The analysis suggests that it depends on the type of culture that leaders want to build.
"It's not just about productivity metrics," Uber CEO Dara Khosrowshahi recently told employees after the ride-hailing company required everyone to return to the office at least three days a week.
"It's about building the culture that will take Uber to the next phase of growth."
Khosrowshahi is not the only executive to invoke these vague ideas as he tries to get employees back to work. In January, Amazon employees were ordered to return to the office for five days, The Economist reports.
"People get to know each other better when they're physically together," Amazon CEO Andy Jassy told Harvard Business Review.
Although company culture is a vague concept, leaders have every right to worry about it. Studies show that a company’s values and norms, including the way employees work, behave and interact with each other, can affect innovation, profitability and stock market performance. But does a forced return to the office really help improve company culture? The Economist’s analysis suggests that the answer depends on the type of culture a firm is trying to build.
Executives generally claim that being in the office is helpful for the work culture. The spontaneity that often leads to new ideas is lost when staff work from home. Collaboration is also damaged. A study of 61,000 Microsoft employees found that remote work in the first half of 2020 made the tech giant more isolated and less dynamic. It also makes it harder to integrate new employees.
Yet nearly all employees say they would prefer to do at least some work from home. Mark Ma of the University of Pittsburgh and his colleagues found that companies that insisted on bringing employees back to the office after the pandemic saw a decline in job satisfaction and an increase in turnover, with no improvement in firm performance.
To assess the link between work policies and company culture, the analysis first looked at data from CultureX, a research firm run by Don and Charlie Sull. They provided a database of nine indicators of corporate culture for about 900 companies, built on reviews and ratings on Glassdoor, a site that collects employee opinions about their workplaces. The second source was Work Forward, a consulting firm that publishes the Flex Index — a database of companies’ remote work policies.
This index classifies firms into three categories: fully office-based, fully flexible, and hybrid. Combining these two sources, it found that companies that required full office presence five days a week were rated higher by employees for “agility” – a company’s ability to anticipate and respond quickly to changes in the market.
“If you are in the office,” explains Charlie Sull of CultureX, “you can receive information much more quickly and efficiently and react to new circumstances more appropriately.”
But on other measures, companies with strict office presence policies scored lower than those with more flexible ones (see chart). Firms that required five days in the office scored worse on employee support (whether they felt valued by their managers), leadership quality, toxicity level (whether inappropriate behavior was tolerated), honesty, and work-life balance.
On the other three indicators measured by CultureX, no significant differences were found between companies depending on their work location policy. The analysis has its limitations. For example, it could be that firms that are less attentive to employee support or to eliminating toxic behaviors are also less likely to listen to requests for flexibility.
Still, the results are significant. “Companies that rank high on agility — like Nvidia, SpaceX, Tesla — tend to make a clear agreement with employees,” says Don Sull, who is also a professor at the MIT Sloan School of Management.
"Employees are offered high salaries, excellent career opportunities, and other benefits. But the trade-off is that the work-life balance leaves much to be desired."
More than five years after the pandemic began, companies are still struggling to find the right balance between in-office and remote work. With labor markets cooling and power shifting from employees to employers, executives may be tempted to demand more time in the office, claiming it helps build company culture. For companies that value agility and responsiveness, this makes sense. But the data shows that this approach comes at a cost./ The Economist
