Employees frustrated with their CEOsâ return-to-office mandates have tried arguing that remote work is linked with greater productivity. That it helps the environment with fewer commutes and improves diversity by broadening the talent pool. Now, they may have another argument to get their CEOsâ attention: Higher revenue growth.
A new report being released Tuesday by Scoop, a startup that compiles the data set Flex Index, includes an analysis of remote work policies and revenue growth at 554 public companies done in partnership with the Boston Consulting Group. It found that the average public company that gives employees choice over whether to come into an office also outperformed on revenue growth over the past three years by 16 percentage points, compared to companies with more restrictive policies.
âThat gap was really surprising to usâand larger than expected,â says Rob Sadow, CEO and cofounder of Scoop, whose Flex Index acts as an online ârepositoryâ of remote work policies for some 7,500 companies. The analysis tracked revenue growth between 2020 and 2022, first normalizing the data for industry performance to eliminate differences between high- and low-growth sectors.
Few studies have yet compared the relationship between revenue growth and companiesâ remote work policies, says Nicholas Bloom, an economist and professor at Stanford Graduate School of Business who is also an adviser to Scoop. Thatâs in part, he says, because most survey tools study employee sentiment or individualsâ experiences with remote work, rather than corporate policies. Combined with past research that connects flexible work policies to headcount growth, âcollectively they paint a pretty strong picture,â he says of the Flex Index two reports, even if the data does not suggest remote policies actually cause revenue growth.
But whether higher revenue prompts firms to need to hire fasterâand choose flexible policies to do soâor more flexible policies are engaging workers and leading them to do better work, âin some ways it doesnât matter so much,â Bloom says. âIf Iâm reading this as a manager, the interpretation is pretty similar. Flexible employment practices are going to help support growth.â
As the conversation remains red-hot over whether working from home helps or hurts productivityâand more CEOs cite efficient work as a reason for return-to-office mandatesâthe new analysis could add fuel to the discussion. âThereâs way too little real data and analytics,â says Debbie Lovich, a senior partner at Boston Consulting Group focused on the future of work. âThereâs a lot of perception and opinion but not real correlations like this.â
The report shows that the three-year industry-adjusted revenue growth rate of companies that have what Scoop calls a âfully flexibleâ policyâmeaning they are fully remote or allow employees or teams to choose when or whether they come to the officeâis 21%. Companies in the data set with more restrictive policiesâsay, those that have corporate mandates for a couple days per week or those that require full-time work in the officeâhad only a 5% industry-adjusted revenue growth rate, the analysis found.
Lovich, whose firm worked on the data with Scoop, says the report doesnât show that flexible policies necessarily cause higher revenue growth. Rather, she says flexible policies are one âsymptomâ of a culture that trusts workers, has other employee-friendly benefits and values forward-thinking strategies, technology and ideas. âIf theyâre less restrictive on [remote] work policies, theyâre probably more pro-innovation, more purposeful and more engaging,â Lovich says, all of which could lead to higher revenues. âI doubt those companies would be taking attendance and measuring badge swipes.â
Scoopâs Flex Index data set includes policies from some 7,500 companies of all sizes; 554 publicly traded companies were included in the analysis. (Among all 7,500 companies in the data set, 33% have âfully flexibleâ policies; 29% have a hybrid policy with some in-office requirements; and 38% are full-time in-office.) Office policies in the data set are generated by submissions of current employees that company leaders can confirm or manual entry of publicly available information such as company web site or media reports.
The Flex Index categorizes remote work policies based on corporate-level rules, meaning some employees included in the âfully flexibleâ category could be subject to team-level in-office requirements. Still, that likely means the office time is more tailored to individual employeesâ work, something Lovich says is important when thinking about hybrid policies.
âThe more we can empower people closest to the work, the better the work will be,â she says. âFor office workers, all of a sudden youâre telling me when and where to show up. It says you donât trust me.â
Sadow thinks that even if the results donât show a causal relationship, they do help counter an increasingly common argument. âThe argument a lot of execs and board members have is they believe companies that offer flexibility are going to underperform because theyâre not together,â he says. âThat theyâre not going to allow for water cooler conversations and relationships to develop. The data suggests not only is that not true in terms of underperformance, but you might actually outperform.â