Amazon’s recent request for employees to return to the office five days a week is yet another example of large companies backtracking on their remote work policies. Proponents of this movement often highlight the importance of in-person interactions, with former Google CEO Eric Schmidt even stating that “Google decided that work-life balance, leaving work early, and working from home were more important than winning.”
Our recent study, carried out under real-world conditions and randomly assigning employees to three- or five-day in-person work schedules, offers a reduction in turnover and an increase in profits. In fact, the results were so significant that the company’s middle management changed their previously skeptical views on remote work.
Experiment results
The company we worked with was Trip.com, one of the largest online travel agencies in the world, with approximately 40 thousand employees. One of us, James, is co-founder and president of the company.
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Around 1,600 Chinese employees from the areas of marketing, finance, accounting and engineering volunteered for the study and were randomly divided into two groups. The division was based on whether their birthdays fell on odd or even days. One group, the control group, worked in the office five days a week for six months. The other, the experimental group, went to the office only on Mondays, Tuesdays and Thursdays in the same period. This way to promote collaboration between employees.
We analyzed data from the six-month experiment and performance reviews over the next two years and found that the two groups showed no differences in terms of productivity, performance review scores, or promotions.
Before the experiment, managers had estimated that the hybrid model would reduce productivity by 2.6%. After the six-month experiment, by 1%. Employees who worked in the hybrid model had a higher satisfaction rate and 35% less turnover. The reductions in the dismissal rate were more significant among female employees. People who did not hold management positions and had long commutes of more than 1.5 hours also had significantly lower dropout rates in the hybrid model.
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According to the Society of Human Resource Management, each layoff costs companies at least 50% of employees’ annual salary, which for Trip.com would mean US$30,000 for each layoff. In the Trip.com experiment, employees liked the hybrid model so much that layoff rates fell by more than a third, resulting in savings of millions of dollars per year for the company.
Managerial lessons
After our study was published in Nature, executives expressed great interest in learning more about the results and their implications. We believe there are three essential ingredients that have contributed to the success of hybrid work at Trip.com.
Firstly, Trip.com has a rigorous performance management system, comparable to global best practices. Managers aren’t constantly monitoring employees at their desks to check progress or offering sporadic feedback once a year. Instead, the company has an extensive twice-yearly performance review process that helps employees adjust their performance in real time. Employee performance data, along with feedback from co-workers, customers, direct reports and managers, is compiled into a detailed, multi-dimensional performance review using a five-point scale. Through an evaluation system based on the bell curve, which guarantees a varied distribution of grades, Trip.com is able to effectively recognize and reward the best performers, while at the same time identifying the worst, which are subsequently included in plans of performance improvement. Furthermore, salaries and promotions are directly linked to evaluation. This way, company managers can effectively motivate and reward high-performing employees, whether they work from home or in the office.
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Second, in Trip.com’s approach to hybrid work, employees have a clear, coordinated schedule that defines when their team will be together in the office. This saves you the frustration of arriving at an empty office only to join Zoom calls that you could have easily done from home. Trip.com allows all employees to work from home on Wednesdays and Fridays. Other companies may choose to define in-person work days at the team or company level, but scheduling clarity is critical to the success of hybrid policies.
Ultimately, Trip.com’s CEO and entire executive team support a hybrid policy. As is common in many modern management practices, from lean manufacturing to organizational agility, leadership support is essential to sustaining a successful strategy.
“At Trip.com Group, we are dedicated to unlocking the full potential of our employees,” said Jane Sun, CEO of Trip.com Group, the Nasdaq-listed parent company. “Our hybrid working model, honed over a decade of innovation and experimentation, is designed to support excellence, both personal and professional.” We remain committed to fostering an environment where everyone can thrive.”
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The value of A/B testing
Another lesson managers can learn from our study is the value of organizational A/B testing. We’ve all participated in A/B experiments probably dozens of times when using online services, but A/B testing with management practices is much rarer.
Trip.com has a tradition of A/B experimentation in management practices dating back more than a decade, using them to continually improve its productivity. For example, in 2010, they ran experiments on remote work for call center employees. The current study involved a more diverse group, consisting of computer engineers, accounting, marketing and finance professionals. And with positive results, leadership took the hybrid model to the entire company.
Trip.com has been heavily data-driven in its decision-making in order to avoid jumping to conclusions about the productivity of the hybrid work model. The data indicated that employees in hybrid mode were working about 1.5 hours less per day from home, which, at first glance, suggested that they were working less. However, when analyzing the data in more detail, they found that hybrid employees worked longer hours during weekdays and weekends to compensate for reduced time at home. Employees reported that they found days at home useful for important activities such as doctor appointments, taking their children to school, traveling or even leisure activities such as golf. As these workers were highly motivated by rigorous performance evaluations, they compensated for reduced time at home with longer hours during weekdays and weekends.
Trip.com is also conducting more experiments to collect data on other aspects related to hybrid, such as adjusting the number of days in the office to find the ideal balance. The benefits of happier employees and better retention make this all highly attractive.
Our results showed that with a hybrid work policy, Trip.com was able to generate millions of dollars in profits by reducing costly turnover, without any negative impact on performance, innovation or productivity. Companies should expand their A/B tests, which are used in the consumer experience, to daily practices, aiming for continuous management improvement. Only companies that continually innovate and improve will survive, and to do so, they need to experiment and improve even their own management practices.
