We’re still learning about the unanticipated impacts of the broad adoption of working approaches such as remote work.
That was underscored with the release this month of a research paper by David Van Dijcke, Florian Gunsilius, and Austin Wright showing how return-to-office (RTO) mandates at several tech companies resulted in the disproportionate departure of senior employees.
Van Dijcke posits that more-senior workers had a greater preference for remote working and attractive job options at rival companies with less strict in-office working policies. We reached out to Van Dijcke, an economics PhD student at the University of Michigan and consulting analyst with Ipsos Public Affairs, to understand more about the findings. Here are excerpts from our conversation, edited for clarity and space:
In your paper, you find that return-to-office mandates drove tenured and senior employees away from organizations. Can you explain what happened?
We look at these three companies: Microsoft, Apple, and SpaceX. They were early movers in returning to the office. When they did that, it was before the big wave of layoffs hit the tech sector, which means we could clearly disentangle the effects of those two policies. If a company implements a return to office and then a few months later does a big layoff, you might say, ‘Oh, people are leaving the company, but it’s all due to the layoffs.’ For these three companies, we could do it cleanly.
What our method allows us to do is to look at how the entire workforce changes. So not just some average statistic, but really look at how the distribution of employees is affected. When we did that, we found that the higher end of the distribution started leaving—or in technical terms, the distribution shifted leftward—meaning there’s more employees at these lower titles compared to people in senior positions. We find also that relatedly, longer-tenured employees leave the company at higher rates. Those are not exactly the same thing because you could be long tenured but not necessarily senior or you could be senior and not long tenured if you were a newly hired VP.
So those companies got more bottom-heavy after their RTO mandates?
Exactly.
What was the magnitude of these effects?
We have these 10 buckets [of employees] which are like trainee, entry-level, manager, senior, all the way up to CEOs. Very consistently for all three companies, you see an increase after the RTO in the buckets at manager and below. If we’re talking about Microsoft, we now have 4% more employees in these lower buckets as a percent of the whole distribution. It was under 4% for Apple and up to 15% for SpaceX.
What do you see as the tradeoffs in implementing a return-to-office mandate?
What we can say is that compared to what was known before, it seems like these mandates have effects independent of the effects of work from home versus in-person, in general. There’s something important about the mandated shift to returning to the office.
There are plenty of studies in the work-from-home literature that show all the various pros and cons of working from home. What our contribution is to show that these attrition rates might be a lot worse than previously thought, in the sense that it’s much harder to replace senior employees. There’s much larger hiring costs involved, you lose a lot of training that you’ve invested in the senior employees. Often the senior employees tend to have firm-specific knowledge. They have specific knowledge of the internal processes that they then also take with them to the firms they’re leaving to. So that’s a competitive risk. They tend to be more productive than the average employee. They tend to make other employees more productive because they’re managing them. They drive the whole agenda of the firm, generally. So that’s a really big loss, much larger than when you’re losing junior employees in general.