Office mandates don’t help companies make more money, study finds

After more than a year of trying and failing to get its more than 5,000 workers to return to the office on a hybrid schedule, Internet Brands took a different approach.

The WebMD parent created a video in which its CEO and some of its executives addressed employees, strongly encouraging them to return to the office.

The lighthearted song “Iko Iko” plays in the background, and at one point, executives dance in a montage to the tune.

“We’re not asking or negotiating at this point. We’re informing,” Bob Brisco, chief executive of Internet Brands, said in the video published in early January.

Some who saw the video on social media described it as bizarre and even cringeworthy. The company later pulled it from its public Vimeo account, but only after it went viral.

Three years after the coronavirus pandemic sent people to work from home in record numbers, U.S. employers are still struggling to get people back to the office.

The power struggle between employees pushing for flexibility and employers trying to reel workers back has manifested in employee walkouts, corporate threats and even mass resignations.

Now, new research from the Katz Graduate School of Business at the University of Pittsburgh suggests that office mandates may not help companies’ financial performances, but they can make workers less satisfied with their jobs and work-life balance.

The Internet Brands incident is the latest example of companies insisting that workers are more productive and employers more successful when workers are together at an office.

“We will not get back to the time when as many people will be happy working from the office the way they were before the pandemic,” said Mark Ma, co-author of the study and associate professor at the Katz Graduate School of Business.

Additionally, mandates make workers less happy, therefore less productive and more likely to look for a new job, he said.

The study analyzed a sample of Standard & Poor’s 500 firms to explore the effects of office mandates, including average change in quarterly results and company stock price.

Those results were compared with changes at companies without office mandates.

The outcome showed the mandates made no difference.

Firms with mandates did not experience financial boosts compared with those without. The sample covered 457 firms and 4,455 quarterly observations between June 2019 and January 2023.

Data from the U.S. Bureau of Labor Statistics shows that over the past year, as more companies have debuted or doubled down on mandates, the number of people working from the office hasn’t changed much.

About 78% of workers ages 16 and older worked entirely on-site in December 2023, down from 81% a year earlier.

Of course, some professions like tech workers, who often have more flexible work schedules, have much lower averages, with only 34% working entirely on-site last month compared with 38% last year.

“There are compliance issues universally,” said Prithwiraj Choudhury, a Harvard Business School professor who studies remote work. “Some companies are issuing veiled threats about promotions and salary increases … which is unfortunate because this is your talent pool, your most valuable resource.”

Companies

double down

Still, some companies are going all in on mandates, reminding workers and sometimes threatening promotions and job security for noncompliance.

Leaders are unlikely to backtrack on mandates once they have been implemented because that could be viewed as admitting they made a mistake, Ma said.

Goldman Sachs, one of the first companies to implement a five-day return to the office policy in June 2021, reminded workers who weren’t in compliance about the company’s mandate in August.

Managers have discretion to include compliance in workers’ performance reviews, a company spokesperson said.

Workers know what’s expected of them, and that four days a week, office occupancy is back to pre-pandemic levels, the spokesperson said.

It’s still working on improving Friday attendance.

While some workers have publicly said the mandate is one reason for leaving the company, Goldman Sachs said it hasn’t caused attrition and plans to push ahead. Employees can ask for flexibility on a case-by-case basis with their managers, it said.

Other companies are still getting pushback.

AT&T, for example, mandated more than 60,000 managers to return to offices on a hybrid basis starting in July as it consolidates its nationwide presence into nine core offices for managers.

Several AT&T workers, who spoke on the condition of anonymity out of fear of retaliation, said that the company’s move seemed aggressive.

Two workers said the company didn’t offer relocation benefits even though some offices near workers were closing.

It also asked workers who were remote pre-pandemic or were hired as permanent remote employees to work from the office, they said.

“It’s been hard for people,” said a West Coast AT&T worker. “I know a lot of folks who are just waiting to be laid off [as a result].”

Another AT&T worker said his office is overcrowded, and after commuting at least an hour to badge in, he’s sometimes turned back home due to space limitations.

“Because of what I perceive as hostile treatment of employees, it really feels like a push for attrition,” he said, adding that some workers feel less loyal to the company’s success. “I think they want people to leave so they can save on severance and unemployment.”

The atmosphere at the company is unhappy, another worker said.

“People that I’ve witnessed to be top employees are just leaving because they can’t comply without uprooting their families or incurring huge expenses to comply with the mandate,” he said.

AT&T said relocation assistance is being offered based on a “common set of criteria.”

However, during a virtual town hall Q&A session on Monday, chief technology officer Jeremy Legg told the technical services division that assistance is only being offered to a “small percentage” of workers, according to a recording of the meeting.

“I don’t expect everyone to like this,” Legg said about the mandate at the town hall. “It doesn’t surprise me that there are people that are upset.”

Employees are paying close attention to enforcement and looming threats of consequences.

Google workers who are part of the Alphabet Workers Union say that they don’t see widespread consequences for people who aren’t following the company’s three-day office policy that was implemented in 2022.

Instead, they say it seems to be dependent on the discretion of the manager and department.

However, if employees see compliance play a big role in annual reviews in February, the issue could quickly become a priority, union workers said.

Last summer, Google began enforcing its policy more strictly, including tracking badge swipes and suggesting that compliance would be part of performance reviews.

Noncompliance could negatively affect a part of workers’ reviews called “teamwork attributes,” which covers topics such as collaboration and fostering inclusion and belonging, said Google spokesperson Ryan Lamont.

That could ultimately play a role in the overall rating, which affects promotions and pay increases.

Rather than grappling with mandates as a means of boosting productivity, companies should instead focus on structuring their policies on a team basis, said Choudhury of Harvard.

That means not only understanding the frequency and venue in which teams would be most productive in-person, but also ensuring that in-person days are structured for more collaboration.

Choudhury of Harvard sad requiring employees to work in-office to boost productivity in general has yet to prove itself out, he added.

“Return-to-office is just a knee-jerk reaction trying to make the world go back to where it was instead of recognizing this as a point for fundamental transformation,” he said. “I call them return-to-the-past mandates.”