‘I expect the pendulum to switch back’: Frances Frei says remote work could make a return

[ResidentialBusiness]

As many organizations implement return-to-office mandates, the debate around RTO’s impact on performance and culture intensifies. Harvard Business School professor Frances Frei joins Rapid Response to bust popular myths around in-person work, and reveal the surprising—and somewhat contradictory—intentions of many pro-RTO business leaders. 

This is an abridged transcript of an interview from Rapid Response, hosted by the former editor-in-chief of Fast Company Bob Safian. From the team behind the Masters of Scale podcast, Rapid Response features candid conversations with today’s top business leaders navigating real-time challenges. Subscribe to Rapid Response wherever you get your podcasts to ensure you never miss an episode.

There’s so much discussion right now about return to office, RTO, for federal employees and on the corporate level. Amazon, JPMorgan, others calling staff into the office full time. Why has this discussion popped up so much at this moment?

I’ll give you my hypothesis, which is that people of a certain age, of a certain income bracket, all uniformly really like to see people when they’re at work. They just like it. They’re used to it when they walk around. It just makes them feel better when the offices are full. It makes them feel like work is going on. And so, if you notice who is calling for these RTOs, the demographic is super narrow—like, by age, by shirt sleeve. I mean, it’s incredible who wants it. I personally believe it’s out of nostalgia. And I’ll tell you why. There is no evidence to support that it actually leads to better results. In fact, all of the evidence points in the other direction. So, what’s amazing to me is these otherwise pretty brutally performance-oriented people are willing to take a performance hit at the altar of their nostalgia.

You’ve been resisting this idea—this pull—that sort of statistically, numerically, it’s a bad idea. Can you explain that?

There are some places that you might have to do it. If you’re serving customers live and they’re pulling into the driveway, you gotta be there, right? But if you look at all of the evidence and all of the academic research, I don’t think there is any, like not a single study, that says unequivocally return to office helps. What it says is, employees value flexibility to a startling amount. And then what it also says is that productivity—not only does it not go down when you have hybrid work, because that’s really what it is, you know. So many of these places where employees could come in three days a week, and now they’ve changed it to five.

The value proposition for the employees just got a lot worse, and the value proposition for the firm got no better. It’s a super curious thing, and every study shows this.

And the idea that being in office all the time strengthens company culture—like, that’s just a myth.

It’s silly because, again, we’re going from three days to five days. What they like to do is say, “Oh, well, compare it to zero days.” I know very few companies that had all remote. This is typically a three-day-to-five-day thing. And what often happens, the rest of the research shows us, is that when people are there all the time, they come in wearing noise-canceling headphones because we didn’t give anybody a private office. If you did give them a private office, they shut the door. And then if you don’t have a private office, you put on noise-canceling headphones so that you can get work done.

Or you can all be on the same Zoom together in the same room, right?

With your laptops up, because that’s good meeting maintenance. What we’re doing is forcing people to be together for activities, even when they aren’t needed to be co-located. What you really want to do is bring people together when it’s valuable.

Can you give us sort of a snapshot of what’s happening right now? Who’s back? How often? Is it different in different fields?

So, most of the headlines are from the CEO who formerly said, “I care about performance. Employees are telling me that they’re going to do better work at three days. Let’s test it.” And everyone who did it saw engagement go up and performance go up. But they still didn’t like it because their sentiment went down. There was a period of like two years where CEOs were grumpy.

It was like, ugh—like if you got them in private, they just couldn’t believe this remote work. Even if they had said, “We’re a hybrid-first location,” they all just resented it.

Because they’re paying for all that extra real estate that they’re—

Well, I actually don’t even think it’s that as much as it is that they just want to see people. It just makes them feel better. Now, of course, this flies in the face of every single international organization in the world. You could only see a subset of the employees in any specific physical geography, but that is just lost.

Even the CEOs of international companies—still, they wanted to see people in their location. And so what happened is, there were a few first movers. And a few big dogs said, “We’re gonna do it, or else.” Made their employees furious. Their research suggests that the best employees are the ones that are leaving.

They feel like tough guys because they stood up to the employees.

And then the other people who were resentful were like, “Well, look, we have license to do it. He did it. He’s tough. We can do it.” And so I think right now they all feel like they’re getting away with it. Although the early evidence—when they look at who’s leaving and the productivity gains that haven’t manifested and the engagement scores that have gone down—the early ones who are willing to look, because most people are just saying, “Don’t tell me.”

But the ones that are looking are like, “Oops.” So, I expect the pendulum to switch back.

They sort of falsely extrapolated that like, well, if three days is fine, why not five? And there are things that they didn’t get about that shift from three to five.

Well, yes, so from three days to five days, they thought, I want better performance, and this is the way to get better performance. If I said to you, I have a great idea to improve performance, it’s gonna make my employees less happy and like make them less individually productive.

Even if I don’t tell you what my black box idea is, are you going to be psyched to have it happen? The only person who can push something like this through is an emotional CEO.

I could see an argument that it’s better to have one uniform policy for an office as opposed to different rules for different jobs. So, why shouldn’t we make it consistent?

We are optimizing on everything except for this blunt instrument. Why are we taking a blunt instrument to our entire employee base? It’s not for performance reasons. It’s for emotional reasons.

And, are there parts of it—I mean, obviously about like control, trust, all those things sort of—

Well, I think they, the problem is they reveal that they don’t trust their employees, and they reveal that they are not looking at the data. Because there’s no performance data to support them, and so they reveal two, I think, unpleasant things, which means the employees who have a choice, which are your best employees, they’re looking at their CEOs right now and if they’re not thinking this too shall pass, like my CEO just saw their friend do it and now they’re doing it, but you know, we just got to grin and bear it and it will change. But if they’re like, oh my gosh, my CEO really feels like they believe this, I’m gonna go to a CEO who cares more about performance than this, who wants to win and is not going to indulge their emotions at the expense of our performance.

I know you consult with and advise CEOs and business leaders. When you raise this with them, what do they say?

This is one of the few issues. . . . So I’m a very direct person and I have learned they can’t handle it directly. So this is an issue where you got to come at it from the side, but even then, otherwise rational people, otherwise performance-oriented people, they just—this is like a third rail. They just say, when we get down to it, they’re like, I just don’t like it.

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