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Return-to-office mandates are often not succeeding in making companies more profitable.That’s according to a new paper that looks at how RTO mandates impact productivity and performance.If RTO mandates are hard to enforce, they probably don’t make sense for that workplace.
Return-to-office mandates may not be doing what bosses want them to do.
A new paper from researchers at the Katz Graduate School of Business at the University of Pittsburgh examines whether pushing employees into the office increases productivity and performance.
“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,” the authors wrote. “Also, our findings do not support the argument that managers impose mandates because they believe RTO increases firm values.”
The researchers analyzed public RTO data from 137 S&P 500 firms and determined that RTO mandates were more common for firms that had poor prior stock market performance. RTO mandates were more common for firms with “male and powerful CEOs.” The authors found no significant impact of RTO mandates on stock returns or firm profitability.
However, the researchers noted that their data often didn’t specify how many days back in the office were required by the companies, meaning there could be differences in performance between full-time and part-time RTO policies.
Additionally, using employee job satisfaction data from Glassdoor, the researchers found that RTO mandates reduced workers’ ratings for work-life balance, senior management, and job satisfaction. Still, many employees may agree with RTO decisions as a way to increase collaboration and better separate work from home, the researchers wrote.
RTO mandates have divided many offices nationwide, including at leading tech and financial companies. In 2023, over 5,000 Amazon employees signed a petition against the company’s return-to-office mandate, which Amazon rejected. Over 2,300 Disney employees also signed a petition against the company’s four-day in-person workweek.
Whether or not workers are more productive remotely has emerged as a key argument for — or against — bringing employees back into the office. Some early research has suggested that remote workers are less productive, and logging in from home curbs innovation. However, a recent analysis from the Federal Reserve Bank of San Francisco finds that shifting to remote work, “on its own, is unlikely to be a major factor explaining differences across sectors in productivity performance.”
When it comes to RTO mandates, “if these are hard to enforce then they likely do not make sense,” Nick Bloom, a Stanford economist and work-from-home researcher, wrote in an email to BI. “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.”
One way to ensure that an RTO mandate is well done is to make managers have “some explicit part of their evaluation focused on mentoring,” per Bloom. That incentivizes leaders to figure out what’s the best way to mentor and develop their teams, often one of the goals of a return to office proclamation.
“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,” Bloom said.
And CEOs seem to have put the brakes on fully yanking workers back in. Just 4% of American CEOs surveyed by The Conference Board said that they’d prioritize bringing workers back into the office full-time this year, while 27% said that maintaining hybrid work was a human capital priority.
“The people who are in any type of manager or leadership role, if they have to see people, if they have to see butts in seats to think people are working, they don’t know how people work,” Danielle, a millennial manager who quit her job over an RTO push, previously told BI.
Is return-to-office not working for you or your company? Contact these reporters at jkaplan@businessinsider.com and nsheidlower@businessinsider.com.