It’s the age-old question: if employees are allowed to telework, are they more or less productive than people sitting in the office?

It turns out that research indicates teleworkers are more productive – but don’t go downsizing your office environment just yet.

The last major Australian research in this area was a McCrindle study in June 2013, where 55% of those surveyed reported being “slightly or significantly more productive” when working from home.

Interestingly, effectiveness increases with age – so while only 45% of Gen Y’s said they are more productive at home, the number increases to 52% for Gen X and up to 61% for Baby Boomers.

To top that off, employees say they will stick around longer if they can telework, and they’ll even take a pay cut for the flexibility.

So what’s the downside? Well, although individual productivity might increase, it might not work best as a full-time arrangement.

Take this recent study by researchers at Stanford University, where call centre workers for a Chinese travel agency participated in a teleworking experiment over nine months.

The study found the teleworkers were 13% more productive at home: they took less breaks, enjoyed the convenience for getting coffee or lunch, and logged more minutes because the environment was quiet.

“The overall impact of working from home was striking,” the study found.

“The firm improved total factor productivity by between 20% to 30% and saved about $2000 a year per employee working from home.

“About two thirds of this improvement came from the reduction in office space and the rest from improved employee performance and reduced turnover.”

And yet not all of the employees were happy. The travel firm was surprised to find “more than half of the workers eligible to work at home decided to return to work in the office”, mostly because they felt lonely or isolated at home.

“The management thought these types of problems would have been foreseen by employees in advance, but apparently they were not,” the study noted.

This supports the earlier Australian research which found most employees thought meeting occasionally was necessary for team culture and productivity.

So what’s the answer? It’s very likely that employers can benefit from a telework arrangement but one that is flexible and allows for time at home as well as in the office.

Indeed, research by US firm Gallup “shows that employees who spend at least some time working remotely are a bit more likely to be engaged in their jobs than those who never work remotely.”

Mobility and productivity technology such as Microsoft Office 365 can also help bridge the gap between office and home.

Research by Forrester found a number of productivity benefits from Office 365, including from its social and collaboration tools, and in helping employees make decisions faster.

The Committee for Economic Development Australia (CEDA) sees technology as critical to making the promise of telework and flexible working arrangements possible.

“In the future, flexible work arrangements such as teleworking, outsourcing, virtual teams, international placements and contracting, crowdsourcing and job sharing will be supported by technologies to make work, rather than workers, mobile,” it recently said.

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