After the widespread adoption of remote work during 2020, many corporate employees continue to enjoy the benefits of working from home. By eliminating commutes, noisy office environments, and endless distractions, many people have found they’re better able to focus and maintain a healthy work-life balance with a remote job. In fact, according to Buffer’s 2023 State of Remote Work, 98% of respondents would like to work remotely, at least some of the time, for the rest of their careers, with 71% of participants sharing that their preferred work structure is fully remote. The practice is not only good for employees, but it also improves the bottom line for companies. According to Zippia’s research, remote employees experience a 22% increase in performance when working from home, with 94% of employees reporting their productivity remained the same or increased when able to work remotely. Additionally, access to remote work decreases employee turnover by 50%. Companies also save an annual average of $11,000/employee on overhead costs when employees work only 2.5 days at home per week, according to a study by Global Workplace Analytics. It may come as a surprise then, that many leadership teams are now requiring their employees to return to the office full or part-time. In this post, I’ll discuss why this choice shows flawed decision-making, and I’ll dig into the disturbing reason these leaders may be doing it anyway.
Studies have shown remote work to be more effective than in-office work
Research from Oxford, Stanford, Microsoft, NBER, and other institutions, has found increased productivity and performance for remote employees compared to in-office employees. RTO requires a rejection of empirical data and is a red flag for poor decision-making. It would be one thing if employers were choosing to pay for expensive office space, utilities, and in-person perks for employees because those costs led to better work output. It makes absolutely no sense, however, that employers are choosing to pay these unnecessary costs when the outcome is actually lowered productivity for their teams.
RTO signifies a failure to adapt and a disconnect with reality
Remote work is our modern corporate landscape. A leader who cannot accept that suffers from an inability to accept reality, adapt to it, and keep up with innovation. This is actually not surprising, because the average CEO age across the top 1,000 US companies is 59, according to research by Korn Ferry. Since people tend to be the most comfortable with what is familiar to them, it may be the case that older people, who’ve spent 90% or more of their careers in physical offices, are less open to a drastic change in workplace structure than younger employees are. A strong leader should be able to look past their own familiarity bias and use data to make a decision on what is best for their workforce. Unfortunately, many leaders are not doing this today. Ask yourself, when was the last time a revolutionary concept started with the word “return?”
True leaders are focused on results and outcomes
A strong leader will tell their team what problem to solve and then empower them to self-organize in a way that allows them to solve it. Telling a team how they need to work is not leading, it is micromanaging. A CEO should spend their time focused on revenue, costs, strategy, and outcomes, and not much else. Time spent on other details, such as where their team works, means less time and thought put into the company’s big picture vision, and that is a scary reality for a company. If a team is producing sufficient outcomes and revenue, why would leadership care where they are doing it, and why would they risk losing those results by throwing a giant limiting variable into the team’s day-to-day? On the other hand, if a remote team is not producing sufficient outcomes and revenue, the leader may consider forcing the team to change how they are working. Again, telling them how to do that is micromanaging and ill-advised, as the teams know far more about what helps and hinders them day-to-day than the leader does, but also - if the leader wants to make an informed decision about what could help this team, they’d find that research does not support the idea that the team will perform better in an office.
RTO shows a failure to avoid the sunk-cost fallacy
Typically when a leader wants to RTO, the company has already invested heavily in an existing office space. Some may even be trapped in years-long leases and feel the need to use the space because they’re paying for it. While it’s disappointing to pay for something that gives you little or no benefit, it is much worse to pay a required cost and then tack on additional unnecessary expenses like utilities, snacks, and office equipment, not to mention the huge cost to employee job satisfaction, productivity, and retention. Companies can look into subleasing their space if they want to make an economical decision about a lease they are locked into. Even though resisting the additional cost of $11,000/employee/year would improve the company’s bottom line, many leaders fall prey to the sunk-cost fallacy, a phenomenon in which people irrationally struggle to abandon ideas or efforts that are clearly not working, because they have already invested time or money in them. This is a basic concept that leaders should have learned about in their first year of business school, and it should be a red flag to employees and shareholders that a company is suffering from poor strategic decision-making at the top.
RTO reveals a desperate need for control
With so many reasons to avoid an RTO, why would a leader ever consider such a move? This actually baffles me a bit and I have a hard time coming up with an explanation for why so many companies are pursuing this strategy when there is so much data showing that it’s a bad idea. The only reason that seems plausible is a disturbing one. Could it be that these leaders simply feel the need to regain a sense of control over their employees? Is it possible that company executives have worked most of their careers in physical offices, putting in years of commutes, distractions, and unhealthy work environments, and that now that they’ve made it, they feel that those below them should have to suffer in the same ways they did? Have they come to enjoy the status and privilege that comes with their C-level titles, like a corner office, and the power to elicit forced laughs at their bad jokes? Perhaps those perks don’t feel quite as sweet without subordinates physically in an office, observing and participating in that power dynamic. I fear that this is the actual driving force behind these decisions, and I would love to hear from you if you have a better explanation. For all of the reasons discussed above, I can’t find a logical benefit that outweighs the high costs of this practice. I would not invest my time or money in an organization that is making such a high-risk decision. A company with a leader who chooses to reject data, outcomes, and employee voices is a bad investment. Steer clear of any corporation that allows an individual to place their ego and a desire for control above profit, culture, and innovation.