What you miss out when you work from home

Many cues each day transform individual workers into a functional company

It’s been more than 10 years since I last worked in an office on any regular basis, and remote work has worked for me and my employers. And yet, when I read that Apple and IBM were moving away from telecommuting and towards more traditional office-time requirements, my first thought was: “What took them so long?”

Don’t get me wrong; remote work has real benefits. I shave two hours of commuting off every workday, time that I can instead spend getting work done.

“I’ll be happy to. But I’m already working more than 12 hours a day, so my commute is going to have to come out of my work output, not my personal time.” (Pause) “What do you want me to do?”

“Enjoy your home office.”

These benefits are obvious. And thus, as far back as the science-fiction stories of the 1950s, people have been predicting that telecommunications would one day take the place of face time and cubicles. Yet these expectations have been steadily disappointed by reality. It turns out that some kinds of information travel very well by wire, but others get lost in transmission. It also turns out that those kinds of information are often vital to a company’s work.

To understand why, it may help to go back to the theory of the firm, and a question that economists have struggled with: Why do companies exist? Why don’t we all act as free agents, bidding our services out in the marketplace, rather than binding ourselves into subordinate relationships with larger entities?

There are a lot of answers to that question, but one of the biggest ones, provided by the eminent economist Ronald Coase, is “transaction costs”. Paying a lawyer to write you a contract is a transaction cost. So is the time you spend finding someone to contract with. If the transactions costs are too high, then deals cannot be profitably done.

Firms are often a good way to solve the problem of transactions costs. Because everyone involved is there for the indefinite future, they don’t have the same trust problems that come from doing one-off deals, and managers don’t have to keep going to the trouble of finding labour and negotiating every time they want something done.

Firms have inefficiencies, too, of course, because they have to manage all that labour (and often, to keep more around than they may need at any given moment). But they are so good at reducing transactions costs that they are still, in many cases, more efficient than simply bidding every single service on the open market.

But one of their most effective means of reducing transaction cost is that most elusive of business-journal ideals: corporate culture. When job performance is difficult to specify in minute detail — as one would for a contractor — corporate culture is what ends up determining how hard your employees work, how far they will go out of their way to help out a co-worker in trouble, what lengths they will go to in order to satisfy customers.

This culture cannot be transmitted by writing it all down in a manual somewhere, or “exhortatory” speeches by managers; it is transmitted in a thousand little interactions that show more than they tell.

© Bloomberg