Mark Ma, Associate Professor of Business Administration, and Yuye Ding, PhD Student
Situation: Since early 2020, the COVID-19 pandemic has dramatically reshaped the landscape of work. Many individuals transitioned to remote work to mitigate the risk of virus transmission in crowded office environments. This shift also granted workers greater flexibility and eliminated the need for time-consuming commutes. After the threat of COVID-19 began to recede since mid-2022, many companies reconsidered their workplace policies. While many firms, such as Nvidia and Airbnb, are sticking to the working from home (WFH) mode, a lot of others, such as Amazon and Disney, have implemented or are considering return-to-office (RTO) mandates.
Key Findings: Our findings are consistent with employees’ concerns that managers use RTO for power grabbing and blaming employees for poor performance. We provide evidence that RTO mandates hurt employee satisfaction but do not improve firm performance. We believe our empirical evidence can better assist managers and shareholders in assessing the value of adopting an RTO mandate and offers guidance for firms in crafting effective workplace policies after the pandemic.
Methodology: The researchers identified Standard and Poor’s (S&P) 500 firms with RTO mandates and then examined the impact on employees, including job satisfaction data from Glassdoor. They used difference-in-difference regressions to determine changes in employees’ ratings of overall job satisfaction, work-life balance and senior management after a firm announced an RTO mandate. The consequences for shareholders were then assessed through research of the mandate’s impact on financial performance and firm values.
Recommendations: Instead of forcing everyone back to in-office work, high-performing employees who perform well at home should be allowed to continue at home. This would benefit the employee as well as the firm in the long-term through retention of high-performing employees, who can more easily find other jobs. Monthly team-building activities in person can help to maintain company culture, which can be essential for problem-solving and brainstorming new ideas. Ma said in a Business Insider interview: “I think firms need to treat the employee more humanely and also give them more flexibility. I see no reason for these big firms to treat their employees more harshly because they’re working from home.”
Researchers: Mark Ma, Associate Professor of Business Administration, and Yuye Ding, PhD Student – both from the University of Pittsburgh’s Joseph M. Katz Graduate School of Business
Additional details: SSRN Research Summary; Business Insider article; WCBS-New York radio interview
