Why are companies calling people back to office when all stats indicate WFH is better?

We knew it was serious when even Zoom Video Communications Inc., a one-time darling of the WFH era, the one that made it all happen, mandated in-office work twice a week in 2023.

All major companies — Amazon (5 days a week in-office from 2025), JPMC (full in-office), Goldman Sachs (full in-office), Citi (full in-office), Apple (3 days a week in-office), BlackRock (4 days a week in-office), Google (4 days a week in-office), etc. put out memos mandating workers to come to the office. They made WFO a part of employee evaluation criteria to enforce it further.

“We’ve decided that we’re going to return to being in the office the way we were before the onset of COVID. When we look back over the last five years, we continue to believe that the advantages of being together in the office are significant,” said the Amazon CEO.

The employees were quick to note that this is not “going back”, this is “going backwards”.

Study after study shows that WFH leads to more efficient workers, less staff turnover, higher quality work, and it’s cheaper for businesses and their workers. So, why do so many companies want people back in 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 WFH, while the other half remained in the office. The WFH group had higher customer satisfaction, took 13% more calls, and suffered 50% less staff attrition, which is a big issue for call centers, as they 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 8% more efficient at their jobs and had turnover rates 35% lower than those 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 better.

Jamie Dimon, the CEO of JP Morgan Chase said in a 2023 interview, “It (remote work) doesn’t work for young kids, doesn’t work for spontaneity, doesn’t work for management.”

Working from home is also cheaper for businesses. Companies that require all their workers in the office will pay more for utilities like electricity, maintenance, security, and internet — costs that workers would happily cover themselves if allowed to work from home. It’s rare that companies turn down better results for less money, but in this case, there are 6 reasons more businesses are demanding their staff return to the office.

1. Give a reason to workers to resign so they do not have to layoff

Companies are struggling. Interest rates are high and investors are not throwing money around like they were in 2021. Companies need to make cuts.

The largest ongoing expense for most service companies is human resources. If a business is receiving less work than usual, laying off staff is a seemingly obvious business decision. If a company can cut expenses at the same rate as lost revenue, it may be able to maintain profits and keep shareholders happy. Less revenue means less work, so fewer staff are needed.

However, 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, and complicate future hiring efforts. No one wants to work for a company known for frequent layoffs, and customers may avoid businesses that appear on the brink of collapse.

What companies really need is a way to get rid of staff without formally laying them off. Business leaders are aware that forcing people back into the office increases staff turnover, which is exactly what they want in some cases. As one business leader put it, at some point, you have to decide to enforce your policy and accept that some employees may quit as a result.

Investment banks like JPMorgan and Goldman Sachs, which have seen declining revenue due to less corporate deal activity, are now requiring all staff to return to the office full-time. Their official communications emphasize the importance of face-to-face interactions with clients and colleagues. Senior bankers from both firms, who often reflect on how much harder they worked as young analysts, accidentally revealed the real motive in media interviews: Goldman doesn’t want to hire people who prioritise how many days they can work from home.

However, this strategy could backfire. Even in a competitive job market, high-performing employees can easily find new jobs. Relying on this tactic means risking the loss of the best workers and being left with only the average and the worst.

2. Access to Large Talent Pool is no longer needed

Meta Founder and CEO Mark Zuckerberg said in a May 2020 interview that remote work allows the companies to tap into a wider talent pool from small cities, that would not have been available otherwise.

That was the reality of 2020–2022. All major service companies were on a hiring spree, one consequence of which is the mass layoffs happening now.

Now that the companies aren’t hiring as much, they just do not require to tap into a wider candidate pipeline.

3. Exposure to underused real estate

The value of office buildings has plummeted as remote work became the norm, posing a problem for companies with large real estate assets on their balance sheets. Around 30% of major public companies in America own the office buildings they use as headquarters, and these properties represent significant assets.

For instance, Apple Park in Cupertino cost $5 billion to build — a huge investment, even for Apple. Investors closely monitor how efficiently companies use their assets, and an empty building does not generate returns for shareholders. As a result, there’s pressure on company leadership to sell or better utilize these buildings. However, selling these assets in today’s market would likely mean taking a major loss. Instead, CEOs find it more beneficial to bring employees back, justifying the investment in office space and offsetting potential rental costs.

Even leasing poses problems. Office space leases tend to last much longer than residential leases, and fitting out office spaces can be expensive. As a result, companies are often locked into long-term rental contracts that are hard to break, and they may be paying for offices they’re not using. A 2022 report found that only 11% of companies fully utilized their office space, and 46% were using less than half of it. Many companies are now planning to reduce their office space, but this is difficult with long-term leases. Some firms are even defaulting on their leases to renegotiate with landlords.

4. Lack of Trust

~40% of the 215 supervisors and managers across 24 countries in an HBR 2020 study expressed low self-confidence in their ability to manage workers remotely. A similar proportion of managers had negative views about remote workers’ performance. 38% of managers agreed that remote workers usually perform worse than those who work in an office.

5. Non-cash incentives, like corner offices or reserved parking spots

Non-cash incentives can have a greater impact on long-term work motivation than cash bonuses, according to studies by McKinsey, Princeton, and the Incentive Research Foundation. Even though employees may say they prefer higher pay, visible perks are more motivating because they are easy to see and talk about.

Many of these non-cash rewards, which require a physical presence, are driving senior managers to favour in-person work.

6. It was, after all, just a temporary measure for most companies in the wake of the pandemic

Before the pandemic, only 6% of the US workers had primarily WFH. ~75% of the workforce had never worked from home. The norm was to go to a physical workspace away from home, work during the office hours, show face, small talk, and come back.

When the pandemic struck, remote work was a no-other-alternative measure that companies took.

Now, that all signs indicate that the worst is over, employers feel it only natural to go back to the OG normal. WFH, after all, couldn’t become the “new normal”.

41% managers, even in 2020, were dubious about whether remote workers can remain motivated over time. (HBR survey)

Senior professionals, who are more comfortable with in-person work, often value traditional business practices like handshakes and casual office interactions, which are completely absent in remote work settings.

In conclusion, these are the major reasons why companies are calling people back to office despite employees’ resistance.