Return to Office

A potential recession hangs overhead: Are RTO mandates to follow?

A recession could trigger a rebalancing of power between workers and companies. In that reshuffling, will companies call their employees back to work?
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· 5 min read

It’s no secret that executives at Silicon Valley companies, including Tesla, Apple, and Google, as well as Wall Street leaders, want workers back at their desks, despite the current waves of Covid-19 and some employees’ disinterest in returning. If the CEOs of some of America’s largest companies had Tony Soprano-style therapy sessions, they might spend them punching air and bemoaning their inability to coax employees back to the office.

With a recession potentially looming, and some tech companies instituting layoffs or hiring freezes, CEOs might sense that workers’ bargaining power for flexible work arrangements stands on shaky ground.

Just last week, Elon Musk, CEO of Tesla, ordered his employees back to the office. If they don’t want to return, Musk tweeted, they can “go pretend to work somewhere else.” We asked workplace experts from SHRM, LinkedIn, Gartner, and Korn & Ferry to weigh in about whether we could start seeing other companies use the current economic uncertainty as leverage to finally end the so-called Great Resistance to RTO.

Party Work like it’s 2019

SHRM president Johnny C. Taylor Jr. and Dan Kaplan, senior client partner at Korn Ferry’s CHRO practice, believe a recession could help some CEOs put an end to remote work.

“CEOs don’t like it. Period,” Taylor said, referring to remote work.

Taylor said that in conversations with CHROs, they’ve expressed that while they recognize that employees can work at home, they view the arrangement as suboptimal. He said employees who are used to working from home are “about to run into a wall, because the companies are going to draw the line,” potentially using an uncertain economy for leverage.

“Based on what I’m hearing from everyone, you’re going to see more companies lay it down and say, ‘Listen, you can’t make the argument that it’s unsafe, because you’re doing everything else you want to do,’” Taylor said. “‘You’re flying, you’re going to malls, you’re doing everything else. So you can come to work.’”

Kaplan agreed that the CEOs who may have “very reluctantly agreed” to hybrid work arrangements while “desperately” wanting workers in the office could take advantage of a “tightening labor market and a tightening economy.”

“It’s been purely an employee- and candidate-driven market for the last 20 months or so. When the market shifts, it becomes a company-led market, and so it puts the control back in companies,” Kaplan said.

In Taylor’s opinion, leadership could potentially frame the call back to work as a bid to survive an economic downturn.

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“We’re not saying come back to work to be punitive. We’re coming back to work because we think we’re going to walk into an uber-competitive environment during an economic downturn, and we need everything going our way—which means innovation, collaboration, efficiency, and having us all in these four walls, we think, will enhance our chances of surviving this economic downturn,” Taylor said.

Also, have you looked up your office on Zillow? It’s expensive!

Others are less convinced that a potential recession could be the death knell for remote work. Brian Kropp, VP of research at Gartner, told HR Brew that in a recession, companies could free up money by “pushing toward radical flexibility.”

According to Kropp, on any given day at companies that allow employees to come in whenever they want, fewer than 50% of employees come to the physical location.

“That means you can actually decrease your real-estate footprint by close to 50% and still have enough space for everybody,” Kropp said, noting this works particularly well if employers assign certain teams to come in on certain days of the week.

“It’s not just what employees want, but that’s where companies are able to achieve cost savings when it comes to preparing for a potential recession,” he added.

Kaplan agreed, noting that while some companies may be quick to call workers back, in every recession he’s lived through, employers “wish they had less real-estate space, and some tried to close it down.” If CEOs want to “yank…people back into the office for five days [a week],” Kaplan thinks the decision will hinge on who wins these possible “battles”: the CEO or the CFO hoping to “shed fixed real-estate costs.”

Don’t expect to turn your home desk into yet another “stuff chair”

Whatever direction companies choose to take in the short term, Guy Berger, principal economist at LinkedIn, believes nothing will change the long-term trend—remote work in some form is here to stay.

“Workers demand, the appetite for [remote work] won’t decrease, but employers might become less generous. I do think, though, and I think this is really important, remote work and hybrid work are likely to become a permanent fixture in the workforce, even after…the next downturn,” Berger said. “It’s part of the benefits package that workers are thinking about. That will not change.”—SV

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Quick-to-read HR news & insights

From recruiting and retention to company culture and the latest in HR tech, HR Brew delivers up-to-date industry news and tips to help HR pros stay nimble in today’s fast-changing business environment.