Why As Many Leaders Insist On Post-Labor Day Office Return, Resistance Continues

Leaders sense that as Covid is no longer perceived as much of a threat as it was for the past two years and that there is some softening in the job market, they have more leverage to insist that employees return to the office. 

But a 3.7% unemployment rate, robust savings, ample job opportunities and competitors looking for an edge in the talent wars are all conspiring to keep leaders cautious about office mandates for fear of losing key skills. And the workforce remains enamored of the flexibility that work from home and hybrid schedules give them. Successful executives recognize that this will be a process which will evolve over time and that some compromise on both sides will be required. JL  

Chip Cutter and Katherine Bindley report in the Wall Street Journal:

Many executives say that, with schools in session and the weather still warm, a post-Labor Day return is their best hope at getting workers on a regular office schedule. “A lot of employers are saying, ‘We’re going to set a line of demarcation,’ ” this fall. With Covid-19 cases in decline and the death rate lower, the virus is less of a deterrent. (But) bosses say it remains difficult to hire while the unemployment rate is 3.7%. Many employees appreciate the flexibility that comes with remote work, and hope to retain a hybrid arrangement. How strongly a company can push for in-person work depends on an industry, what competitors are doing and how much leverage companies assume workers have to switch jobs

Labor Day marks the line in the corporate sand.

Many company leaders say the end-of-summer holiday represents the best chance to finally lean on workers to return to the office this year.

After months of encouraging white-collar employees to return, or attempting to coax them back with free pizza, warm cookies and catered lunches, many executives now say they feel emboldened to take a tougher stance. No longer can workers merely come to the office if they so choose; this fall, executives say, attendance is expected and the office resisters will be put on notice.

Employers including Apple Inc., Prudential Financial Inc. and BMO Financial Group plan broader September returns at their U.S. offices. Some companies, such as Ally Financial Inc., have sent notes in recent weeks reminding workers to come into the office consistently. Goldman Sachs Group Inc. said it was lifting all vaccination and other requirements to enter most of its offices after Labor Day, eliminating a final barrier to a full return.

Others, including Marriott International Inc., are opening gleaming new office spaces with the hope—and expectation—that workers will use them.

Hybrid-work arrangements take effect after Labor Day at Prudential’s New Jersey headquarters and other offices.PHOTO: JOSE A. ALVARADO JR. FOR THE WALL STREET JOURNAL

Many executives say that, with schools in session and the weather still warm, a post-Labor Day return is their best hope at getting workers on a more regular office schedule before the fall and winter holidays. With Covid-19 cases and hospitalizations in decline and the death rate lower, workers say they are growing accustomed to living with the risk of the virus, making it less of a deterrent to office work. Bosses also feel emboldened to step up demands as signs emerge that the economy is weakening.

“A lot of employers are saying, ‘We’re going to set a line of demarcation,’ ” this fall, said Steve Pemberton, chief human-resources officer at the workplace technology company Workhuman, which is requiring its employees in the Boston area to return one day a week starting this month under hybrid schedules, while some employees can remain remote.

Many bosses say it remains difficult to hire in an environment in which the unemployment rate is 3.7%. Still, workers might be more willing to accept return-to-work orders given recent announcements from several prominent companies that they planned to shed workers. Social-media company Snap Inc. said Wednesday it plans to slash a fifth of its workforce. Others that have announced layoffs this year include Ford Motor Co., Carvana Co., Netflix Inc., Coinbase Global Inc., Robinhood Markets Inc., and Peloton Interactive Inc.

Fears of a recession or job cuts could give employers an upper hand, but some remain reluctant to tell workers they will be fired for not showing up—even if companies are reserving the right to do so as a last resort.

Other corporate leaders are arming themselves with new data that help to bolster their case for in-person work. Some are linking identification-badge swipe data with separate metrics to show whether employees who go to the office regularly are more productive and engaged, said Zig Serafin, chief executive of cloud-software company Qualtrics, recounting an experience of one of the company’s clients.

What makes the return effort more complex now is that many employees say they appreciate the flexibility that comes with remote work, and hope to retain at least a hybrid arrangement, according to interviews and surveys. Bosses are often more interested in what they see as the benefits of coming in: promoting collaboration, energizing the corporate culture and helping younger employees connect with colleagues.

Some companies say they have had success in trying to balance all preferences. Audio giant Spotify Technology SA said its roughly 8,600 employees, who have been largely remote during the pandemic, returned in recent months in larger numbers than the company expected. That is partly because it hasn’t forced them to do so, said Katarina Berg, Spotify’s human-resources chief. After Spotify offered most employees a choice on their work setup, about 60% chose to work from an office a majority of the time, while roughly 40% decided to remain largely at home.

 

“Psychology comes into play on this,” Ms. Berg said. “Nobody is telling me that I need to come in. It’s just my choice. And I think that is very important for you as a human being, too. I’m smart; I know how I want to do my job, when I want to do my job.”

She added: “If you recruit grown-ups and then you treat them as kids, it’s going to backfire.”

Previous campaigns to get workers together in-person—including one last Labor Day—largely failed, executives said, as Covid-19 cases surged or workers simply ignored return-to-office decrees. The office occupancy in an average of 10 major U.S. cities hasn’t surpassed 50% throughout the pandemic, according to data from security provider Kastle Systems, which tracks badge swipes.

How strongly a company can push for in-person work now depends on an employer’s industry, what competitors are doing and how much leverage companies assume workers have to easily switch jobs, executives say. When Christian Ulbrich, CEO of real-estate company Jones Lang LaSalle Inc., chats with clients or executives at other companies, many ask: What’s it going to take to repopulate workspaces?

“They’re also concerned because, as we all know, that message was sent earlier, and it didn’t really resonate” with some employees, Mr. Ulbrich said.

Apple initially chose a phased approach in which employees at its California headquarters were to come in two days a week starting in April and work their way up to three days a week by the end of May. The company later pushed to September its timeline for adding the extra day.

At Prudential, where hybrid-work arrangements take effect after Labor Day at its New Jersey headquarters and other offices, the commute is likely to be the biggest hurdle to employees returning, said Vice Chair Robert Falzon. Still, the company wants people to come in, he said.

 

“We expect people to work their hybrid arrangement,” Mr. Falzon said. “I am trying to create intentionality and reasons for people to be in the office. If we have a problem [doing that] six months from now, we’ll have to cross that bridge.”

Erik Kostelnik, CEO of the marketing-technology company Postal.io, called his workers back three days a week to the company’s headquarters in San Luis Obispo, Calif., in mid-August. Workers who live within commuting distance, which is about half of the company’s 120 employees, don’t get to choose which days they go in: it’s Tuesdays, Wednesday and Thursdays.

“If you don’t have a standardized time of when you’re in the office and when you have core working hours, it becomes too loose,” said Mr. Kostelnik.

When everyone was working remotely earlier in the pandemic, Mr. Kostelnik said he found that his “A players” were self-sufficient and thriving but his B and C players weren’t benefiting from the knowledge and experience of their colleagues.

“It’s not about productivity; it’s not about the output or making sure you’re getting what you pay for,” he said. “The office is a resource.”

Mr. Kostelnik said there has been no pushback on the attendance requirement and the office is about 80% full on the days people are supposed to be in. He doesn’t have a plan to enforce the policy if employees start slipping.

Workers largely prefer flexibility both in terms of when they work and how often they go to the office, surveys have shown. And while the labor market has been tight, many companies have obliged them: Some firms that initially planned to bring people back three days a week decided to opt for two instead. Others, including cloud-communications company Twilio Inc., initially rolled out hybrid arrangements but changed course and decided to go remote-first.

Some hiring managers say they have been able to attract talent by telling prospective candidates they can work from anywhere. But the number of remote jobs has started to fall, even as demand for remote roles remains high. Around 17% of paid job postings in the U.S. on the professional-networking site LinkedIn offered remote work in July of this year, down from a high of around 20% in March. In July, paid remote jobs attracted the majority of applications, at around 54%.

While worker preferences about flexible work might not budge, people’s willingness to show up at an office may be affected by factors like concerns over proximity bias, the tendency to favor those physically close to you, and worries about job security amid an uncertain economy.When it comes to primary motivators for going into the office, “putting in facetime” rose from 2% last quarter to 10% in the most recent quarter, according to a survey of more than 10,000 knowledge workers from Future Forum, a consortium funded by Slack Technologies LLC, Boston Consulting Group and MillerKnoll.

“That is not good,” said Brian Elliott, executive leader of Future Forum, referring to making an appearance in front of superiors as a reason for going to the office.

Workers should ideally be motivated to go in to collaborate and build relationships with colleagues, Mr. Elliott said, not because they feel it’s important for the boss to see them working.

The same survey also showed that 40% of employees working mostly or entirely in-person said that doing so was helping their career trajectory.

Yuen Yee See, a 29-year-old account director with an advertising agency in New York City, said she’s expected to go into the office two to three days a week after Labor Day. She isn’t planning to go in more than is required.

“Two to three times is a nice balance for me personally,” she said. “You can still do your job equally well when you’re remote.”

Some companies hope new spaces will boost enthusiasm for the office. Hotel giant Marriott plans to hold an opening ceremony for a new headquarters in Bethesda, Md., in mid September. The space has high ceilings, pods of treadmill desks for group meetings and a cafeteria with indoor and outdoor seating.

“Once you get here, the prevailing view I hear is, ‘I want to be here a lot,’ because it’s a great work environment,” said Anthony Capuano, Marriott’s CEO. “In some ways, walking around this building is like a family reunion.

Marriott hasn’t mandated specific days for a return, though Mr. Capuano said he expects office attendance to grow over time—particularly as workers start to feel left out. Already, he has noticed a shift during daylong hybrid meetings. When the in-person group breaks for lunch and rejoins the meeting in the afternoon, laughing together as the meeting resumes, those at home seem to look on with what Mr. Capuano described as the same expression of children peering into a store window in a Norman Rockwell painting. “You can tell they miss some of that unofficial interaction,” he said.

If a Marriott employee refuses to return to the new office altogether, the company would assess the situation based on the business needs and the specific role, he said. A cybersecurity professional would likely be allowed to work from home. But if someone who often interacts with executives asks to work remotely in a different time zone instead of at headquarters, that is likely to get a “no,” Mr. Capuano said.

Ally Financial encouraged employees to return to its offices in recent months. Like many companies, it found that some employees stayed home anyway, said Kathie Patterson, the financial-services company’s HR chief. Ally has hired close to 2,000 people during the pandemic, Ms. Patterson said, and new employees need to learn alongside company veterans.The company sent a message to staff in recent weeks to remind employees that office attendance is expected, and leaders are telling staff to reiterate that point. “There is a real strong push now, after Labor Day, for all employees to come back into the workplace,” she said. “We want a more consistent schedule.”

For those workers who have spent little to no time in the office, managers are reaching out to have individual conversations, Ms. Patterson said, and may give staffers a deadline to make personal arrangements to return. Further action could take place in the year ahead.

“We’re prepared to have a very clear conversation that this position is in-office,” she said. “If they’re not in the office, it could be seen as a form of insubordination, but we have not gotten to that point yet.”