Companies that require workers to be in the office for a set number of days each week face losing a significant number of employees who cherish work flexibility, new studies showed.
Companies that mandate a return to office (RTO) for their workers fare no better than companies that do not — and, in fact, forcing people to give up remote work hurts employee well-being and retention, new studies found.
A Gartner survey of 2,080 knowledge worker employees released today measured the impact of mandated requirements on employee outcomes among various employee categories. The result: On average, when companies force workers back to the office, their intent to stay with the organization declined by 8%.
Among high-performing employees, their desire to stay dropped by 16%. And among millennials and women, plans to stay in their current role declined by 10% and 11%, respectively.
“Mandated on-site requirements can carry very steep costs for talent attraction and retention,” said Catilin Duffy, a research director in Gartner’s HR practice. “This is especially true for high performers, women, and millennials — three employee segments who greatly value flexibility. Often, these costs far outweigh the moderate benefits to employee engagement and effort. We also found no benefit to performance.”
While a September 2023 Gartner survey of 170 HR leaders found that 63% had an increased expectation about employees spending days in the office, 48% of employees in the newest survey said RTO mandates prioritize what leaders want over what employees believe they need to do good work.
Gartner’s latest study follows research published last week by the Katz Graduate School of Business at the University of Pittsburgh; it found RTO mandates don’t help an organization’s financial performances, and can make workers less satisfied with their jobs and work-life balance.
“We do not find significant changes in firm performance in terms of profitability and stock market valuation after the RTO mandates,” the study concluded. “Instead, such mandates hurt employee satisfaction. We demonstrate that one of the most frequently cited motivations by managers for implementing the RTO policy, namely, firm performance improvement, might not be a valid justification for such a policy in the post-pandemic era.”
The University of Pennsylvania study compared a sample of Standard & Poor’s 500 firms that had RTO mandates to those that appeared not to have such mandates. (The sample covered 457 firms and 4,455 quarterly observations between June 2019 and January 2023.)
Other studies have indicated remote work actually improves worker productivity. For example, a June 2023 survey published by Tech.co found that slightly less than half (47%) of companies experienced higher productivity by remote employees.
One-third (32%) of hiring managers say productivity has increased since remote work policies were implemented, and 22.5% found that it decreased, according to an Upwork survey.
“Multiple studies confirm these types of mandates reduce job satisfaction and employee retention without improving productivity or company performance,” said Jessica Kriegel, chief scientist of workplace culture at management consultancy Culture Partners.
Kriegel said her company’s research has shown organizations that issued broad back to work orders have since softened their stance after losing top talent or failing to recruit the best talent.
“Fully remote may not suit everyone or every role, but neither does mandating fixed in-office days,” she said. “Companies find the greatest success with hybrid flexibility focused on employee needs instead of one-size-fits-all policies.”
Previous studies have also shown that as organizations engaged in RTO policies post-pandemic, productivity rates dropped.
“For leading Fortune 100 organizations, we have found that [RTO] mandates have not been effective nor successful over the long term,” said Peter Miscovich, global future of work leader at JLL, a real estate investment and management firm that tracks remote work trends.
The workplace has been completely redefined post-pandemic, according to Miscovich, including a wholesale reimagining of the purpose of the workplace.
“Work should not be defined by where you work or when you work,” Miscovich said. “Work should be defined by what you do in terms of outcome-based workforce performance that will drive superior business results.”
The rate of office occupancies has hovered just below 50% over the past year in major metro areas, according to Kastle Systems, a provider of fob security key technology for 2,600 buildings in 138 US cities. Those numbers are even worse for the federal government.
Last year, a study by the US Government Accountability Office (GAO) found that federal buildings had been dramatically underutilized in the first three months of 2023 due to longstanding challenges and increased telework. Seventeen of the 24 federal agencies in GAO’s review used an estimated average 25% or less of their headquarters buildings’ capacity.
On the higher range, agencies used an estimated 39% to 49% percent of the capacity of their headquarters on average, the study found.
That prompted US President Joe Biden to tell Cabinet members to get federal employees back into the office by last fall. But little more than a week ago, White House Chief of Staff Jeff Zients reportedly sent an email to various cabinet secretaries and agencies heads telling them to pressure federal employees to get back into the office, and to “personally track” their progress and develop “concrete plans” to achieve their goals, according to Axios.
Even as office occupancy rates remain moribund, corporate leaders seem to sense shifting workplace priorities. Just 4% of US CEOs (or six out of 158 surveyed) said they would prioritize a full-time return to the office, according to a survey released this month by The Conference Board, a US-based think tank.
A clear majority (68%) of Fortune 100 companies have now adopted hybrid work strategies for office workers that average two to three days with employees in the office, according to JLL Research.
“Those firms that expand their hybrid work offerings to include greater flexibility combined with essential technology workplace investments — these firms will drive to greater levels of innovation and future business success,” Miscovich said.
While in-person collaboration can yield some benefits such as increased employee engagement, organizations are finding it challenging to get employees to return to the office more frequently. Some HR leaders have been met with low compliance after encouraging employees to spend more time at work, causing them to resort to stricter RTO mandates.
According to Gartner’s Duffy, those strict in-office requirements are to the detriment of employees.
“Even requiring only a few days back in the office reduces employees’ autonomy compared to a fully flexible hybrid model, and past Gartner research has shown that increased rigidity of hybrid work models corresponds with lower intent to stay, worse performance, and higher fatigue in employees,” Duffy said.
How companies plan to enforce RTO mandates
Overall, the results of studies on RTO policies have been mixed. A study released in August 2023 by Resume Builder claimed 72% of companies believe their RTO policies have improved revenue and 91% plan to require their employees to go to the office on a monthly basis this year; 75% will require them to work from the office at least once a week.
In order to enforce RTO policies, 8 in 10 companies said they intend to track employee office attendance this year. And 28% indicated they would threaten to fire employees who don’t comply with RTO mandates.
One result of tracking employee office attendance has been the rise of “coffee badging,” where employees do the bare minimum to satisfy in-office requirements; they simply show up long enough to get credit for being at the office before returning home to work.
A survey of 2,000 full-time US workers conducted by videoconferencing tech vendor Owl Labs last year found that 58% of hybrid workers said they’re coffee badging to meet the minimum in-office requirement each week. Another 8% of respondents said they haven’t been coffee badging, but would like to try it.
“The idea of coffee badging is consistent with other behaviors we’ve seen during the hybrid work era,” J.P. Gownder, a vice president and principal analyst at Forrester Research, said in an earlier interview. “One client told me that he, himself, drove into the parking garage to badge in because he knew his company tracked it. He drove right out afterwards.”
Avoiding worker attrition with RTO policies
Data suggests executive teams continue to struggle with the best way to approach and enforce RTO decisions, with 74% of HR leaders citing RTO mandates as a source of leadership conflict, according to Gartner.
“Many HR leaders foresee challenges from the negative impact on employee work-life balance, productivity, and overall satisfaction that could follow returning to the office, putting talent outcomes at risk,” Duffy said.
According to Gartner, the best way to prevent employee attrition is for HR leaders to avoid rigid mandates and instead create strategies that maximize talent and business outcomes.
Gartner identified its four best practices HR leaders should consider if their organizations seek to formalize in-office work requirements
1. Motivate employees to return to the office rather than mandate. Organizations can motivate employees to come to the office by designing their office space and hybrid policies to make employees feel capable, autonomous, and connected.
2. Consider policies that focus on-site attendance per year, not per week. Gartner research found that organizations mandating a minimum number of in-office days per year achieve greater employee performance than those mandating a minimum number of in-person days per week.
3. Enable employees to shape the RTO policy. Employees who contributed to their teams’ hybrid work arrangements and felt like their needs were considered demonstrated both higher engagement and work performance.
4. Provide a clear reason behind requirements for working on-site. Organizations that transparently communicated their reasons for wanting employees to come into the office saw positive impacts on engagement, discretionary effort, and retention.
