The Challenges of Work From Home for Organizational Design

Abstract

The onset of COVID-19 hastened the transition to remote work (RW) arrangements such as work from home (WFH). Many organizations, including Apple, Facebook and Microsoft, are permanently moving to hybrid models, with WFH becoming integral to organizational design. The benefits of WFH are well-documented, but so are its drawbacks. For instance, the negative cognitive impact of WFH on the remote worker has been widely acknowledged: mental health problems due to social isolation, digital fatigue, and difficulty in compartmentalizing work, among others. But the focus has been on the individual employee, and there is no systematic study on the challenges of WFH for organization design and governance. This is a critical issue that has made some organizations, such as IBM and Yahoo, far less optimistic about the benefits of working remotely. We caution organizations that despite its advantages for employees and firms, WFH poses critical organizational design challenges along two critical dimensions: alignment of organizational goals with those of individual employees working remotely, and, coordination of tasks among organizational participants. After all, it is not the lack of a common goal that causes Olympic relay teams to drop the baton. To successfully adopt WFH, firms must identify and adequately address the organizational alignment and coordination problems arising from RW.