Good morning!
Many executives today are done with managing fully-remote teams and looking to get employees back into the office. Leaders should be careful though—doing so could result in mass departures from top performers, writes my colleague Sasha Rogelberg.
A new working paper by associate business professor Mark Ma and colleagues at the University of Pittsburgh analyzed the LinkedIn profiles of more than 3 million people employed across 54 financial and technology companies on the S&P 500, all of which issued RTO mandates between April 2020 and June 2023. The results are clear: firms that implemented return-to-office (RTO) mandates also lost a significant number of senior and skilled employees.
These companies saw a 14% spike in departure rates immediately after requiring an office return, the paper found. And the employees who did decide to leave were more likely to be middle or top-level managers. Employees who showcased the most skills on their LinkedIn profiles were also more likely to leave due to RTO mandates than others.
“Who will leave? It’s just the people who have other opportunities,” Ma tells Fortune. “And these are the people with a lot of skill, with a lot of experience that corporations want.”
Return-to-office mandates also affected the ability for HR teams at these companies to refill these empty roles. Ma found that among companies that instituted RTO mandates, it took companies 23% more time on average to replace workers. Overall hiring rates also dropped 17% for these companies, showing a lack of desire from candidates to work somewhere without flexible options.
Even though flexible work is wildly popular among employees, many companies are still issuing hardline RTO mandates. Amazon’s Andy Jassy ordered workers to return to the office five days a week beginning in January, and a major backlash from employees hasn’t changed that edict. Executives from Starbucks, JPMorgan Chase, Goldman Sachs, and Disney are all taking similar approaches. And most recently, Elon Musk and Vivek Ramaswamy announced that one of their first goals as heads of the new Department of Government Efficiency (DOGE) is to require federal workers to come back into the office full time. Some of these workers, Ma notes, are likely to leave and switch over the private sector.
“Together, our evidence suggests that RTO mandates are costly to firms and have serious negative effects on the workforce,” the working paper concludes. “These turnovers could potentially have short-term and long-term effects on operation, innovation, employee morale, and organizational culture.”
Brit Morse
brit.morse@fortune.com
