Telecommuting loses favour
Firms see value in face-to-face collaboration
Critics of Yahoo! Inc.’s recent ban on telecommuting say the policy will hurt productivity, while supporters say that making employees come into the office will help the struggling company.
But the decision, issued by Marissa Mayer, the chief executive officer, makes a larger point: Technological progress makes face-to-face contact more, not less, important. A complicated world needs personal interactions, and the cities that enable those interactions, to promote innovation.
Telecommuting itself is neither always right nor always wrong. Many commentators point to a recent study in which Chinese callcentre workers were randomly chosen to work at home.
The study, by Stanford University economist Nicholas Bloom and three co-authors, found that telecommuters were 13 per cent more productive, with nine per cent of the increase coming from working more minutes per shift and four per cent from handling more calls a minute.
The workers who stayed home were also more satisfied with their jobs, which isn’t surprising given China’s arduous commutes and often difficult working conditions.
Yet manning a call centre can be simple, and simple tasks provide the best case for telecommuting. Productivity is easy to measure, especially if you care more about speed than customer satisfaction. Typically, companies don’t ask their call-centre workers to be wildly creative. The relatively routine nature of these jobs explains why these places are often located in low- density areas of the U.S., such as Sioux Falls, South Dakota, or are outsourced across the planet.
One company — Zappos.com Inc. — has a different vision for its call centres. It has embraced face-to-face connections within the company and has close ties to the urban area where it is based. (Disclosure: I have given a paid talk at Zappos.) Zappos expects its salespeople to turn every phone conversation into a personalized interaction that cements the tie between customer and company.
That is specialized, even innovative work. It made sense that the company chose the Las Vegas area, with its cluster of hospitality and entertainment workers trained in personal interactions, over California’s Silicon Valley as its base. Employees work closely together, and the chief executive officer, Tony Hsieh, thinks that the company will become even more creative by moving into the city centre.
Humans can function perfectly well at home, but our greatest gift is the ability to borrow knowledge from the people around us. I can write sitting in my bedroom, but every decent idea I’ve ever had was the result of conversations with colleagues and students.
Experiments show that face-toface contact makes it easier to resolve conflict and increase cooperation. I have collaborators across the planet, but those interactions all began in person.
Trading floors epitomize that kind of contact in a knowledgeintensive industry. In most sectors, people as wealthy as traders occupy comfortable offices with large desks, oak panelling and executive assistants. But trading floors eschew all that privacy because knowledge trumps space. There is no industry where insight can be transformed into a fortune more quickly than finance, which is why traders put up with dense workplaces and dense cities.
Although companies in all sectors can get good value out of stayat-home workers, evidence shows that these employees often find that their work-related human capital hits a plateau. Spatial isolation means intellectual isolation from the experiences and ideas that circulate in office buildings and flow in client meetings.
Hundreds of studies have documented how globalization and new technologies have increased returns in skill and education. My own work finds that while newcomers to cities don’t earn higher wages immediately, they experience faster wage growth, year by year, as they acquire skills.
Similarly, the Bloom study of the Chinese call-centre workers also found that stay-at-home workers were less likely to be promoted, holding productivity constant, perhaps because they were less likely to acquire the knowledge that comes from being in the office. As ideas become more complicated, they are easier to lose in translation.
Thirty years ago the cyberseers predicted that new technology would make face-to-face contact, and the cities that facilitate that interaction, obsolete. The technoprophets were just as wrong as the geniuses who thought telephones would halt urban growth.