Tag: RTO

The economics of office presence

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The virtualization and decentralization of knowledge work has greatly reduced the need for office attendance. But it nevertheless holds value for many knowledge organizations as shown by return to office policies mandating attendance for all or some of the work week.

That value is being assigned and weighed by both knowledge organizations and workers in terms of compensation and talent attraction and turnover.  

The math of the office attendance value equation works roughly inversely. Some organizations offer premium pay for office attendance. It’s also being valued insofar as spiffing up offices to make them “worth the commute.”

Conversely, some knowledge workers are willing to accept lower compensation for roles that don’t require much if any office attendance. A paper issued earlier this year by the National Bureau of Economic Research found on average, tech workers are willing to accept a 25 percent pay reduction for roles that don’t require full time office attendance.

This explicitly recognizes the personal cost in terms of time and money incurred by the commute whereas traditionally it was externalized onto staff and seen as part of the job. Now it’s being factored into the employment relationship. Higher compensation for roles requiring regular office presence can offset employees’ cost of commuting.

On the other hand, companies that do not demand office attendance and thus remove the cost of commuting from the employment bargain are being flooded with job applications per this recent Business Insider article, reflecting their high desirability among knowledge workers.

“It’s not about where we work, but how,” Melanie Rosenwasser, chief people officer at Dropbox, told Business Insider. “Flexibility and agency are the new currencies of work.”

The length of the commute and housing costs also factor in. The math there is well established and similarly inverse. Housing tends to cost more nearer to downtown business districts or office parks and campuses or with reliable and fast public transit. Conversely, housing costs tend to be lower in outlying edges of metro areas but come with longer and more time-consuming commutes that take away from employees’ personal time.

As for talent attraction and retention, the most skilled and knowledgeable staff know they are marketable and factor that into their calculations. Knowledge organizations that require office attendance run the risk of losing talent not inclined to work in a mandated organizational office setting.

RTO mandates part of push-pull struggle to redefine employment amid ICT advances

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Proponents of the argument that return-to-office mandates are a kind of layoff-in-disguise notched a grim win this week.

Business leaders from across the country told the Federal Reserve’s Beige Book that their RTO policies had “encouraged” a reduction in their workforces via attrition, rather leaders having to resort to layoffs.

The remark came ahead of a starkly weak jobs report from the Bureau of Labor Statistics that showed 22,000 net jobs added in August, where white-collar job losses were offset by gains in health care.

https://www.businessinsider.com/rto-mandates-driving-workers-quit-helping-employers-avoid-layoffs-2025-9

This isn’t the typical recessionary business cycle downsizing: layoffs either directly — or indirectly via attrition as described here. It’s something more fundamental. It’s a debate about how employment is defined as information and communications technologies virtualize and decentralize knowledge work.

RTO mandates are an attempt to adhere to the traditional definition of employment: showing up at the office. That fits with the legal definition of employment wherein an employer determines when, where and how the work is done.

But that’s clearly no longer essential to employment as ICT has rapidly advanced and demonstrated its capabilities to support knowledge work independent of time and location and thus requiring transportation of knowledge workers. The assumption that employment must necessarily involve an office setting controlled by an employer is under challenge.

It’s not surprising employers prefer the traditional definition of employment since it’s they who are doing the employing. But the knowledge workers they employ have a different perspective.

It was dawning years before the pandemic’s social distancing measures and then solidly reinforced during it. It’s now being reinforced again with RTO, requiring work in a cube farm, videoconferencing and otherwise communicating on their computers with co-workers nearby that they could easily do elsewhere.

ICT’s disruption of traditional employment relationship basis of RTO tensions

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Advances in information and communications technology (ICT) over recent decades are fundamentally altering our perceptions of knowledge work: what it is and how and where it’s performed. Particularly in the context of the employment relationship between knowledge workers and knowledge organizations.

As legally defined in the United States, employment empowers the employer to determine when, where and how employees do their jobs. For knowledge work, that has traditionally meant 8-5, Monday through Friday in a commute in office setting owned or leased by the employer.

ICT advances have virtualized and decentralized knowledge work to the point that arrangement makes less and less sense. Knowledge workers can increasingly get their work done outside of those constraints of time and location. That gives them more ability to choose when and where they work.

Having that agency – the ability to decide – is at the heart of the return to office tensions between knowledge workers and their employers. To employers, it appears to undermine their traditional role to direct how, where and when work is performed.

Knowledge workers are now claiming agency over those domains, recognizing going through the motions of commuting daily to an office to use computers and phones in a sea of cubicles during a set time frame no longer makes much sense.

It really hasn’t since the dawn of the commercial Internet in the 1990s. The social distancing public health measures taken during the COVID-19 pandemic broke the habit of the daily commute to the office for both knowledge workers and knowledge organizations.

Habits change when behavior changes. The pandemic forced a change in behavior, making knowledge work less dependent on transportation of knowledge workers to commute in office locations. Modifying habits is how change fundamentally begins and becomes the new norm.

Office presence controversy overlays larger question of how knowledge work managed, organized.

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The controversy over attendance in centralized commute-in offices is currently centered around return to office (RTO) policies and when knowledge workers should be in them.

Advances in information and communications technology since the 1980s are virtualizing and decentralizing knowledge work, making when and where it’s done less relevant. Knowledge workers can develop their ideas, analyses, projects and plans and collaborate with others most any time and any place.

The trend developed slowly. Offices had been in place for many decades before and were still being built as ICT developed and matured. For knowledge organizations, they were the primary place staff work was done.

Social distancing measures taken to tamp down COVID-19 pandemic infections in 2020 suddenly accelerated what had been a very incremental trend with about 95 percent of knowledge workers commuting into offices each workday. Now that many more have worked outside of the cube farms of analog edifices of office buildings since then, circumventing time sucking commutes has taken the place of potentially dangerous viral infections. They are questioning the need for them as digital ICT replaces the analog scheme of transporting knowledge workers to them.

Some organizations including Amazon, JP Morgan, AT&T and most recently the U.S. federal government have adopted strict RTO policies that some have cautioned pose organizational risk for the attraction and retention of knowledge workers. But these organizations don’t necessarily see that as a negative but rather a positive with separations even welcomed and encouraged.

That raises the larger question how knowledge work in organizations is defined: what it is and who is needed to do it. This extends beyond RTO, “remote” or “hybrid” knowledge work itself. It’s about how it’s organized and accomplished.

Return to office tensions point to reassessment of employment for knowledge work

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“Increasing numbers of employees may leave traditional employment, choosing to start their own businesses as freelancers and contractors.“

So predicts management author Lynne Curry in a blog post today. The context of her post is tension in knowledge organizations. The source is conflict between managers’ beliefs that knowledge work – gathering and the analysis of information to reach a decision – can only be done optimally at centralized, commute in offices – and the practical experience of knowledge workers who have done their work outside of this setting with no commute necessary.

What’s noteworthy is Curry’s prediction that is the decentralization and virtualization of knowledge work is eroding the concept of employment as well. “Traditional employment” as Curry terms it means the employer determines when, where and how an employee performs their job duties. When knowledge work can be done outside of a set “workplace” or time frame, that definition doesn’t fit as well anymore. Employers operating from this framework might sense that not only are their beliefs about how knowledge work is best done are being challenged, but also their agency and authority.

In that sense, the tensions we are seeing expressed as the “return to office” debate are fundamentally questioning whether knowledge work necessarily involves employment. Or can it be done as Curry suggests on a contract basis with knowledge workers paid to complete defined projects? That would require a serious rethink by knowledge organizations of whether employment as traditionally defined continues to make sense or if another model of management would be more appropriate taking into account advances in information and communications technology over the past 30 years.

At its core, return to office debate about redefining knowledge work

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Personal computing and communication devices and the Internet have decentralized knowledge work and made the daily trip to centralized commuter offices (CCOs) obsolete. Knowledge workers discovered its irrelevance and enjoyed recovering personal time spent commuting during the public health social distancing measures in response to the COVID-19 pandemic.

Now as some organizations demand they return to the office (RTO) on a set number or designated days of the week, many are understandably rebelling.

But the real debate isn’t about showing up in person at the CCO on a prescribed number of specific weekdays. It’s about redefining knowledge work and specifically how it’s done and managed.

In his 2013 book 2013 eBook Four Dead Kings at Work: The Decentralization and Blending of Work in the 21st Century, author Dave Rolston predicted the imminent death of the four primary tenets or kings of knowledge work in the Industrial Age:

  1. Set job duties;
  2. Managed by a single manager;
  3. Performed at one place (the CCO);
  4. At the same time (8-5, Monday-Friday).

This definition worked well before 1990 when the tools for knowledge work were at the workplace and not portable like today’s personal devices, online databases, collaboration platforms and more recently, AI chatbots.

Now, organizations and knowledge workers must adjust to the post-Industrial Age environment. That entails determining when co-located work is beneficial and when it isn’t. It also requires assessing the communications culture.

When knowledge workers were regularly in the CCO, meetings — both scheduled and ad hoc — were frequent. Even too frequent for many knowledge workers. They express a real time, speaking-based communication culture.

To fully utilize today’s communication and collaboration tools, knowledge organizations must adopt a more written, asynchronous communication culture. They also must find the right balance between this and spoken communication and when knowledge workers must be assembled to discuss and sort through complex and difficult issues that benefit from synchronous, in person discussion. That is driven more by business needs to complete reports and projects and reach decisions rather than the daily calendar.

It’s also critical that knowledge organizations keep their missions clearly communicated to staff so they can see how their work makes a meaningful contribution as this article in today’s Wall Street Journal implies.