Remote work has become increasingly common thanks to the COVID-19 pandemic and left its mark on the Australian workplace, with knowledge workers such as accountants, engineers and IT specialists the ones who can and do work from home the most.

But while some businesses such as Google and Tesla tell their employees to return to the office, others - most notably Atlassian - insist that working from home will not hurt their output. So, is working from home good or bad for productivity?

The answer depends on whether employees in a particular workplace compete with one another, or if they are collaborators sharing in the success of their team’s project.

To elaborate on this, very broadly we think that there are two types of work.

In some work environments employees are essentially pitted against each other, with the spoils going to the ‘winner’. Employees could be competing to make a sale, or to have their idea for a new project adopted. These situations can be thought of as a tournament, akin to a sporting competition, with the bonus, commission or promotion going to the employee who comes out on top.

When work is like a tournament, only the best worker or idea gets selected.

In other workplaces, the way output is produced is completely different. In these workplaces, output depends on the combined contributions of all team members, and employees share in the success of the team. Work can be thought of as collaborative, or as a ‘public good’, using the economics jargon. Typically, with public-good type work environments, the efforts of all workers combined produce the total (or team) output.

In a tournament, seeing their colleagues work hard can spur an employee to ramp up their own effort. Working in the office can increase the observability of others’ efforts. This means that working in the office can boost the total effort of employees, enhancing output.