Some Firms Backtrack On Work-From-Anywhere Policies

Last week, software titan Salesforce — which owns Slack, the tool that enabled workplaces everywhere to be “from anywhere” the instant the pandemic hit — joined the ranks of Snap, Twitter and Comcast in telling some employees to return to in-person work after previous work-from-anywhere policies.

Companies are continuing to tinker with their return-to-office policies, with a focus on which version of hybrid work will help them to retain employees in a bid to boost productivity and revenues as employers anticipate a mild recession in 2023. Workers may find themselves on the receiving end of stricter enforcement of in-person working days next quarter, experts told Bisnow, as employers seek to crack down on remote work in the hopes of boosting productivity and profit.

“I think a lot of it depends on earnings and how companies are doing, especially with a looming recession," said Julie Whelan, CBRE's head of occupier research for the Americas. "And that's when you'll start to see companies maybe change stance, if they feel that their performance is faltering and that it has something to do with folks that are not coming into the office.”

Tech companies’ profits swelled during the pandemic, but wave after wave of brutal layoffs have made headlines in recent months as executives grapple with disappointing growth amid economic headwinds. Calling employees back to the office could be one reaction to the confluence of smaller-than-expected revenues and economic uncertainty that several tech firms have demonstrated, Whelan told Bisnow.

Snap pivoted away from its remote work policy last month when CEO Evan Spiegel told employees that they would be expected to be in the office 80% of the time. Weeks earlier, Twitter instigated an even more dramatic change, swapping its work-from-home “forever” policy for a mandatory, 40 hours in-person week under new owner Elon Musk.

Even outside of the tech world, U.S. Bank CEO Andy Cecere last month told employees, most of whom have been working from home, to come back three days a week after collaboration and culture had eroded.

With economic growth slowing and the threat of a recession looming, experts told Bisnow that most companies are tweaking their return-to-office policies, doubling down on enforcing set amounts of in-person days after months of having guidelines — which have often been voluntary to this point — in place. But despite office landlords’ hopes that a recession will mean bustling offices again, most employers are looking at custom hybrid solutions, experts said.

“There's always this wishful thinking for returning to the past. We have never ‘returned’ to the past,” JLL Executive Managing Director and Global Future of Work Leader Peter Miscovich said. “I think we have to be very careful of real estate developers and landlords predicting their own futures.”

Some companies might look at fully remote work if next year’s forecast economic downturn hits revenues hard at a moment when their leases are expiring, Arpit Gupta, an associate professor of finance at New York University's Stern School of Business, said on the Bisnow Reports podcast this week.

“Recessions are times historically when employers don't want to take on leases, that was true even before the pandemic,” he said. “Having additional options, being able to leave the office and have your employees work at home, makes that choice a little bit easier.”

Salesforce announced its policy in the same breath as announcing that its year-over-year annual revenue had increased by the smallest amount during Q3 2022 than any other quarter since the company went public in 2004.

In-person work could particularly benefit some of Salesforce's younger employees, whose professional skills would get a boost from mentorship by more senior employees, CEO Marc Benioff said during the firm's quarterly earnings call last week. But operational staff are another group affected by Salesforce's return-to-office mandate — which was announced just before the company revealed its diminished growth levels.

However, for the most part, remote-first companies like Salesforce have always been in the minority, experts said.

“These companies that have said that they're going to be fully remote, or that have really promoted work-from-anywhere policies, are reversing on that a bit now,” Whelan said. “It's just a slight course correction that is bringing them more in line with, I'd say, where we see the majority of companies today.”

Between 70% and 80% of office tenants surveyed by CBRE have consistently said they would prefer a hybrid scenario, where workers are in-person at least half the time, according to Whelan. For the most part, companies are still tinkering with their hybrid policies, she said.

Hybrid and remote work is the preferred choice among most workers, according to a Stanford University study this year that found workers said they were happier and more productive when at home compared to at the office.

But even with a mild recession remaining likely, many companies learned the hard way during the pandemic how difficult it is to replace previously laid-off talent when the economy rebounds, Whelan said. That makes retention, and therefore the right hybrid work policy, all the more important.

“I joke that no brand of coffee is enough for somebody to spend an hour driving into the office,” said Damla Gerhart, Avison Young principal and managing director for Chicago, who added that real-life interactions with colleagues can offer motivation to adhere to hybrid work policies.

She expects to see more policies announced in the coming months — with more teeth — as companies try to figure out their long-term strategies.

“We've seen sort of a little bit of a shift,” she said. “Let's say that you've been working under a hybrid policy for the last year, but they haven't really been enforcing it. Now they're saying, ‘OK, we have this policy, we're really going to start enforcing it with a bit more rigor.’”

Workplaces that are serious about retention should pay attention to inclusivity, Houston-based ARVO Realty Advisors Associate Director Tiffany Ryland said. Many companies rushed to HBCUs in an effort to diversify their new hires in months following George Floyd’s murder in 2020, but have struggled to retain those new hires, she said.

“The turnover is high. You're seeing more people not being able to stay, or not wanting to stay, because the environment is not inclusive,” Ryland said. “And so, when we're talking about the return to work, there has to be an intentional initiative making sure that you have cultivated an environment from the top down that incentivizes and makes people feel comfortable when it comes down to the diversity within your office — especially if it's something new.”