Return-to-office mandates continue to trickle in, and every now and again a prominent employer makes a headline-grabbing decision that all employees must be back in office. The news articles focus on the obvious impact of RTO mandates: the threat to dual income families successfully managing school and daycare with career-advancing employment; loss of quality of life to nonproductive commute time. These are real. But RTO mandates also indicate something else: they are a public acknowledgement of an erosion of trust within a company.
Every company is a society unto itself, with values and social norms that determine how people behave and interact. There are high-integrity and low-integrity workplaces, the distinguishing characteristic being the extent to which people are “free from corrupting influences or motives”. Integrity manifests itself in how people interact with one another, in commitment to craft, and in the administration of the business itself.
First is interpersonal integrity, things that define whether the company is a toxic or fulfilling place to work. Do people take credit for the work of others? Do people want to look good to a point they will make others look bad? Is it safe for a person to acknowledge things they do not know, or to accept responsibility for a mistake?
There is operational integrity, things that define a firm’s commitment to excellence. Does recruiting pursue competent candidates or are they just filling vacancies? Do salespeople inflate the pipeline with low-probability or worthless leads? Do colleagues complete their work without taking shortcuts that could impair results? Does finance send invoices in the hopes the payer will pay without scrutinizing the bill?
Administrative systems indicate whether a workplace is high- or low-integrity because they communicate the extent to which trust is extended to individuals. Are the administrative systems an enabling mechanism for labor or a control mechanism over labor? For example, how highly restricted are employees in how they incur travel expenses? Is performance measurement designed to drive good practice, or confirm adherence to practice? Are annual reviews designed for personal development and advancement, or as a means of gathering structured data to rank order the workforce?
Societies work best when they run on trust. Companies cannot escape the need to spend money to demonstrate or investigate compliance - violations of trust are unfair and can be expensive when they occur - but it is not value generative expenditure. The more a company invests in controls and surveillance to compensate for a lack of trust, the higher the operating costs to the business. Conversely, the lighter the controls on labor, the lower the administrative burden, the greater the productive and creative output from labor. A company with few - ideally no - bad actors - has little real reason to incur cost to compensate for a trust void.
Which brings us back to the RTO mandates.
One of the primary justifications given for RTO is to increase worker collaboration with an eye toward driving creativity and innovation. That sounds plausible as most of us have had an experience where a creative solution came together quickly because of high-bandwidth, in-person collaboration. But if in-person collaboration is so compelling, having globally sourced teams and departments is an impairment of convenience, not a strategic advantage for sourcing best-in-class capability. Nor would firms severely cut employee travel budgets in the face of declining revenues - isn’t that precisely the time a company needs more innovation? Toss in the free productivity harvested from the individual laborer from flexible working, and justifying RTO because of a “paucity of innovation” is a bit of a stretch.
The more likely explanation is a desire for greater workforce control. Working from home proved that a lot of jobs can be done from anywhere. Knowledge is transferable. It isn’t a big stretch that jobs that can be done from anywhere can be done by anyone from anywhere. Physical supervision does not improve management’s ability to provide higher fidelity performance profiles, but it does allow management to assess performance with less friction. Is this person executing at the highest level of throughput, or are they dogging it? Is that person really an expert with deep knowledge, or are they expert at gaming the system? Spot productivity audits are a lot easier in cubeland than in Teamsland. If - when - the edict comes that we have to contract operational labor spend, middle managers may not have better data than they would have with a distributed workforce, but they'll have no excuse for not having it.
Why a push to increase control now? Because corporate income statements are still being buffeted about. Interest rates have cooled off but remain generationally high, depressing corporate capital spending. Price increases have masked drops in unit sales volume. Cumulative inflation has increased input costs. Management has little control over the topline, so it must exercise what control it can over the bottom line.
Labor is a big input cost, and labor working from home is an invisible workforce. Income statement pressures twined with future economic uncertainty make that invisible workforce an easy target. When asked about the number of people who work at The Vatican, Pope John XXIII is credited - probably erroneously - with having replied “about half”. It’s not hard for a COO to be cynical about labor productivity given supply chain, labor, price and cost roller coasters of the last four years.
Before RTO came shelter-in-place necessitating work from home. A lot of people who had never worked in a distributed fashion figured out how to make it work. They’re certainly not heroes in an altruistic sense as they were motivated by self-interest: preserving the company preserved the job. Still, this cohort kept the internal workings of the business functioning during a period of unprecedented uncertainty. That, in turn, merited an increase in operational trust (they responded with excellence) and interpersonal trust (they will do the right thing). RTO negates all of that earned trust.
