The current RTO push is about power—and real estate

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The current RTO push is about power—and real estate

By AJ Hess

Workers overwhelmingly want the option to work from home (at least part time). Meanwhile, the majority of bosses appear to want workers at their desks in the office. Now employers are pressuring workers to return to the office—again.?

During the onset of the pandemic in 2020, many teams successfully adapted to working remotely. They were so successful, in fact, that when Mercer, a workplace benefits consulting firm, surveyed 800 employers in September 2020, the vast majority said that remote work made employees more productive. Approximately 94% of employers said productivity was the same as, or higher, than it was before the pandemic, and 82% said they would implement flexible working policies post-pandemic.?

But the years following 2020 have included periodic waves of employers encouraging, and often requiring, that workers return to their desks. ResumeBuilder surveyed 756 business leaders who had implemented a return-to-office (RTO) mandate since 2021 and found that 8 in 10 companies had lost talent due to their mandates.

Still, 70% of leaders said they will increase or maintain the number of days employees are required to be in the office in 2025. Overall, 93% of leaders said employees should work from the office. (Specifically, 25% of leaders said employees should be in the office five days a week, 29% said four days, 26% said three days, 11% said two days, and 2% said one day.)

While many workers have complied with these mandates, others have quit and/or decided not to comply. In some cases, workers are “coffee badging,” in which they check into the office just long enough to grab a coffee before heading home, to appease managers tracking attendance. We’re now experiencing a hybrid compromise that, as Jared Lindzon writes for Fast Company, “makes everyone unhappy.”

Of course, some workers have found satisfaction returning to the office, and others feel that hybrid compromises offer “the best of both worlds.” However, data suggests that workers and leaders continue to have differing preferences about where they work, resulting in a persistent debate in workplaces across the country.?

Some have wondered whether employers’ demands for workers to RTO are motivated by productivity paranoia. Others have opined that employers are pressuring employees to return to the office because they want workers to quit. According to experts, however, the current RTO wave is at least partly due to an economy-wide power struggle, not to mention real estate costs.?Here’s why:

WHAT WORKERS WANT

Research consistently shows that most workers are happier, and more productive, when they are able to work from home. According to Glassdoor, 72% of women and 65% of men would prefer to work remotely over working in an office.?

“Workers have seen in the last few years that remote work is possible. And they feel like they can be just as productive in that setting,” says Daniel Zhao, lead economist at Glassdoor. “So the fact that they’re losing access to those options feels even worse because it feels like a step back.”

Zhao adds that there is not significant research to support many employers’ claims that workers are more productive when they have to commute to an office. And for workers who feel they are happier and equally productive when working from home, the demand for in-person work comes across as an unjustified attack on their well-being.?

“It feels like it’s unjustified, because [employees] don’t see the same reasoning about productivity in their work,” says Zhao, adding that “there can be reasonable disagreement between leaders and employees about what productivity actually means.”

A POWER SHIFT

It also appears that where people work has become a central part of a broader power struggle.?

“We’re in an interesting economic moment where the balance of power is shifting back to employers from workers,” Zhao says. “During 2021 and 2022, [when] everybody was talking about labor shortages, there was a lot more power on the side of workers for them to negotiate for not just better pay but also better working conditions, which might include remote work or flexible working hours. And now as power shifts back towards employers, that gives employers more leverage to push back on remote work requests or other things that workers might want.”

(Fast Company wrote about this trend back in February 2023, asking whether the “age of the empowered employee” was over.)

The irony is that the U.S. is currently facing a tight labor market, in which there are many open jobs unfilled. In fact, Anu Madgavkar, partner at McKinsey Global Institute, characterized the labor market as the “tightest it has been in several decades.” Under these conditions, it would stand to reason that workers would have more power, not less.?

But workers may feel hesitant because of recent waves of high-profile layoffs—including at highly profitable tech companies like Dell, which is reportedly planning to lay off as many as 12,500 workers, or about 10% of its staff. And while the unemployment rate has hovered just above 3% for the past several years, it recently ticked up to 4.3%.?

Emily Levine, executive vice president at recruitment firm Career Group, says she has seen a “huge shift” from the era of the Great Resignation, in which workers wielded the power necessary to earn pay raises and demand flexible working conditions.?

Now many workers are trying to “play it safe, stay put, and plant roots,” she says, explaining that many employers have slowed hiring and many employees are choosing to stay in their current roles. “We’ve shifted from what was a candidate’s market, in which candidates were calling the shots, to it being more of an employer’s market with fewer job openings and [hiring] just being slower.”

REAL ESTATE REALITIES

Levine suggests that the desire to establish a collaborative company culture, and optimize real estate costs, is driving the current RTO push.

“A lot of companies want on-site collaboration. They feel as though [workers] perform better together,” Levine says. “They’re also feeling as though they’re paying a lot of money in rent, so to only have people come on-site two days a week, they may as well forgo their real estate.”

For leaders, requiring employees to work from the office “nourishes their ego and justifies the real estate costs that they’re paying for their big buildings that nobody’s in,” says Jeff Dewing, CEO of facilities management company Cloudfm. He says he’s had to make difficult decisions regarding office space himself. After the pandemic lockdowns, Dewing decided to close six of his company’s eight offices and remodel the remaining two offices as “collaboration hubs” for hybrid and remote workers to meet occasionally.

However, commercial leases typically last between 5 and 10 years, and many decision-makers do not feel they have the option to be as flexible as Dewing. The result is what Levine calls a “misalignment” between what employers and employees want.?

“Employers are back to calling the shots,” Levine says. “And candidates have been used to being in the driver’s seat for the last few years, so it’s a bit of a wake-up call.”

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