Amidst Impending Economic Instability and Widespread Layoffs, Bosses Order Return to Office: Is In-Person Work Here to Stay?

In-person work making a comeback as major corporations reverse course on remote work policies

Amidst widespread layoffs and looming economic instability, employers are mandating that their workers return to the office. This has resulted in major corporations, such as Disney, Starbucks, Twitter, and auditing firm KPMG, mandating more in-person workdays, or even a return to full-time office working patterns. Disney, for instance, had been operating a hybrid-working policy, but in January, CEO Bob Iger announced in a memo that the company would be reversing course and mandating a four-day return to the office starting in March.

Iger emphasized the importance of physical connection, observation, and collaboration with peers in creative businesses like Disney, stating that being physically together is irreplaceable. This sentiment is echoed by other companies who believe that in-person work fosters professional growth and learning from leaders and mentors. While many employers had planned to adopt virtual or hybrid models a year ago, a third have since changed their minds, according to a January 2023 survey of 1,806 US workers by recruitment agency Monster.

CEOs argue that in-person collaboration, camaraderie, and mentorship are vital reasons for returning to the office. However, studies demonstrate that what most employees value the most is flexible working arrangements. These arrangements have reduced worker burnout, improved work-life balance, and even enhanced professional performance in many instances. Therefore, there is a significant discrepancy between what employers want and what their workers want. Nevertheless, bosses are pushing to bring their employees back to the office.

The shift towards more in-person work settings is a crucial development in the evolving work landscape, especially as workers have held the upper hand during the hiring crisis, bargaining for flexibility. However, as economic instability looms and firms resort to massive job cuts, the power dynamic is shifting back towards employers. Many may be leveraging the downturn to enforce or reform their work practices. Workers affected by these changes may have to return to the office due to the fear of a recession and possible layoffs, at least for the time being.

How the power dynamic has shifted

Just three years ago, working remotely was considered a special privilege that was reserved for workers in certain circumstances. However, due to the pandemic, a large portion of the workforce shifted to working from home, particularly in knowledge-work sectors. For many workers, remote work allowed them to establish new and productive habits while also having a better work-life balance since they no longer had to commute or adhere to a strict office schedule. As a result, flexibility became the most desirable job perk, and many employers offered remote work options to job candidates and current employees to retain their workforce. In fact, a survey conducted by consulting firm McKinsey & Company found that workplace flexibility was a top motivator for 40% of global workers to stay in a job. Some companies even made permanent remote work arrangements, and many others implemented hybrid-working policies. During the pandemic hiring boom, employers had little choice but to offer flexible working options to attract and retain talent. As Charley Cooper, the chief communications officer at enterprise-technology provider and blockchain-software company R3, based in New York City, explains, executives prefer their employees to work in the office, but the competition for talent during the pandemic made it difficult to enforce such a policy.

Just three years ago, the privilege of working remotely was limited to specific job arrangements. However, with the pandemic forcing most of the workforce to stay home, virtual work became the norm for many employees, resulting in increased productivity, new working habits, and a better work-life balance. This change in work culture led to flexibility becoming the most desired job perk. Employers recognized this and started offering remote work options to attract and retain talent.

According to a July 2022 study by McKinsey & Company, workplace flexibility was a significant motivator for 40% of workers, behind only salary (41%). As a result, many companies made remote work arrangements permanent, and others adopted hybrid-working policies. However, the labour market has shifted, and some companies have started reversing these policies due to the tech slowdown and economic instability. In such a situation, employee retention is no longer a top priority, and some companies have started demanding their workers return to the office.

Despite this, the demand for flexibility among workers remains strong. A December 2022 survey of 10,992 US employees showed that 30.6% wanted to work from home full-time. For some, virtual work has allowed for non-linear hours, better work-life balance, and even relocation away from the office.

However, as Professor Nicholas Bloom of Stanford University explains, some tech firms have started enforcing office mandates to increase office days, with layoffs accelerating this trend. Although flexibility remains desired by workers, they are now more likely to comply with office mandates due to job insecurity.

Explaining the Mandates for Returning to the Office

Explaining the Shift from Remote Work to Office Work Mandates

In response to a changing labor market, some companies are abandoning remote work arrangements and requiring employees to return to the office. While some employers have been careful to avoid calling it a “return to the office,” opting instead for phrases like “flexible, intentional working,” the worker-friendly job market has made this messaging less important. As competition for talent wanes, employees face a choice: comply with the new office requirements or risk losing their jobs.

Although executives may risk losing top talent, they see the benefits of having workers back in the office as outweighing the risks. Some companies are willing to invest time and resources into getting employees back into the workplace, or they will find new hires who will comply. This shift reflects a desire for in-person interaction and leadership, elements that have been lost during the pandemic.

Some experts suspect that employers are reneging on flexibility as a way to downsize after a period of over-hiring. Employees who want to remain remote may be shown the virtual door, and employers may not replace them.

Where it leaves workers

The Impact of Current Return-to-Office Mandates on the Workforce

The effects of the current wave of return-to-office mandates on the workforce will largely depend on their success and the extent to which other companies follow suit. According to Cooper, the leading corporations across various industries are the ones that are most demanding of their workers returning to the office, while smaller firms are choosing to delay their decision. “JPMorgan and Goldman Sachs are currently setting deadlines, with other banks waiting to see what happens next. If it succeeds, we’ll follow suit,” he says. In other words, widespread adoption of the return-to-office trend may normalize the end of remote-work privileges.

Although these moves signify a shift away from fully remote working patterns that peaked during the pandemic, “we’ll likely still end up with a higher percentage of remote working than before the pandemic,” says Hancock, as many of the companies recalling workers are still settling for three or four days in the office, as opposed to one or two, leaving some remote work in place.

For now, macroeconomic factors suggest that power is shifting away from workers: bosses now have the power to determine the next phase of the new world of work and how often workers need to be in the office. If companies are willing to diminish or eliminate the flexible work that so many employees desire, it could signal the end of worker power that defined the pandemic era.

While there is no concrete evidence yet of a definitive trend toward a mass return to the office for all workers, it is not impossible, say some experts. “It’ll be over the course of the year, and forcing people back that we’ll all get a sense of whether productivity remains the same,” says Cooper, “and if companies are really more innovative when people work together in the same room.”