies can lose out, too, when often vital information gets lost in transmission, writes Megan McArdle.
It’s been more than 10 years since I last worked in an office on any regular basis, and remote work has worked for me and my employers. And yet, when I read that Apple and IBM were moving away from telecommuting and toward more traditional office-time requirements, my first thought was: “What took them so long?”
Don’t get me wrong; remote work has real benefits. I shave two hours of commuting off of every workday, time that I can instead spend getting work done. Early in my telecommuting career, in fact, I had the following conversation with a manager who wanted me to spend more time at the office.
“I’ll be happy to. But I’m already working more than 12 hours a day, so my commute is going to have to come out of my work output, not my personal time.” (Pause) “What do you want me to do?”
“Enjoy your home office.” These benefits are obvious And thus, as far back as the science fiction stories of the 1950s, people have been predicting that telecommunications would one day take the place of face time and cubicles. Yet these expectations have been steadily disappointed by reality. It turns out that some kinds of information travel very well by wire, but others get lost in transmission. It also turns out that those kinds of information are often vital to a company’s work. To understand why, it may help to go back to the theory of the firm, and a question that economists have struggled with: Why do firms exist? Why don’t we all act as free agents, bidding our services out in the marketplace, rather than binding ourselves into subordinate relationships with larger entities?
There are a lot of answers to that question, but one of the biggest ones, provided by the eminent economist Ronald Coase, is “transaction costs.” Paying a lawyer to write you a contract is a transaction cost. So is the time you spend finding someone to contract with. If the transactions costs are too high, then deals cannot be profitably done.
Firms are often a good way to solve the problem of transactions costs. Because everyone involved is there for the indefinite future, they don’t have the same trust problems that come from doing one-off deals, and managers don’t have to keep going to the trouble of finding labour and negotiating every time they want something done.
Firms have inefficiencies, too, of course, because they have to manage all that labour (and often, to keep more around than they may need at any given moment). But they are so good at reducing transactions costs that they are still, in many cases, more efficient than simply bidding every single service on the open market. But one of their most effective means of reducing transaction cost is that most elusive of business-journal ideals: corporate culture. When job performance is difficult to specify in minute detail — as one would for a contractor — corporate culture is what ends up determining how hard your employees work, how far they will go out of their way to help out a co-worker in trouble, what lengths they will go to in order to satisfy customers.
This culture cannot be transmitted by writing it all down in a manual somewhere, or exhortatory speeches by managers; it is transmitted in a thousand little interactions that show more than they tell. This is exactly the sort of information that gets lost if your employee’s interaction with the firm consists largely of daily video chats.
Then there’s the problem of transmitting other kinds of information. It’s easy enough to send a document or a spreadsheet from headquarters to a remote worker and back. The real obstacle is how to transfer the stuff that you don’t put into those confidential documents, a million little bits of knowledge about the markets you compete in, the firm’s challenges, the changes going on in management.
Call it “sub-information”: the stuff people don’t even really know they know.
McArdle wrote for the Daily Beast, Newsweek, the Atlantic and the Economist and founded the blog Asymmetrical Information. She is the author of The Up Side of Down: Why Failing Well Is the Key to Success.
Bloomberg