remote work is profitable at least that's true according to a survey by Boston Consulting Group who looked at over 500 companies who employed a collective 26. 7 million people and companies that implemented remote work policies saw on average four times greater growth compared to companies that forced in office working and yet you might have noticed that despite these seemingly quite shocking headline figures companies are moving rapidly in the other direction as of late more and more corporations have been announced ing return to office orders including Amazon most recently which told its workers that they would have to come in 5 days a week this was incredibly unpopular with its staff what's maybe even more surprising is that around 80% of CEOs expect a full return to office within the next 3 years this isn't just a private sector thing the Canadian government recently announced a mandate requiring all federal workers to be in the office at least 3 days a week it was met with great resistance and yet they much like these private companies decided to go ahead with the change and yeah corporations are not stupid right despite the fact that this seems like it's obviously a bad move there is some logic here and there are some reasons why governments and private companies alike seem to be following the same policy I think a great place to start is with Amazon because they announced their return to office in this letter by the CEO Andy Jesse and this letter tells us actually quite a lot about the reasons behind it we're going to try and translate from CEO into English in this letter there is one word that appears time and time again culture it appears like 11 times and is cited frequently as the reason behind implementing this change culture is one of those words that's like pretty pretty Loosely defined and quite open to interpretation in terms of how Amazon CEO defines culture he mentioned things like scrappiness and being joined at the hip with your teammates which is probably closer than I want to get to most people but specifically I want to focus on this one word frugality because remote work isn't just good for growth it obviously can lead to millions and potentially billions in cost savings and you would expect a company which is as Frugal as Amazon to consider the fact that half of us workers would actually accept a pay cut for remote work and yet rather than do that they would rather force them back into the office now despite the fact that the letter doesn't actually mention any numbers there are other people who have actually tried to run the numbers for example I came across this one study which looked at trip trip. com is like a $40 billion business and they actually ran a proper academic study to measure whether the impact of working from home was positive or negative on their company and the things they found were that working from home led to a 133% performance increase largely due to people taking fewer sick days if they were working remote The Firm also saved around $2,000 per employee per year and workers show improved satisfaction and lower turnover meaning they were less likely to quit and they were more likely to enjoy their job while they were there when a company that has a 100 times as much to gain from just checking doesn't mention any of the numbers it seems to almost imply that it's like just Vibes right was this decision made just based on Vibes well if you scroll down a little further into his letter he kind of gives away the game a bit at least so Andy jasse says so we're asking each s team organization to increase the ratio of individual contributors to managers by at least 15% by the end of q1 2025 there are two ways you can increase the ratio right you could either hire more staff who aren't managers or you could get rid of managers clearly the implication is here quite strongly that he'd like to get rid of managers his justification for this is that it allow the team to move fast clarify and invigorate their sense of ownership and strengthen our organization's ability to make our customers lives better when they're looking to reduce the number of managers by 15% I'm sure we can all think of a more practical reason why that might be the case the tech industry has been carrying out layoffs Non-Stop for the last year and Amazon is a tech company much like any other Morgan Stanley the the Investment Bank published a report on Amazon just recently which found that by cutting 13,000 manager rules they could save around 2.
1 to $3. 6 billion this idea of like firing people is a huge reason for the return to office movement and there are big incentives to do to do it in this way rather than to lay off people directly a stealth lay off like this is also a way to avoid the the public backlash Amazon does not have the best public reput reputation as a company and by forcing people to quit in this way they avoid the huge reputational Fallout that comes from having to fire 10,000 people but it's not without any consequences because Stealth lofs have this habit of causing the people who quit to typically be your smartest your best and brightest those who actually have better options elsewhere and the fact that they're willing to do this seems to at least go against the argument that they're trying to drive Innovation and better ways of working because better ways of working are created by your best staff members who are the ones who most likely to quit Stealth lofs have been a method that's used across the world and I think the best example is Japan you might not realize Japan has incredibly strong labor laws in some ways they make it really hard to fire an employee even if the employees underperforming you have to make a real effort to show that you've tried to help them before you can buy them it's a whole thing so Japanese companies have come up with this clever strategy called the banishment room if the company wants to fire them but can't they put them in this room they give them the most mind-numbing work that they can until they get so depressed that they that they quit of their own valtion this is a super creative strategy to to get around these hiring laws and you know there's no reason to expect a company like Amazon to be any less creative in how it encourages staff to leave and layoffs are one factor amongst a few in my opinion actually the second arm of this return to office movement concerns commercial real estate if you haven't been keeping track commercial real estate has been in a bit of a bad place lately foreclosures jumped almost 50% in September the value of commercial real estate has been been dropping as steadily as people have been evacuating from City centers and companies are are a bit mad about this some companies are more mad than others Amazon bought just before the pandemic fully kicked off a brand new building in New York City for $1.
