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Work from Home Study Successful with Chinese Firm

December 11, 2014

A recent study initiated by Stanford Economics aimed to explore the benefits of companies adopting a work from home (WFH) model. As the first randomized experiment regarding WFH, the study focused on a 16,000-employee Chinese travel agency by the name of Ctrip.


Ctrip call center employees were given an option to volunteer to work from home, and those who did were then split into two groups using an even/odd birth-date randomization method. The treatment group was scheduled to work from home for four days of the typical work week, while the control group remained in the office all five days, in both cases for an experimental period of nine months.

The results of the study outline a 13 percent increase in employee performance for the treatment group working from home, with 9 percent of this attributed to working more minutes of the shift period due to fewer breaks and sick days. The other 4 percent is linked to higher performance per minute, presumably because of a more relaxing, stress-free environment. Conversely the researchers found no negative spillovers onto workers in the control group, affirming the benefits of WFH in this particular study.

Beyond these direct improvements to job performance, WFH employees also reported higher satisfaction and scored higher in psychological attitude evaluations. Job attrition rates declined more than 50 percent.

The firm itself of course benefitted overall from the higher productivity and job satisfaction of its employees. Profits rose by a rate of approximately $2,000 per employee and total factor productivity (TFP) rose by 20 to 30 percent. These performance gains were almost doubled when the experiment ended and all employees were offered a WFH position, including those previously in the control group.

Ctrip noted that one of the main reasons it was so receptive to this experiment is the utter lack of WFH initiatives among similar Chinese firms. History has demonstrated that pioneers in a given area often reap major rewards. The overwhelming success of the study will inevitably inspire a trend of other companies allowing employees to work from home and gradually adopting new management techniques to facilitate the process.

Stanford Economics closed its report with a list of a few factors that undeniably skewed this particular firm in the direction of success when adopting WFH practices. Most prominently, because Ctrip is a call center it is automatically suitable for telecommuting simply by the nature of the job. There is no collaborative component, a setup is cheap and easy and there is a direct, quantifiable link between effort and performance. Second, the firm can make use of its centralized database to closely monitor performance and the labor supply, allowing it to easily detect and correct problems with individual employees. Lastly, the extent of Ctrip's WFH initiative was limited enough to not necessitate an overhaul of the workplace's organization and the company's employee hierarchy. 

The results of this study will inevitably spawn others similar in nature, covering different geographic regions, companies of different sizes and in different industries, etc. WFH was certainly a success for Ctrip, but other companies may have a more difficult time with it, and once the majority adopts these practices the benefits for individual firms will probably be minimized. However, the improvements to employees' productivity and happiness will never go away, so WFH will have a solid stake in the future.




Edited by Maurice Nagle

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