Frustrated By the RTO Mandate Debate? Don't Be.Frustrated By the RTO Mandate Debate? Don't Be.
A debate means there's still time to get it right when it comes to modern employee experience -- we haven't permanently settled for getting it wrong for everyone.
December 5, 2024
After four years of the remote work/hybrid work experiment that kicked off in 2020, we know a lot about the benefits and drawbacks of return to office (RTO).
We know that employees have correctly identified RTO as bad for their health: Gallup research showed that a 30-minute commute was linked to higher stress and anger, while a 45-minute commute was linked to a decline in overall well-being. Employees have also correctly identified RTO as being a net negative for their finances; the average employee returning to the office spends $561 per month on transportation, additional child and pet care, and domestic assistance.
We know that companies with flexible and remote work report higher levels of employee productivity and we also know that these companies enjoy a higher rate of return in the stock market. As Fortune reported in October:
A working paper from University of Melbourne assistant professor of finance Gabriele Lattanzio found that companies ranked highly for flexible work opportunities had higher short- and long-term share prices compared to peer firms in their respective industries.
Separate research corroborated this performance trend:
Looking at the share prices of large companies following the implementation of RTO policies, [Mark Ma, an associate professor at the University of Pittsburgh] found that the stocks of companies like Nike and UPS, which introduced four- or five-day-a-week RTO mandates, underperformed peer companies like Adidas and FedEx following the policies’ announcements. Among nine companies with RTO mandates, seven underperformed their peers with flexible work options. Companies with five-day RTO mandates saw on average 15% lower stock returns than their flexible work counterparts.
We know that companies with flexible working arrangements have lower voluntary attrition rates, while other companies have been using RTO mandates as a way to reduce headcount without assuming the effort or expense of layoffs. And we know that the people who are most likely to leave after an RTO mandate is announced are the ones who have options -- i.e. the company talent who are happy to walk to a competitor so long as they retain some control over when and where they work.
With the abundance of data we have on hybrid work, RTO, and employee experience as a success driver for companies, it's a little mind-boggling that workforce strategists and upper management are still leaning into the idea that forcing people back into an office produces either the best possible workforce or the best possible performance.
However, it's also a little heartening that the debate isn't settled. Because that means in some quarters, managers are acting on data that demonstrates the value of giving a workforce agency and setting up a work culture that allows for better work-life balance. And it means in some quarters, people are drawing the connection between better employee experiences and better bottom lines. A debate means there's still time to get it right when it comes to modern employee experience -- we haven't permanently settled for getting it wrong for everyone.
Related Reading:
"Strong Workplace Culture: It's Good Business" (November 23, 2022)
"How to Strengthen Employee Experience and Improve the Work Relationship" (October 17, 2023)
"Want to Figure Out the Best Office Policy? Try an A/B Test" (October 30, 2024)
