White-collar workers are getting used to recognizing the signs that remote work is dying—and lately, it’s coming in the form of CEO memos demanding a return to the office.
Major businesses from beauty retailer L’Oreal to banks like Deutsche and Goldman Sachs are beginning to reign in years of pandemic-era workplace flexibility, and based on the rhetoric, they appear to mean business this time.
But hidden within those ominous memos is a big secret, and the clue to unraveling it comes from a quick look at many companies’ post-pandemic office footprints.
CEOs’ secret
The secret is many companies simply no longer have the space they need to fit the number of workers they say they want back at the office
Businesses are probably being overly ambitious with their RTO orders with the expectation that the targets will never be met by staff, according to Sue Aspey Price, EMEA CEO for real estate services group Jones Lang LaSalle (JLL).
“Our experience is that companies, frankly, will say a day longer than what they expect because they just know about human behaviors and patterns, and travel and sick days and holidays,” Aspey Price told Fortune.
“So when we see a company say four days a week back in the office, usually they’re expecting around three, so that means they’re now going to be planning their portfolio, their footprint, and the type of space they need around that three day a week model.”
JLL manages thousands of clients’ real estate affairs. In the past few years, Aspey Price says trends of both downsizing and shifts to more sustainable office spaces have changed the workplace dynamic.
That story matches up with the data. A survey published last June by Knight Frank found half of the world’s biggest firms were planning to cut their office space by 10-20%. In 2024, Moody’s expects a “muted” corporate real estate market.
More recently, companies in major hubs like London, New York, and Singapore are buying up new office space because they have realized they cut back too far.
For now, that realization means many return-to-office orders don’t stack up.
“If everybody followed the policies that are being put out there, a lot of companies don’t have anywhere near enough space,” Aspey Price says.
“If every working team came in on those days, the chances of them having enough space are almost non-existent.”
It might explain why statements and actions of intent aren’t often matched by increased signs of attendance.
Accountancy group EY began tracking their staffers’ keycards to work out how often they were coming back to the office. The group found around half of its staff weren’t even making it in the required two days a week.
Employer power returns
The power dial around where staffers spend their working hours is gradually shifting back in favor of employers.
L’Oreal ordered its workers back into the office on Fridays not long after the beauty brand’s CEO Nicolas Hieronimus claimed remote workers have “absolutely no attachment, no passion, no creativity.”
Last week German banking giant Deutsche ordered its managers back into the office four days a week and the rest of its employees back three days a week, with the added twist of banning workers from working both Friday and Monday from home.
Deutsche’s move was particularly interesting for two reasons. Firstly, the company had regularly openly praised the productivity benefits of remote working among its staff.
The bank had publicized that 87% of its workers felt productive under the hybrid model, which saw employees spending between 40% and 60% of their time, or two to three days per week, in the office. The group continues to press upon the positive impact of remote work on productivity.
Secondly, the move came even after the bank said it was planning to cut capacity at its key Frankfurt location by 40%, begging the question, where does Deutsche expect to house all of its returning workers?
The second point is the most important one and explains the bind 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 has banned employees from working from home on a Friday followed by a Monday across their workforce.
JLL’s Aspey Price says this is likely an attempt to smooth out office space use. Most analysis has shown employees tend to pick Tuesday through Thursday as their three days in the office. That could lead to overcrowding in smaller spaces.
Indeed, in a memo to staff seen by Bloomberg, Deutsche’s CEO Christian Sewing and COO Rebecca Short told employees that current office use was “inefficient” and that they are aiming “to spread our presence more evenly across the week.”
However, more aggressive moves like Deutsche’s might not be well received, particularly without added perks like free meals.
“That’s a tough sell. And I do think they may have some employee backlash around that unless they’re offering something in return,” Aspey Price says.
The return of the water-cooler
One water-cooling company, Bevi, thinks orders like Deutsche’s are beginning to take effect. The group has its coolers in 25% of Fortune 500 offices, including those of Apple, Netflix, and Uber.
Usage data for these water coolers suggests attendance is slowly creeping up on Fridays and Mondays, though rates of use are still well below pre-pandemic levels.
However employees choose to respond to their bosses’ new guidelines, Aspey Price says the new realities of space mean it’s unlikely this is the beginning of a full-time return to the office.
“There’s tweaks around the edges, but three days a week is the norm.”
