Trip.com Group Pioneers Hybrid Work in China – The Impact of New Working Models on Society

With the rapid development of online communication technology and the spread of the COVID-19 pandemic, the trend of remote working has taken hold worldwide. Due to strict pandemic prevention and control measures, China has largely been able to resume in-office work, with remote working not as widespread as in the United States, the United Kingdom, Singapore, and other regions. Trip.com Group has led Chinese tech companies in this space and took the decision to experiment with hybrid work.

?This week, Trip.com Group announced that it is introducing a hybrid work model. The new policy will allow employees to choose to work remotely 1-2 days a week on Wednesdays and Fridays. his week, Trip.com Group announced that it is introducing a hybrid work model. The new policy will allow employees to choose to work remotely 1-2 days a week on Wednesdays and Fridays. Trip.com Group is the first large company in China to introduce a "3+2" style hybrid work model for the majority of its employees. Prior to this, Trip.com Group had conducted experiments across two departments that showed remote working did not have any impact on work efficiency, significantly increased employee satisfaction and reduced the staff turnover by a third.

Outside of work performance, the social impact of hybrid work is clearly reflected in factors such as shorter commutes, reduced carbon footprint, benefits to families, alleviation of high housing prices and regional disparities, favorable conditions for female career development, and higher fertility rates.

Hybrid work can benefit companies, employees and society, and have a profound impact on the job market and overall economy. Therefore, we should all be eager to see hybrid work being rolled out to more Chinese companies and having a wider social impact.

?With the development of online communication technology, many companies began delving into working from home over a decade ago. Trip.com Group experimented with work from home with its China-based Customer Service department in 2010, with positive results. However, in the past, working remotely was limited to staff such as online Customer Service teams, while standard or flexible working hours staff such as R&D teams were generally considered to work more efficient in the office, as there was a lot of need for communication and meetings with others. This has changed over the last two years of the pandemic, with the mass rollout of working from home for all types of staff.

?The pandemic has brought about dramatic changes, some temporary and some long term. For companies, one of the most important long-term changes is that companies around the world have made working remotely the norm. As the pandemic has passed, social conditions have largely returned to normal in Europe and the US, but there has been a huge backlash when companies have asked their employees to return to the office. Faced with strong opposition from employees, some companies have had to repeatedly postpone their return to the office.

?Leading tech companies such as Amazon[1], Google[2], Microsoft[3] and Apple[4] have started to normalize and institutionalize remote working, asking employees to come to the office only 1, 2 or 3 days a week, with some companies asking for a face-to-face meeting at the office only once a month. Politicians in some countries are also proposing to amend labor laws to legislate the protection of the choice to work remotely as a standard labor benefit for companies and professions that are in a position to do so. These are all signs that remote working will gradually become the norm globally. This is the biggest change in the labor system since the forty-hour workweek was introduced nearly a century ago, and will have an extremely profound impact on society and the economy. China, as a major labor market and leading tech nation, will need to face this change head-on. At this time, Trip.com Group has taken the lead in promoting its hybrid work model across the majority of its departments, reflecting that the efficiency gains of remote working are not only applicable to offices overseas, but can also be realized in China.

Productivity and Efficiency in a Hybrid Work Model

There have been many studies showing that working from home can improve productivity and job satisfaction. The 2010 large-scale trial conducted by Stanford University researchers and Trip.com Group where Customer Service employees were offered to work remotely evidenced exactly that, showing not only increased employee job satisfaction but also increased productivity. Participants who worked from home demonstrated relatively more hours worked, less sick leave and lower staff turnover [5].

For staff in more standard work positions, many companies in the US made passive attempts during the pandemic to enable them to continue to work. Throughout the first year of the pandemic, video conferencing and co-working technology became increasingly stable and reliable, whilst the organizational design, operating rules and payroll for those working remotely matured. From these steps, it appears overall productivity was not affected. Again showing the general efficiency of work from home should be better than that of a traditional centralized office when employee satisfaction is taken into account.

Trip.com Group’s recent collaboration with Stanford University researchers consisted of an AB experiment on a hybrid office model across several R&D departments where employees could work from home every Wednesday and Friday. The results showed no drop in productivity and an increase in employee satisfaction, demonstrated, among other things, by a significant reduction in turnover of one third.

The most common concern with remote working is that remote video conferences are not as efficient as face-to-face communication. It is true that face-to-face communication is more immersive than remote communication, but generally speaking, a large part of an employee's workday is spent independently, and a small part is spent communicating. So even if only half of the time is spent in the office, it does not affect face-to-face communication, hence the proposed 3+2 style model implemented by Trip.com Group for the majority of employees does not, in theory, result in a significant reduction in face-to-face communication.

A lot of communication does not have to be face-to-face either. Some communication is formal and routine, and in fact, video conferencing is no less effective than face-to-face communication. Of course, there are some scenarios such as heart-to-heart meetings that may still require face-to-face communication, but the proportion of such communication is not high and a hybrid model is perfectly adequate by still allowing time for such face-to-face interactions.

In fact, during the pandemic, communication in many companies has become remote, some via video conferencing, however most via email or instant messaging. The implementation of the hybrid office model has the option for scheduling in-person meetings on in-office days, leaving the normal work pattern basically unaffected, and this is supported by the trial data. In the nearly six-month trial conducted by Trip.com Group, there was no impact on the productivity of employees in the R&D department, and there was no significant difference in the overall evaluation scores of the employees in the trial group and the control group.

The main result of the trial was a significant increase in employee satisfaction. This seems simple to explain, as employees saved a lot of time and costs in commuting and were able to organize their personal life more flexibly. One study showed that the benefits of working from home were equivalent to an 8% pay rise for employees, meaning that employees were willing to trade 8% of their salary for the benefits of hybrid work [6]. Therefore it is not difficult to explain the substantial increase in employee satisfaction, which is a direct reflection of increased employee loyalty, with staff turnover in the third group being a third lower than in the control group, which is a huge benefit to the company.

Globally, during the pandemic, the vast majority of eligible tech companies adopted a fully remote approach, and after the pandemic subsided, only a small number of companies reverted to a centralized approach, such as Goldman Sachs and JP Morgan. Many more companies, especially high-tech companies, adopted a fully or hybrid remote working model, such as Apple, Microsoft and Google, switching from full remote working to hybrid work. While Spotify[7] and Twitter[8] have announced permanent remote working policies. It seems that the younger the high-tech company, the more likely it is to embrace new ways of remote working.

Impact on House Prices and Urbanization

Firstly, there is no need to build so many office buildings. As the demand for office buildings in the city may be half of what it used to be, rents will drop significantly and in the long run, the unused office buildings can be converted to other uses such as hotels and commercial and residential buildings. There will be fewer business people in the city center and some of the associated spendings such as business lunches, coffee and even shopping will be reduced and rents for commercial properties will fall. The upside is that city centers will be less crowded and rental costs will fall, leaving more space for amenities such as residential buildings and hotels. Whilst the demand for tourist spots, such as cultural and historical sites, and nightlife in the city center still cannot be replaced by the suburbs.

Another immediate effect will be a substantial increase in demand for suburban housing. If you don't need to travel to the office, or if you only need to travel to the office two or three days a week, company staff may be willing to live further away, and suburban housing is cheaper compared to the city center, allowing for more spacious living conditions for the same price or rent. Remote working also requires a quiet environment, such as a separate study or a spacious bedroom with a desk, so larger homes are more desirable.

If an average of 20% of a city's workforce works remotely each day, it can go some way to alleviating traffic congestion on commuter days, and with fewer cars commute times are reduced, further encouraging people to live in the suburbs.

In the long run, the total price of housing in the suburbs and city center could become increasingly similar. More suburban housing will be developed to meet the new demand precipitated by remote working. Cities become less dense and suburban sub-centers become more prosperous.

Recent real estate changes in New York have reflected this phenomenon. While prices in the central business district of Manhattan have fallen over the past year, prices in the suburbs of New York have bucked the trend. This phenomenon of stronger prices in the suburbs and weaker prices in the city center has been seen in many major cities in Europe and the US, such as London, San Francisco and Seattle [9].

Not only will remote working benefit the suburbs of large cities but possibly some smaller cities as well. If full remote working is popularized, the location of staff does not matter so much. Employees in smaller cities could just as easily work from home for a company based in a large city. This is especially true for smaller cities that are within 2 hours of a big city by high-speed train. For example, a Shanghai company with a hybrid work policy could have staff live in Nantong and then travel 2 hours by high-speed train to Shanghai on in-office days. This could further increase employee satisfaction and loyalty, as the cost of living, especially housing, is comparatively much lower in smaller cities.

The biggest beneficiaries of this phenomenon will be the satellite cities on the outskirts of major cities where young people tend to choose to start families. In these cities, young people can live more spaciously whilst schools and other public amenities would grow in response to the new demand. These cities may develop into desirable places of residence where diverse groups of employees choose to settle down. These smaller cities have better prospects for growth, helping to alleviate house prices in larger cities and mitigate regional disparities.

China's major cities are home to some of the country's most well-known large enterprises and are the ideal place for many university students to find employment, but the housing prices in these cities are among the highest in the world, putting enormous pressure on young people to afford rent. One solution to this dilemma is to promote remote working, using motorways and high-speed railways to connect the city center with the suburbs and smaller surrounding cities. Because they also only have to travel to the office two or three days a week, employees may be willing to accept a commute of around two hours to live in a suburb two hours' drive from a major city, or even a smaller city two hours away by high-speed rail.

Policy Implications: If land policy can focus on increasing the supply of land for housing in the suburbs of major cities and the smaller cities around them, and develop a large number of spacious and livable homes and necessary public facilities in the vicinity of major cities, it will lead to a new round of investment and construction, and an opportunity to boost economic growth.

Accelerated Globalization

Another effect of the spread of hybrid work is the deepening of globalization. Now that employees can work remotely from other cities, your potential employee base is no longer limited geographically. Some companies already utilize remote working to recruit staff globally. The cost of renting an office is also saved, as long as you can have a gathering i.e. a party + a trip once every six months or a few months. This will further reduce the demand for office space and increase the demand for travel which will again have a profound impact on the labor market.

Countries and regions where English is the official language will benefit from the spread of international remote working. For example, some companies moved their entire Customer Service departments to the Philippines during the pandemic, where staff worked directly from home there was no need to spend on setting up a physical office space, all done at a fifth of the cost of doing so in the US. Some companies are also hiring programmers in large numbers from developing countries such as India, Brazil and Eastern Europe who work remotely at a much lower cost than in Europe and the US. This trend clearly benefits companies and talent in countries where English is the official language.

Policy Implications: If China is to realize its full potential in this area, it needs to strengthen the training of English and IT talent, open up more to international investment and exchange, including the exchange of people and information, and participate more deeply in the integration of global talent.

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Benefits to Families and Increasing Fertility Rates

A hybrid work model allows parents to spend more time with their children, reducing the already heavy burden of childcare. Employees can spend more time at home with their children, with the option to dedicate more time to their home life. Of course, employees with children benefit even more from a hybrid work model, as they can save on commute time and work from home 1-2 days a week, allowing more flexibility in work allocation and dedicating more time to other areas.

If the hybrid work model were to become widespread in China, it could go some way to alleviating the anxiety and stress of couples, and potentially also increase the willingness of couples to have children, which would go a long way to improving the overall fertility rate in China. China is facing a serious fertility crisis today, with only about 10 million newborns in 2021, a record low. The average woman will have only 1.1 children, which is only about half the replacement level, meaning that China's population is declining at a rate of half every generation, with all the negative economic and social consequences that lie ahead. The most important reason behind China’s low fertility rate is the cost of childbirth, of which the cost of childcare is not only financial but also time-consuming. In particular, the high pressure of further education in China takes up a lot of parents' time and effort. A hybrid work model can have a significant positive effect on addressing the pressure on parents, especially mothers.

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Conclusion

In summary, the value of a hybrid work model for businesses and employees is that it can reduce commuting costs and increase employee satisfaction and loyalty without compromising efficiency. The hybrid work model also allows employees more flexibility to reach a better work-life balance. In terms of social impact, the spread of hybrid work not only reduces traffic congestion and contributes to environmental protection, can benefit families and improve fertility rates; the popularization of remote working also helps to reduce the distance between cities and suburbs, big cities and small cities, and between countries. In addition, the spread of hybrid and remote working will reduce the demand for office buildings in large cities and increase the demand for housing in the suburbs of major cities and surrounding small cities, which will help to alleviate high property prices in major cities.

From a policy perspective, the Chinese government should promote the development of these areas by increasing the supply of residential land in the suburbs of major cities and surrounding small cities. This will allow people to fully enjoy the various benefits of working remotely while driving a new round of economic growth.?

References:

[1]??????https://nbloom.people.stanford.edu/sites/g/files/sbiybj4746/f/wfh.pdf

[2]?????https://www.aboutamazon.com/news/workplace/amazon -updates -return -

to-office-guidance

[3]?????https://www.npr.org/2021/05/06/994123311/googl e-adapts-to-long- term-telework-offers-employees-hybrid-work-week

[4]?????https://blogs.microsoft.com/blog/2021/03/22/the-philosophy-and- practice-of-our-hybrid-workplace/

[5]?????https://www.forbes.com/sites/jackkelly/2021/06/03/apple -

announces-employees-will-return-to-a-hybrid-work-style-in- september-signaling-an-end-to-the-pandemic-era/?sh=81ad2376d31c

[6]?????https://static1.squarespace.com/static/5cfdf6cb8acf8600012f8920/t/600ba00

a0210533f9f0d31c2/1611374608159/WFH_Will_Stick+January+21+2020.pdf

[7]?????https://www.cnbc.com/2021/02/12/spotify-will-let-employees-work-from- anywhere-after-the-pandemic.html

[8]?????https://www.indiatimes.com/trending/social-relevance/companies-that- have-shifted-to-work-from-home-permanently-559054.html

[9]?????https://siepr.stanford.edu/publications/policy-brief/donut-effect-how- covid-19-shapes-real-estate

[10]???