Return-To-Office Mandates Aren’t Making Companies More Profitable

It’s official: being back in the office doesn’t increase value or productivity, according to a recent study.

New research has found that return-to-office (RTO) mandates don’t increase value or productivity for companies.

The study aimed to measure the impact between productivity and performance with RTO mandates and concluded that they bore little weight on the company’s stock returns or profitability.

The news comes just a day after IBM issued an ultimatum to US managers, insisting they return to the office at least three days a week or leave the company.

“No Significant Impact”

Researchers from the Katz Graduate School of Business at the University of Pittsburgh have shared a revised paper this week that looks into whether forcing employees to return to the office has a positive effect on productivity and performance.

Spoiler alert: it doesn’t.

Following analysis of public RTO data from 137 S&P 500 firms, the researchers concluded that RTO mandates had two similar traits:

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  • They were more common for firms with poor prior stock market performance.
  • They were more common for firms with “male and powerful CEOs.”

They similarly found that RTO mandates had no significant impact on stock returns or profitability. 

Interestingly, however, researchers did pose a theory that RTO mandates act as a means of control for managers, who can also use the mandate (and those who don’t follow it) as justification for the company's poor performance. According to the authors:

“Results of our determinant analyses are consistent with managers using RTO mandates to reassert control over employees and blame employees as a scapegoat for bad firm performance. Also, our findings do not support the argument that managers impose mandates because they believe RTO increases firm values.”

Using employee job satisfaction data from Glassdoor, researchers also found that RTO mandates reduced workers’ scores for job-life balance and job satisfaction.

However, what the data didn’t specify is how much the companies researched required employees to be in the office, meaning the frequency of RTO days could potentially play a part in productivity too.

A Contentious Issue

RTO mandates, hybrid working, and work-from-home policies have divided business owners since remote working was no longer considered a necessity, as it was in the pandemic. This is particularly true for the tech industry. 

Last summer, nearly 2,000 Amazon employees staged a walkout in protest to the company’s return-to-office policy. Then, only a few months later, Amazon began blocking promotions for those who didn’t comply with its RTO mandate.

Safe to say, it’s a contentious issue and productivity seems to be a key argument for those in favor of having employees back at office desks.

The research did find, however, that some employees saw RTO mandates as a way to increase collaboration and better separate their work and home life.

Direction Is Essential

These findings seem to align with recent surveys that show only 4% of US CEOs are prioritizing bringing their employees back into the office full time this year. This was alongside 27% who said that maintaining hybrid working was a top priority. 

After all, without tangible data to prove that RTO mandates are beneficial for the bottom line, what’s the point of spending time and money enforcing them?

“If [RTO mandates] are hard to enforce then they likely do not make sense. A well-executed RTO will have employees back in the office for maybe 2 or 3 days a week when all employees are back on the same days, they are working together, connecting, with energy in the office.” – Nick Bloom, Stanford economist and work-from-home researcher

For managers insistent on RTO mandates, it seems that direction on days and deliverables is the key to ensuring they’re productive. Bloom continued:

“Badly run RTO will be requiring minimum days per week but with no guidance on days, and no guidance on activities in the office. Then folks come in just to continue on Zoom calls all day, or badge swipe to get coffee and leave.”

If you’re keen to ditch the RTO mandates for good, keep an eye on our ever-growing list of remote working-friendly companies.

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Written by:
Ellis Di Cataldo (MA) has over 9 years experience writing about, and for, some of the world’s biggest tech companies. She's been the lead writer across digital campaigns, always-on content and worldwide product launches, for global brands including Sony, Electrolux, Byrd, The Open University and Barclaycard. Her particular areas of interest are business trends, startup stories and product news.
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