Return-to-office mandates rise as worker productivity drops

Bosses are imposing more strict in-office mandates as new data from the US Bureau of Labor Statistics showed productivity has slumped slightly since the end of the COVID-19 pandemic.

shutterstock jirsak back to office image

When Bill Mandara was a young architect decades ago, he would follow senior designers around his office to pick their brains to learn the profession.

“In architecture, and I’d imagine in a lot of other industries, what’s particularly important is the mentorship,” said Mandara, now CEO of Mancini Duffy, a Manhattan-based architecture and interior design firm with about 90 employees.

Mentorship, collaboration, and productivity, Mandara argues, suffer in remote-work settings. So he began asking his employees to return to the office as soon as Manhattan would allow it during the COVID-19 pandemic -- in June 2020.

“I don’t work from home at all. I like to be around people,” Mandara said. "Part of my job is to be a resource for people and to be there.  If I’m sitting in my home office with my dog, my dog likes it, but that’s about it.”

Over the past year, it's become clear that more and more industry leaders agree with Mandara — and they’re requiring employees to get back into the office on average three days a week.

According to Kastle Systems, a provider of key fob security technology for 2,600 buildings in 47 states, the 10-city average occupancy rate on the company’s so-called Back to Work Barometer  was 49.2% last week. While it was a slight drop from a week earlier when occupancy was at 50.2%, it remained close to the highest occupancy rate since March 2020. Additionally, every city on the Back to Work Barometer saw occupancy gains this year. (The Barometer includes cities such as Chicago, New York City metro, Dallas metro, Los Angeles and San Francisco.)

kastle systems occupancy rates Kastle Systems

Kastle Systems data shows buidling occupancy rates steadily climbing over time.

Office desk bookings are also up, increasing 20% between January of June of this year, according to Robin Powered, a vendor of office scheduling software. Real estate firms, financial services companies, and educational institutions have led the drive for back-to-office policies, according to Robin.

Increasingly, executives are identifying large shares of remote work as a potential culprit for lagging productivity.

Over the past two years, productivity has declined 1.9%, according to the US Bureau of Labor Statistics (BLS), “the sharpest two-year decline in over 75 years of recorded data.”

Studies have shown that most bosses believe remote work hurts worker productivity. A survey of 20,000 people in 11 countries by Microsoft this spring found that 85% of business leaders believe the shift to hybrid work has made it harder to have confidence that employees are being productive.

The change in productivity is in stark contrast to the pandemic, when it actually rose. Between the second quarter of 2020 and the second quarter of 2021, labor productivity increased by 1.8%, compared with an average annual increase of 1.4% from 2005 to 2019.

bill mandaria on couch Bill Mandara

Bill Mandara in his Manhattan office. In 2022, the company moved into a new headquarters that was rearchitected with various spaces condusive to hybird work. Everyone has a laptop that can be plugged into any desk in the office. Mandaria typically sits on a couch in the middle of the office. 

In the first quarter of 2023, labor productivity dropped 2.1% in the US, even as the number of hours worked increased by 2.6%, according to the BLS.

The highest levels of remote workers are in North America and Northern Europe, with lower levels in Southern Europe, and even fewer still in Asia — particularly in developing countries, according to a study by Stanford University’s Institute for Economic Policy Research (SIEPR) released in July.

“The US has been lagging the rest of the world in returning to the office, which is why you saw that increase in bookings, because the US has further to go. We see that in our data,” said Robin CEO Micah Remley.

In May 2020, on average, more than 60% of days were worked from home, according to SIEPR. Then, as the pandemic eased, levels of remote work dropped; by this summer they appeared to be converging towards about 25% of days. “Ultimately, the pandemic increased the share of days worked from home from about 5% in 2019 to 25% in 2023, a five-fold increase,” the SIEPR study concluded.

When it comes to location, the SIEPR study divided US workers into three groups: Fully on-site, hybrid, and fully remote. Six in 10 US employees are fully on site — and they’re also the lowest-paid employees, typically in retail, food services, accommodation, travel, cleaning, security, and other in-person jobs that are difficult to do remotely.

Hybrid employees working from home part of the time are the highest paid group, on average, and account for nearly 30% of employees. The last group, fully remote employees, represent just 10% of the labor force, and they are typically in support roles like payroll, benefits, HR, call centers, and some coding jobs; they earn less than the typical professional hybrid worker.

An edict, and a mixed reaction

The reaction was mixed when Mandara required all of his firm’s 90 employees to return to one of three office locations – two in New Jersey and the Manhattan headquarters.

“Some weren’t too jazzed about it,” Mandara said.Within two weeks, everyone was fine with it. There’s always going to be some folks who didn’t care for it and wanted to continue [with remote work], and we’ve always been a flexible firm. We’ve always made accommodations for folks and there were some folks we made accommodations for. More often than not, it was fine.”

Mandara’s policies were regimented from the start: be in the office three days a week, with the exact days varying by team. But one of the days had to be a Monday or a Friday. “Monday’s are pretty packed,” Mandara admitted.

Not every organization needs such strict guidelines, Mandara conceded, but in larger organizations they can reduce the need to police employee activity. “You don’t want to be in the business of policing people and you especially don’t want to be in the business of legislating to the bottom if folks are abusing the system,” he said. "You don’t want to have to dictate to people who are doing the right thing, and doing it well, because of a few people who are abusing the system.

“If you just say everyone can come in when you feel like it, it's just human nature that some people aren’t going to feel like coming in,” Mandara added.

Studies have shown that, in particular, younger remote workers develop skills at a slower rate than their colleagues in the office. Those same studies show innovation has lagged in remote settings, and employee engagement has fallen dramatically, affecting both  productivity and retention, according Kastle Systems.

In other words, marginal efficiency gains from remote work are overshadowed by the diminished ability to develop human capital.

kastle systems 10 city average Kastle Systems

Mandates aren't always the best tactic

“Bosses want workers back in the office; workers want flexibility,” said Peter Miscovich, the managing director of Jones Lang LaSalle IP (JLL), a global real estate investment and management firm that tracks remote work trends.

But current return-to-office mandates haven't always been effective and they risk driving employees away, according to Miscovich. "Given current low-unemployment rates — particularly in technology fields — talent has the upper hand and will have the upper hand over the next 10 to 15 years,” Miscovich said.

While some companies have drawn attention for heavy-handed tactics to get employees back to the office, others are succeeding for  getting buy-in for structured hybrid work policies.

jll productivity chart JLL

Globally and in the US, organizations have moved from ad hoc hybrid work policies, where employees could pick their days in the office to structured schedules, according to Remley. On average, workers are required to be in the office 2.6 days per week, with Tuesday, Wednesday and Thursday by far the most popular in-office days.

“Most people will say, Fridays are dead unless you have some direct, customer-facing role that requires you to be in five days a week,” he said. “Five days a week in the office is out. The new full time in the office is four days in the office.”

In Q2 2023, nearly one-third of employees had a set, in-office schedule, up 8% compared to Q1. For companies that have a formal hybrid work strategy, 91% of employees were in the office two to three days per week.

It's not just workers; visitors are on the rise, too. Guest visits, or the number of meetings with external clients in the office, increased 147% from January to June this year, Robin Powered’s data showed. “So, it’s the idea of in-person work with colleagues, but also in-person work with customers,” Remley said. “That’s coming back in a major way. That drives more people to the office specific days of week.”

New attendance policies gaining ground

Technology continues to face the most acute shifts in remote work policies, according to a JLL report. After mandates announced by both Meta Platforms and Lyft earlier this year, the 10 largest technology tenants in the US now all have some form of concrete hybrid attendance policy affecting the majority of their workforce.

But such policies were not confined to the tech industry— prominent insurance companies, law firms, banks, and telecom companies also introduced them. In the second quarter, for example, AT&T and investment firm Blackrock announced stricter attendance requirements. Blackrock boosted its in-office mandate from three to four days.

Dena Prastos, CEO of Indigo River, a New York-based architectural design and project management company with 20 employees, said projects often require a lot of collaboration between different teams, such as architects, engineers, and contractors.

“This collaboration can be difficult to do effectively over video chat or other remote communication tools,” she said via email to Computerworld. "In-person collaboration allows team members to brainstorm ideas together, share physical models and drawings, and resolve conflicts more easily."\

bls productivity chart US Bureau of Labor Statistics/Computerworld

Productivity has dropped in recent months, according to BLS data.

In-person work can also foster innovation and problem solving, because it allows team members to interact with each other in a more informal and spontaneous way, she said, yielding new ideas and solutions that might not be possible if everyone is working remotely.

In-person training and onboarding, Prastos said, is also more effective than remote training "because it allows new team members to learn from experienced colleagues and ask questions in person."

dena prastos Indigo River

Dena Prastos, CEO of Indigo River design firm.

The debate around remote work has morphed into how many days employees should be in the office to boost productivity through work supervision, collaboration, and comradery, but there is no one-size-fits-all answer. Companies such as Airbnb report huge benefits from fully remote work practices, while others such as Google and Meta are demanding employees to spend more time in the office.

“Certainly, we’re seeing office policies changing. People have really moved away from ad hoc work schedules,” Remley said.

The other change? People are creatures of habit, so even if a company dictates which days an employee must be in office, the employees will settle into consistent routines.

Prastos chose not to implement a strict hybrid work policy specifying which days employees must be in the office. Instead, she solicited employee feedback on what days work for them and what the office environment should be. That policy, she said, creates a culture of trust.

“At times, this means giving employees the freedom to work from wherever they want, as long as they are getting their work done. This can help to boost employee morale and productivity,” she said. “Ultimately, we have found that the best way to bring employees back into the office is to find a solution that works for both the company and the employees. By offering a flexible and progressive work environment, we have been successful in encouraging employees to come back to the office and be more productive.”

Mandara, the architectural firm owner, admits that commuting to work is a pain — but the gains from being in-person outweigh that.

“Yeah, some people don’t like it,” he said. “I live in suburban New Jersey, and there are days when it’s a quick 45-minute drive and then were are days like yesterday when I was in my car for three hours. That’s what we all signed up for when we decided to work in the big city.”

He also believes in looking at return-to-work policies as “a glass half full.”

“If someone had told me 10 years ago there’d be a time when someone would allow me two days a week at home when I wouldn’t have to deal with commuting, I’d would have been ecstatic.”


Copyright © 2023 IDG Communications, Inc.

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