Remote Work Is Down but Not Out
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First, an apology and a confession. I apologize for not publishing a newsletter last week. I am sure it won’t be the last time I miss a weekly cadence, but so early in the game…it feels like a betrayal of all 39 of my subscribers. Second, I had planned to publish a newsletter last week. I spent quite a few hours writing one. And, plotter that I am, I thought I had my arms around it before beginning. But the tale grew in the telling, and before I knew it, a piece I thought was narrowly and appropriately focused on solopreneurship had ventured into deeper stuff.
I still want to publish that piece. I’m not sure I even have a choice. It’s consumed most of what little focus I have and seems unlikely to let go until I have birthed it. But not this week. This week, we’ll stick to Marketing, or at least business.
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The Real Reason Remote Work Is The Future
Over the past year, I’ve read a steady feed of headlines and LinkedIn posts wondering aloud whether remote work is here to stay. Or just flat out asserting that it’s on the way out. After the remote-by-necessity dark days of Covid, many large companies, and I’m sure just as many or more small ones, have been requiring employees to spend some amount of time in office. This makes more sense for large companies than small ones, but is probably sub-optimal for all of them.
If we think about the impact of remote work (we’ll just use the term “Remote” from here on) vs “In Office” policies on enterprise value as an equation, I think we can bucket all of the arguments into three groupings:
Employee productivity per day (rather than per career, to keep Retention as a separate factor):
For In Office - this could come from a reduction in distractions and implicit pressure to work instead of do other things, proximity to teammates leading to better onboarding/quicker ramp, improved efficiency of meetings from being in the same space, increased focus in an office and away from home, or magical new ideas being born from coffee room chit chat
For Remote - this could come from time clawed back from commutes, increased focused and less stress in a quieter home office, or fewer unproductive meetings/desk ambushes.
Employee Retention
For In Office - employees may feel more connected or perform better from being in the office.
For Remote - employees have been really clear that they want to be able to work remote, likely for all the reasons listed above, and also the flexibility to tackle the rest of their lives with less stress.1
Recruiting
For In Office - some employees may actually prefer an employer who not only has an office that they may choose to use, but that requires all employees to be in the office (they want more socialization, they feel the company will perform better, they hate Zoom, and so on).
For Remote - the same point as for Retention above, but, crucially, also the expansion of the pool of applicants from (a) those willing to live within commuting distance from an office to (b) the entire US or even international talent pools.
Now, imagine an equation for Impact on the value of any employer considering In Office vs Remote. For each of those three buckets above, there’s some difference between Remote and In Office. You might think it’s a big difference in favor of Remote for one and for In Office for another. For instance, maybe you think having employees In Office leads to a 40% increase in per day productivity. And maybe you think In Office actually leads to a 25% increase in employee tenure. Those would be pretty big gains.
But how can even gains of that size compete with the recruiting impact of hiring from all 330 million Americans instead of just the 4.5 million in the San Francisco MSA?2 That’s a 73X increase in talent pool. OK, maybe not exactly. If you’re a tech company, then a lot of the talent you want has already sorted itself to the Bay Area, so maybe it’s only like a 25X increase for the Bay Area startup? What if it’s even 10X?
And if you’re a corporate giant with multiple offices in MSAs comprising 20% of the US population, then maybe that factor is only like 3X (though I would argue here, that a lot of the benefits you’d be touting in terms of working in close proximity to your team vanish if that team is spread across different offices). Even so, can you imagine any of the other factors, even combined, providing In Office with a 3X advantage? If so, I’d love to hear about it in the comments. I cannot.
Further, that math assumes your ability to recruit the most talented folks to In Office environments is only a function of the population of your metro area. We know that’s not the case. Many employees will only interview with remote-friendly companies; less so with In Office only ones.
Which is all to say, maybe remote work opportunities are decreasing in the short run. Google, Apple, Meta, Amazon, and X have all backtracked to requiring between 3 and 5 days in the office.3 But unless the preferences of employees change, the market will correct towards Remote over time. Those employers with Remote policies will garner a huge talent advantage, which will increase their value and valuations, allowing them to pay higher compensation, and eventually forcing the hand of any employer who wants to compete for that talent.
So, hang in there. The Remote future may be delayed, but it’s as inevitable now as ever.
https://www.mckinsey.com/industries/real-estate/our-insights/americans-are-embracing-flexible-work-and-they-want-more-of-it
https://en.wikipedia.org/wiki/Metropolitan_statistical_area
https://www.statista.com/statistics/1416837/tech-companies-return-to-office-mandates-globally/#:~:text=As%20of%20January%202024%2C%20several,least%20three%20days%20per%20week.