White-collar workers are getting used to recognizing the signs that remote work is dying, and lately they’re manifesting themselves in the form of reminders from CEOs calling for a return to the office.
Major companies, from beauty retailer L’Oreal to banks like Deutsche and Goldman Sachs, are starting to reign in years of pandemic-era workplace flexibility, and by the rhetoric, they appear to mean business this time.
But hidden in those ominous memos is a big secret, and the clue to unlocking it comes from a quick look at the office footprints of many companies after the pandemic.
The secret of the CEOs
The secret is that many companies simply no longer have the space they need to accommodate the number of employees they have To say they want to go back to the office
According to Sue Aspey Price, EMEA CEO of real estate services group Jones Lang LaSalle (JLL), companies are likely to be overly ambitious with their RTO orders, expecting targets to never be met by staff.
“Our experience is that companies, frankly, will say one day more than they expect because they only know human behaviors and patterns, travel, sick days and vacations,” Aspey Price said Fortune.
“So when we see a company say four days a week in the office, they usually expect about three, which means they will now plan their portfolio, their footprint and the kind of space they need around that model of three days a week.
JLL manages thousands of clients’ real estate deals. In recent years, Aspey Price says the trends of both downsizing and the shift to more sustainable office spaces have changed the dynamic of the workplace.
That story fits the data. A survey published last June by Knight Frank found that half of the world’s largest companies were planning to reduce their office space by 10-20%. In 2024, Moody’s predicts a “muted” corporate real estate market.
More recently, companies in major hubs like London, New York and Singapore are buying new office space because they realize they’ve cut too much.
For now, this knowledge means many return-to-office orders aren’t stacking up.
“If everyone followed the policies that are put in place, a lot of companies wouldn’t have anywhere near enough space,” says Aspey Price.
“If all the work crews arrived on those days, the chances of them having enough space are almost non-existent.”
This may explain why declarations and actions of intent are not often accompanied by greater signals of participation.
Accounting group EY began tracking its employees’ key cards to calculate how often they returned to the office. The group found that about half of the staff couldn’t even make the required two days a week.
Return of power to the employer
The issue of where employees spend their working time is gradually shifting in favor of employers.
L’Oreal ordered its workers to return to the office on Friday, not long after the beauty brand’s CEO Nicolas Hieronimus said remote workers have “absolutely no attachment, no passion, no creativity.”
Last week the German banking giant Deutsche ordered its managers to return to the office four days a week and the rest of its employees three days a week, with the further change of banning workers from working from home on both Fridays and Sundays. Monday.
Deutsche’s move was particularly interesting for two reasons. First, the company had regularly openly praised the productivity benefits of remote working among its staff.
The bank had advertised that 87% of its employees felt productive under the hybrid model, which saw employees spend between 40% and 60% of their time, or two to three days a week, in the office. The group continues to harp on the positive impact of remote working on productivity.
Second, the move also came after the bank said it would reduce capacity at its key Frankfurt location by 40%, raising the question: Where does Deutsche plan to house all its returning workers?
The second point is the most important and explains the situation anxious CEOs now find themselves in.
The end of WFH Fridays?
Deutsche Bank’s move appears to be a new line in the sand for RTO mandates. The company banned employees from working from home on Friday followed by Monday for its entire workforce.
JLL’s Aspey Price says this is likely an attempt to simplify the use of office space. Most analyzes have shown that employees tend to choose Tuesday through Thursday as three days in the office. This could lead to overcrowding in smaller spaces.
In fact, in a note to staff seen by BloombergDeutsche CEO Christian Sewing and COO Rebecca Short told employees that the current use of the office is “inefficient” and that they aim to “spread our presence more evenly throughout the week.”
However, more aggressive moves like Deutsche’s may not be well received, especially without additional perks like free meals.
“It’s a tough sell. And I think they might get some reaction from the employees about it, unless they offer something in return,” says Aspey Price.
The return of the water cooler
One water cooling company, Bevi, believes orders like Deutsche’s are starting to take effect. The group has its refrigerators in 25% of Fortune 500 offices, including those of Apple, Netflix and Uber.
Data on usage of these water coolers suggests that attendance is slowly increasing on Fridays and Mondays, although usage rates are still well below pre-pandemic levels.
Regardless of how employees choose to respond to their bosses’ new guidelines, Aspey Price says the new realities of the space mean this is unlikely to be the start of a full-time return to the office.
“There are marginal changes, but three days a week is the norm.”