Merit-based flexibility could be the future of work as return-to-office mandates fail to prop up productivity

Merit-based flexibility could be the future of work as return-to-office mandates fail to prop up productivity

In the evolving landscape of flexible work, leaders face a monumental challenge: ensuring performance without constant oversight. It’s time to upend this conventional narrative–and unlock a paradigm where flexibility fuels productivity, not fear.

Extensive research shows that flexibility isn’t a luxury–it’s a productivity powerhouse. Nick Bloom’s meta-analysis offers an enlightening perspective: A flexible hybrid work model can outperform the traditional in-person setup by 1% to 3%.

The magic lies in strategic scheduling–reserving office time for collaborative tasks while empowering employees to tackle independent work in their personal havens. This model doesn’t just trim down commute times but also optimizes the workday, allowing for deep concentration when needed and collaboration when it’s most fruitful. It mirrors a principle I often share with clients: maximize your team’s potential by aligning their work environment with their tasks. The key is having employees commute to the office only for the activities that can be most productively completed there, such as intense synchronous collaboration, nuanced conversations, socializing, team bonding, and on-the-job training and mentoring. You can do these activities remotely, but it takes more time and effort, which lowers productivity.

Additionally, hybrid work is the equivalent of an 8% salary increase in terms of employee satisfaction, as Bloom’s findings suggest. An Oxford-Saïd Business School and BT study takes this further, quantifying happiness and its impact on productivity among content workers: a 13% increase in performance.

The dichotomy of remote work

By contrast to a flexible model, fully remote work results in more mixed outcomes. A recent study by the Federal Reserve Bank of New York revealed a concerning trend for certain white-collar roles that require less education and fall on the lower end of the pay scale, such as those in call centers. Evaluating the real-world context of a Fortune 500 company, the researchers found that when call center workers moved to a remote setting at the start of the pandemic, the workers experienced a marked 4% dip in productivity. The researchers attributed the reduction to a decline in the quality and quantity of customer interactions, complicated by the inherent difficulties in remote collaboration. In customer service, prompt and effective communication is vital, and any barriers can have immediate effects on performance metrics.

This downturn contrasts with data indicating that higher-paid, more educated workers may actually benefit from remote work. They often engage in tasks that require deep concentration and can be performed independently. The lack of interruptions typically associated with office environments can result in significant productivity gains, as seen in a study evaluating the research productivity of Federal Reserve Board economists, which surged by 25% during remote work over the course of the pandemic.

And it’s not simply the impact of the pandemic itself. For example, Harvard Business School research found that U.S. Patent officers independently gained 4% in productivity from greater remote flexibility.

Productivity paranoia

This dichotomy is a pivotal concern for leaders. While it’s tempting to attribute productivity losses solely to remote work, the issue may be more nuanced. It necessitates a deeper understanding of the individual roles within an organization and how they’re affected by the environment. Remote work is not inherently detrimental–its success depends on the nature of the job, the individual’s role, and the resources provided to support their work.

Leaders are tasked with navigating this complex terrain, discerning the most appropriate work configuration for each role and worker within their organizations. Embracing flexibility, when supported by a performance-oriented approach, can be key to unlocking the full potential of the workforce, whether they’re in the office, remote, or part of a hybrid work model. It is a nuanced balancing act that requires a keen understanding of the needs and capabilities of their teams.

Yet, a chasm exists between the data and leaders’ perceptions. Microsoft’s research unveils a basic productivity paranoia, where 85% of leaders express doubts about their team’s diligence in a hybrid world. Microsoft found that many leaders and managers are missing the old visual cues of what it means to be productive because they can’t literally see who is hard at work by taking a casual stroll down the office corridor or a glance through the glass of a bustling conference room.

This skepticism is substantiated by the ZipRecruiter survey, which surveyed more than 2,000 U.S. employers between July and August, and pegged employee monitoring as the primary concern in remote work scenarios. The survey found that the biggest disadvantage of remote work cited by 45% of respondents involves the difficulty of observing and monitoring employees.

Performance as the passport to flexibility

The crux of the issue lies not in the nature of remote work but in the outdated methodologies used to assess productivity. In my experience consulting for over two dozen organizations navigating flexible work policies, I’ve discerned a powerful strategy for solving this problem: tethering flexibility to performance.

By establishing clear metrics and baselines for productivity, bosses can create a culture where flexibility is earned through demonstrated output and quality of work. This method transforms flexibility from a broad-brush entitlement into a dynamic reward, reinforcing a results-oriented mindset.

In this framework, employees are empowered to earn their autonomy, creating a direct correlation between their output and their work flexibility. It’s a strategy that transcends the traditional confines of fixed schedules and static office spaces, acknowledging that the ultimate measure of a worker’s value lies not in the hours they spend tethered to a desk, but in the tangible contributions they make to the company’s objectives.

This approach necessitates a robust, week-by-week performance management system, one that is nuanced enough to capture the multifaceted nature of productivity beyond mere presence. It considers key performance indicators (KPIs), project milestones, and the quality of outcomes to assess an employee’s effectiveness. The underlying message is clear: Deliver on your commitments, and you will gain the freedom to work in a way that best suits your life and work style.

It’s not only my clients who adopt this approach–it’s also adopted by Fortune 50 Wall Street CEOs, typically seen as hostile to flexibility. Consider Citigroup’s Jane Fraser. Upon assuming the helm of the bank at the pandemic’s peak, she introduced a flexible, hybrid work environment. As she notes, Citigroup’s foray into this new territory revealed that remote work isn’t for everyone. According to Fraser, those whose output slips are asked to come back to the office, curtailing their flexibility, and offering them coaching in the office to improve their performance.

Adopting this approach demands a cultural shift within an organization. It requires leaders to relinquish traditional notions of oversight, replacing them with trust and a focus on accountability. For employees, it is a powerful motivator. The company recognizes their professional capabilities, as well as their personal needs and preferences. This approach champions the idea that work is an integral part of life, not a separate entity, and by doing so, it unlocks a higher level of engagement and satisfaction.

For businesses, this paradigm fosters a more dynamic and adaptive workforce, capable of navigating the challenges of a rapidly changing market with agility and resilience. It is a reciprocal relationship, where flexibility becomes both the reward for high performance and the catalyst for its continuation. In essence, performance becomes the currency with which employees purchase their right to work flexibly, creating a self-sustaining cycle of productivity and satisfaction.

Navigating cognitive biases in the flexible work paradigm

The debate over workplace flexibility often falls prey to a variety of cognitive biases, which can cloud decision-making and leadership effectiveness. Two particular biases–attentional bias and confirmation bias–significantly impact how leaders navigate the new territory of flexible work environments.

In the context of monitoring productivity, confirmation bias can cause leaders to seek out information that supports their preconceived notions about flexible work arrangements. If a leader believes that remote work leads to productivity losses, they are more likely to notice data that upholds this view while disregarding evidence to the contrary. This selective information processing solidifies their stance and can result in missed opportunities to harness the productivity and satisfaction gains that a well-implemented flexible work policy can offer.

In turn, attentional bias, which refers to the tendency to pay more attention to certain types of information or observations while overlooking others, often results in paying attention to the wrong indicators in the remote work setting. Without the traditional visual confirmation of an employee’s presence at their desk, leaders may become hyper-focused on digital indicators of productivity, such as online statuses or email timestamps, potentially overlooking more meaningful measures of output and work quality.

Combatting these biases requires a conscious effort to consider all data, both for and against flexible work arrangements. Regularly revisiting and reassessing remote work policies with a critical eye and being open to adapting strategies in response to empirical evidence can mitigate the effects of status quo and confirmation biases. Additionally, developing clear, quantifiable performance metrics can provide an objective foundation for evaluating the effectiveness of flexible work models.

For instance, rather than relying on physical presence or digital indicators as a proxy for productivity, CEOs can use specific performance indicators, such as project completion rates, customer satisfaction scores, and sales targets. By focusing on outcomes rather than inputs, leaders can create a culture where flexibility is viewed not as a potential risk but as a reward for demonstrated performance. This approach aligns with the best practices of performance management, where the focus is on the value and quality of work produced, rather than the visibility of the worker.

As a leader, your vision for your company in this new world of work must be as dynamic as the environment itself. Embracing a model that rewards performance with flexibility can help dispel doubts and harness the full potential of your workforce. Moving away from an oversight-heavy model to one that rewards performance with flexibility isn’t just about keeping up with trends–it’s about fostering an environment where innovation thrives and productivity peaks.

By anchoring flexibility as a merit-based privilege, you invite a culture of self-motivation and responsibility–one that values results over routine, innovation over presence, and autonomy over micromanagement. It’s a cultural shift that can redefine what it means to be productive in the modern world.

Gleb Tsipursky, Ph.D. (a.k.a. “the office whisperer”), helps tech and finance industry executives drive collaboration, innovation, and retention in hybrid work. He serves as the CEO of the boutique future-of-work consultancy Disaster Avoidance Experts. He is the bestselling author of seven books, including Never Go With Your Gut and Leading Hybrid and Remote Teams. His expertise comes from over 20 years of consulting for Fortune 500 companies from Aflac to Xerox and over 15 years in academia as a behavioral scientist at UNC–Chapel Hill and Ohio State.

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The opinions expressed in commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

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