"We find that certain management practices that encourage knowledge sharing between coworkers can raise long-term productivity. The Structured-Meetings treatment was particularly effective, suggesting the constraint on knowledge flows is initiation costs..."

As magical as it is to zoom across the Pacific from the router in the living room, to join Lee on a guided forest bathe meditation in Kyoto’s sacred mountain, you’ll likely end the virtual experience on a new browser tab scouring flights in Q3 to Japan. Yes, the temperature from the hose in your yard would match that from the hidden waterfall shrine at Fushimi Inari, but those Shinto spirits don’t live in your garden. And despite the data on productivity gains during the pandemic, themselves juiced by time saved from commutes, longer working days, and multitasking during meetings, new data is emerging on the productivity of being there in real life and of in-person collaboration.

Workplace Knowledge Flows, published in Harvard’s Quarterly Journal of Economics, conducted a field experiment in a sales firm to test whether improving knowledge flows–during structured meetings and catered lunches between coworkers–improved sales productivity.

It did.

Data included 6 weeks of pre-intervention sales data, 4 weeks of sales data during the intervention, and 20 additional weeks of performance data after the interventions ended.

The study centered on a sales firm with two offices and 653 sales agents that receive inbound calls from potential customers seeking television, phone, and internet services across the United States. The agents were placed into four groups; a control group at the second office unaware of the experiment, a Pair-Incentive group that was rewarded for improvements in their joint output, a Structured-Meetings group, and a Combined group where agents had Pair-Incentives and participated in the Structured-Meetings. The meetings began at the start of the week and included a worksheet on sales strengths and challenges, and this was followed-up with a catered lunch meeting at the end of the week.

Essentially, there are two things that impede knowledge flows: a) initiation costs, including social concerns (signaling incompetence), coordination difficulties (setting up meetings), and search friction (knowing whom to ask), and b) contracting costs that limit the ability of knowledge seekers to compensate knowledge providers. In this case, contracting costs were built into compensation, as a portion of an agent’s compensation was determined by that agent’s relative performance to peers.

Twenty weeks after the experiment’s pairing interventions ended, performance in the Structured-Meetings and Combined groups remained between 18% and 21% higher than the business-as-usual expected base case level.

The authors conclude that management can play a crucial role in unlocking interactions between the team, so as to support “knowledge spillovers” first identified in economic research from 1890, and “macro-economic agglomeration effects” that include the positive outcomes of bringing people together in a city.

Or, on the micro-economic scale pertinent to this study, at lunch in the office.

Source: Sandvik, Jason, Richard Saouma, Nathan Seegert, and Christopher Stanton. “Workplace Knowledge Flows.” Quarterly Journal of Economics 135, no. 3 (August 2020): 1635–1680.

About Millen Paschich

Millen began his career at Cambridge Associates, trained in finance at SMU, and has an MBA from UCLA. Talk to him about bicycling, business, and green chile burritos.

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