RTO: Finding the Post-Covid Balance

The three-letter acronym that was unknown just three years ago now dominates many C-level discussions. RTO now represents one of the more significant and apparently lasting impacts of the pandemic. It has created a new perspective toward working remotely. Moreover, this issue includes all employees, from clerical staff to the executive suite.

Is There a Sweet Spot?

Many CEOs pushed in 2022 for a “return to normalcy.” The leading tech companies such as Google, Apple, and Twitter were joined by others such as Disney, GM, and Goldman Sachs in issuing memos calling for employees to return to their offices at various points during the year.

The responses were less than encouraging to those and other companies calling for employees to be in the office at least three or more days a week. A variety of sources are now tracking employee attendance statistics. Based on the data from one of them, Kastle Systems, office occupancy remained below fifty percent in 10 of the largest U.S. cities.

However, one bright spot is that the same source now indicates at least a few cities are seeing greater than 50 percent occupancy for the first time since the pandemic lockdown. Austin is one such city, while most of Silicon Valley remained at 41 percent. One inference from this new research is that the larger companies in larger metro areas are seeing higher RTO numbers. Smaller companies in smaller work centers are showing more flexibility.

HR pros are also grappling with how to advise their management teams on the issue. As employees resist the call to return, the question becomes what latitude can and should be used to enforce RTO mandates. For example, General Motors announced in September an immediate call for a minimum of three days in the office. Immediate strong resistance resulted in the decision being rescinded just two days later.

Similar responses and false starts left most companies writing off any major push for 2022, hoping for more success in 2023. According to several authorities in this new area of study, that may be more difficult than those CEOs expect.

A recent article by CNBC quotes Nick Bloom as one who sees a “new normal” of less than three days a week. Bloom, a professor of economics at Stanford, focuses on work-from-home issues. He states, “I feel pretty confident in saying we will not see much more shift towards the office.” His group publishes a monthly report on RTO statistics and sees the issue centering around 2.3 to 2.8 days a week in office. According to their latest analysis, employees want the higher end of that range at home. Employers, on average, are calling for the 2.8 days or more in the office.

Many HR departments report that company RTO policies now play a surprisingly large role in many recruitment, hiring, and retention efforts. Even in the executive recruiting process, the expectation of average days-in-office is now part of almost every negotiation.

Conflicting Priorities and Tradeoffs

When looking to 2023, the RTO question is muddied by other factors than post-covid issues. The expectation of a recession has many companies considering or initiating force reductions and layoffs. This lowers costs and lessens the need for real estate and leased spaces. It also presents a cost-cutting justification for less stringent RTO mandates.

Another consideration shaping the discussion is newly emerging data challenging traditional views of the value of in-office staff. There are, of course, needs for a certain level of onsite presence for communications and building/maintaining a company’s culture. The big question is how to determine those needs for which employees and in which areas of company operations.

Early in 2022 Julia Pollak, a labor economist for ZipRecruiter, predicted resistance to RTO until 2023. She is now saying that if employees can show two years of productive work from home, they have a strong case for arguing against any mandated returns. She states, “The most reluctant companies to face the new reality are going to have to experience significant pain to catch up.”

Stephanie Reynolds of Unify Consulting reinforces this view. She recently briefed HR professionals on ensuring their company executives understand the right metrics. Specifically, companies should look at what parts of the business have suffered and which have grown while in remote operating mode.

An additional factor that has entered the equation is the “happiness” issue for a new generation of workers. Their expectations are challenging executives to carefully evaluate their company paradigm in meeting what are actually “soft demands” by many of today’s workers.

Crunching the Numbers: Looking Beyond Numbers

The mass of data now being generated is focused on attempting to assess the realities of the impact of remote work vs in-office work and overall productivity. The growing expectation is that a new, hybrid workforce is what will evolve, with 2023 being the beginning of that “new normal.”

Professor Bloom summarized the perspective his research has given him by stating, “The best way to make a horrible mistake in business right now is to predict that we’ll return to the office the way we did in 2019.”

While we can celebrate a 50 percent milestone in some cities, 2023 will undoubtedly continue to see conflicting results across the country.