The Edge

Key Takeaways from the Latest Research on Return-To-Office (RTO)

Written by Meghan Krause | January 11, 2024

Over the holiday, researchers at the University of Pittsburgh published new findings on return-to-office (RTO) mandates. They compared S&P 500 firms with and without RTO mandates to evaluate:

  1. Impacts on financial performance (profitability and stock market values)
  2. Impacts on employee satisfaction
  3. Factors that make a company more likely to implement an RTO policy (the unspoken motivation)

 

What you need to know

  1. In-office workers weren’t found to be more productive.
  2. RTO policies did not increase profitability or stock market valuation.
  3. Employee job satisfaction significantly declined.
  4. Strict RTO advocates tend to have more controlling tendencies, come from poorer performing businesses, and may be using WFH employee productivity as a scapegoat for that poor performance. (Ouch.)

 

What it means for you

1. Despite the big tech layoffs, there is still a talent shortage. RTO policies pose both retention and hiring challenges.

Keep high value employee retention top of mind. The pandemic and great resignation shifted these high performer’s values and priorities. They are in high demand and not afraid to make moves to better meet those values.

Hiring remote increases the potential talent pool by increasing geography.
View flexible work programs as part of your compensation and benefits package. Research shows workers consider these accommodations as equivalent to an 8% pay increase.

2. Think twice about forecasting increases in productivity or profitability as a result of your RTO policies.

Recalibrate your forecasts if you baked in increased performance as a result of return to work. It’s still early in the year so there’s time to adjust and make up the delta in other ways.

Pulse check retention of those vital to delivering on plan. Address talent linchpins that would hinder your performance if those employees left.

3. Blanket RTO can paint you as performance apathetic to high performers. Counter by championing performance above all.

Create objectives that you can measure and have a business impact. Uncover hiding poor performers (and scapegoating managers) with a culture of transparency and accountability.

Create flexible workplace policies that accommodate your varying performance levels and personalities without penalizing your high performers. Remember, they’re viewing these policies as part of their compensation package.

4. Don’t let poor performance hide behind the flexible work boogeyman. Take a moment for reflection.

Make sure your policies are addressing the right problems. As harsh as it sounds, this study found those pushing RTO may be doing so for the wrong reasons.

Measure the impacts your policies have had. The findings in this study are generalized so your mileage may vary. Evaluate your individual risks and benefits to make the right decision for your business.

 

References

Ma, Mark (Shuai) and Ding, Yuye, Return-to-Office Mandates (December 25, 2023). Available at SSRN: https://ssrn.com/abstract=4675401

Tangalakis-Lippert, K. (2024, January 8). The data is in: RTO policies don’t improve employee performance or company value, but controlling bosses don’t care. Business Insider. https://www.businessinsider.com/rto-policies-dont-improve-employee-performance-company-value-controlling-bosses-2024-1