January has seen a flurry of studies, articles, etc. regarding the state of the workplace, employees, management and related AI impacts. In some of these revelations, employers aren’t coming off too well. In others, recruiters are problematic and laid off employees are especially vulnerable (with the over-50 crowd seeing massive pain). While it’s been a busy month of HR insights and reporting, the news (spoiler alert) is not at all cheerful.
RTO (Return To Office) – bad justification/dubious benefits
RTO was all in the news this month. Several Big 4 accounting firms are taking some tough love steps to enforce it. But, the justification for doing so may be long on a CEO’s opinion and short on facts. These mandates might serve to prove that causality and empathy should be things all leaders should ponder before dictating policy changes.
Case in point: Fortune reports (in a paywalled piece) that:
A new working paper by Mark (Shuai) Ma, an associate professor at the University of Pittsburgh, and Yuye Ding, a PhD student at its Katz Graduate School of Business, found that an office return isn’t actually boosting a company’s bottom line. What’s more: Many bosses simply carried out mandates in an effort to regain control over an employee base they could no longer see – or, as it were, trust.
Ma concludes that performance and shareholder value isn’t the real overarching intent of an RTO mandate, despite many managers suggesting it is. Not only did the researchers find that RTO mandates fail to significantly change financial performance or stock value, it does little more than rankle employees and tank their satisfaction.
Control and trust issues popped up in several pieces this month when the conversation focused on RTO. When WFH (work from home) became a business necessity during the pandemic, business people and employees pondered when this would end or if it could remain the ‘new normal’. The reality for many is that a hybrid may be what’s helpful for companies and employees but intractable, one-sided perspectives aren’t doing anyone any good for now. That same Fortune article also had this quote of the day regarding WFH: “there’s no putting the toothpaste back in the tube”. Sage counsel!
RTO – what poor-performing firms do
There’s also some insight emerging as to which firms are triggering RTO mandates. One piece noted:
The researchers analyzed public RTO data from 137 S&P 500 firms and determined that RTO mandates were more common for firms that had poor prior stock market performance. RTO mandates were more common for firms with "male and powerful CEOs." The authors found no significant impact of RTO mandates on stock returns or firm profitability.
Tying RTO to performance reviews
Fortune and other publications noted that checking for attendance was part and parcel of RTO efforts at some firms. Fortune noted:
Bosses argue that there are clear up-sides to having people in offices, so many of them have been firm about advocating for it. Goldman Sachs CEO David Solomon was early to call working from home an "aberration" in the hybrid work debate. Other banks, including Citibank, have also said they'd monitor employee attendance through their ID card swipes as a proxy for attendance. Earlier this month, Bank of America issued letters (the company calls it "letters of education") to workers flouting return-to-office rules, warning them of "disciplinary action.
It's become apparent that bringing people back into offices is not as simple to pivoting to old times. Return to work mandates have their fair share of short-comings too, given its impact on employee satisfaction and future recruitment prospects.
A different Fortune piece noted that more than investment banks were looking at turnstile swipes to track attendance. Big accounting firms are doing this as well:
Yet, some employees continue to defy back-to-office mandates, forcing companies to find new ways to keep an eye on who makes their way in and who doesn't. At accounting giant EY, that's been by tracking the turnstile entry of its employees, the Financial Times reported Monday.
Anonymized turnstile access data was shared with some partners at EY to show how often people come into the office in the U.K., staffers at the Big-Four firm told FT. Sometimes, data on attendance was even correlated to mid-year performance reviews, one of the sources said.
The big takeaway? At least 50% of the people in some teams were falling short on meeting the return-to-work policy, currently at least two-days a week, a person familiar with the matter told the outlet.
But IBM may be the one taking the crown for the feel-good RTO moment of 2024. According to a Bloomberg piece:
International Business Machines Corp. delivered a companywide ultimatum to managers who are still working remotely: move near an office or leave the company.
All US managers must immediately report to an office or client location at least three days a week “regardless of current work location status,” according to a memo sent on Jan. 16 viewed by Bloomberg. Badge-in data will be used to “assess individual presence” and shared with managers and human resources, Senior Vice President John Granger wrote in the note.
WFH is still in demand, RTO – not so much
Anecdotally, I hear from jobseekers and others that some form of WFH is clearly on their must-have requirements for a new job. But wanting and getting (an old Texas euphemism) are often two different things. Fortune reported:
American workers are clamoring for remote jobs right now, but the number of available positions is in short supply.
US remote job postings on LinkedIn dropped by 9% between January 2022 and December 2023, according to the company’s Global State of Remote and Hybrid Work report published earlier this month. And although remote jobs only accounted for 10% of open roles in December, they received 46% of all applications. That means that competition for remote jobs is nearly five times that of non-remote positions.
Smart recruiters should heed this especially if their employer is struggling to win the war for talent. RTO makes firms less, not more, attractive from a talent acquisition perspective.
Business Insider adds more color to this aspect of the RTO story:
Additionally, using employee job satisfaction data from Glassdoor, the researchers found that RTO mandates reduced workers' ratings for work-life balance, senior management, and job satisfaction. Still, many employees may agree with RTO decisions as a way to increase collaboration and better separate work from home, the researchers wrote.
RTO mandates have divided many offices nationwide, including at leading tech and financial companies. In 2023, over 5,000 Amazon employees signed a petition against the company's return-to-office mandate, which Amazon rejected. Over 2,300 Disney employees also signed a petition against the company's four-day in-person workweek.
What RTO does to/for employees
Does RTO come with a career cost? Do remote workers get less recognition, promotions, etc. than their in-office peers? That’s a distinct possibility. Colleague Tim Sackett recently tweeted:
This could an area of HR research that needs a lot more investigation. But, Tim’s three conclusions are likely true/reasonable.
RTO is not the only TRUST issue in HR
There were a number of stories involving AI-triggered layoffs in this month’s news. Tech companies, in particular, have been shedding a large number of employees who are tied to older solutions, processes, systems, etc. Apparently, these vendors feel they need to ‘pivot’ their products and workers to an AI-fueled future. Call me skeptical, but, I don’t know how these shifts can occur when the talent pool around AI technologies is woefully inexperienced and scarce.
Layoffs, attendance tracking, mandatory RTO, etc. all impact the workforce. These events signal that:
- Management can be capricious
- Management is terrible at planning and/or sensing market shifts
- Management can’t be trusted
- Management didn’t invest in the future skills needs of its current employees
- There is no reason for employees to be loyal to an employer when this loyalty is not matched (or is unrequited)
Case in point, the Wall Street Journal just announced that global package service firm UPS will mandate RTO and layoffs:
United Parcel Service said it plans to shed about 12,000 jobs this year and mandated staff work from offices five days a week starting March 4, as the package-delivery giant seeks to boost productivity amid a protracted slowdown in business.
The cuts are primarily targeted at management staff as well as contract workers, UPS executives said Tuesday, adding that those jobs aren’t likely to return even when parcel volumes rebound. The company has around 85,000 workers in management.
Executives should expect decisions like layoffs or return to office will stir the emotions of employees. Any executive who doesn’t understand this basic aspect of human beings (i.e., they will react negatively when a stimulus threatens their livelihood or other aspects of their lives) is possibly ill-equipped for their job. Empathetic leaders are what businesses need if they want to capture the hearts and minds of their workforce. Brutish, authoritarian leaders are not effective for the long-term.
When people are hired by a firm, there is an implied or implicit contract between the employee and employer. It may not be documented but it’s there. People will stay with an employer through all kinds of changes until the changes of this implicit contract become too numerous and too far afield to what was originally ‘the deal’ when the employee signed on. One Business Insider article noted:
It turns out there's a whole body of research around these questions. It focuses on what organizational psychologists call the psychological contract — the set of things that employees and employers believe they owe each other and are owed in return. Many of these beliefs are societal in scope. Others emerge from personal experiences on the job. But for the psychological contract to hold up, you need both mutuality (both parties have a shared understanding of expectations) and reciprocity (both parties believe they're getting a fair deal). Do that, and you generate the kind of trust and loyalty that leads to high productivity and low turnover. Fail to do that and — well, that's where we find ourselves right now. A world in which the psychological contract is profoundly broken.
This lack of empathy is quite common today. That article added:
A new management philosophy was born — one that was neither mutual nor reciprocal. "They don't treat people relationally," says Rousseau, who's a professor of organizational behavior and public policy at Carnegie Mellon University. "They treat people transactionally and as fungible, as easily substituted one to the next."
Even worse, during the Great Resignation, employers effectively penalized employees for their loyalty, offering sky-high salaries to attract job candidates while neglecting their existing staff. As I reported in 2022, veteran employees received salaries that were 7% lower, on average, than new hires.
So, of course, when employees try to match the lack of loyalty from their employer with a similar level of loyalty of their own, employers can react badly. They treat those who aren’t blindly, 100% loyal and dedicated to the employer as a pox. Business Insider noted these reactions:
Some have enacted unofficial policies to never hire back a former employee. Others are using surveillance software to track employee keystrokes in an effort to catch workers who are coasting on company time. Most egregiously, a few are even suing quitters using contract clauses known, ironically, as TRAPs — training repayment agreement provisions that require workers who leave a job before a specified date to reimburse their employer for training costs.
Those certainly don’t sound like great employers or great places to work.
With all of the above discussion re: layoffs, unemployment, etc. we need to wrap this with a look at what employers are doing to engage those people, especially those over 50 years of age, in gaining new employment. The people who get hurt the worst from layoffs are often those:
- Who were loyal to their employer and now find the company didn’t feel the same way towards them
- Who have lots of experience and have commanded a high salary. Unfortunately, other employers don’t want to pay those kinds of wages and won’t hire these people. That may be really short-sighted as these persons may be significantly more productive, knowledgeable, etc. than cheap, right out of school hires.
- Didn’t have a pipeline of side gigs, connections at other firms, etc. at the ready
- That will need months or years to find a new job that may or may not compare to their old one
Recruiters look at unemployed job seekers as some sort of pariah to be avoided at all costs. According to the Washington Post:
After six months, nine months, a year of unemployment, you can hear recruiters and employers thinking (maybe even saying): “Why hasn’t anyone hired you yet? You have all these qualifications and experience. Is something wrong with you?” The worst part is when the voice asking those questions is coming from inside your own head.
As you have probably guessed, there’s no punchline coming. It’s not a joke, but a tragic tale of our times, one I have heard from readers, friends and colleagues. I had a front-row seat to it in my marriage.
What keeps skilled, educated professionals locked in this demoralizing cycle of long-term unemployment? Ofer Sharone, a professor of sociology at the University of Massachusetts Amherst who researches career transitions and trends, sums it up in one word: stigma.
How bad is this problem? The Washington Post adds:
Sharone cites a 2018 study by ProPublica and the Urban Institute showing that 56 percent of workers between age 50 and retirement will suffer at least one “involuntary job separation”; of those, only 10 percent will again earn a salary comparable with what they were making.
In one baffling example, Sharone quotes recruiters confirming that, all other things being equal, employers prefer currently employed or “passive” candidates over unemployed ones actively looking for work. The longer job seekers stay out of work, the more “unemployed” seems to equate to “unemployable.”
So, when so many firms are struggling to find qualified talent, their recruiters are intentionally shunning some of the most qualified and experienced workers out there.
I’ve run offices, large projects and multiple service groups. I wouldn’t applaud or demand someone to come into the office during foul weather. I also wouldn’t demand that they work in one specific spot if it created more cost, inconvenience, etc. for this or other employees. For the record, I implemented WFH on Fridays in the early 1990s (other days were spent at clients all over the world). I cared about the results people produced not where they worked.
January was indeed a month of insights and disappointments re: HR. Business leaders may be making unnecessary trouble with poorly thought-out RTO mandates. They might be missing out on great talent with their singular focus on those who are already employed. And, of course, the lack of empathetic leadership will come back to haunt these firms as their recruiting brands will suffer from these miscues.
The RTO issues are painfully acute and many of the dislocations are/were foreseeable and potentially avoidable. Any executive who wants to put his/her organization in a time machine set for 2019 can try but they won’t get 2019 worker loyalty or in-office attendance. Management and business policies must be relevant and fit the times. By my math, 2019 policies don’t compute in 2024.
Checking attendance really sends a bad message, too. If you don’t trust your workforce, first find out why you do so. An RTO policy won’t likely fix your trust problem. Tying attendance to performance reviews leaves me cold, too. I can just see some eager beaver coming into the audience with the flu and 104-degree fever just to get his/her perfect attendance certificate and a gold star on his/her performance review. I haven’t had a perfect attendance certificate since grade school and I’d look upon any employer of mine that wanted to issue these with a dismissive look. I can’t wait for some enterprising HR software vendor to generate digital participation trophies for those persons who made it into the office during a snow storm.
Before your firm readies its next corporate social responsibility report, think about the RTO grief that leadership heaped on its workforce. Think about all of the added building heating costs, commute energy consumption, etc. that was expended to make everyone come into the office. And, think about the adverse impact your layoffs had on the communities that your firm operates within. Tell me that your firm is a great place to work at while doing all of these non-empathetic acts and I’ll shake my head in disbelief. Great workers will flock to great firms. Mediocre firms struggle to attract and retain the less extraordinary talent. What kind of firm will yours be in 2024?