The RTO is gonna huRTO your business
If you think this is a bad joke, wait until you see what the reality looks like! Another great discussion from the Sudo Make Me a CTO Community
Hello there! Last week, we held another interesting session with the Sudo Make Me a CTO community.
The topic for the session: RTO mandates, what we know about them, and what to learn from the studies.
The RTO trend in the Industry
This is no breaking news: over the past couple of years, we have witnessed a major push for companies to mandate Return-to-Office (RTO) policies for their employees.
The trend is so widespread that there are even web pages entirely dedicated to listing per-company approaches, such as this one.
There are a few things we know about this trend, and namely:
It started slowly and then accelerated in the post-COVID period. Its acceleration correlates strongly with the end of the ZIRP policy and the shift towards “efficiency” and “bottom-line” focus for most companies. However, remember that correlation does not imply causation.
It seems to affect mostly companies that were forced to become remote during COVID. Companies that were remote-only or remote-friendly before the pandemic tend to stick to their approach. Apparently, those couple of years or worldwide madness didn’t seem to be enough to affect the natural inertia of companies’ deeply ingrained habits.
The most commonly provided reason for mandating RTOs has to do with the belief that having people back in their offices will somehow improve productivity and shareholder returns. That’s if we believe what is being officially stated.
In other words, leaders at companies that used to work in-office in the pre-pandemic era seem to have abundant evidence that the shift to remote work has been a major driver for company underperformance (not their leadership!), and are now taking their responsibilities by bringing everyone’s asses back.
While it’s true that nowadays the public discourse and research funding seem to be only interested in one degenerate aspect or another surrounding the so-called revolution of GenAI, a few mighty researchers out there are still stubbornly dedicated to exploring the space of RTOs and their measurable impact.
Let’s see a couple of interesting studies
Return to Office Mandates and Brain Drain
The abstract from a study from December 2024 (revisited in September 2025), eloquently titled Return to Office Mandates and Brain Drain1 states the following:
By tracking over 3 million tech and finance workers’ employment histories on LinkedIn, we analyze the effect of return-to-office (RTO) mandates on employee turnover and hiring. We find that firms experience abnormally high employee turnover following RTO mandates. The increase in turnover rates is more pronounced for female employees, more senior employees, and more skilled employees. Further, it takes significantly longer for these firms to fill their job vacancies time after the mandates. Their hire rates also significantly decrease. These results are consistent with firms losing their best talent and female employees and face greater difficulties with talent attraction after RTO mandates. In addition, we find a significant increase in the percentage of departing employees who leave for lower ranked positions at companies in a different industry, suggesting that employees are willing to sacrifice their career for workplace flexibility. The results highlight brain drain as a significant cost of RTO mandates and underscore the importance of workplace flexibility to employees. The current study has important policy implications for corporate managers, especially those who are using or considering RTO mandates as “a less costly way” to reduce employee headcount without paying severance.
The study focused on 54 high-tech and financial companies from the S&P 500 with RTO mandate announcements prior to June 2023, and found the following:
Companies that issued RTO mandates saw an average turnover increase of about 9%.
Female employees were more affected, with an average increase in turnover of about 12%.
More senior roles saw a bigger increase in turnover
A significant portion of employees left for jobs that paid less but offered the benefits of remote work
Are they just telling us that a key driver for intrinsic motivation is autonomy?
Shocking!
I don’t know these folks, but they must be a bunch of pro-DEI, woke, communists or whatever epithet is currently mainstream to dismiss the opinions from any of those enemies of the free market that are plaguing the planet.
Who cares if employees’ morale went down and resignations increased?
After all, leaders at those companies are chasing shareholder returns.
And surely they’re getting it thanks to the RTO policies, no matter what the human cost is.
I mean, why would they do it otherwise? They know what they’re doing and why.
Are they?
Return-to-Office Mandates - Hold my Beer
If the title of this early 2024 paper sounds as dry as it can be, Return-to-Office Mandates2, its abstract is a joyful read. It goes as follows.
Using a sample of Standard and Poor’s 500 firms, we examine determinants and consequences of U.S. firms’ return-to-office (RTO) mandates. Results of our determinant analyses are consistent with managers using RTO mandates to reassert control over employees and blame employees as a scapegoat for bad firm performance. Also, our findings do not support the argument that managers impose mandate because they believe RTO increases firm values. Further, our difference in differences tests report significant declines in employees’ job satisfactions mandates but no significant changes in financial performance or firm values after RTO mandates. In summary, our research contributes to the ongoing debate over RTO versus working from home and has important implications for practitioners.
It’s important to notice that its authors are a subset of those who authored the previous one. These folks must really hate good old capitalism, how dare they?!
While it’s true that absence of evidence is not evidence of absence, what the paper points to is an embarrassing and unquestionable absence of any positive impact on financial performance or firm values after RTO mandates.
Interestingly, the study mentions a survey among leaders who have issued RTO mandates, observing the following.
Further, nearly a quarter of managers acknowledge that they made RTO decisions primarily based on intuition rather than facts, leading to employee resentment and disillusionment.
And the summary of the findings, elaborating on what was anticipated in the abstract, includes the following gem.
Our empirical analyses find that the probability of RTO mandates is higher for firms with poor prior stock market performance. However, institutional ownership and board independence significantly decrease the probability of RTO, and CEO stock ownership does not have a significant effect on RTO mandates. Also, recent financial performance does not explain RTO decisions. Therefore, RTO mandates are driven by poor stock market performance due to factors other than bad financial performance, which would have been affected if employee productivity was actually lower before RTO. Further, the probability of RTO mandates is significantly higher for firms with male and powerful CEOs, who are more likely to grab power back from employees through RTO (Cragun et al., 2020; Business Insider, 2023a). Overall, our results do not support the argument that managers impose these mandates to increase firm values. Instead, these findings are consistent with managers using RTO mandates to reassert control over employees and blame employees as a scapegoat for bad firm performance
It almost feels like Elon Musk has become the role model for a whole class of executives out there: blindly trust your intuition, trust no one (except your instinct), and never admit you’re making things up out of thin air.
Or, to put it more seriously, as Jorge Días recently did, RTOs are just the tip of an iceberg. What’s below sea level and supporting the tip is a massive lack of trust among people who are supposed to collaborate effectively to create value.
And even if this was a Machiavellian way to do cheap and silent layoffs, it seems like a very shortsighted way of doing it. Unless you believe the whole narrative about Juniors + AI being the future, having your most experienced employees leave the firm doesn’t strike me as a wise talent strategy.
I mean, if you really want to lay people off, wouldn't you want to have a say on who gets to stay and who doesn't? Has the industry become such a penny-wise and pound-foolish sitcom?
Are we entering the middle age of management philosophy, or is it just that we take for universal whatever happens in big tech and other S&P 500 companies?
I don’t know, but here is what you can do about it.
What can you do?
As both data and my anecdotal experience show, this is a challenging situation for many of you out there. I do empathize profoundly.
I have 3 orders or recommendations to share to help navigate the situation.
Decide what’s most important for you. I know this isn’t always possible, as our lives are full of constraints, but I do invite you to reflect on what’s most important for you. What is the dollar value you’re willing to put on your autonomy? What are you willing to sacrifice to retain your current job? I’m not inviting you to resign on a whim, but to reflect strategically on how you want your life to be, and what role you want your job to play in it. This is what led me to leave the 9-to-5 world almost two years ago. It involved sacrifices, but it allowed me to prioritize what was most valuable. Maybe a job with a more modest salary and a higher degree of flexibility is a better life choice. Definitely do not use your salary as the only KPI for your career: chances are you’ll end up in organized crime.
Share the information with people around you, including and especially your leaders. As the research highlighted, a lot of these decisions are based on instinct and opinions. The strongest weapon against them is data and facts. Share the above research with people in your organization and your leaders. Question them on the expected results. Sometimes it’ll be a “the king is naked” moment, sometimes it’ll help people organize. Sometimes it’ll just be ignored, but even that is a relevant datapoint. It tells you the kind of leadership you’re helping succeed.
If you’re in a position of leadership, have the courage to go against the current. If you happen to be a CTO or at a senior enough level that you can influence your company’s decisions, then you have another card to play. Instead of playing the same game as everyone else, which is arguably leading to talent leaving your company and no positive results, advocate for going against the current. A lot more talent is available today on the remote market than a few years ago. This could be your opportunity to attract people beyond your local market, which might be saturated or very limited.
A final note on remote vs in-office. My view is not that we should force everyone to work remotely, as happened during COVID. Instead, we should avoid limiting employees’ autonomy to choose the working setup that makes them most effective. This includes giving managers the latitude to organize in-person events and workshops in a mostly remote company, or doing quarterly company off-sites, and the like.
Autonomy is what motivates people, and giving them flexibility is a way to increase their sense of agency. That includes allowing people to come to the office every single day if they believe it’s a more effective setup for the role they have in the company.
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Ding, Yuye and Jin, Zhao and Ma, Mark (Shuai) and Xing, Betty (Bin) and Yang, Yucheng, Return to Office Mandates and Brain Drain (November 23, 2024). Available at SSRN: https://ssrn.com/abstract=5031481 or http://dx.doi.org/10.2139/ssrn.5031481
Ding, Yuye and Ma, Mark (Shuai), Return-to-Office Mandates (December 25, 2023). Available at SSRN: https://ssrn.com/abstract=4675401 or http://dx.doi.org/10.2139/ssrn.4675401