RTO and the Bottom Line

Leaders say productivity increases when workers are in the office, but a new study asks: Do profits get any better?

Bosses know that return-to-office mandates aren’t particularly popular. But for the last three years, leaders have argued that they need employees in the office, because that’s where they’re most productive. There’s some research backing up their argument.

But is that higher productivity translating into better financial performance? Maybe not.

A new study from researchers at the University of Pittsburgh suggests that office mandates don’t change a firm’s profitability—or stock valuation. But they can cause a decline in employees’ job satisfaction.

If nothing else, experts say, the study’s findings should convince organizations to be clear in their communication of office mandates. Additionally, many companies may need to consider how to make the office experience more engaging for employees. “You can’t just order people back. You need a new office culture to get them back, or they’ll be embittered about it for the next twenty years,” says Dan Kaplan, Korn Ferry senior client partner in the firm’s Chief Human Resources Officers practice.

To explore the effects of office mandates, the study analyzed a sample of Standard & Poor’s 500 firms, looking at variables like average change in quarterly results and company stock price. Those results were compared with changes at companies without office mandates. The study—which covered 457 firms and 4,455 quarterly observations between June 2019 and January 2023—“did not find a significant effect” of mandates on finances.

To measure employee satisfaction, the researchers analyzed workers’ reviews of their employers on Glassdoor.com. This feedback provided significant evidence that worker satisfaction declined after employers instituted return-to-office mandates.

To be sure, the study has some limitations. It focused only on US-based giant firms; for smaller or foreign firms, results could be different. Plus, the time period the study encompasses had a particularly low unemployment rate (with the exception of the monthslong lockdown period in 2020). Workers might feel more satisfied with their current job if they think they might struggle to find a new one.

Profitability might not be the only factor a leader should consider when determining working arrangements, says John Long, a Korn Ferry senior client partner in its North America Retail practice. “You need multiple metrics to assess the success of a program, even if it doesn’t contribute to profitability in the immediate term.” There could be other dynamics at play as well. At some organizations, a significant part of the workforce has never had the opportunity to work remotely; to allow a minority of mostly white-collar workers to continue to do so could cause major resentment.

Regardless, experts say, too many leaders rely on financial performance to justify RTO mandates. “There’s no payoff to the lower engagement,” says Andrés Tapia, Korn Ferry’s global strategist for diversity, equity, and inclusion. Instead, leaders can rely on other rationales for bringing people back. For instance, onboarding individuals or teams, kicking off a project, and strengthening team cohesion are accomplished far more effectively at the office when people are dispersed.

The rationale for the RTO mandate doesn’t even have to appeal to the employee’s sense of commitment—as long as it’s honest. Kaplan said he appreciated it when the boss of an investment firm acknowledged to his employees that commuting wasn’t ideal, but that they had to return to the office because the company owned billions in commercial real-estate assets. A firm that owns office buildings that also has a fully remote workforce would be a terrible look. “There was candor,” Kaplan says. 

Many employees might grouse about returning to the office, but experts say they’ll do it if they feel they’re getting something out of the experience. In one study, 85% of employees said they’d be motivated to return to the office to rebuild team bonds. Other popular incentives include in-person training, better feedback, and career-development opportunities.


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