Hybrid work is here to stay, as noted by economists from Harvard Business School and the University of Pennsylvania, and employees are likely to seek other opportunities if they are denied this “new norm.” While companies like Amazon and AT&T seem to be successfully pushing for a return to the office, flexible workers are quietly winning the battle for remote work. With the pandemic now in the past, some executives argue that remote work has lost its relevance.
However, the data suggests otherwise: the economy has exceeded expectations, companies that embrace hybrid models are experiencing improved stock performance, and productivity is on the rise. So, why the push for a full return to in-office work when flexibility is clearly contributing to success? For some companies, the answer lies in sunk costs; having invested millions in premium office spaces, executives expect these spaces to be utilized.
Others view the return-to-office (RTO) strategy as a subtle means of reducing staff without resorting to layoffs—an approach that employees are increasingly aware of. Experts largely agree that the debate is settled: hybrid work is here to stay. Economists emphasize that flexibility is essential for attracting and retaining talent, and companies that prioritize their real estate over their workforce may soon find themselves with vacant desks.
HUMAN CAPITAL VS OFFICE SPACE
Any CEO—regardless of their stance on hybrid work—would struggle to argue that office space is more vital to a company’s future than the ability to attract and retain top talent. This sentiment is echoed by Raj Choudhury, an associate professor at Harvard Business School. Choudhury stated to Fortune: “My prediction is that eventually every company and every leader will have to accept [remote work].” Amazon’s CEO, Andy Jassy, would disagree; he has recently informed his hundreds of thousands of employees that they must return to the office five days a week.
Unsurprisingly, many of his employees are dissatisfied, with over 70% indicating they are seeking employment elsewhere. Choudhury remarked that the situation is clear: “This is a straightforward economic argument about talent. There are plenty of companies—including major players like Microsoft—that recognize Amazon’s loss is Microsoft’s gain. In the Seattle area, if a significant number of people are looking for jobs outside of Amazon, many will likely end up at Microsoft. There are enough savvy CEOs who understand that rigidity comes with a cost.”
These lessons seem to be taking hold. In October 2023, 63% of CEOs surveyed by KPMG anticipated a complete return to in-office work by the end of 2026. However, when KPMG spoke to CEOs of U.S. companies generating at least $500 million in revenue by April 2024, only one-third expected a full office return within the next three years. Nvidia’s Jensen Huang appears to have recognized this trend early.
The CEO of the AI powerhouse—whose share price has surged by 171% this year—opted out of RTO mandates entirely, ensuring that the company retains top talent in a competitive landscape. David Cook, an anthropologist at University College London, adds that this trend is likely to become even more pronounced: “With younger generations, the expectation for remote work is even stronger. It’s definitely a cultural battle. As the economic landscape shifts and employers compete for talent, flexible working arrangements will be seen as a key attraction.”
THE ELON ARGUMENT
Some members of the business elite may argue that showing up to work is a rite of passage for adulthood—an opinion echoed by federal workers now under the scrutiny of Tesla CEO Elon Musk. Musk’s motivations are clear. In an op-ed for The Wall Street Journal, co-authored with DOGE co-lead Vivek Ramaswamy, Musk stated: “Requiring federal employees to come to the office five days a week would lead to a wave of voluntary resignations that we would welcome.”
While Musk might be articulating what other leaders are thinking, Choudhury points out that this approach won’t resonate with employees for long. He explained: “You can employ these tactics a few times, but employees will eventually see through them. Continuing down this path could lead to serious reputational harm when it comes to attracting and retaining talent.”
Another issue with this strategy is that employers have little control over which employees choose to leave due to an RTO mandate. Research indicates that in-office requirements are causing companies to lose high performers, as noted by Nick South, managing director of the people and organization practice at the Boston Consulting Group. “It’s much more challenging to reshape your workforce using this method while trying to maintain control over who stays and who goes,” South told Fortune during a phone conversation. “Most organizations I work with, when faced with these situations…”
