This week on the Friday 15 – an All-Breaking-News edition.  Andy & Brian take a look at Amazon’s decision to have everyone return to the office 5 days a week and what impact this has on employees and on the business more broadly.

While executives report improved productivity when they’ve had employees return full-time to the office, Andy & Brian share some statistics showing that these mandates also cause higher turnover while also disproportionately negatively affecting women in the workplace.

Does the perceived improved productivity outweigh the negatives?

— 

Brian Beck: Welcome to the Friday 15 with Master B2B. My name is Brian Beck. I’m here with Andy Hoar, my partner in crime here at Master B2B. We’ve got some exciting stuff to talk about this week. And we’ll start with just a little bit of breaking news and this breaking news is close to home.

Andy Hoar: Brian, you live in LA and actually go to stay in LA for a Master B2B event. Tell us about it.

Brian: Yeah, it was awesome. So we had a roundtable this week Tuesday. It was a group of over 20 e-commerce leaders from the Los Angeles area from across all different kinds of companies. We had what’s interesting about LA Andy is you get companies that have B2C that have just as much B2B business as an industrial products company does. They’re selling to a distributor. They’re selling to retailers or selling to boutique stores and wholesale and private label. And they’re just as B2B as anybody else. So what’s fascinating, because we had some of those traditional industrial type companies. And then we had folks all kinds of others in the room. And it was really just a fantastic discussion all around how to use B2B or in modern tools to leverage to create differentiated B2B experiences, online experiences. And we talked about all sorts of things. AI of course came up, but a lot of talk about the organization. My favorite question is – who should own the digital experience, ultimately make decisions about it. We had a big debate about that. And should it be on the IT side? Should it be a chief digital officer? Should it be the CEO? A lot of folks said it should be the customer. Well, the customer makes decisions, but they’re not sitting in your organization. So it was a great talk and I appreciated everyone that was there. So thank you again for joining us. And we’re doing these all over the country. In fact, next week, I’m in Atlanta to do one of these great groups coming together for that one. So we still have one seat left. If anyone wants to join us, you can go to our website and see go to events and sign up there. Anyhow, any great time. And of course, in LA, Andy, we had amazing views. We’re looking over the Hollywood sign and you can see all downtown LA. It was fabulous. So our topic today, and it’s a meaty one – We’re going to talk about our return to office mandates. But for productivity, this is a huge question. I was sitting in Seattle last week, for Amazon’s Accelerate Conference. And it was in mid-September. And when this announcement came out, that Amazon CEO called for everyone back to the office full time, five days a week starting in January 2025. So if you thought your two days a week at home were safe, well, hey, think again, the free for all it’s coming to an end. And man, did we hear it? Sitting there, Andy, from folks that are at Amazon. This is causing a lot of chatter. Amazon has a million and a half employees. This is a very significant change for Amazon. And why are companies doing this? Well, you found this data – Andy, you want to speak to this?

Andy: According to business leaders, it’s about what? It’s about productivity. But you know, this is not just Amazon. It’s the chatter, the chattering class extends to basically all of tech. And because tech is sort of driving out of the markets and the way other companies think about themselves, either they’re tech companies. This one it’s the butterfly effect. This one flap of the wings that Amazon has spread through all of tech and all of non-tech. And so it’s rekindled this perennial debate about working from home versus working in the office. You and I have debated this for a couple of years through the pandemic. Here we are again. But it’s a classic case of the employers believe that employees are more productive in the office and employees, by and large, believe the exact opposite. And so the story once again is who’s going to win the argument. And it seems to be the same deal every time. Whoever has the upper hand, which we’ll get to in a moment. But this is the kind of data that the employers cite, which is this is a study done by resume builder, business executives, business leaders by a factor of almost three to one, they believe that being in the office improves cost or employee productivity. Now this is, I don’t know how scientific this was. But this is generally what they think. And of course, this is the quantitative side on the qualitative side, Andy Jassy, the CEO of Amazon actually makes the argument himself too. And you found this quote.

Brian: Yeah. Andy said in his letter to employees, and I was sitting there with employees when they were reading it. It was crazy. It is easier. He said, Andy said, “it is easier for our teammates to learn, model practice, and strengthen our culture; collaborating, brainstorming and inventing are simpler and more effective Teaching and learning from one another are more seamless, and teams tend to be better connected to one another when employees are together in person 5 days per week.”

Andy: Have you looked at the market cap of tech companies before and after the pandemic? I think they’re doing just fine. And it’s also not just a tech thing. Apple is worth more than the top 10 largest public companies in all of Europe. Combined. That’s crazy. One company is worth 10. And one of those companies, by the way, is SAP is one of the largest public trading companies in Europe. So Apple is doing just fine. Amazon is doing just fine. Which does cause us to wonder what’s the real intention here? But let’s go through the Kabuki theater. And let’s throw out some more of these stats that the executives seem to cite all the time. I have another one.

Brian: Well, actually, Carrie found this for us. Carrie Hogan, thank you, Carrie on our team. CEOs expect full return to office in the next three years. Look at this. 79% in office. Right? So the CEOs envision working environments for corporate employees to shift away from hybrid and certainly away from fully remote. Only 4% expect fully remote. Now, there have to be business reasons for this, Andy. I love this. People are going to return to office because people are returning to office. That’s the reason they’re going to be traveling to the office. All right. Fine. But I mean, what is — What do the actual statistics show? Well we found this funny cartoon. For those of you who can see this, I’ll read it for those who aren’t. This is a manager talking to a bunch of people on Zoom saying, “Everyone should come back to the office now.” And all these people saying, “From Zoom,” they say, “Why? Productivity hasn’t dipped. We’re saving commute time. Why do you want us to come back to the office?” The manager says, “Well, so that I can better monitor you.” [ Laughter ] I think we have to look at the actual productivity stats to start getting some insights into this. And what’s fascinating here is that when we look and ask or when organizations like in this case research come, was WFH research found that employees want to work from home about a half a day a week more than firms are offering. So you’ve got this base of employees. It feels like they don’t even have enough work from home today, right?

Andy: Well, and you can’t see this on the screen. This goes up until April of 2023. And it’s a firm plan average offering like 2.25 days a week working from home, employees want closer to 2.75 days a week. But the dotted line here was still going up or about the same. What we’ve seen recently is just if you’d extend this out to the present, it would fall. So the gap is widening. What is not happening is employees are saying, “Sure, I would love to come back into the office and work some more.” Employers, on their hand, for a lot of reasons, some of which I guess I would say about training and just team culture. I agree with that. But five days a week, so basically Amazon says, “We want to forget about the pandemic, forget about digital technologies, forget about communication technologies like Zoom teams, etc.” We just want to ignore all of that. And have you come back and work the same way you did before the pandemic. Now, there’s no evidence that that’s required or necessary or actually five days a week is more productive than two or three. So that’s just made up out of thin air. And it’s also the case that this stuff is hurting. This return to office mandate stuff is hurting very specific types of employees, which is the stats on the next screen. We found the evidence. Now, we went through the pandemic. There have been studies that have been done. There’s very clear evidence that the remote and hybrid work thing has reshaped the labor market. You know, it’s enabled workers to live in lower cost areas, which by the way, broadens the talent pool. I remember another day in Silicon Valley. It was really hard to get anybody to move to Silicon Valley, not because it’s not a beautiful place and lots of our children, but nobody can afford to live there. So when the pandemic came along, suddenly Google could hire people in Boise, Idaho. Who could do the same work as somebody in Sunnyvale, California, except in Boise, you could afford to own a house. What are you going to do about those folks who are now living in these places? A lot of them are like, well, screw it. I love Boise now, so I’m going to leave. This is a bit when it brought more women into the workforce. We saw a record of 79 million jobs. It’s 78% of women working age are employed. It’s up from 75% from five years ago. Why? Because women, especially moms – working moms, can work from home and also take care of a lot of the traditional duties that have been assigned to them for better or worse. That’s another discussion of another day about taking care of children. So you can have those two lives. You can’t have those two lives when you go to an office, especially if there’s not a great reason for that. Another one is increased opportunities for workers with disabilities. If you’re disabled, it’s a lot harder to get into the office. Especially if you’re taking public transportation. It’s really hard to get on a train, get off a train. Versus rolling into your office, turning on Zoom and doing your work remotely, just as easily as you could in the office. And by the way, it’s raised satisfaction and performance ratings without the relationship costs of having to travel, etc. So there’s a lot of evidence that this has reshaped the labor market. And like I said at the beginning, these companies seem to be doing just fine with profitability and market cap, etc.

Brian: So what we’re talking about here, what you just shared, Andy, are all statistics that benefit the employee. In other words, opening up more opportunities, you could argue that opening up a broader labor pool helps companies for sure. It raised satisfaction, better performance ratings, bringing more people in the door of course. But what does it do to productivity when companies say, “Hey, you’ve got to go back to the office.” And this is some interesting and fascinating stuff. Number one, employee attrition, right? So we have a number of sources we found here that talk about how these mandates can actually impact retention or attrition: 42% of companies with return to office mandates have experienced higher turnover than they expected. That was a study by Unispace. 63% of C-suite leaders surveyed said that their return to office policies have led to a disproportionate number of women leaving their jobs. That 57% of those leaders said that the loss of women and workers has negatively impacted company productivity. So I think you’re on to something there. All of this return to office stuff is relatively new. When I’m sitting there at Amazon with the guy that moved to Spokane, which is 3 and a half hours from Amazon’s headquarters in Seattle says, “I gotta leave” because I can’t be commuting every day. My life is now there. I can handle three days a week. I can’t do five.” So remember too that some of these are immediate reactions to near-term reactions. So I think part of this needs to play out, right?

Andy: Yeah, but there’s one real bitter irony about this. I touched on it earlier is the reason they want people to come back in the office is arguably productivity, right? But the return office mandates very clearly have one particular demographic, which I said earlier, is working mothers, who believe or not in the research are disproportionately, they are the most productive of all these different groups, working mothers. And so what’s happening is because these return office mandates are driving working mothers away because they want to keep their work from home relationship. Companies that want to increase productivity by ordering people to come back in the office are driving working mothers away, which is causing them to leave, which is reducing the productivity of the organization. So the original one’s in here was to make the company more productive, but return office mandates have driven away the most productive segment of their employees, which has actually had the reverse effect of reducing productivity.

Brian: What I think we need to do is balance, There’s going to be an adjustment period here as more companies push this. And I think we’re going to need to see some normalization in this data. It’s also about executive employees, it’s also about executive attrition. Gartner found that one in three executives who were presented with a return to office obligation reported they would leave their current employer for that reason. These are executives, right? So executives want the flexibility as well, not just employees. And when we look at moving beyond retention into recruitment, we do see that it’s harder. I see this in my own businesses, and we see it at Master B2B, companies that require people to be in the office, it’s harder to find people because you’re limiting the number of people in your universe for recruiting. And you know, there’s also studies that have been done, Farmers Group did a study that said return office mandates and policy reversals are often presented without clear evidence of lack of productivity. Now we looked, because we really did look to try to find evidence of increased productivity. And you know, when you talk about a company like Amazon they’re a data based company, they have legions, I’m sure, of management experts, helping them make these decisions. So what’s fascinating is though, I haven’t found any actual data saying it is more productive when people are in the office. Have you?

Andy: Well, not only did you not, Andy Jassy didn’t because you remember from the statement, I listened carefully to what you read there. It was all qualitative and anecdotal. There was no stat. How does the company so steeped and deep in data not say according to our research five day week employees are 16 20 87% more productive than those who aren’t in the office. Now, I don’t mean to say there aren’t studies that have been done. I’m sure there have been that have shown that spending more time in the office is more productive…So really it’s like zero versus five days. You probably can’t say that zero office days is more productive than five days. Going from two to five- I’ve never seen anything that says going from two or three to five makes organization more productive and I can say apparently Andy Jassy doesn’t have any either because if he had he would have shared it, I think.

Brian: I think what’s really happening here is the balance of power has shifted and the economy is in a different place. It’s easier to manage people when they’re in the office, number one. So it’s easier for me. It just is. Let’s be honest. Management of people and oversight like that cartoon showed is easier so this is a management decision, and that is where the power rests these days. Andy, you found this interesting statistic…
Tech employment has cooled off right so you look at these big companies and the balance of power we said this in 2023 in our predictions a year and a half ago Andy. But the balance of power was shifting back to the employer from the employee and I think we’re seeing this play out just look at these layoff numbers.

Andy: Whoever has the upper hand is going to win and right now because of a lot of reasons the tech economy is cool. These numbers are pretty stark. Just in 2024 alone according to layoffs.FYI, which by the way is a site where they keep track of all the companies who lay people off- it’s fascinating… according to them 124,000 tech employees have been laid off in 2024 adding to 428,000 who lost their jobs in 2022 and 2023. There’s been kind of a quiet revolution that’s taking place here of a lot of tech employees and a lot of software developer. The number of jobs that have been on sites like Indeed have dropped precipitously for software developers compared to two or three years ago. These guys were getting paid ridiculous sums of money because there was such demand and now post pandemic and with ChatGPT, you’ve seen this fall off a cliff. And history is going to write this was a time when this changed dramatically but again to your point when people are getting laid off, it’s a buyer’s market for labor and so you got to get in line and so if Amazon says you got to be there five days a week for whatever reason they quote unquote make up or not. If you want a job at Amazon you’ve got to be there. One quick point about Amazon that’s worth mentioning. They’re the second largest private employer in the United States of America now. That’s amazing because I have all these warehouse workers. Number one is Walmart. They have a lot of people who can’t work from home and so we know from the conversations we’ve had with B2B executives this is a cultural problem because you can’t tell all the people in the warehouse you’ve got to go to work and I’m going to go to the home or I’m going to go to the beach and I’m going to work from Tahiti. That doesn’t create the right kind of environment and so Amazon has millions of employees who are working in warehouses and maybe they’re thinking too hey it’s not a great look if all of our executives in Seattle are working from home in the beach while people are working really hard in the warehouses. So that could be a dimension of this discussion.

Brian: We asked our LinkedIn audience about this so with tech companies these days focused on profitability more than anything else – and they have also a lot of unused office space – so you’ve got that that element… we asked our LinkedIn audience whether Amazon’s five day return to office mandate was primarily about improving productivity or a clever way to do a reduction. And 67% said mostly a reduction in force, and 16% said it’s for productivity.

Andy: I think we had some comments to this effect like yeah it’s a RIF, and it actually is a clever RIF because if Amazon says hey you got to come to the office five days a week and these groups of segments say no I’ve already moved or I want to work from home or I’m a working mom – Amazon saves billions of dollars.

Brian: I found this article from the study that was done last week by this company called blind and what they found is that only 9% said that they were happy with the back to your desk order and 73% are now considering moving jobs because of it.

Andy: Let’s be honest here if there were increases in productivity and people were interested in being more productive so they could be better at their jobs, we would see a higher percentage of these respondents who would say yeah I don’t love going back in the office but I am better when I’m there and so yeah I can see the argument. But we’re not even seeing that because there are people who literally believe that going to the office makes them less productive because they have more time in the commute they get there and they spend more time in meetings. How many times have we heard this story? I’ve heard it dozens of times where people say yeah I went back to the office and you know what I did? I said hello to a few people, then I went into my office and I spent the entire day on Zoom talking to my team located all around the world because return to office mandate doesn’t affect anybody in distributed teams and don’t we live in a global economy where most people’s teams are all over the place so what am I actually going to the office for? To sit there and go and on Zoom all day long? Why can’t I just do that from home and save the commute time?