Return-to-Office Mandates: How to Lose Your Best Performers

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Illustration Credit:  Carolyn Geason-Beissel/MIT SMR | Getty Images

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Your organization’s highest-performing employees want executives to focus on outcomes and accountability, not office badge swipes.

Recent return-to-office (RTO) mandates like those at UPS and Boeing have a simple message: Come back to the office five days a week. CEOs cite productivity as a core reason for these proclamations, even in the face of employee resistance. Many executives simply don’t trust that employees are as effective as possible when managers can’t see them at their desks.

But in a world of globally distributed teams, falling back on management-through-monitoring is falling back on the weakest form of management — and one that drives down employee engagement. There is mounting evidence that mandates don’t improve financial performance. Instead, they damage employee engagement and increase attrition, especially among high-performing employees and particularly those with caregiving responsibilities.

There is a better way forward, but it requires culture work at the top as well as deep within organizations, along with a significant upgrade in management philosophy. Too many organizational cultures use face time at the office as their metric for productivity. That’s not the best benchmark. Instead, focusing on outcomes while providing trust and flexibility about where and when to get work done allows individuals and organizations to thrive.

What’s Behind the RTO Drive

We’re four years past the start of the pandemic-driven shift toward flexible work. While the peak of remote work has passed for now, office utilization in the U.S. has been effectively flat. For the past year, it’s been hovering at 50% of pre-pandemic norms.

RTO pronouncements have come loud and clear from Amazon, Google, IBM, JPMorgan Chase, and more. Some CEOs talk about the solidarity that office workers need to have with front-line workers, although Gallup research shows that a strong majority of front-line workers aren’t bothered by office worker flexibility. In fact, they want flexibility themselves, including a choice of which days to work, the option for four 10-hour days, and some flextime — in other words, equity, not equality. CEO concerns also seem a bit selective. As one chief human resources officer put it to me, “We don’t seem to be offering our factory workers access to the corporate jet.”

Wall Street pressures on CEOs are often closely tied to RTO pronouncements. In 2022 and 2023, you could draw correlations between pressure from activist investors and subsequent announcements of RTO mandates, particularly in the technology sector. While activist investors targeting companies such as Amazon, Disney, Google, and Salesforce all pointed to the need to drive higher returns, the timing of their pressure also coincided with the appearance of RTO mandates shortly thereafter. There is a strong feeling of wanting things to go back to the way they worked in the old days.

But there’s no clear evidence that these mandates improve financial performance. A recent study of S&P 500 companies that was conducted by University of Pittsburgh researchers found that executives are “using RTO mandates to reassert control over employees and blame employees as a scapegoat for bad firm performance.” Those policies result in “significant declines in employees’ job satisfaction but no significant changes in financial performance or firm values,” they concluded.

I still get asked, almost weekly, “What about those headlines last summer saying that studies showed that remote work was less productive?” Much of the data was acquired during the throes of the pandemic, often under horrible circumstances and in the absence of support in terms of management oversight. Productivity among the IT workers in India who were thrown into remote work in 2020 and whose performance is cited in those studies was, indeed, demonstrably worse, thanks to the horrific impact of the pandemic in that country.

Perhaps most instructive is evidence that most executives don’t think the mandates they’ve already imposed have helped. Among executives who have instituted a return-to-office mandate, only 1 in 3 thinks it had “even a slight positive impact on productivity.” That’s not surprising to anyone who’s been inside an organization during these drives. They create internal churn and distract employees and their managers from focusing on what matters more: their customers.

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The lingering uncertainty I’ve heard about in many conversations with senior executives comes down to two simple questions: Are people really working when they’re at home? And would they work more and get more done if they were in the office? Some of this skepticism is fed through a CEO echo chamber and by board conversations, where anecdotes about bad experiences can easily start to feel like trends, and where dissent by CEOs sympathetic to hybrid work paints them as outsiders. In the words of one chief people officer, “We dread every time CEOs get together — the peer pressure is a real challenge.”

A company driven by measuring outcomes instead of monitoring employees will allow for flexibility about where and even when people work. Most people want some time together with their teams and some time at home. Teams that figure out a regular rhythm that works for them perform best. Many executives are aware of this, which explains why, in a Conference Board survey, 27% of U.S. CEOs, 30% of Europe CEOs, and 13% of Latin America CEOs said that “maintain hybrid work” is a human capital priority in 2024, whereas only 4% to 6% of CEOs across those regions wanted to drive a full-time, five-day-a-week return to the office.

The bottom line is that when trust is balanced with accountability, people and organizations will thrive. The time employees save by not having to commute can be put toward their jobs or their personal lives. Judging employees on the outcomes they drive, not whether they’re showing up to an office after a grueling hour in traffic or on public transportation, reinforces two key elements: first, that the company takes accountability for performance seriously, and second, that people will be rewarded for their performance. Instead of focusing on internal debates about policies, mandates, and monitoring, employees can focus on delivering outcomes.

That’s the boom loop. It’s time to go build it.

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Here is a direct link to the complete article.


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