Leadership   //   November 22, 2023  ■  5 min read

How companies allowing remote work outperform those that don’t

New data could shift the conversation around productivity metrics and returning to offices among leaders still resisting more flexible policies. 

From 2020 to 2022, companies without in-office requirements saw revenue grow 20%, while those in hybrid and fully in-person arrangements saw 5% revenue growth, according to a new report from Scoop Technologies and Boston Consulting Group. The report analyzed 554 publicly traded companies across 20 different sectors and adjusted for industry averages. Altogether, those companies employ about 27 million people. 

Those with structured hybrid policies — most often two or three days required in-person a week — also performed better on revenue growth than those with full-time in-office policies.

Some company leaders have justified RTO mandates with goals of strengthening collaboration, innovation, and company culture in ways they feel they couldn’t while working remotely, hoping those improvements will translate to positive business outcomes.

Some believe the report’s results re-emphasize that there is no single magic productivity measure and that more investigation is needed before many dismiss the notion of remote working in favor of in-office. “This research itself is dollars and cents data,” said Cali Yost, CEO of workplace consultancy Flex+ Strategy Group.

What’s really behind that gap?

“Perhaps just the fact that remote employees “feel” productive thanks to the right balance of home and work time is helping them to focus on the work that matters,” the report said. 

Higher revenue growth for fully flexible companies could be attributed to a number of factors, though. One key reason is that fully flexible companies have an easier time attracting top talent as they aren’t limited to certain geographic areas, and those employees are less likely to leave, said Rob Sadow, CEO and cofounder of Scoop, a hybrid work planning tools provider.

An August survey from the Conference Board found fully on-site companies saw voluntary turnover rise 26% over the preceding six months — almost twice the rate seen with fully-remote workers. And as demand for flexible jobs remains high, openings for those roles have dwindled throughout this year. 

“Our instinct is those impacts on engagement, recruitment and retention flows through to employees being more focused on doing well at their job, and happier in their job, and that might be driving revenue difference,” Sadow said. “But we’re going to continue to explore it and see what we find.”

RTO reasoning and reliance on industry

The feasibility of flexible work policies also differs widely across industries, suggesting a key reason for some CEOs to disagree with fully remote work policies. Corporate workers in service-driven industries, for instance, benefit from being near their customers, experts say.

“There’s no real reason why a corporate employee or a desk based employee in one industry could work flexibly, but a different industry couldn’t work flexibly,” Sadow said. “At the same time, there might be very different business models across companies that might make it more valuable for an employee to be in the office more often in a particular type of company,” he said.

“I don't think it's about the capability to work remotely being different across those companies, but there may be a different level of value being in the office depending on how close you could be to the customer."
Rob Sadow, CEO and cofounder of Scoop Technologies.

Jobs in tech, media, insurance, professional services and financial services are most likely allowed to be done remotely, the report found, while corporate positions at companies in the food services, hospitality, education and retail industries are least likely to be allowed to be done remotely. A key justification among CEOs in those latter industries may be that working in-person allows them to be closer to their own consumer, Sadow said. 

Sadow previously knew of a retail executive whose office was right above one of its stores. When that executive struggled thinking through a problem he’d often leave the office and visit the store below, walking the floors while observing the customers and merchandise.

“It was helpful just to kind of bring to life the problem you are experiencing, and not every industry is that way,” he said. Tech companies selling software, for instance, have no real hub for their consumers that they can be near.

“When our clients were in, we were in. When you're in a service business, you need to be around your clients."
Rachel Forde, co-founder of the independent business consultant community The Zoo London.

Client relationships are also key in certain industries, said Rachel Forde, co-founder of the independent business consultant community The Zoo London. “When our clients were in, we were in,” Forde said. “When you’re in a service business, you need to be around your clients,” she said.

“I don’t think it’s about the capability to work remotely being different across those companies, but there may be a different level of value being in the office depending on how close you could be to the customer,” Sadow said.

How a company’s age and size factors in

The report also found that company age and size matter when it comes to allowing more flexible work. Smaller companies with 500 or fewer employees are overwhelmingly fully flexible, with 74% allowing employees to choose whether to come into the office at all. Big companies with 25,000 or more employees are increasingly in structured hybrid models, with 60% choosing them. 

And companies younger than 10 years old are more likely than those founded prior to 2010 to offer more flexible working policies. “That coincides with some pretty meaningful changes in the technology that we use around work,” Sadow said, noting the entrance of smartphones. 

Hybrid still predicted to take over

The Scoop analysis and other recent reports predict structured hybrid models to be the dominant working arrangement for most companies in the future. The “structured” model is when a company mandates a certain number of days to be worked in the office, with the remainder at home – as opposed to giving employees the choice of when to come in.

“There is a gap between the employees working flexibly that did translate into operational growth, and the way leaders are seeing flexibility, that is going to stand in the way of leaders being able to ultimately attract and retain the talent they need, and also to prepare their organizations to be future ready,”
Cali Yost, CEO of workplace consultancy Flex+ Strategy Group.

“However, if fully flexible companies continue to outperform structured hybrid companies in revenue growth, that may cause further movement in larger companies toward more flexible models,” the report said. 

“There is a gap between the employees working flexibly that did translate into operational growth, and the way leaders are seeing flexibility, that is going to stand in the way of leaders being able to ultimately attract and retain the talent they need, and also to prepare their organizations to be future ready,” Yost said.