The WFH x RTO crusades
A futile battle, and why it's time to move on
Last week I made the case for why more amenities are not what’s missing from American offices: how the costs that come with a 5-hour/week commute are so severe that few would accept them for a free gym or fancy cappuccino bar.
Before we can start to explore what the future of work and the physical world should look like, we’ve got to address one other perspective dominating headlines today.
If carrots can't do it, how about a stick?
In our interviews over the last 6 months, we asked dozens of office brokers and building owners: if the answer to getting teams back in person isn’t fancy buildings with lots of amenities, what is?
The answer we heard from most was disturbing: it's a hot job market, and when the economy cools, you will see employees flock back by force, if not by choice. "Remote workers will be the first to be laid off, and then things will change," a VP with a major office real estate investment trust told us recently.
That is -- amenities are the carrot, and if the carrot continues to fail us, just wait for the stick. Media has coined this stick the “Return to Office,” or RTO for short.
I am convinced that this perspective is wishful thinking -- a denialist refusal to accept a rapidly changing future of work. That wishful thinking is a problem for progress. Let's talk about why.
WFH vs. RTO: employee vs employer
If you are reading the headlines, you may be thinking the fight over WFH vs. in-office is a battle between two conflicting parties, the employer and the employee, fighting over the past (pre-March-2020) and the present (post-March-2020). A battle that will be won, eventually, by whomever has more power — power that ebbs and flows with the state of the broader economy.
This fight stems from individually-held beliefs about the efficacy of working from home. Employees are far more likely to say they are more productive working from home than their managers would say about them:
We can dig into what ‘productivity’ really means and why it might be that managers and individual contributors see the same thing so differently (and HBR does a decent job explaining how it’s possible both sides are actually right). But what’s worth focusing on here is simply the fact that this whole discussion about where we work has taken two sides, because I think that as long as we see this as a power dynamic between two parties, we won’t be able to make real progress on what hybrid should look like.
Bosses playing bad cop
If you buy into this us-vs-them framing, you’d probably say that the employee, so far, has been winning. That we know because offices are still half as empty as they were pre-pandemic (see my last post) — if you’re an American office worker making over $80k, chances are working from home is still your norm.
And indeed, all signs point to employers shifting their approach from carrots to sticks: if we can’t convince you back, we’ll force you back.
Starbucks CEO Howard Schultz spent last year begging his corporate employees to come into the office:
I have been unsuccessful, despite everything I’ve tried to do, to get our people back to work. I’ve pleaded with them. I said I’ll get on my knees. I’ll do push-ups. Whatever you want. Come back. No, they are not coming back at the level I want them to. And, you know, we’re a very collaborative, creative group. I realize I’m an old-school person and this is a different generation. I’m in the office at 7 a.m. and I leave at 7 at night.
Now, he’s had enough. Starbucks last week joined Disney in mandating in-person work for office employees, because the asking wasn’t working:
Partners in our offices have had the privilege of not coming into the workplace and when we embarked on hybrid work last year, each of us made a promise to each other to be in the office between one to two days a week. From our badging data, it’s clear that a good number of SSC partners are not meeting their minimum promise of one day a week.
Would you look at that — habits from WFH have caught on so strongly that an ask from the CEO won’t make a difference.
It’ll be interesting to see if these mandates fare any better. According to more data from the WFH Research team cited above, employees think ignoring an in-office mandate merits little more than a verbal reprimand, whereas employers think it’s a fireable offense:
Truth be told, these mandates will probably only do so much.
The media seems to be creating a story that they are indicative of the power dynamic shifting because of the state of the economy (which, by the way, we’re not even sure is so bad with still record low unemployment rates). The truth, as economists are now beginning to argue, is that this isn’t really about the economy after all:
The reason is that employees have spent nearly three years discovering an entirely new way of working, a discovery so strong they’d take a pay cut to not let it go. They've moved cities, built out their home offices and gotten used to the freedom that comes with not being physically constrained to a pin on a map. It's far from ideal, most would admit -- 70% of employees want to be in the office at least one day a week (WFH Research). But the benefits are pretty sweet, and they will never accept a reality that looks like what it did before the pandemic: 5 days in-office.
Job-seeking Americans said they would take a 14% pay cut, on average, in order to have the ability to work remotely, according to a survey from ZipRecruiter. Think about that: Americans will literally give up more of their paycheck than they do to state taxes every year than have to be forced back into the office full time.
American office workers have seen a future better than the past, and they can’t unsee it now.
For executives that dispute this, here’s why their sticks won’t work:
American employers are too broad and fragmented to act unilaterally. As long as some companies allow remote work, others will be forced to or risk losing their talent. And that's a vicious cycle which ultimately will prevent most major companies from mandating a 5-day-a-week office presence.
Management themselves don't want to be back in the office 5 days a week. They want their worker bees in person, but if Zuckerberg prefers to work from his compound in Hawaii, what kind of behavior modeling are they setting?
Letting go of RTO and creating a hybrid future
The battle of WFH vs RTO is a futile one. It’s cheap and exciting, and newsmakers love it.
Why has this conflict escalated so much? My guess, it has a lot do with a generational divide. The people we socialize with and trust most more than likely see things the same way we do.
For employees: fully-remote probably isn’t all you think it is — we’ll come back to that in a future post.
For employers, I say: it’s time to do away with “return to office.” There will be no "return" because the office of the past, for the vast majority of employers, will cease to exist.
RTO represents a conservative call for a undoing, a belief that if only the power dynamics shift, our old reality will be possible again. The 5-day in-office lifestyle is dead, and RTO adds fuel to the fire — a fire that must be put out before we can begin to make progress.
The reality is that the future of work will look neither as it did before the pandemic, nor how it has since the pandemic began.
The future, rather, will be both in-person and remote. Data from Nick Bloom here at Stanford suggest that most companies — nearly 70% — will stabilize their working norms at some form of hybrid: some days working in-office, and some days at-home. What this looks like will vary by firm, for most between 2 and 4 days a week in-person.
Most of us know this truth deep down, but continue to play into the employer-employee fight because, well, it’s easier.
But then what?
Figuring out hybrid is going to take a lot of work. Who should work in person, when? For what activites? What kind of physical space do we need, and at what price?
These questions may seem trivial, but they have consequential effects on real lives and real companies: the quality of product we are able to put out and the experience our workforce has creating it. We’ve been ignoring these questions because we’ve never really had to confront them before, and frankly, we don’t really know how.
But times are changing and the companies that invest more, sooner in tackling the challenge of what hybrid means will slowly start to see a competitive edge. The impact may not be visible day-to-day, but over time these companies will innovate faster, create better, and see employees sticking around much longer. Purely from a bottom-line perspective, those impacts will be massive.
So let’s put down our weapons and come together — employee and employer — to start to craft a better future.
Very insightful, Rafi. Looking forward to reading the next articles in this series!