Will employees bow down to stricter RTO policies?

There’s a fight going on in the workplace and how it ends could shape what the office looks like for decades to come.

Will employees be given the freedom to work from a location of their choosing? Or will a few, mostly larger organizations force employees back to commuting to the office, reversing the work-from-home revolution of the last four years?

Though many employees have settled into a remote work groove, others have recently received word that new stricter policies are in effect.

Big-name companies requiring employees to return to the office (RTO) include Amazon, Apple, AT&T, Bank of America, BlackRock, Boeing, Chipotle, Dell, Disney, General Motors, Goldman Sachs, Google, IBM, Jotform, JPMorgan Chase, Meta, SAP, Starbucks, Tesla, TikTok, UPS, Walmart, X, and Zoom. Some mandate five days a week in the office — and threaten termination for non-compliance. If these companies succeed, other companies may well follow suit.

IBM, for example, is demanding that managers relocate if they are not within 50 miles of an IBM office and be in that office three days a week. Meanwhile, at SAP, Amazon, and other companies, thousands of employees have signed petitions against their companies’ newly tightened RTO policies. It’s doubtful petitions will have a significant effect. But some affected employees might well decide to keep working from home anyway and force their companies to either look the other way or fire them.

Fortune magazine maintains a useful downloadable spreadsheet showing the stricter RTO policies of 100 or so companies. It apparently updates the spreadsheet on a monthly basis.

Remote work research: the good, the bad, and the surprising

Work-from-home proponents have cited a variety of studies in recent years to show that remote work is more productive, including 1,000 Days of Distributed at Atlassian and Hubstaff’s data showing remote workers engage more deeply with work because of fewer interruptions.

A December 2023 study from the University of Pittsburgh, Katz Graduate School of Business, “Return-to-Office Mandates,” examined the underlying determinants and consequences of US company RTO demands. One conclusion: managers are using RTO mandates to regain control over remote employees and scapegoat them for unsatisfactory company financial performance.

Mark Ma, the associate professor of business administration at the University of Pittsburgh who led the Return-to-Office Mandates study, analyzed 137 S&P 500 companies with publicly announced RTO policies, according to Business Insider. The study compared “each firm’s financial performance on the stock market before and after implementing return-to-office mandates and found no significant change in either financial performance or the stock market value.”

Not everyone is eyeing more RTO strictures. According to the Conference Board’s C-Suite Outlook 2024: Leading for Tomorrow, far more CEOs are focused on keeping hybrid work models than bringing workers back to the office full time. “Maintaining hybrid work as a 2024 human capital priority is cited by 27% of US CEOs, 30% of European CEOs, and 13% of Latin American CEOs,” the Conference Board said. Meanwhile, just 4% of US CEOs, 5% of European CEOs, and 6% of Latin American CEOs say they will prioritize bringing workers back to the office full time. And just 1% of C-level HR professionals list this as a priority in [2024].”

There are also studies that show no increase in productivity from remote work, like a January 2024 Federal Reserve Bank of San Francisco report entitled, “Does Working from Home Boost Productivity Growth?”

Fed Chairman Jay Powell was interviewed on 60 Minutes where he pushed back against the recent spate of RTO mandates, saying “it looks like [remote work] will be a persistent thing.” (Remote work at scale eases inflation.)

If you’re getting the sense that the evidence on remote productivity is all over the map, and that this is a topic that people have strong, in some cases, emotionally-based feelings about, you’re right.

But it’s important to realize that while, top execs with stringent RTO policies claim remote work reduces productivity, there is little to support that claim. Remote work, it would seem, is at least as productive as office work. And the well-being and reclaimed time that remote employees enjoy by avoiding grueling two-way commutes might help them remain energized to take on their jobs. It also likely helps with talent acquisition and retention, two areas that global and US CEOs say are a top concern, according to the Conference Board’s C-Suite Outlook 2024.

Reading the tea leaves

Five work-related trends are emerging in 2024:

1. Some notable large companies are pushing back against remote work.
2. Employee hiring and retention is top of mind for many companies.
3. It’s clear that job layoffs continue to be a thing, and more are reportedly planned throughout 2024.
4. Recent US Bureau of Labor Statistics data shows that the job market is stronger than recently expected, despite the layoffs.
5. Companies are looking to hire people with AI experience.

Could it be that IBM (and other companies) whose RTO messages can be boiled down to “return to the office three days a week or quit,” hoping to get people to quit their jobs ahead of forthcoming lay-offs? Such a move, if successful, would likely save significant funds on layoff benefit packages when employees quit or are fired for cause.

But at what price?

Many enterprises are focused now on acquiring and retaining top talent in a variety of areas, including workers who have experience applying generative AI tools to business goals. But for companies trying to attract and hang onto the best talent, sharp-edged RTO policies are counterproductive.  

Companies taking a hard stance with their RTO policies risk alienating employees, leaving them betrayed, disillusioned, and demotivated. And those employees forced to relocate their homes to comply with new RTO policies? They’re apt to be angry. Before long, tough RTO policies could foment a toxic work environment.

It’s difficult to picture companies like Amazon, Google, IBM, Bank of America, and JPMorgan Chase rescinding their very strict RTO policies. But it’s equally difficult to imagine that a global workplace trend that’s proven effective, reduces our carbon footprint by taking vehicles off the road, and gives employees back their commute time, will be eliminated by CEO fiat. Something has to give.

One thing that seems certain is that talent keen on working remotely will have no trouble finding new employment with a company that better supports work from home. Top execs who invoke stringent RTO policies may wind up with a resentful workplace culture and an exodus of their best talent.