Is the increasingly common trend of working from home a problem or a solution? That depends not only on who you are talking to, but also the context. What is increasingly clear is that the WFH honeymoon is over, and the heat is on those for whom it has been an escape from many things—long and troublesome commutes, the pollution outside, having to eat out, and facing an unpleasant office atmosphere.
The new abbreviation in town is RTO—return to office—a reverse swing on the original reverse swing that happened as Covid shut down the world. That happy convergence between emerging communication technologies and avoidable disease is now getting a reality check. A closer look reveals that the WFH-RTO debate may not be just about where you work from, but the very idea of how people work in corporate teams and family units.
Things came to a head last week when an employee was sacked and then reinstated by the biggest American bank, J P Morgan Chase, for pleading in courteous language during a town-hall meeting with CEO Jamie Dimon that RTO decisions should be left to employees. Nicolas Welch, among the bank’s 317,000 employees affected by the forced return to office five days a week from March, said his team was spread across different time zones and RTO was not going to enhance productivity. It won applause from colleagues, but went against the grain of the company’s big boss who spoke against the inefficiencies of remote work. A leaked audio clip of Dimon’s stern message revealed that he summarily dismissed a petition by employees for more flexibility.
In India, the chairman of construction giant L&T, S N Subrahmanyan, who recently survived a social media storm over his idea of 90-hour work weeks, said employees are increasingly reluctant to move cities or leave home.
“When I joined L&T in 1983, my boss said, if you are from Chennai, you go to Delhi and work. Today, if I take a guy from Chennai and tell him to go to Delhi, he says bye,” he told a business conference, adding that the reluctance to relocate was more pronounced in the IT sector, where remote work was preferred.
My view is that both Dimon and Subrahmanyan are speaking with sound management logic, but may be treading on new man-woman equations at home.
The arguments of these gentlemen are related to theories by Ronald Coase, a Nobel-winning British economist. Coase held that under the right conditions, parties in a property dispute would be able to negotiate an economically optimal solution regardless of the initial distribution of rights. The Coase theorem offers a useful way to resolve conflicts between competing business interests, or other economic activities involving limited resources. The theorem works best when the transaction costs are close to zero—that is, when it’s easy to collaborate, and collaboration boosts productivity in the best possible manner.
But Coase also has a theory of the firm that says companies exist in the first place to economise on the cost of coordinating economic activity, and are characterised by the absence of a tedious price mechanism. For instance, you do not negotiate a salary every day. One key aspect is information-sharing. Employees of a company in a team—as opposed to independent professionals—tend to share information more easily, lowering information and transaction costs.
Now, IT aided by high bandwidth and modern telecom dramatically altered some assumptions around Coase’s theorem. We can now share information across the planet quite easily. Thus, the distance between a company and its workplaces is less about geography and more about actual information-sharing that can be done remotely, even from home.
Yet, things are not as smooth as they ought to be. Real-life economics works somewhat differently, which is why Dimon’s RTO call may have a point. For this, we need to understand the so-called ‘water-cooler effect’ at the workplace. Management scientists say chats at a shared office water-cooler—a latter-day equivalent of the village well or chai shop—and hallway conversations are critical for the social bonds that drive innovation, teamwork and productivity.
But then, we also have this thing called work-life balance and the increasing participation of women in the workforce that is altering family equations. Despite deeply-entrenched patriarchy, WFH may produce a better effect on work shared within families. If the family is seen as an economic unit, it’s as if one aspect of Coase’s theorem works in favour of WFH by creating better efficiency at home through mutual adjustments, while it hurts workplace efficiency in the corporate sense.
That may also help us understand Andhra Pradesh Chief Minister N Chandrababu Naidu’s move to frame WFH rules especially aimed at encouraging the participation of women under its IT policy. Does that unconsciously confine women to homes and stop them from conquering the big world, or does it enable home makers to join the global workforce with relative ease? The answers may differ on this.
What’s clear is that WFH cuts both ways. As economies become more developed, productivity needs to go up. But so does the demand from workers for better lifestyles that include higher doses of ‘me time’.
(Views are personal)
(On X @madversity)
Madhavan Narayanan | Senior journalist