It’s been about four years since COVID-19 began spreading across the world—and with it, the popularity of remote work.

Here in the U.S., most remote-capable jobs (60 percent) used to be done exclusively on-site. But in a few short years, those numbers have been flipped on their head. Now that number is just 20 percent. In other words, the majority of workers who can telework now do, at least part time.

So at Kellogg Insight, we’re always on the lookout for studies that can tell us how to make sense of remote work. Today, we’ll share one such study. Plus: compensating Elon Musk, and why we’re all suddenly afraid to fly on planes.

Proximity isn’t dead yet

In-person work has an important role to play in innovation and, in particular, in how much we are able to learn from our collaborators.

This finding comes from a study by Kellogg’s Hyejin Youn and her collaborator Frank van der Wouden of the University of Hong Kong (and a former Kellogg postdoc). The researchers analyzed more than 17 million scientific publications over the past 45 years.

Specifically, they set out to identify scholars who had gained new knowledge from their previous collaborations. A good proxy for this, they realized, was doing research in a new field: someone who started their career in one academic discipline, then collaborated with authors from another discipline, and ultimately published a paper in that new field as a sole author. This seemed like straightforward evidence that they’d learned from their earlier collaboration. In their sample, the team found 1.7 million researchers who fit the bill.

Then they identified the geographic locations of those researchers and their collaborators. Collaborators were considered “local” if they were less than 700 meters apart, about a 10-minute walk.

They found that researchers who collaborated locally were more likely to gain new knowledge from their teammates than those who collaborated at a distance. The difference was most pronounced in the science and engineering disciplines, as well as for researchers who were in the earlier stages of their careers, and those at lower-ranked institutions.

The researchers take this as evidence that being together physically—perhaps reading body language, mulling a problem at a whiteboard, and teaming up to use specialized laboratory equipment—is particularly important for innovation.

Which doesn’t mean working remotely doesn’t have its place. Youn is a big fan of hybrid work, where employees can be productive at home, but then work together in-person to generate something new.

“We learn from each other in person more than we think we do,” Youn says. “That’s part of our success as humans, especially when it comes to knowledge that is new, not yet defined. You have to be present to watch and learn. And collaborating locally is the way to do that.”

You can read more about the research in Kellogg Insight here.

The importance of aligning incentives

Elon Musk isn’t the only one who was disappointed when a Delaware judge decided to deny him his $55 billion dollar compensation package. George Georgiadis, an associate professor of strategy at Kellogg, wasn’t pleased either.

Yes, $55 billion is a pretty eye-popping sum, he acknowledges in a recent piece for The Hill. But the package was specifically designed to be high-risk, high-reward to incentivize performance—and somewhat improbably, Tesla’s stock price hit nearly all of its targets.

My argument doesn’t center on whether Musk, already a multibillionaire, would be more or less incentivized with $10 billion instead of $50 billion. The concern lies in preserving and protecting the integrity and effectiveness of performance pay.

Performance pay can be highly effective in aligning a company’s goals with employees’ actions, even when the likelihood of hitting performance targets seems slim. It aids in retaining employees, particularly high performers. Bonuses, alongside stock and option awards subject to vesting, provide compelling reasons for talented individuals to remain with the company. Their effectiveness, however, hinges on trust in the stability of rules and the commitment that goalposts won’t shift if someone defies the odds.

You can read more of Georgiadis’s argument in The Hill here.

See you next week!

Jess Love, editor in chief
Kellogg Insight