Study after study shows that working from home leads to more efficient workers, less staff turnover, higher quality work, and it's cheaper for businesses and their employees. So why do so many companies want people back in the office?
A detailed study by : RajVeer Singh
CEO "Life Unboxed"
Before COVID-19, high-tech companies were already experimenting with the advantages of remote work. A peer-reviewed report from an unidentified NASDAQ-listed company ran a trial where half of their call center workforce was randomly selected to work from home, while the other half remained in the office. The group given the opportunity to work from home had higher customer satisfaction, took 13% more calls, and suffered 50% less staff attrition, which is a big issue for call centers that typically struggle with high staff turnover.
A follow-up study done on workers in a wider selection of roles, including finance, marketing, and software development, had similar results. They compared staff working full-time from the office with staff working hybrid schedules from home and the office. That study found that hybrid workers were 8% more efficient at their jobs and had turnover rates 35% lower than staff working in the office full-time.
If businesses want to get the most out of their workers, the results are clear: more work from home is better. Working from home is also cheaper for the business. Companies that want all of their workers in the office will pay more for utilities like electricity, maintenance, security, and internet that workers would happily provide themselves if they were allowed to work from home.
It's rare that companies turn down better results for less money, but in this case, there are four reasons that more are demanding their staff come back into the office.
Opportunity to Reduce Staff Without Layoffs
A lot of companies are not doing so well right now. Interest rates are high, investors are not throwing money around like they were in 2020, and companies need to make cuts. The easiest and largest ongoing expense for most companies are their employees.
If a business is getting less work than usual, laying off staff is a prudent business decision. If a business can cut expenses at the same rate as lost revenue, then it may be able to maintain profits to keep the shareholders happy. If a business is making less revenue, then it also means there's less work to do, so it just won't need as many staff.
The problem is that laying off staff signals to the market that the company is struggling, which can affect the share price, make it harder to generate new business, and make it harder to hire new staff in the future. Nobody wants to work for a company that lays off a lot of people on a whim, and customers don't want to work with a company that looks like it might go out of business.
What companies really need is a way to get rid of staff without formally laying them off. Business leaders have already seen the studies, and they know that forcing people to work from the office leads to higher staff turnover, which in this case is exactly what they want.
Exposure to Real Estate Becoming Useless
The value of office buildings has slumped as people shift to working from home, which is a problem for the companies that have risk exposure to that market. Around 30% of major public companies in America own the office building they are headquartered in. This real estate represents a major asset on the balance sheet for those companies.
Apple Park in Cupertino cost $5 billion to construct, which is a major investment even for a company like Apple. Investors pay close attention to how efficiently companies utilize their assets. A big building that is sitting empty is not doing anything to return money to shareholders, so there's pressure on company leadership to sell these assets.
The problem is company executives trying to sell an office building in today's market would likely take a significant loss on the estimated value listed on the balance sheet. This loss would be considered a bad look for the CEO when it's time for the board to decide their bonus.
Instead of selling an asset that's not being used and realizing the loss, a better play for the CEO is to make sure the asset is being used. If an office is full, then company leadership can justify the capital tied up in a building as it offsets the rent they would have to pay if they didn't own the building.
The Power of the Office for Managers
Some managers don't actually have that much to do besides stand over their subordinates and look important. It's easy to fill a day with redundant tasks and micromanagement in an office, but it's harder to do it online.
Senior managers at companies making the decision to bring people back to the office are also going to be more comfortable with work done in person than work done online. The old soft skills of business, like a firm handshake and small talk with colleagues, are less relevant online.
Senior managers in the penultimate years of their career have spent most of their lives learning how important these skills are, and for many of them, it's how they got to their level to begin with. Straight-laced, old-school business managers are being confronted with a new work culture of online team meetings sat in by someone in their bathrobe and a co-worker's cat.
Professional office culture is something that managers use as a powerful tool for extracting the most out of their subordinates. People stay late at the office to get extra work done, in large part because they know sitting at their desk in the dark hours after everybody else has left is a good look and demonstrates to their superiors that they are willing to make sacrifices for their career.
Managers' Preference for In-Office Work
According to a study of 10,000 workers in the summer of 2021, of executives who primarily worked completely remotely throughout the pandemic, 44% said they wanted to come back into the office every day. Just 17% of their employees said the same.
It's nicer to go back to a comfortable office that you oversee than it is to go back to a shared desk that gets micromanaged. Managers are also just people, and they are more reactive to negative news than positive news.
A manager is more likely to remember that one employee that played video games at home all day when they should have been working than they are to remember the hours saved by cutting out commutes for their entire team, leading to small incremental improvements.
When surveyed, most managers believe that working from home had a negative impact on their team's output, even though the data suggested exactly the opposite. The use of employee monitoring software has increased by 66% in the fall of 2021, and even as workers return to the office, managers have remained on average more suspicious of their subordinates.
The Cost-Benefit Analysis of Working from Home
- Improved employee productivity and satisfaction
- Reduced turnover and higher quality work
- Cost savings for businesses and employees
- The future of remote work and hybrid models
Navigating the Return to Office Debate
- Balancing employee preferences and company needs
- Adapting to the changing real estate market
- Fostering a positive remote work culture
- Reevaluating traditional workplace perks and incentives
The ongoing debate surrounding working from home is complex. Companies must make data-driven decisions that balance the needs of their employees with the realities of their business. As we move forward in the post-pandemic workplace, it's crucial to embrace change and find a balance that works for everyone.
FAQ (Frequently Asked Questions)
Why do companies want employees to return to the office?
Companies want employees to return to the office for several reasons, including the opportunity to reduce staff without layoffs, exposure to real estate becoming useless, the power of the office for managers, and managers' preference for in-office work.
How does working from home benefit employees and businesses?
Working from home has been shown to improve employee productivity and satisfaction, reduce turnover, lead to higher quality work, and provide cost savings for both businesses and employees.
What challenges do companies face when navigating the return to office debate?
Companies must balance employee preferences with company needs, adapt to the changing real estate market, foster a positive remote work culture, and reevaluate traditional workplace perks and incentives.
How can companies make data-driven decisions about remote work policies?
Companies can make data-driven decisions by analyzing the impact of remote work on employee productivity, satisfaction, and turnover rates, as well as considering the cost-benefit analysis of maintaining office space versus supporting remote work.
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