The Impact of Hybrid Working on Employee Retention and Performance

The conversation and debate around remote, flexible, hybrid and asynchronous working rages on. Whilst some well know organisations are beginning to call for a ‘return’ to workplaces, and monitor employee activity, most of the data and anecdotal evidence seems to support a continuance of employee choice over how, when and where they work.

One of the complaints often voiced by leaders who would prefer more of their people to be visible to them during the working day is the impact on productivity and performance - the narrative is usually around lower levels of output. I’ve recently been digging into some peer reviewed research published by international journal Nature in June 2024, and reviewed by leading academics. 

The research - a six-month randomised control trial investigating the effects of hybrid working from home - was conducted with employees of Chinese technology firm Trip.com in 2022, and has only recently been peer reviewed and published. 

Overall findings were that hybrid working improved job satisfaction and reduced quit rates by one-third. The reduction in quit rates was significant for non-managers, for female employees, and for those with long commutes. Tests showed that hybrid working did not affect performance grades over the next two years of reviews, and there was no evidence of an impact on promotions. In fact, a number of managers within the business, who believed that hybrid working would negatively impact productivity, changed their views.

So what were the key lessons learned?

Job Satisfaction and Employee Retention

One of the key findings from the research was a substantial improvement in job satisfaction among employees who worked under the hybrid arrangement. These employees reported greater work-life balance and flexibility, attributing their improved satisfaction to the time and costs saved on commuting and the ability to manage personal tasks during the day.

Additionally, they found that hybrid working reduced employee attrition by one-third, most notably among non-managers, women, and employees with longer commutes. Non-managerial employees, who often experience less autonomy in traditional office environments, particularly benefited from the flexibility afforded by working from home. 

For women, the ability to manage family responsibilities alongside work was a major factor contributing to the decreased quit rates. Employees with long commutes—those spending over an hour and a half on the road each day—were also more likely to stay with the company when given the option to work from home two days a week.

Gender disparity in how hybrid working affected attrition showed a clear split - female employees experienced a 54% reduction in quit rates, compared to only 16% among their male counterparts. Previous studies have shown that women tend to value remote work more highly, possibly due to its role in enabling them to better balance work and personal responsibilities. Interestingly, while women benefitted more from hybrid working, they were less likely to volunteer for the experiment, possibly out of fear of negative career signalling.

Performance and Productivity

One of the main concerns regularly voiced by opponents of remote work arrangements is a negative impact on employee performance. However, the research offered compelling evidence to the contrary. The researchers found no significant difference in performance ratings between employees working from home two days a week, and those working full-time in the office.

Neither was there a notable impact on promotions for any major employee subgroup over the two years following the experiment. In creative team roles such as software engineering, marketing, and finance, hybrid working did not hinder the ability to perform team-oriented or innovative tasks. For the computer engineers in the study (over 650), there was no difference in productivity as measured by lines of code written between the hybrid workers and those working full-time in the office.

Changing Managerial Perceptions

Before the experiment, many managers admitted they were sceptical of the effectiveness of hybrid working. They expected a decrease in productivity and were generally less enthusiastic about remote work than their non-managerial counterparts. However, after experiencing the results of the hybrid working arrangement first hand, their views shifted significantly. By the end of the experiment, managers revised their assessment of hybrid working’s impact on productivity to positive, which aligned closely with the views of non-managers who had initially supported the idea.

Is Hybrid Work a Win-Win Solution?

Resoundingly yes! The study showed that hybrid working - at least in the context of two days a week working from home - doesn’t detract from employee performance or career progression. On the contrary, it improves job satisfaction and reduces turnover, particularly for employees with demanding commutes or personal responsibilities.

The research study - and many more less rigorous studies - have all highlighted the importance of offering flexible working arrangements in the modern workforce. Specifically by adopting a more hybrid work model, companies can foster greater employee loyalty, reduce attrition, and maintain productivity. 

Many managers and leaders are still on the fence though, but most rigorous - and anecdotal - research indicates that hybrid working wasn’t a temporary response to the Covid 19 pandemic,  but a sustainable strategy that benefits both employees and employers in the long term. 

I'm US bound for the latest data, trends and insights!

On Monday I'll be heading over the Atlantic for the first of two trips to the US over the next fortnight. Next week I'll be in the beautiful surroundings and alpine serenity of Deer Valley for Influence Greatness #IG24 courtesy of O.C. Tanner to find out more about the latest research on workplace culture and employee experience & retention.

The following week I will be in the hustle & bustle of Las Vegas for the 2024 HR Tech , where I will be speaking on designing employee experiences and taking briefings on the latest technology innovations that will impact the way we work.

Looking forward to updating you with the key findings and insights in future editions of this newsletter!