Why Companies NEED People Back In The Office

according to study after study working from home leads to more efficient workers less staff turnover higher quality work and it's cheaper for the business and its workers so why the do so many companies want people back into the office the days of working from home are fading for more employees now being called back to the office before covid-19 high-tech companies were already experimenting with the advantages of remote work a peer-reviewed report from an unidentified NASDAQ listed company ran a trial where half of their call center workforce was randomly selected to work from home and the other half would remain in the office the group given the opportunity to work from home had higher customer satisfaction took 13 more calls and suffered 50 percent less staff attrition which is a big issue for call centers which typically struggle with high staff turnover a follow-up study done on workers in a wider selection of roles including Finance marketing and software development had similar results they compared staff working full-time from the office with staff working hybrid schedules from home and the office that study found that hybrid workers were eight percent more efficient at their jobs and had turnover rates 35 percent lower than staff working in the office full-time if businesses want to get the most out of their workers the results are clear more work from home is more better working from home is also cheaper for the business companies that want all of their workers in the office will pay more for utilities like electricity maintenance security and internet that workers would happily provide themselves if they were allowed to work from home it's rare that companies turn down better results for less money but in this case there are four reasons that more are demanding their staff come back into the office the first reason is that a lot of companies are not doing so well right now interest rates are high investors are not throwing money around like they were in 2020 and companies need to make cuts the easiest and largest ongoing expense for most companies are their employees if a business is getting less work than usual laying off staff is a prudent business decision if a business can cut expenses at the same rate as lost Revenue then it may be able to maintain profits to keep the shareholders happy if a business is making less Revenue then it also means there's less work to do so it just won't need as many staff the problem is that laying off staff signals to the market that the company is struggling which can affect the share price make it harder to generate new business this and make it harder to hire new staff in the future nobody wants to work for a company that lays off a lot of people on a whim and customers don't want to work with a company that looks like it might go out of business what companies really need is a way to get rid of Staff without formally laying them off Business Leaders have already seen the studies and they know that forcing people to work from the office leads to higher Staff turnover which in this case is exactly what they want uh but at some point you've got to make a decision to say look this is our policy you have to return to work and be okay with the idea that some employees may say well if that's the case I just can't work for this company anymore investment Banks like JPMorgan and Goldman Sachs which have seen declining revenue from less corporate deal activity are forcing all of their staff to return to the office full time their official communication stress the importance of face-to-face interactions with clients and co-workers senior investment bankers from both firms who love to talk about how much harder they worked when they were analysts accidentally said the quiet part out loud when journalists contacted them about their firm's decision to bring everybody back a senior manager at Goldman declared to the financial times that Goldman does not want to hire people for whom the most important thing is how many days they have to spend in the office at the moment this plan could backfire for businesses unemployment is still low and it's easy for high performing employees to find a new job so managers using this tactic need to be careful or they will be left with nothing but their worst employees an easy way to get rid of Staff without bad publicity is just the first reason so it's time to learn how money Works to find out why you are going to be forced back into the office even if it makes no business sense this week's lesson was sponsored by blinkist blinkist is a handy app that simplifies the key ideas from thousands of non-fiction books and podcasts into 15-minute chunks get a ton of knowledge in less time Linkus isn't for replacing reading it's there to give you a quick overview of a book before you dive in or a fast recap afterwards you can use blinkus to explore loads of topics whenever it suits you if a title catches your eye you can delve Deeper by reading the whole book I recently found a book on blinkus called multipliers by Liz Wiseman it's about the difference between good leaders who can boost any team and bad ones who can suck the life out of a team I was so intrigued by this concept that I decided to read more about it it's from books like these that I often get video ideas blinkist makes your learning more efficient with blinker spaces you can share a space with friends or family to recommend books to each other anyone in the space can access all the books there even without a blinkist premium subscription blinkus has a ton of content that can help improve many areas of your life like parenting communication and teamwork it's a must-have tool for personal growth in our busy lives don't miss your chance to learn more and reach your full potential get a seven day free trial and 25 off blinka's annual premium subscription by going to blinkist.com forward slash how many works the second reason that companies want their staff back in the office despite all the advantages that working from home offers is that they are exposed to real estate that is becoming useless everyone's saying you got to come back to the office now it's just like it's all just giant propaganda to keep real estate commercial real estate market up the value of Office Buildings has slumped as people shift to working from home which is a problem for the companies that have risk exposure to that market around 30 percent of major public companies in America own the office building they are headquartered in this real estate represents a major asset on the balance sheet for those companies Apple Park and Cupertino cost five billion dollars to construct which is a major investment even for a company like apple investors pay close attention to how efficiently companies utilize their assets a big building that is sitting empty is not doing anything to return money to shareholders so there's pressure on company leadership to sell these assets the problem is company Executives trying to sell an office building in today's market would likely take a significant loss on the estimated value listed on the balance sheet this loss would be considered a bad look for for the CEO when it's time for the board to decide their bonus instead of selling an asset that's not being used in realizing the loss a better play for the CEOs to make sure the asset is being used if an office is full then company leadership can justify the capital tied up in a building as it offsets the rent they would have to pay if they didn't own the building most major companies do rent their offices but that can actually put even more pressure on company leadership to get people back in the office the average rental term for office space is much longer than the average rental term for a residential home office spaces require fit outs to make them ready for the companies that will be occupying them office spaces often rented as nothing more than an empty concrete shell and the Landlord and Tenant will negotiate how the office will be built out to fit the needs of the company the typical cost to fill out a high-rise office after the core of the building has been constructed is between 250 and 500 dollars per square foot if managers want their offices to look like the one in suits it will cost even more usually the building owner pays for the fit out so they want to ensure their corporate tenant is going to pay rent for a long time which is why office leases last much longer than residential leases companies that still have their leases from before kovid will be paying money every month for something they are not using but can't get out of a lot of company managers have decided if they are paying for it they might as well use it because the cost benefit of working from home disappears if the company is still paying for an office according to a 2022 office space report on 247 companies conducted by Robin powered found that only 11 percent of companies were fully utilizing their office space 46 percent of the company surveyed were using less than half of their available office space and another 46 percent of companies surveyed said that they plan to reduce office space within the next year but that is difficult with long-term leases one of the only options left to a lot of companies is to default on their leases to open negotiation with the building's owner some perfectly healthy companies have started to do this to try and get rid of a major ongoing expense banks are another group with significant exposure to Office Buildings 3.8 percent of Wells Fargo loans are secured against commercial office space this represents 37 billion dollars in loans or roughly a quarter of the company's market cap banks are under pressure to make sure that offices Remain the standard working environment or they will need to do significant write Downs if defaults continue the third reason that companies are pushing people to come back to the office is because the power that an office can give managers and a lot of that has to do with employers starting to pull back starting to say we are still hiring but we want you on site we want you in place some managers don't actually have that much to do besides stand over their subordinates and look important it's easy to fill a day with redundant tasks in micromanagement in an office but it's harder to do it online senior managers at companies making the decision to bring people back to the office are also going to be more comfortable with work in person than work done online the old soft skills of business like a firm handshake and small talk with colleagues are less relevant online senior managers in the penultimate years of their career have spent most of their lives learning how important these skills are and for many of them it's how they got to their level to begin with straight laced old school business managers are being confronted with a new work culture of online team meetings sat in by someone in their bathrobe and a co-worker's cat professional office culture is something that managers use as a powerful tool for extracting the most out of their subordinates people stay late at the office to get extra work done in large part because they know sitting at their desk in the dark hours after everybody else has left is a good look and demonstrates to their superiors that they are willing to make sacrifices for their career if on the other hand you are someone that works from home you won't get nearly the same recognition for working on something after hours because you are sitting around at home in either case anyway a large motivator for Upward career advancement in the past has been the perks that come with Senior Management in a corporate role if you come into work every day and sit down at a shared desk in an open plan office that has no privacy where you sit short ordered a shoulder with noisy colleagues you would be willing to work extra hard for a promotion if the job gave you your own office with walls and enough room to stretch out without annoying your neighbors according to Studies by Mackenzie the incentive Research Foundation and Princeton non-cash incentives have more of an impact on long-term work motivation than cash incentives so even though we all say that we wouldn't just prefer the extra money the science says we wouldn't the research has presented four reasons why the first reason is that non-cash incentives are easier to see every day you go into work you will see an executive's private parking spot their large office and their personal assistant that fetches them coffee if a company just paid that executive more money instead of offering them visible workplace perks you would never see their big house or retirement savings so you would be less career motivated the second reason is that non-cash incentives are easier to talk about if you get given your own corner office it's easier to talk about than a large salary increase workers should talk about their salaries more but there is still a taboo about it which company management is more than half happy to keep in place so for now people get to brag about their new office more than their big bonus the third reason is that while people say they would prefer extra money it quickly becomes their new normal and the higher income level becomes their new expectation do you remember what your salary was 10 years ago probably not but you would probably remember where you worked the fourth reason is that people just like recognition and even small incentives like their face on the wall for employee of the month goes a long way most of these non-cash Awards need some kind of physical presence to work and working from home quickly makes a role far more transactional and easily comparable with another role where the worker will sit behind the same desk and work the same hours just for different money additionally since most of these perks go to senior managers in a business they are more likely to want to return to work themselves and make the same decisions for everyone else according to a study of 10 000 workers in the summer of 2021 of Executives who primarily worked completely remotely throughout the pandemic 44 said they wanted to come back into the office every day just 17 percent of their employees said the same it's nicer to go back to a comfortable office that you oversee than it is to go back to a shared desk that gets micromanaged managers are also just people and they are more reactive to negative news than positive news a manager is more likely to remember that one employee that played video games at home all day when they should have been working then they are to remember the hours saved by cutting out commute for their entire team leading to small incremental improvements when surveyed most managers believe that working from home had a negative impact on their team's output even though the data suggested exactly the opposite the use of employee monitoring software has increased by 66 percent in the fall of 2021 and even as workers return to the office managers have remained on average more suspicious of their subordinates collecting employee information and getting rid of underperforming staff is one of the reasons that companies have become obsessed with data but it's not the most profitable reason to find out what is go and watch my video on how they have turned your information into a trillion dollar bank account and how they are planning to cash it out also if you like the these videos and want to get them a day early completely free you should subscribe to my new email newsletter compounded daily where I will be sharing business and finance insights so you can all keep on learning how money works

Channel: How Money Works

Views: 913,016

Keywords: work from home, companies work from home, is working from home better, careers, business, return to office, working from home layoffs, home office, working from home more efficient, hybrid work, companies hybrid work, office rental crisis, office rent, converting office space, open plan office, how money works, how history works, why companies hate work from home, layoffs

Id: jrsRvozsUQ8

Length: 13min 12sec (792 seconds)

Published: Thu Jun 08 2023

Reddit Comments

[u/LincHayes]

My supervisor can't wait to RTO. Every time he mentions it, I remind him that of course he's looking forward to it, he's a supervisor. The office is where he has status and power.

But for the rest of us cubicle sitters, commuting to the office is an expense...so less money in our pockets, to sit in a Grey, dank environment with no fresh air or windows, share a bathroom with strangers, to work on the shittiest equipment the company could buy in bulk, and somehow we're supposed to keep up the same level of enthusiasm and productivity...while having less money in our pockets, + adding hours of unpaid, work related time to our week.

And oh yeah, we get to pay for parking.

For the company, it's all upside. For the worker, it's a crap deal.

[u/OldBallCoach49]

Some offices won't even have cubes. They'll do "hot desking". Lame.

[u/rdickert]

- commuting to the office is an expense...so less money in our pockets, to sit in a Grey, dank environment with no fresh air or windows, share a bathroom with strangers, to work on the shittiest equipment the company could buy in bulk

Supervisor here. Corporate mandated RTO last month. I have the same expenses as everyone else, commute frustrations (hour from the office on a good day). Got into my cube this morning joined by a cockroach. I had this huge 38" monitor at home - no budget for monitors so I'm on a 13" laptop screen. Secure facility so zero windows. So far the AC has failed twice in the past couple of weeks (in Florida). No one on my team is here at this office, they're in different cities. But hey, collaboration. I can generally get behind decisions that our leadership makes but this seriously makes no sense at all.

/end rant

[u/ViceroyClementine]

At its core this is about major shareholders whispering in the ears of the CEOs who report to them to get office utilization up. These same shareholders who also own the buildings and will see massive write-downs of their assets. It’s no coincidence that every single newspaper is framing a pro-RTO narrative right now- these same shops are owned by the same shareholders. It’s like that video that went out showing every Sinclair-owned local news station parroting the exact same lines. At the end of the day though- capital flows to where it is freest and most efficient- I.e not tied to assets (real estate). WFH will grow as shareholders divest themselves of commercial property over the coming decade, and as they see the value of lowering real estate costs for actual businesses and apply these savings to their net and projected earnings and thus share value.

[u/here_4_cat_memes]

Me listening to this in the office after my company upped the amount of days we work in the office:

👁️👄👁️

[u/WonderWheeler]

Investors need a new breed of corporation with few offices, mostly WFH, more productive, more production oriented. Fuck management frivolities. New corporations not bogged down with "old" office buildings in expensive, high cost cities. This is a decision to be made by investors, not management! Something like Apple Lite, or Microsoft WFH corp.