- Hybrid work is here to stay, according to economists from Harvard Business School and the University of Pennsylvania, and employees will vote with their feet if they are denied the “new norm.”
Amazon and AT&T may appear to be winning high-profile battles to bring staff back to the office, but flexible workers are quietly prevailing in the remote-work war.
With the pandemic behind us, some executives argue that remote work has outlived its usefulness. Yet the data tells a different story. The economy has outperformed expectations, hybrid-friendly companies are seeing better stock performance, and productivity is up.
So why push for a return to full-time office work when flexibility is driving success? The answer, at least for some companies, lies in sunk costs: if millions were spent on high-end office spaces, the C-suite expects them to be used. Others see RTO as a quiet way to cut staff without layoffs—an approach employees are increasingly aware of.
Experts agree the debate is largely over: hybrid work is here to stay.
Economists point out that flexibility is critical for attracting and retaining talent, and businesses that prioritize real estate over their workforce may soon find themselves with empty desks.
Human capital vs office space
Any CEO—whether they’re a fan of hybrid work or not—would be hard-pressed to argue that office footprint is more critical to a business’s future than attracting and retaining top talent.
This is the opinion shared by Raj Choudhury, an associate professor at Harvard Business School.
Choudhury told Fortune: “My prediction is eventually every company and every company leader will have to accept [remote work].”
Andy Jassy, CEO of Amazon, would disagree—he’s just told his hundreds of thousands of employees they need to be back in the office five days a week. His staff aren’t happy, in fact more than seven in ten have said they’re looking for work elsewhere.
Choudhury said the outcome is clear: “This is a simple economic argument about talent. There are enough companies—including very large companies like Microsoft—that have realized Amazon’s loss is Microsoft’s gain.
“In the Seattle area if a large number of people are going to be looking for jobs out of Amazon, where will they go? Many of them will end up at Microsoft. There are enough smart CEOs out there who understand that rigidity has a cost.”
It seems these lessons are already being learned.
In October 2023, 63% of CEOs KPMG surveyed predicted a full return to in-office work by the end of 2026.
By April 2024, when KPMG spoke to CEOs of U.S. companies turning over at least $500 million, it found just one-third expected a full return to the office in the following three years.
It seems Nvidia’s Jensen Huang read the room early on. The CEO of the AI darling—riding high on an 171% increase in share price this year to date—skipped RTO mandates entirely, ensuring the company retains the brightest talent in a competitive market.
This trend is only going to become more pronounced adds David Cook, an anthropologist at University College London: “With the younger demographic the expectation is even stronger that they want to be able to work remote.
“It’s definitely a culture war. Once the economic context changes and employers are competing for employees, flexible working, hybrid working, working from home, will be seen as one of the attractions.”
The Elon argument
The vanguard of the business elite may argue that coming to work is a checkbox of adult life—which is why federal workers now under the watchful eye of Tesla CEO Elon Musk are so concerned.
But Musk’s motivation is obvious.
Writing in The Wall Street Journal alongside DOGE co-lead Vivek Ramaswamy, Musk declared: “Requiring federal employees to come to the office five days a week would result in a wave of voluntary terminations that we welcome.”
The Tesla CEO might be saying what other bosses are thinking, added Choudhury, but it’s not a tactic which will wash with staffers for long.
Choudhury explained: “You can try these gimmicks a couple of times but employees will see through this. It’ll be serious reputational damage if you continue this path of [not] being able to attract and retain talent.”
The other problem with this method is bosses have absolutely no power over which staff decide to move on because of an RTO mandate.
Research has found that in-office mandates are costing companies high performers, as pointed out by Nick South, managing director of people and organization practice at the Boston Consulting Group.
“It’s much harder if you’re trying to reshape the size of your workforce to do it through this sort of device and keep control of who goes and who stays,” South tells Fortune in a phone call. “Most organizations I work with when they have to do these sorts of things really try and do it in the right way, but also make sure that they do their best to keep the best people and help them see this is where they want to be for the future.”
Stick to the plan
South’s continuing advice to leaders is to establish the goalposts for staff and stick to them.
Not everyone got the memo—just take Mark Zuckerberg, who said during the pandemic that Meta would be “the most forward-leaning company on remote work.” Yet by the summer of 2023, employees who weren’t in the office three days a week risked being terminated.
Data indicates that while headline-grabbing companies might feel powerful enough to change the rules for their staff, the majority of employers have settled into a steady rhythm.
Data from the Flex Index—which analyses employer-provided data from more than 8,000 businesses in the U.S.—found that throughout 2024, the number of businesses offering work location flexibility has stabilized at around 70%.
This is a trend that Peter Cappelli, a professor of management at the University of Pennsylvania’s Wharton Business School, loosely expects to continue.
“Usually a safe bet is tomorrow will look like today, only slightly more so,” Professor Cappelli tells Fortune.
The biggest problem in the RTO battle is a fundamental lack of communication, the academic added: “The bigger problem is that top executives don’t really see management as being what they do—they see cutting deals, playing in finances, talking to investors, M&As—but the nitty gritty of managing our workforce is pretty low on their list of things they want to do.
“The problem they created for themselves was that when we started the pandemic they did a lot of appropriate and smart things … and were motivated by the fact that they had no alternative. Then, after that, the companies were trying to do the right thing and said: ‘We’ll be back by the summer. Oh no, by fall. OK, Labor Day.’ They got irritated by the pandemic so they stopped saying anything. That’s the problem.
“Now they’ve gone four years with this model without telling anybody what the plans were. So, of course, it’s the new normal … and taking things away is really irritating for people, especially if you haven’t told them anything about it or what your goals are.”
