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Ideas for Leaders #817

Work from Home and Job Satisfaction: It’s Complicated

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Key Concept

Many factors, including compensation, occupation, and perhaps most importantly, the workplace environment can influence whether or not working from home increases job satisfaction or an employees’ intention to leave their jobs. 

Idea Summary

Work-from-home (WFH) flexibility was once available only to a select group of employees and professions. The sudden emergence of the Covid-19 pandemic forced companies in many industries to make WFH arrangements for as many of their employees as possible. This forced natural experiment allowed both companies and their employees to experience the benefits and pitfalls of remote work. As widespread vaccination reduces the severity of the pandemic, and life returns to a semi-normal state of cautious pre-pandemic interactions, companies—and their employees as well—must decide to what extent, if any, WFH arrangement should continue.  

One important consideration for both companies and employees is job satisfaction, a major factor in the productivity and effectiveness of a workforce. A study based on an extensive database of self-reported data for 70,000 employees offers important insight into the relationship between job satisfaction and various levels of work from home arrangements: always WFH, more frequent WFH, less frequent (sometimes) WFH, and never WFH. The data also enabled the study to examine the impact of work-from-home arrangements on employees’ intent to leave with six months.

The study revealed a complexity to the question of working from home that can be too easily overlooked by employers and business leaders. 

A first analysis of the data seemed to confirm a growing consensus that working from home increased job satisfaction and decreased employees’ intent to leave. Further analyses, however, revealed that these first results were misleading because they did not consider other factors that could skew the results. These factors included:

Compensation: When highly compensated employees working from home express satisfaction with their jobs, compensation rather than the remote arrangement may be the cause of their satisfaction. 

Occupation: Employees in professional services, insurance, or computer science occupations are more likely to be able to work always or sometimes from home, while employees in construction, health care or manufacturing are likely to have no opportunity to work from home. Employee attitudes toward working from home may vary substantially between those who have the opportunity to experience work-at-home arrangements and those whose occupations make the issue irrelevant. 

Work environment: The environment of workplaces can vary dramatically. This study analysed the impact of five elements that could influence job satisfaction and intent to leave:

  1. Pay transparency – whether employees felt the process for determining pay was transparent at the their company.
  2. Fairness of pay – whether employees felt they were paid fairly.
  3. Intrafirm communication – whether employees felt they had frequent communication with management.
  4. Development/training – whether employees felt they had sufficient opportunities for learning and development.
  5. Degree of appreciation – whether employees felt appreciated at work.

When the study’s researchers factored in compensation, occupation, and work environment into their analysis, they found that that:

  • Employees who always worked from home expressed the same level of job satisfaction as employees who never worked from home.
  • Employees who sometimes or frequently worked from home expressed greater job satisfaction than employees who always or never worked from home. This result was stronger for employees who sometimes rather than frequently worked from home.
  • Employees who always worked from home showed a higher intention to leave their jobs within six months compared to other employees who didn’t have this option (i.e., employees who frequently, sometimes, or never worked from home all showed similar levels of intent to leave).

Drilling further into the data, the researchers found that:

  • Employees who more frequently worked from home expressed greater job satisfaction when their work did not require coordination with others or when they had poor relationships with their managers or superiors.

The data for this study was drawn from the website PayScale, the largest real-time salary survey in the world. Users of the website complete an extensive survey about themselves and their work and workplace. They then receive multiple reports comparing their salary to the salaries of others in similar positions and with similar education and experience, can explore the return on different options for increasing their salary, such as changing cities or returning to schools. The study is based on user responses from May 2020 to July 2021.

Business Application

The Covid-19 pandemic dramatically brought to the forefront the issue of alternative work arrangements, notably the opportunity for employees, when feasible, to work from home. Intuitively, it would seem that the chance to work remotely would increase employee engagement and job satisfaction. This study strikes a cautionary note, arguing that such arrangements are not the silver bullet proponents may make them out to be. Instead, the beneficial impact of working of home varies, with the most positive impact emerging from situations in which employees occasionally (rather than frequently or always) have the option to work remotely. 

The study also notes that employers should consider the characteristics of a job when deciding whether to have employees work from home—notably whether the work requires employees to coordinate with others.

Finally, employers might want to question more closely why employees would prefer to work from home, specifically whether negative elements in the workplace environment are fuelling this preference. If employees are more satisfied working from home because of toxic relationships with their managers or supervisors, as indicated in the study, working from home is not addressing the core problem.

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Idea conceived

  • June 2016

Idea posted

  • March 2022

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