according to study after study working
from home leads to more efficient
workers less staff turnover higher
quality work and it's cheaper for the
business and its workers so why the do
so many companies want people back into
the office
the days of working from home are fading
for more employees now being called back
to the office before covid-19 high-tech
companies were already experimenting
with the advantages of remote work a
peer-reviewed report from an
unidentified NASDAQ listed company ran a
trial where half of their call center
workforce was randomly selected to work
from home and the other half would
remain in the office the group given the
opportunity to work from home had higher
customer satisfaction took 13 more calls
and suffered 50 percent less staff
attrition which is a big issue for call
centers which typically struggle with
high staff turnover a follow-up study
done on workers in a wider selection of
roles including Finance marketing and
software development had similar results
they compared staff working full-time
from the office with staff working
hybrid schedules from home and the
office that study found that hybrid
workers were eight percent more
efficient at their jobs and had turnover
rates 35 percent lower than staff
working in the office full-time if
businesses want to get the most out of
their workers the results are clear more
work from home is more better working
from home is also cheaper for the
business companies that want all of
their workers in the office will pay
more for utilities like electricity
maintenance security and internet that
workers would happily provide themselves
if they were allowed to work from home
it's rare that companies turn down
better results for less money but in
this case there are four reasons that
more are demanding their staff come back
into the office the first reason is that
a lot of companies are not doing so well
right now interest rates are high
investors are not throwing money around
like they were in 2020 and companies
need to make cuts the easiest and
largest ongoing expense for most
companies are their employees if a
business is getting less work than usual
laying off staff is a prudent business
decision if a business can cut expenses
at the same rate as lost Revenue then it
may be able to maintain profits to keep
the shareholders happy if a business is
making less Revenue then it also means
there's less work to do so it just won't
need as many staff the problem is that
laying off staff signals to the market
that the company is struggling which can
affect the share price make it harder to
generate new business this and make it
harder to hire new staff in the future
nobody wants to work for a company that
lays off a lot of people on a whim and
customers don't want to work with a
company that looks like it might go out
of business what companies really need
is a way to get rid of Staff without
formally laying them off Business
Leaders have already seen the studies
and they know that forcing people to
work from the office leads to higher
Staff turnover which in this case is
exactly what they want uh but at some
point you've got to make a decision to
say look this is our policy you have to
return to work and be okay with the idea
that some employees may say well if
that's the case I just can't work for
this company anymore investment Banks
like JPMorgan and Goldman Sachs which
have seen declining revenue from less
corporate deal activity are forcing all
of their staff to return to the office
full time their official communication
stress the importance of face-to-face
interactions with clients and co-workers
senior investment bankers from both
firms who love to talk about how much
harder they worked when they were
analysts accidentally said the quiet
part out loud when journalists contacted
them about their firm's decision to
bring everybody back a senior manager at
Goldman declared to the financial times
that Goldman does not want to hire
people for whom the most important thing
is how many days they have to spend in
the office at the moment this plan could
backfire for businesses unemployment is
still low and it's easy for high
performing employees to find a new job
so managers using this tactic need to be
careful or they will be left with
nothing but their worst employees an
easy way to get rid of Staff without bad
publicity is just the first reason so
it's time to learn how money Works to
find out why you are going to be forced
back into the office even if it makes no
business sense this week's lesson was
sponsored by blinkist blinkist is a
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forward slash how many works
the second reason that companies want
their staff back in the office despite
all the advantages that working from
home offers is that they are exposed to
real estate that is becoming useless
everyone's saying you got to come back
to the office now it's just like it's
all just giant propaganda to keep real
estate commercial real estate market up
the value of Office Buildings has
slumped as people shift to working from
home which is a problem for the
companies that have risk exposure to
that market around 30 percent of major
public companies in America own the
office building they are headquartered
in this real estate represents a major
asset on the balance sheet for those
companies Apple Park and Cupertino cost
five billion dollars to construct which
is a major investment even for a company
like apple investors pay close attention
to how efficiently companies utilize
their assets a big building that is
sitting empty is not doing anything to
return money to shareholders so there's
pressure on company leadership to sell
these assets the problem is company
Executives trying to sell an office
building in today's market would likely
take a significant loss on the estimated
value listed on the balance sheet this
loss would be considered a bad look for
for the CEO when it's time for the board
to decide their bonus instead of selling
an asset that's not being used in
realizing the loss a better play for the
CEOs to make sure the asset is being
used if an office is full then company
leadership can justify the capital tied
up in a building as it offsets the rent
they would have to pay if they didn't
own the building most major companies do
rent their offices but that can actually
put even more pressure on company
leadership to get people back in the
office the average rental term for
office space is much longer than the
average rental term for a residential
home office spaces require fit outs to
make them ready for the companies that
will be occupying them office spaces
often rented as nothing more than an
empty concrete shell and the Landlord
and Tenant will negotiate how the office
will be built out to fit the needs of
the company the typical cost to fill out
a high-rise office after the core of the
building has been constructed is between
250 and 500 dollars per square foot if
managers want their offices to look like
the one in suits it will cost even more
usually the building owner pays for the
fit out so they want to ensure their
corporate tenant is going to pay rent
for a long time which is why office
leases last much longer than residential
leases companies that still have their
leases from before kovid will be paying
money every month for something they are
not using but can't get out of a lot of
company managers have decided if they
are paying for it they might as well use
it because the cost benefit of working
from home disappears if the company is
still paying for an office according to
a 2022 office space report on 247
companies conducted by Robin powered
found that only 11 percent of companies
were fully utilizing their office space
46 percent of the company surveyed were
using less than half of their available
office space and another 46 percent of
companies surveyed said that they plan
to reduce office space within the next
year but that is difficult with
long-term leases one of the only options
left to a lot of companies is to default
on their leases to open negotiation with
the building's owner some perfectly
healthy companies have started to do
this to try and get rid of a major
ongoing expense banks are another group
with significant exposure to Office
Buildings 3.8 percent of Wells Fargo
loans are secured against commercial
office space this represents 37 billion
dollars in loans or roughly a quarter of
the company's market cap banks are under
pressure to make sure that offices
Remain the standard working environment
or they will need to do significant
write Downs if defaults continue the
third reason that companies are pushing
people to come back to the office is
because the power that an office can
give managers and a lot of that has to
do with employers starting to pull back
starting to say we are still hiring but
we want you on site we want you in place
some managers don't actually have that
much to do besides stand over their
subordinates and look important it's
easy to fill a day with redundant tasks
in micromanagement in an office but it's
harder to do it online senior managers
at companies making the decision to
bring people back to the office are also
going to be more comfortable with work
in person than work done online the old
soft skills of business like a firm
handshake and small talk with colleagues
are less relevant online senior managers
in the penultimate years of their career
have spent most of their lives learning
how important these skills are and for
many of them it's how they got to their
level to begin with straight laced old
school business managers are being
confronted with a new work culture of
online team meetings sat in by someone
in their bathrobe and a co-worker's cat
professional office culture is something
that managers use as a powerful tool for
extracting the most out of their
subordinates people stay late at the
office to get extra work done in large
part because they know sitting at their
desk in the dark hours after everybody
else has left is a good look and
demonstrates to their superiors that
they are willing to make sacrifices for
their career if on the other hand you
are someone that works from home you
won't get nearly the same recognition
for working on something after hours
because you are sitting around at home
in either case anyway a large motivator
for Upward career advancement in the
past has been the perks that come with
Senior Management in a corporate role if
you come into work every day and sit
down at a shared desk in an open plan
office that has no privacy where you sit
short ordered a shoulder with noisy
colleagues you would be willing to work
extra hard for a promotion if the job
gave you your own office with walls and
enough room to stretch out without
annoying your neighbors according to
Studies by Mackenzie the incentive
Research Foundation and Princeton
non-cash incentives have more of an
impact on long-term work motivation than
cash incentives so even though we all
say that we wouldn't just prefer the
extra money the science says we wouldn't
the research has presented four reasons
why the first reason is that non-cash
incentives are easier to see every day
you go into work you will see an
executive's private parking spot their
large office and their personal
assistant that fetches them coffee if a
company just paid that executive more
money instead of offering them visible
workplace perks you would never see
their big house or retirement savings so
you would be less career motivated the
second reason is that non-cash
incentives are easier to talk about if
you get given your own corner office
it's easier to talk about than a large
salary increase workers should talk
about their salaries more but there is
still a taboo about it which company
management is more than half happy to
keep in place so for now people get to
brag about their new office more than
their big bonus the third reason is that
while people say they would prefer extra
money it quickly becomes their new
normal and the higher income level
becomes their new expectation do you
remember what your salary was 10 years
ago probably not but you would probably
remember where you worked the fourth
reason is that people just like
recognition and even small incentives
like their face on the wall for employee
of the month goes a long way most of
these non-cash Awards need some kind of
physical presence to work and working
from home quickly makes a role far more
transactional and easily comparable with
another role where the worker will sit
behind the same desk and work the same
hours just for different money
additionally since most of these perks
go to senior managers in a business they
are more likely to want to return to
work themselves and make the same
decisions for everyone else according to
a study of 10 000 workers in the summer
of 2021 of Executives who primarily
worked completely remotely throughout
the pandemic 44 said they wanted to come
back into the office every day just 17
percent of their employees said the same
it's nicer to go back to a comfortable
office that you oversee than it is to go
back to a shared desk that gets
micromanaged managers are also just
people and they are more reactive to
negative news than positive news a
manager is more likely to remember that
one employee that played video games at
home all day when they should have been
working then they are to remember the
hours saved by cutting out commute for
their entire team leading to small
incremental improvements when surveyed
most managers believe that working from
home had a negative impact on their
team's output even though the data
suggested exactly the opposite the use
of employee monitoring software has
increased by 66 percent in the fall of
2021 and even as workers return to the
office managers have remained on average
more suspicious of their subordinates
collecting employee information and
getting rid of underperforming staff is
one of the reasons that companies have
become obsessed with data but it's not
the most profitable reason to find out
what is go and watch my video on how
they have turned your information into a
trillion dollar bank account and how
they are planning to cash it out also if
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