IT Operations

RTO mandates don’t help businesses succeed, but decimate staff morale, study finds

“If you look at all these RTO firms, most of them did have a stock market price crash,” says the University of Pittsburgh’s Mark Ma.
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3 min read

Return-to-office mandates don’t actually appear to improve business performance—and the data suggests they actually help execs at ailing companies scapegoat employees, according to a new study.

Mark Ma, an assistant professor at the University of Pittsburgh, and Yuye Ding, a student at its Katz Graduate School of Business, analyzed the performance of 137 firms on the S&P’s 500 index that had imposed return-to-office mandates.

The findings come at a time when many tech companies, including Amazon, Apple, AT&T, Google, and others, have tried to force workers back into the office on a regular basis. Dell and IBM notably cracked down on remote work earlier this year, despite surveys showing many CEOs regret such mandates and have begun to de-prioritize the issue.

The researchers found no “significant changes in firm performance in terms of profitability and stock market valuation after the RTO mandates.” Instead, study found evidence of the opposite: That RTO mandates do little to fix the situation at ailing firms, and may be making employees miserable in the process.

The research also sheds doubt that managers actually believe the RTO mandates will fix anything broken at a firm in the first place, Ma told IT Brew. He explained that while corporate leaders should have access to data showing that the impact of remote work on productivity is unclear at best, and plenty of evidence of backlash from employees, the researchers didn’t find any evidence CEOs with big stakes in a firm were any more likely to demand staff return.

“If a CEO owns a company they should do the thing that’s best for the firm’s performance and stock market value,” Ma told IT Brew. “But we do not find any association.”

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In fact, the study found firms owned by institutional investors “more likely to see through managers’ ‘blame game’” were significantly less likely to impose RTO mandates. Analysis of stock market performance also showed no evidence other investors expected RTO mandates to make much of a difference, according to Ma.

“If you look at all these RTO firms, most of them did have a stock market price crash,” Ma said. “The CEO, the top executives, face huge pressure from investors, they need to do something and they need to find a result to explain to the investors why their firm is not doing good.”

“A scapegoat for them is the lazy employees,” he added.

The study also found employees working at the firms which implemented RTO mandates saw “significant declines” in ratings of job satisfaction, work-life balance, and corporate culture. Tech workers are already some of the most prone to burnout, as well as very open to new jobs, so mandates run the risk of being the breaking point for many.

On the upside, Ma said, RTO mandates likely created a rare opening for smaller companies to snatch up top-tier talent. That’s a big risk when it comes to tech and IT talent, as surveys have shown remote tech workers have high expectations to continue doing so. (Just 2% of respondents to ITPro Today’s 2024 salary survey ranked “ability to work in an office environment” as a job priority.)

“It’s quite clear that the most talented employees want better, greater flexibility and a better work-life balance,” Ma said. “This actually represents a great opportunity for smaller firms.”

Top insights for IT pros

From cybersecurity and big data to cloud computing, IT Brew covers the latest trends shaping business tech in our 4x weekly newsletter, virtual events with industry experts, and digital guides.