Why CEOs Want Employees Back in the Office

​When the COVID-19 pandemic hit in March 2020, millions of office workers packed up their laptops, went home and haven't seen a five-day office workweek since. But even during those peak pandemic years, some companies held tight to their Monday-to-Friday, 9-to-5, in-person schedules.

"We didn't believe in remote work as a company, and we actually still don't," says Jamie Lomason, the CHRO of Carlisle Interconnect Technologies, a Florida-based manufacturer with about 6,000 workers globally. When employees work together onsite, Lomason says, "there's camaraderie, relationship building … [and] opportunities to engage and collaborate and keep the business from being siloed."

The problem for companies like Carlisle: The remote-work cat is out of the bag.

As the pandemic abated and Carlisle's employees realized remote work was available if they jumped ship, the company saw increased turnover in its office staff. In 2022, Carlisle began to allow hybrid work schedules for some positions, and now it leaves the decision up to individual people managers.

Today, more than a quarter of U.S. employees (27 percent) are fully remote, up from just 6 percent in 2019, according to the U.S. Bureau of Labor Statistics (BLS). And a Gallup survey reports that only 12 percent of employees want to work in an office full time.

Workers argue they can be just as efficient working from home. Many company leaders disagree, citing everything from reduced collaboration, innovation and productivity to a lack of supervision and training, especially for younger employees—not to mention all the empty office space that companies are still paying for.

As a result, 2023 has seen more organizations ratchet up the post-pandemic norm of two to three days per week in the office. Among companies unveiling more-aggressive return-to-office (RTO) policies this year:

• Disney moved to a four-day in-person schedule—up from two or three days previously—soon after the return of CEO Bob Iger.
• Chipotle started requiring office staff to come in four days a week last spring.
• Amazon's CEO, Andy Jassy, began requiring corporate employees on May 1 to spend at least three days per week in the office, citing the need for more "face-to-face" and "serendipitous interactions."
• JPMorgan Chase ordered managing directors back in the office five days a week. CEO Jamie Dimon declared that in-person workers simply do more—and better—work.

Most large-company executives lean toward those pre-2020 norms. In a recent survey by consulting firm KPMG, nearly two-thirds of CEOs at multinational companies said the "ideal" working environment at their company by 2025 would be full-time in-office. Another 28 percent favor a hybrid model, and just 7 percent say they foresee a fully remote setup.

"As business leaders, we're not saying come back to the workplace simply to be punitive," says Johnny C. Taylor, Jr., SHRM-SCP, president and chief executive officer of SHRM. "We're returning to the office because we are in an uber-competitive environment on the verge of an economic downturn, and we need everything going our way—which means innovation, collaboration, efficiency.

"However, returning to the office is likely to face stiff resistance from an emboldened workforce with a newly found taste for remote work and an expectation for work flexibility. Having us all within these four walls, we think, will enhance our chances of surviving this economic downturn. Remote work doesn't cultivate the interpersonal relationships vital to workplace synergy, collaboration and innovation."

Business leaders widely agree that the drawbacks of remote work far outweigh the benefits, for a range of reasons. Here, based on SHRM's extensive research and reporting, are CEOs' and the C-suite's four biggest concerns about remote work:

1. PRODUCTIVITY: 'It's Not Just About You'

Since the pandemic began, employees have claimed their productivity at home was equal to, or better than, in-office levels. Some CEOs were skeptical, especially in the face of headlines such as "Weekday golf outings spike by 272 percent since 2019" (a Stanford study). But, for a while, the data backed up employees' claims. Not anymore.

U.S. employee productivity rose by 4.4 percent in 2020 and 2.2 percent in 2021, according to the BLS. But that came to a screeching halt in 2022. Last year, productivity fell by 1.6 percent. In fact, the U.S. has now experienced five consecutive quarters of year-over-year declines in worker productivity. That has never happened before in the data that goes back to 1948.

"The assumption is that people may work less efficiently when at home because they're often multitasking nonwork tasks," says Gregory Daco, chief economist at EY-Parthenon, the strategy consulting arm of global advisory firm EY. Daco didn't put all the blame on flexible work, noting that the average number of hours worked by employees is also increasing. That means people are working longer hours but aren't as productive as they used to be. Other factors could be triggering lower productivity, including the ongoing high rate of turnover.

Also, you can't simply measure productivity as a single employee's output, says Jake Wood, CEO of Groundswell, a corporate philanthropy company. Wood is a self-proclaimed "huge proponent" of in-person work and says productivity is also about helping boost the effort and output of your co-workers.
"It's not just about you. … You might be able to execute your work on time and to standard in a remote environment. But what about your colleagues?" Wood asked in a recent LinkedIn post. "Top performers raise the performance of those around them. This is severely degraded when those top performers (who are most capable of thriving remotely) are working from home. This renders much of the rest of the org operating in an insufficient capacity."

2. COLLABORATION: 15% Fewer Ideas Online

Even the most fervent supporters of remote work admit that collaboration and communication suffer when employees don't regularly see each other in person or have those casual, spontaneous interactions.

Ginni Rometty, the former CEO of IBM, says one key factor to consider when deciding on in-office work schedules is how much mentoring and informal training need to occur among employees. "That will dictate to you the kind of work culture you need to have," Rometty said at a recent SHRM conference.

"If I think about where I learned the most in my career, it was apprenticing under other people," Rometty explained to conference attendees. "And it wasn't by schedule, it wasn't by Zoom. It was serendipity."

In addition, a recent study shows that all of those Zoom meetings may be stifling innovation.

An experiment conducted at Stanford found that in-person teams generate about 15 percent to 20 percent more ideas than remote teams working on the same problem. And a separate Stanford experiment involving 1,500 engineers at multinational companies found that in-person ideas received higher ratings for originality.

Why? Stanford researchers say that when people focus on the narrow field of vision of a screen, their thinking becomes narrower as well. "And for creative idea generation, narrowed focus is a problem," says study co-author Jonathan Levav, a marketing professor at Stanford's Graduate School of Business.

In-person meetings are also more likely to veer off in different directions and create more unique ideas. "You want to generate ideas that can be structured like a sprawling oak tree, not a tall and narrow cypress. In the video interactions, the idea structures look more like cypresses," Levav says.

In lieu of mandating more in-office days, some organizations try to encourage as much in-person collaboration as possible within their hybrid policies. That could mean setting certain days—such as Tuesdays to Thursdays—as in-person workdays. Other companies still leave the collaboration and meeting schedule up to departments or individual managers.

Axcelis, a Massachusetts-based semiconductor company with 1,500 workers, used to have each department set its own "Density Days," in which workers would come into the office and have meetings. For example, Wednesday was the Density Day for engineers. But the company is now allowing departments to design their own hybrid plans.

"We're letting each department figure that out on their own," says Christina Wyman, Axcelis' VP of HR. "At this point, we really don't want to mandate anything from the corporate level. I'm all for having intentional employee collaboration so that employees can be their most productive. But I'm not in favor of making people sit in an office just because it makes someone feel good that they can see people working and the optics are good."

Other companies are adapting their physical workspaces to encourage collaboration. As part of their "Flex and Connect" initiative, Daiichi Sankyo, an 1,800-employee global health care company, lets employees choose one to four days in the office. And the company has revamped its corporate office layout, creating unassigned seating areas grouped by department "communities."

3. CULTURE: 'It's Easier to Build Trust In Person'

While culture has often been seen as a "soft" variable, CEOs increasingly understand that corporate culture is vital to bottom-line performance. Stronger culture typically means a more engaged worker, and a more engaged worker is more productive.

"What we're seeing is an evolution from culture as an afterthought or 'nice to have' to culture as a real value creator for the business," says Sarah Jensen Clayton, global leader of culture and change for Korn Ferry, in the consultancy's Back to Work report.

In a 2022 Korn Ferry survey of 15,000 executives worldwide, two-thirds said they felt culture accounted for more than 30 percent of the market value of their respective organizations. And a Harvard Business Review study found that organizations with strong cultures saw revenues increase over a 10-year period by four times as much as those with weaker cultures.

Many CEOs arguing for a return to office cite culture as one of the key reasons for ending fully remote work.

When Jassy, Amazon's CEO, called employees back to the office in the spring, he told them "it's easier to learn, model, practice and strengthen our culture when we're in the office together most of the time and surrounded by colleagues." Not all Amazon workers agree, as hundreds staged a walkout at its Seattle headquarters in May, carrying signs like "Say No to RTO."

At Goldman Sachs, CEO David Solomon also wants a full return to normal, pushing for five days in-office for most employees. "For Goldman Sachs to retain that cultural foundation, we have to bring people together," Solomon recently told Fortune.

Flexible work often comes down to trust. Do CEOs trust their employees to be working and producing at the same level whether they're remote or in-office? In March, Facebook founder Mark Zuckerberg told employees that in-person work helps create a trusting culture that can boost creativity and productivity.

"Our hypothesis is that it is still easier to build trust in person and that those relationships help us work more effectively," Zuckerberg wrote in a letter to employees.

4. CAREER DEVELOPMENT: 'Your Career Does Suffer'

Another rallying point for CEOs is their belief that employees—especially younger staff—need to work together in person to improve the skills and knowledge that allow them to grow and advance. Meanwhile, experienced workers need to be onsite to provide that mentorship.

"In the short term, you probably can be equally productive [working remotely], but your career does suffer," Arvind Krishna, IBM's CEO, told Bloomberg recently. Krishna says about 80 percent of IBM employees work from home at least some of the time, but remote arrangements are best suited for specific "individual contributor" roles such as software programmers and customer service reps.

"Moving from there to another role is probably less likely [if they're remote] because nobody is observing them in another context. It will be tougher," says Krishna, who encourages three days a week in the office for IBM staffers.

New data supports this point. A study by WFH Research says that office-based workers spend 25 percent more time in career development activities than their remote counterparts. The study showed that, on average, in-office workers spent 40 more minutes weekly mentoring others, as well as 25 more minutes on formal training.

Younger employees are most in need of in-person interactions to advance their careers, especially those unplanned moments of knowledge-sharing.

A new SHRM study found that Millennial and Generation Z employees place more emphasis on spontaneous, casual connections with co-workers. Only 21 percent of all workers say such "casual collisions" are more important now for career advancement than in 2019. In contrast, a full 47 percent of Millennials and Generation Z workers say those connections are more important today.

Employee mentorship won't thrive, however, if in-office employees are stuck on Zoom calls most of the day. That's why leaders say a mix of formal mentorship activities and casual connections is needed for career advancement.

Another key point CEOs have learned: RTO and hybrid policies can't be handed down on stone tablets from the executive suite. It's important to give employees as much input as possible in creating the plans.

According to Rometty, "It's really more about co-creating your back-to-work policy, not dictating it."

 
Patrick DiDomenico is managing editor of SHRM's Executive Network publications.