Human Change Brief - Return to office doesn’t work
Two researchers from the University of Pittsburgh's business school conducted a study on a group of companies listed on the S&P 500, focusing on 137 companies with Return-to-Office (RTO) mandates and 320 without such mandates from June 2019 to January 2023. They gathered publicly accessible information on each firm, including financial reports and employee feedback. Their analysis sought to identify factors influencing a company's decision to adopt RTO policies, such as size, financial health, and CEO attributes, and to assess the impact of these policies on employee contentment and the company's financial performance.
The study revealed that RTO mandates did not enhance the financial outcomes for companies but led to a reduction in employee happiness.
Further examination showed a correlation between RTO policies and companies led by male CEOs with a higher degree of authority, gauged by the CEO's compensation relative to that of the top four executives.
Initially, the researchers speculated that RTO mandates might be employed to deflect blame for poor company performance onto employees. The findings supported this notion, showing that companies more likely to enforce RTO mandates had weaker stock performance prior to the pandemic and that firms with significant institutional ownership, like hedge funds or educational endowments, were less inclined towards these mandates.
Despite some corporate leaders arguing that RTO mandates could boost company performance, the researchers concluded that these policies were more about reasserting control and pinning the blame for poor results on employees.
Moreover, the study found that RTO mandates were associated with a drop in employee satisfaction, particularly in areas related to job satisfaction, work-life balance, senior management, and corporate culture, while factors not connected to RTO remained unchanged. This indicates the mandates were a primary factor in lowering employee morale.
The research acknowledges certain limitations, such as its relatively brief examination period and the overlap with a labor shortage, which might affect worker attitudes in a tight job market. Nonetheless, this study contributes valuable insights into the contentious discussions and disagreements surrounding RTO policies.
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