The State of RTO and What It All Means for Total Rewards Pros

Several high-profile companies, including Amazon, Apple, JPMorgan Chase and Goldman Sachs, recently told segments of their workforce that they must return to the office for most — if not all — business days.

In addition, a recent KPMG report found 83% of 1,300 surveyed CEOs think companies will mandate full return-to-office (RTO) policies in the next three years, an increase from 64% at this time last year.

These policy shifts run counter to research that shows RTO policies do not impact future profits or stock returns, and lead to the exit of employees, especially those that are higher skilled and more tenured, said Nick Bloom, an economics professor at Stanford University.

“One driving force [of RTO policies] is a way to reduce headcount, as typically this will increase quit rates by maybe a third,” Bloom said. “The other may be personal preference, with the research on over 1,200 RTOs showing these tend to come from older male CEOs.”

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Bloom’s first assertion aligns with a recent BambooHR study that showed 25% of surveyed executives hope RTO moves lead employees to quit, and 28% of employees said they would pursue new opportunities if forced to return to office.

Total rewards professionals who aren’t actively seeking turnover but are tasked with supporting or implementing RTO directives may face significant challenges gaining buy-in from employees and job candidates. But there are levers that these pros can pull.

“Pairing new benefits with a policy change perceived as less favorable can help create a more balanced experience for employees, reducing negative impacts on engagement and morale,” said Alex Bertin, director of total rewards at BambooHR.

Gauging Employee Impacts

Prior to exploring solutions, TR pros should consider workforce sentiment and experience, along with the cost-benefit balance.

“Even before the pandemic, people [if given the choice] would take 80% of their salary to work from home,” said Mark Ma, an associate professor of business administration at the University of Pittsburgh. “After the pandemic, this issue of workplace flexibility is even bigger. There are extra dining costs [when working at the office] compared to working from home, plus extra clothing needed, depreciation to cars and daycare costs.”

A recent Owl Labs study calculated that working at a corporate location costs an employee an estimated $61 per day between parking fees, gas or transit, coffee and meals.

Ma added that his current research, which has not yet officially been released, will show female employees and more skilled employees are most likely to quit when faced with RTO mandates.

An organization that decides to implement RTO to enhance productivity or culture may find that those positives are undermined by other less desirable outcomes, such as lower employee engagement, and more difficulty attracting and retaining talent, said Brad Bell, Cornell University’s professor of strategic human resources and the director of its Center for Advanced Human Resource Studies.

“If an organization eliminates flexibility altogether, they should expect some degree of downturn [momentum] in many of these areas,” Bell said. “They will need to consider whether other rewards can be offered instead to offset the increased costs that many employees experience when forced to return to the office full-time.”

Offering Alternative Benefits

To mitigate RTO-related concerns from some employees and job candidates, experts agree TR pros need to get creative with their compensation and benefit packages.

Raises, stipends and incentives (e.g., carpooling perks to address employee transportation and parking costs) are among the levers to consider.

“For employers that aren’t able or willing to provide remote work accommodations, they may need to incentivize in-office opportunities or perks to attract top talent,” said Michelle Reisdorf, a district president at Robert Half.

Approximately 66% of 2,500 surveyed hiring managers are willing to increase starting salaries for new hires to work in the office for jobs that could be done remotely, according to a recent Robert Half study. Of those hiring managers, 59% are offering workers up to 20% more pay to come in four to five days a week.

Monica Martin, a senior director of integrated and global solutions and total rewards leader at WTW, said this is all part of considering the WIIFM (“What’s in it for me?”) of RTO.

“Onsite amenities like subsidized meals, clinics/healthcare and childcare are part of the appealing work environment that employees are seeking,” Martin said.

Employers also will likely need a strategy to effectively support elder and child caregiving needs, she said.

“Even introducing new programs like profit-sharing arrangements to provide more cash incentives can be useful in making the RTO proposition more compelling and further link potential company financial upside with employee financial upside,” Martin said.

Additional paid time off can help make up for lost flexibility, but employers should also consider continuing to offer remote work on an ad hoc or incentive basis, said the University of Pittsburgh’s Ma.

“Workplace flexibility is a reward for good performance,” he said. “Ask teams to meet in-person, but let them decide when and where is best. Don’t mandate the number of days or the location.”

Above all else, talk to those high-performing employees you don’t want to lose, Ma added.

“For those low-performing employees, they won’t be happy, which may affect productivity, but if they don’t find another job, they won’t leave,” he said. “But those high-performing employees? Talk to them. Ask what compensation they need, what perks would bring them back [to the office and retain them].”

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