Hybrid working from home improves retention without damaging performance, James Jianzhang Liang finds
Hybrid working from home improves retention without damaging performance, James Jianzhang Liang finds
The businessman-economist ran an experiment at his own company and then published it in Nature.
James Jianzhang Liang is the Co-founder and Chairman of Trip.com Group, a leading travel platform. He is also an economics professor and public intellectual, having been featured multiple times in The East is Read and Pekingnology.
Recently, his dual roles came together in an experiment he conducted among his own employees during the COVID-19 lockdown, the results of which were published in an article in Nature this June.
Co-authored with Nicholas Bloom from Stanford University and Ruobing Han from the Chinese University of Hong Kong, Shenzhen, the study found that hybrid remote work left performance unchanged, improved job satisfaction, and reduced quit rates by one-third. The article, therefore, recommended hybrid work models to profit-driven organizations.
A crucial context is that working from home has almost completely disappeared from China after the end of the COVID-19 pandemic, but Liang has been advocating it as one essential tool for giving people time for childcare, something he is extremely passionate about as a leading demographer. His company’s adoption of the hybrid model and gave generous parental leave for employees also made headlines across Chinese media.
Below is a condensed version of Liang's open-access article with Bloom and Han, with the mathematical details removed.
Hybrid working from home improves retention without damaging performance
Working from home (WFH) surged after the COVID-19 pandemic, with university-graduate employees typically WFH for one to two days a week during 2023. However, the effects of hybrid working on employees and firms have been debated, and some executives argue that it damages productivity, innovation and career development. Here we ran a six-month randomized control trial investigating the effects of hybrid working from home on 1,612 employees in a Chinese technology company in 2021–2022. We found that hybrid working improved job satisfaction and reduced quit rates by one-third. The reduction in quit rates was significant for non-managers, female employees and those with long commutes. Null equivalence tests showed that hybrid working did not affect performance grades over the next two years of reviews. We found no evidence for a difference in promotions over the next two years overall, or for any major employee subgroup. Finally, null equivalence tests showed that hybrid working had no effect on the lines of code written by computer-engineer employees. These results indicate that a hybrid schedule with two days a week working from home does not damage performance.
The experiment
The experiment took place at Trip.com, the third-largest global travel agent by sales in 2019. Trip.com was established in 1999, was quoted on NASDAQ in 2003 and was worth about US$20 billion at the time of the experiment. It is headquartered in Shanghai, with offices across China and internationally, and has roughly 35,000 employees.
In the summer of 2021, Trip.com decided to evaluate the effects of hybrid WFH on the 1,612 engineering, marketing, and finance employees in the Airfare and IT divisions, spanning 395 managers and 1,217 non-managers. All experimental participants were surveyed at baseline, with questions on expectations, background, and their interest in volunteering for early participation in the experiment. The firm randomized employees with an odd-number birthday (born on the first, third, fifth, and so on day of the month) into the treatment group.
Effects on employee retention
One key motivation for Trip.com in running the experiment was to evaluate how hybrid WFH affected employee attrition and job satisfaction. The net effect was to reduce attrition over the experiment by 2.4%. Consistent with this reduction in quit rates, employees in the treatment group also registered more positive responses to job-satisfaction surveys.
One possible explanation for the lower quit rates in the treatment group is that quit rates in the control group increased because the individuals in this group were annoyed about being randomized out of the experiment. However, quit rates in the same Airfare and IT divisions were 9.8% in the six months before the experiment—higher than the rate for the control group during the experimental period. Quit rates over the experimental period in the two other Trip.com divisions for which we have data (Business Trips and Marketing) were 10.5% and 9.8%—again higher than that for the control group during the experimental period. This suggests that, if anything, the control-group quit rates were reduced rather than increased by the experiment, possibly because some of them guessed (correctly) that the policy would be rolled out to all employees once the experiment ended.
Employee performance and promotions
Four performance reviews span a two-year period from the start of the experimental period: July to December 2021, January to June 2022, July to December 2022 and January to June 2023. Across all review periods, we found no difference in reviews between the treatment and control groups
We see no evidence of a difference in promotion rates across treatment and control employees. This is an important result given the evidence that fully remote working can damage employee development and promotions.
We also analysed the effects of treatment on performance grades and promotions for a variety of subgroups, including managers, employees with a manager in the treatment group, longer-tenured employees, longer-commuting employees, women, employees with children, computer engineers and those living further away, as well as looking at whether internet speed had any effect. We found no evidence of a difference in response to treatment across these groups.
The experiment also analysed two other measures of employee performance. First, the performance reviews at Trip.com have sub-components for individual activities such as ‘innovation’, ‘leadership’, ‘development’ and ‘execution’ (nine categories in all) when these are important for an individual employee’s role. We collected these data and analysed these scores for the four six-month performance review periods. We found no evidence of a difference across these nine major categories over the four performance review periods. This indicates that for categories that involve softer skills or more team-focused activities—such as development and innovation—there is no evidence for a material effect of being randomized into the hybrid WFH treatment. Second, for the 653 computer engineers, we obtained data on the lines of code uploaded by each engineer each day. For this ‘lines of code submitted’ measure, we found no difference between employees in the control and treatment groups.
Discussion
Once the experiment ended, the Trip.com executive committee examined the data and voted to extend the hybrid WFH policy to all employees in all divisions of the company with immediate effect. Their logic was that each quit cost the company approximately US$20,000 in recruitment and training, so a one-third reduction in attrition for the firm would generate millions of dollars in savings. This was publicly announced on 14 February 2022, with wide coverage in the Chinese media. Since then, other Chinese tech firms have adopted similar hybrid policies.
This highlights how, contrary to the previous causal research focused on fully remote work, which found mostly negative effects on productivity, hybrid remote work can leave performance unchanged. This suggests that hybrid working can be profitably adopted by organizations, given its effect on reducing attrition, which is estimated to cost about 50% of an individual’s annual salary for graduate employees. Hybrid working also offers large gains for society by providing a valuable amenity (perk) to employees, reducing commuting and easing childcare.
