What you’re missing when you work from home

Humans built for interpersonal relationships

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 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 companies 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, 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 through Georgetown cocktail parties, or taking important meetings with high-level political figures, which I mostly don’t. No, I gain this sub-knowledge at dinner parties with mid-level civil servants, from other journalists in the quiet moments before think-tank panels begin, from little asides in sitdown interviews about something else. I can type anywhere, but the job that I do, the way that I do it, can be done from only one city on this earth.

And so with firms: Each big company is a sort of little city unto itself. If the city tries to scatter itself to the four winds, the traffic stops, and the city starts to die. No wonder these big companies are starting to recall their residents.