Remote workers who’ve been ordered back to the office might suspect the directive is nothing more than a power trip by the boss, and research suggests they’re probably right.
Return-to-office (RTO) mandates are often a control tactic by managers and don’t boost company performance, according to a new research paper from the Katz Graduate School of Business at the University of Pittsburgh. What’s more, the mandates appear to make employees less happy with their jobs.
Researchers at the university examined how RTO mandates at 137 S&P 500 companies affected profitability, stock returns and employee job satisfaction. They discovered that companies with poor stock market performance were more likely to implement RTO policies. Managers at such companies were also likely to point the finger at employees for the company’s poor financial showing, seeing it as evidence that working from home lowers productivity. Companies pushing for more days in the office tended to be led by “male and powerful CEOs,” the researchers said, underlining a belief among workers that mandates were being used by leaders to reassert control.
“Our findings are consistent with employees’ concerns that managers use RTO for power grabbing and blaming employees for poor performance,” the authors said in their paper. “Also, our findings do not support the argument that managers impose mandates because they believe RTO increases firm values.”
Indeed, requiring more days in the office did nothing to improve profitability or boost stock prices, the researchers said. But it did seem to make employees miserable, and more likely to complain about the daily commute, loss of flexibility and erosion in work-life balance, according to reviews on Glassdoor. It also made them less trusting of their managers. “We find significant declines in employees’ overall ratings of overall job satisfaction, work-life balance, senior management and corporate culture after a firm announced an RTO mandate,” the researchers said.
Returning to the office remains a contentious subject between employers and employees, and many companies that have issued mandates have suggested workers who don’t comply could find themselves holding a pink slip. For example, Amazon.com Inc. chief executive Andy Jassy late last year told employees that “it’s probably not going to work out” for them at the company unless they come in “at least three days a week.” International Business Machines Corp. also recently said any manager still working from home would need to move near an office or find themselves out of a job.
But employees have pushed back at being asked to come into the office more often. For example, workers at Amazon have held protests and circulated a petition demanding the company reconsider its RTO push. Elon Musk’s X Corp., formerly known as Twitter, reportedly experienced a wave of resignations after he banned working from home.
Surveys repeatedly show that people value flexibility over other considerations such as salary or benefits. Nearly two-thirds of Canadians said they’d even take a pay cut to keep their flexible hours, according to recent research from the Harris Poll and Express Employment Professionals. And 38 per cent of professionals said they’d refrain from looking for a new role at another company because their current job offered flexibility, according to research by recruiter Robert Half Inc.
In good news for workers, evidence suggests 2024 could bring a lull in the RTO wars. Only four per cent of chief executives in both the United States and globally say they’ll push to get workers back to their desks this year, according to a January outlook from The Conference Board Inc. They say a big reason they’re abandoning the fight is because flexibility makes workers happy and executives have made retaining and attracting talent their No. 1 priority this year.
At a time when many executives are focused on reining in costs amid a slowing economy, keeping the employees they have makes financial sense. Productivity losses, recruitment, hiring and training can cost a company between six to nine months of salary, according to Martin Fox, managing director of recruitment firm Robert Walters Canada Inc. “A lot of people forget about the cost of losing talent,” he said. “Companies have strong reasons to hold on to their talent.”
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Scaling back RTO mandates could be one tool executives can leverage to keep employees satisfied, the paper by Katz suggests. Plus, managers who doggedly push staffers to make the commute may be unwittingly signalling that the company is having some serious issues, which might give people more reason to quit. That might mean any executive doubling down on their RTO mandate could be making a misstep.
“My interpretation is that RTO mandates are often a response to poor recent company performance, perhaps adopted by under-pressure CEOs,” Nicholas Bloom, a Stanford University economist and remote-work researcher, said on LinkedIn in response to the paper. “These RTO mandates upset employees, but do not appear to yield performance benefits in return.”
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