Focus on Research

November 23, 2012 3:03 pm

Something for the weekend

Employees across much of the industrialised world struggle with the work-life balance. Now research into flexible working arrangements has found that in one large company at least, working from home can pay dividends.

A 10-month study of a company based in Shanghai compared the productivity of call centre workers who were working from home with their colleagues doing the same work from rows of office cubicles.

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Focus on Research

Nick Bloom, an economics professor from Stanford Graduate School of Business, with fellow economics professor John Roberts, Zhichun Jenny Ying, an economics department graduate student and James Liang, a doctoral alumnus found in their study of a Chinese company, that allowing workers to work from home led to a boost in productivity. Furthermore, these workers were also happier than their colleagues in the office.

The authors found that home workers took off less sick leave, worked more hours because they took shorter breaks, were more likely to stay with the company and also said that they were happier. The writers point out that staff retention is important because it keeps down a company’s recruitment and training costs.

However, Prof Bloom and his co-authors state that while on average home workers were happier and more productive, nonetheless home working productivity varied substantially. Moreover, when the experiment ended almost 50 per cent of the home workers chose to return to the office – despite commuting costs – citing loneliness.

The writers say the benefits of home working include less pollution from commuting, greater regional income equality and an improved family and community life.

Does working from home work? Evidence from a Chinese experiment can be read online.

The term “black swan event” – an event that is so unlikely it could not be anticipated – and its cousin “perfect storm” have both become part of popular vocabulary. But according to a Stanford professor many of the events which carry these labels have been incorrectly described and are being used as an excuse for bad risk management.

Elisabeth Paté-Cornell, a professor of management science and engineering, says that true black swan events are extremely rare. For example, the terrorist attacks of 9/11 she says were not black swan events because the FBI was aware that “questionable people were taking flying lessons on large aircraft”. Whereas the Aids virus she says was a true black swan event. Similarly says Prof Paté-Cornell the perfect storm scenario in which a series of forces unite to create a much bigger disaster can all be assessed before the disaster occurs because even though their united occurrence is rare, all the events and what causes them have occurred before.

Prof Paté-Cornell says that instead of labelling these events companies and regulators should think like engineers and use risk analysis strategies to make better management decisions.

“Risk analysis is not about predicting anything before it happens, it’s just giving the probability of various scenarios,” she says. If companies explore these scenarios they can make better decisions she adds. An engineering risk analyst thinks in terms of systems and has to understand the way in which the entire system works so that they can then understand how it could potentially go wrong. The same approach applies to medical, financial or ecological systems she adds.

Prof Paté-Cornell dismisses the notion that once humans are included in a risk analysis the strategy cannot be applied because of uncertainties of human error. Instead she says a risk analysis can factor in all available information about past behaviours, training and skills. Human error she adds is not unpredictable and is often rooted in the way a company is managed.

“We look at how the management has trained, informed and given incentives to people to do what they do and assign risk based on those assessments,” she says.

The research can be read online at Stanford News.

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