Bosses are increasing RTO requirements, but experts say it won’t stick: ‘We’re at an inflection point’

If 2022 was the year corporate bosses planned for a mass return to offices, 2023 might usher in a new era of concessions.

All throughout the last year, companies like Apple, Google, Twitter and Goldman Sachs sent out memos coaxing people back in-person, to varying degrees of success. But hopes of a grand return haven’t quite panned out en masse. For most of the year, the average office occupancy rate in 10 major U.S. cities remained below 50%, according to data from Kastle Systems, the security firm that tracks office entries.

With a new year and fresh recession concerns come more return-to-office orders. Returning Disney CEO Bob Iger, for example, caused a stir this month with the announcement that employees will be expected in the office four days a week by March.

More corporate bosses could follow Iger’s lead with fresh RTO mandates, says Caitlin Duffy, director of research at Gartner. But she doesn’t expect them to stick.

“Onsite work requirements are being reintroduced, but employers are walking them back because employees are increasingly unwilling to comply with those requirements, and organizations are unsure or reluctant about how to enforce them, even though they’re technically in place,” Duffy says.

Workplace experts say the state of remote, hybrid and in-person work is reaching an equilibrium point and that today’s level of RTO will probably stay put, even in the face of recession warnings.

Plans to boost in-office days unlikely to pan out

So far, most hybrid policies expect workers in offices two to three times a week. The Disney requirement falls on the stricter side in that sense, even though it’s still technically a hybrid setup.

But requirements increasing in-office days are unlikely to become a norm, experts say.

“I feel pretty confident in saying we will not see much more shift toward the office,” says Nick Bloom, a Stanford economics professor who researches work-from-home topics.

Bloom co-authors a monthly report that captures how many people are working from home and says behaviors haven’t shifted since September, when many companies went through another post-Labor Day RTO campaign to boost in-office attendance.

In the last year, the gap between workers’ expectations of remote work and employers offering it post-pandemic has been shrinking, according to analyses from Bloom’s WFH Research team. As of January, workers say they want to work from home for 2.8 days on average, versus employers planning to allow 2.3 days remote.

Businesses that want people in-office more than that will have to make a strong argument, says Amanda Armstrong, the senior vice president of brand and community at Encore, a global event-planning company.

Employers that have been able to keep up productivity, if not thrive, during remote work will have to show a marked drop in success and tie it directly to not being in a central office, Armstrong says. “But without those proof points, it’s going to be hard to say, ‘We need you here just to be here.'”

Bosses lean on remote work to slash costs and boost happiness

Some CEOs have pointed to a potential recession as reason to bring people back into offices to boost productivity and engagement.

In practice, though, several companies have resorted to slashing costs, namely by laying off tens of thousands of workers as well as downsizing their office real estate. In recent weeks and months, notable tech giants like Salesforce, Meta and Microsoft have canceled their leases or nixed expansion plans.

Bloom says he recently spoke with leaders at a big tech firm who said they plan to increase remote work in order to get rid of their expensive office building in San Francisco. “For every Elon Musk-type pushing people back to the office, there are many others increasing work from home for the cost savings and because it’s easier to recruit,” he says.

And even Musk, who banned remote work at Twitter after taking over the company in November, reversed course when the company shut down its Seattle offices and instructed people to work from home.

Some leaders are expanding remote work to keep their workers happy with their jobs and pay, Bloom says. After all, despite loud layoffs, even major staff cuts don’t represent the relentlessly tight hiring market.

In the last 12 months, 38% of senior business executives say they’ve expanded remote work to “keep employees happy and to moderate wage-growth pressures,” and 41% say they plan to in the next year, according to a working paper co-authored by Bloom and based on data from the Atlanta Fed.

Businesses are clawing back remote jobs, but it could cost them

Employers aren’t offering as many remote jobs as people who want them. According to LinkedIn data from January 2021 to date, remote job listings on the site peaked in March 2020 with over 20% of postings offering the option, but has dropped ever since. In November, just 14% of job listings were open to remote applicants.

But the appetite is still there, according to Gallup data.

As of mid-2022, 29% of people with remote-capable jobs were working exclusively remotely, though 34% want to; 49% were working in a hybrid setup, though 60% want to; and 22% were working completely onsite, though just 6% would prefer it.

It’s true that the hiring market is cooling, but Duffy says taking away worker flexibility is a move in the wrong direction for the long-term. Not only could employee morale take a hit, she says, but it could dissuade star talent from applying.

According to Gartner surveys, those with flexible and hybrid work models express a higher intent to stay, better performance and lower fatigue — topics that translate directly to the bottom line, Duffy says.

“Good organizations will capitalize on the benefits of remote work and outstrip their peers to become employers of choice on the talent market,” she adds. “We’re at an inflection point, and organizations that refuse to adapt may struggle to survive long-term.”

Adds Bloom: “The best way to make a horrible mistake in business right now is to predict that we’ll return to the office the way we did in 2019. We are in the new normal. Now it’s more about adjustments.”

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(With Inputs from cnbc)

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