For better employee retention, why hybrid work may offer the most value

A study found that turnover at one organisation was 33% lower among hybrid employees than those who worked in the office.
By: | July 2, 2024

In the post-pandemic world of work, employee and employer expectations for where work gets done continue to evolve. In an effort to provide clarity around the business value of in-office versus hybrid work arrangements, Stanford University professor and work-from-home expert Nick Bloom led a research project at one organisation that yielded insightful results—particularly around the impact of hybrid work on employee retention.

The project, published this month in Nature, followed 1,612 employees at a large multinational Chinese technology organisation, Group, who were randomly selected to go from working five days a week in the office to three in-office and two at home. After the six-month study, the hybrid group had 33% lower turnover and greater job satisfaction than employees working full-time in the office. Group had approximately 32,202 employees when the experiment was conducted.

Subsequently, Group leadership established a permanent hybrid policy, giving all employees the option to work remotely on certain days.

What it means for HR leaders

Organisations have struggled with the debate over the benefits of remote, hybrid and in-office work since the pandemic started in 2020, resulting in heated employee protests against coming back to the office and employers threatening to fire employees who did not adhere to a return-to-office policy.

However, Bloom wrote last week in a LinkedIn post, the Group research highlights positive employee and business impacts from the shift to hybrid.

Bloom says the transition to a hybrid schedule did not affect organisational performance. Before the hybrid pilot, company managers surveyed expected productivity to fall by 2.6%. However, after the trial, which was conducted from 2021-22, managers found productivity increased by more than 1%.

Bloom says the project also did not impact employee performance or access to promotions or development opportunities, often cited as an important consideration for bringing employees back to the office. For instance, a 2023 study by Executive Networks found that more than 70% of HR leaders surveyed believe in-office employees benefit from proximity bias, or favourable perceptions by managers and leaders, compared to remote and hybrid employees.

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The hybrid arrangement was well-received by those in the experiment; 93% of those who participated said they used their time more efficiently, while more than three-quarters reported stronger wellness outcomes.

Such factors can influence retention, with the Group study demonstrating the potential business impacts of hybrid.

“Given that each quit cost the [technology] organisation about US$20,000, this saved millions a year, making hybrid very profitable,” Bloom says.

Among those in the hybrid group, turnover was particularly lower among female employees, non-managers and employees with the longest commutes, Bloom says.

“In industries struggling with gender diversity—like finance and tech—this is another benefit,” Bloom adds.

About the author: Dawn Kawamoto is HR Editor of Human Resource Executive, where the article was first published.

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