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RTO mandates push senior leaders to join direct competitors, study says



Dive Brief:

  • Recent research raises new concerns about return-to-office policies: Following an RTO mandate, long-tenured and senior-level employees are more likely to leave for direct, large competitors — taking with them invaluable human capital, according to a May 7 report authored by University of Chicago political scientist Austin Wright and researchers from the University of Michigan.
  • This “pronounced exodus” of long-time and senior personnel means companies implementing an RTO mandate face significant costs in hiring and training their replacements, along with the competitive costs of losing operational knowledge, the research found.
  • Interestingly, the research also found no differences between the share of men and women who left to join other companies, as well as the share that flowed into unemployment or accepted a demotion or changed their roles at their new job, suggesting that women are not acting on their strongest preference for working at home, as documented in several surveys, the report noted.

Dive Insight:

The findings are based on a study of how RTO mandates affected Microsoft, Space X and Apple. The researchers chose the tech sector because that’s where the discourse over RTO has been the most heated, the report noted.

Using data provided by People Data Labs, the researchers evaluated more than 200 million resumes to see how RTO affected employee tenure and seniority at the three tech giants. The companies were selected because they are among the largest in the U.S. to implement RTO mandates and did so before a wave of layoffs starting in late 2022, allowing the researchers to isolate the mandates’ effects. 

Just as important, “what happens at those companies matters for the American economy, and sets the precedent for the wider debate around return to office,” the authors said.

The University of Chicago findings align with what other experts have observed. For one, taking an “all or nothing” approach to RTO sets employers off on the wrong foot, a management professor at George Washington University recently told HR Dive.

Demanding that employees who have been working remotely come back to the office immediately on a full-time basis or face discipline can turn them against organizations at a time when job satisfaction and engagement has been declining, the management professor said.

Rushed mandates also don’t take into account employees’ productivity and accomplishments and can destroy trust between them and their managers, isolved’s chief marketing officer previously said.

Nor do RTO mandates necessarily improve a company’s performance, according to recent research from the University of Pittsburgh. Instead, companies often deploy RTO mandates to “reassert control” and use employees as “scapegoats for bad firm performance,” tactics that can boomerang against productivity and retention, the Pittsburgh researchers noted.

Mandates have also been ineffective in driving consistent in-office attendance. Almost half of the workers who responded to a recent survey of 600 full-time employees by management firm Robin said they don’t come into the office because they believe they are more productive with their at-home setup.

In the University of Chicago study, Space X was the only company that demanded full-time RTO (40 hours a week). Microsoft required 50% in-office attendance, while Apple required 1 day a week.

Despite these differences and the companies’ “markedly different corporate culture and product gamut,” the researchers estimated “nearly identical effects for all three companies,” suggesting these effects are driven by common underlying dynamics, the report said.

Read the full article here