> Anticipate more mid-size and smaller companies will go back more fully into the office as times get tougher. This will not be one size fits all, but will be an increasing trend.
Up to this point in the article, whether you agree or disagree with the points, the author offers some arguments and reasoning supporting each. Here, they simply assert that small and mid-size companies will go into the office, with no supporting argument. Why? Won't many small and mid-size companies have come up under covid and not have an office lease in the liabilities column? Why would they pay (insert large city) rents to save money? How does it help?
As CEO now is your opportunity to rethink remote work. You may decide you want to continue as is, or you may want to make changes. You have an opportunity to act.
Not that returning to the office will necessarily result in better results, but many CEOs will tend to believe that things will go better with everyone back in the office.
Class A office space outside of super expensive cities runs about $35/sqft on average. Employees need about 175 square feet each. So every employee is $6125 more expensive -- but that's only assuming you're renting someplace turnkey, which you probably aren't, so even if you cheap out at an additional $100/sqft ($17,500 per employee) for a custom build-out (one-time cost, but still).
Where is all this money coming from? If your business is perfectly functional remote, with capital costs being what they are, why would you do this?
Many of us SWEs believe the same!
Especially since right now that lack of leverage was literally manufactured on purpose by the fed.
Re: printing money and money drops, that seems to entirely ignore that was happening while unemployment was in the double digits.
Re: drivers on inflation, Karie Porter has some really interesting presentations that input costs are not increasing proportionally to profit increases (regardless what you think of her, the data presented stands on its own). That evidence suggests simple price gauging is a significant factor (citation: https://www.marketplace.org/shows/make-me-smart/corporate-pr...)
Those are just some examples of yet more statements given as assertions, which seem somewhat foundational to the remaining conclusions. These flaws really gives me pause for any of the analysis presented.
There you go. A lot of companies that were forced to WFH -don't actually want it- and so haven't invested in changing their culture to actually be effective at it. Some companies that -have- embraced it...also haven't changed their culture to actually be effective at it. But some want it, and have, and, oddly, I think they're in the majority, since studies keep showing an increase in productivity and employee happiness https://www.apollotechnical.com/working-from-home-productivi... .
Also consider that productivity might be best with employees choosing their office schedule. Some might be more productive in the office five days a week, others zero... and the majority will probably be somewhere in between, spending some days at home and some days in the office.
Bottom line, though: the pandemic is not a good time to measure productivity for any reason, and consider it representative of the norm.
Currently working for company where we our team gets together once a week and that part works well, but management is mostly stuck in old ways so sometimes it's weird.
Then that means your company doesn’t have a proper onboarding procedure. I was hired at $BigTech in June 2020 and didn’t meet any of my coworkers in person until 9/2021. I had a complete organized onboarding experience including all of the prerequisite indoctrination.
This is still a bit of an open question. Productivity can be a weird metric because it doesn't capture if you're making the right thing, just that you're making something. WFH productivity was also measured at a pretty weird time, so there wasn't a good control. What you'll see is a lot CEOs pick policies by which model they prefer, and in a poor labor market, they'll have the leverage to do it.
Were they started during Covid? Office leases are typically at least 5 years, so most existing companies will still have them, hence return.
Edit: removed assertion assertion
As the job market is changing, I am worried about my work-from-home status despite having started over a year before the pandemic. I just think there is going to be a mass get your butt in the office email that will include everyone.
https://blog.eladgil.com/p/back-to-office
But reading between the lines, he seems to consider remote workers being the lowest performers and a danger to the company culture and mission.
If fell he is also deliberately missing the point of remote work even when it hits him in the face, for example
> a few companies anecdotally see more employees going back in NYC offices than SF. This probably has more to do with local work culture
Ironically enough, I was just at a team meeting in the SFO financial district. They would have to pay me at least $100K more for me to even consider moving to San Francisco - and that’s only because my kids are grown and we could give up our nice big house in the burbs in a much lower cost area.
It's not as expensive as you might first expect.
To the people who actually go into the office, it's probably well worth it.
Open plan is only cheap on the books. It costs a lot in decimating the focus of people working there.
There are way more small and medium sized companies which are older than 3 years.
Like in sales, you're much more likely to close the deal if you meet in-person than over a Zoom call. If your competitors are flying out salespeople to meet clients, but you're still stuck on Zoom, you won't catch a bid.
This kind of generic armchair general "advice"[1] is everywhere when you run a company and is basically completely useless because every company is a complex and unique special case and if you're in charge you don't have to make the decision that would on average be the right decision for companies of your type, you have to make the best decision you can for your specific situation. This goes double for people decisions because they have a huge impact on those affected so it behooves you to take the time to really do your utmost to do it right.
[1] By which I mean the kind of phoned-in powerpoint analysis that would be produced by someone with a career at a 2nd tier wannabe McKinsey consultancy
In general with any of the management consultants, you're going to get people with very little actual experience telling you how to run your company.
Whilst some of the stuff, usually more accountancy / factual based, doesn't require experience, and thus may be delivered to a high standard, you're also going to got a bunch of hot takes that don't make sense in reality.
Outsourcing, the Spotify model, and not really agile Agile are all sold by the top tier consultants, even though you basically can't name successful examples.
All the other workstreams continued for a while with them burning our investors' money and also all ended with a big nothingburger.
Basically the team we worked with had one guy who was genuinely brilliant - razor sharp, really knew his stuff etc just great - and like 8 people there whose function was to pad the billable hours, make slides, carry printouts and drink the free coffee.
It might true that some companies are extremely bloated and their competitors may be demonstrating a similar level of productivity with 30%~50% of people but different companies have different history and contexts; path dependency is the thing. For that level of productivity loss, the root problem is more likely deeply ingrained in the structure (especially management and decision making) so cutting more and more people usually won't help.
More than 15% often means a change in the business model.
But, as an employer, I've been given the advice "cut once, cut deep" many times. The theory (which I understand) is that employees get skittish once you get to a second or third cut.
The author suggests some companies could stand a 50% cut if that is what is needed.
This month though we've seen twitter cull 50% and twitter users, and customers (advertisers) became equally skittish.
Do twitter employees feel safe? Does the "cut once, cut deep" have the desired effect here? Are customers reassured [1]?
Maybe twitter is a unique case because of other factors - Elon? The fact that people can make their opinions heard on, well, twitter? The fact that other media are reliant on twitter traffic and buzz?
My guess is that employ confidence after a round of layoffs is dependant on their faith in management to begin with, and the clarity of communication between management and staff. Perhaps a transparent financial reality helps employees understand that what they do affects the bottom line, and that line pays their salaries.
Now Elon is ending a policy literally called "Work From Home Forever" and with no flexibility -- back to the office 5 days a week.
Why would an employee feel safe when literally everything about Twitter changed overnight?
But why would we want employees to feel safe? They should feel like they need to produce value, or they'll get cut.
In general the cut once advice is not to make people less skittish immediately, it's to avoid the long term mistrust that comes from cutting repeatedly. When you do that, the message is you are either incompetent or you hid information from them the first time. A bigger one time cut is more shocking, but things settle down after and you have an opportunity to start building trust back up and put the company on an upward trajectory people will want to stay on.
really, you think that a rapid change of leadership preceded by an extended legal battle is MAYBE a unique situation? Elon is very clearly one of the most erratic ceos of a 10b+ public company right now
customers and employees are uncertain about the future because the ceo and controlling shareholder seems to change his mind every day about twitter's product, company culture, and general philosophy every single day. if he laid off nobody it would still be mayhem.
It seems like our standard of working has transformed and will not revert back.
When COVID more or less "left" corporate culture, a lot of US businesses wanted to go fully back to work or to make remote work a benefit, i.e., you'd take cuts elsewhere for the privilege to work remotely/from home.
While some of it is likely power-tripping on the part of managers, I suspect some of it is more complex involving expensive building leases and trying to justify costs, fear of "what happens if the culture shifts again and we need to find office space", which I do think is a reasonable concern, but not to the point that it should shut down remote work entirely.
Anecdotally, I do know quite a few higher management ones who were very upset by remote work; they liked the idea of having "their" employees in a single spot so they could check it at any time for various projects; some relented when after an honest talk they conceded they never really checked in person and did everything by chat/call/email anyways, but there were a few sticklers that just honestly believed "butts in chairs or we lose all productivity", even though 2 years of data from COVID times shattered this belief entirely.
Part of why I think the position was so predominant in the US was that the job market power was so vastly different there; in European countries, it was far more competitive for a company seeking candidates and this gave a lot more negotiating power for employees I think since there was certainly a job lined up for them, whereas in the US it was a bit more uncertain that you could get a position since there were so many more candidates than positions in many cases, so businesses had the ability to be far more exclusive and demanding.
The quality of the data senior leaders typically use to make business decisions like this are usually either very poor and would never pass any kind of statistical or scientific bar, or non-existent. It's usually just a gut feeling and they roll with it. Managers just usually have no idea how to manage a remote team and go about replicating the physical office in digital form.
This is also why employees should be nervous about firms that sync a hiring cycle with Q2/May.
In the US, a CEO must make the profitable decision, or face direct legal peril. It often has nothing to do with the character of those on the board. ;)
https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co...
The CEO might still get complaints, but legally there is no obligation.
I think this is overthinking it or looking for a conspiracy theory. Layoffs aren't deeply calculated or hand-wrung over in advance. They're somewhat arbitrary and ambiguous but purposeful: to stop the hemorrhaging of cash. There's no clean or perfect way to do a layoff precisely in limited time, so they happen in discrete units of reduction in particular areas. They're rarely pleasant and never perfect.
It was pretty straightforward and un-conspiranoic: The CEO got us all execs together and showed us the P&L which showed that we had 10 month runway. It also showed that (as in most companies) the highest burn rate was from payroll. Then he mentioned that we had to expand our runway to 18 months. Which meant cutting in various places (including no free sodas). Finally we agreed to cut payroll in 10%-15% , which would have a strong impact on the runway.
And that was it... pretty straightforward.
It’s a number big enough to reduce cost and create fear but not enough to cause panic.
And so — presuming at least some hiring managers in each bigcorp are unethical and lazy or able to be manipulated — 10–15% dead-weight becomes an equilibrium point: the number of dead-weight employees asymptotically approaches 10–15%, where firing one means being able to hire one more, and hiring one means being unable to hire one more.
(Which isn't to suggest that there's top-down awareness in all these companies of these employees being dead-weight; rather the opposite — they survive because the structure of these companies has no continuous visibility into employee productivity. But when they consider layoffs, that's the time to do a point-in-time productivity audit... and that's when they find that this dead-weight has been accruing, and set out to burn it off. And, if they're smart, to also "burn off" the people who were willing to commit malfeasance by hiring/endorsing them.)
At any given moment, most companies can probably justify cutting 10-15% of dead weight. But when you cross that line, that's a much different smell. The most talented get a whiff, update their CVs and head for the door.
The goal is to cut the bottom and leave the top. Take off too much bottom and your top will leave "voluntarily".
> 10-15% seems to be the number that reflects “big enough that I can tell myself and my investors or board I am doing it, but not so big that it causes truly uncomfortable conversations for the team”
Most people don't find that such a terrible idea.
The 10-15% percent aren't necessarily all bad performers but might just be people working on teams that are to be disbanded entirely.
Side note: if staff took better to getting their pay cut, they'd get more frequent (faster) raises. When a company is suddenly more profitable, compensation increases lag far behind, as they have to first feel very secure of the higher profit level. After all, if it falls back to normal, they can't cut salaries...
Note: my personal experience is limited to managing a few dozen people and there are surely plenty of exceptions to the advice above.
I guess the fear seems to be that it will lead to uncontrolled attrition of good people. But I would assume hiring freezes in the industry would still prevent this. Also, you will retain the truly "loyal" employees that are willing to suffer a bit for future growth.
It also addresses the wasteful folks in a fair way. I've definitely observed shifts in company cultures of new hires not being attached to the overall mission, demanding more and more benefits (e.g. business class flights) without "giving back" in equal amounts by working hard.
Your best employees can leave and you are left with the “Dead Sea Effect”
https://en.wikipedia.org/wiki/Vitality_curve
> The vitality model of former General Electric chairman and CEO Jack Welch has been described as a "20-70-10" system. The "top 20" percent of the workforce is most productive, and 70% (the "vital 70") work adequately. The other 10% ("bottom 10") are nonproducers and should be fired.
10% layoff means you are being ranked.
>> The dual purpose intended was to stiffen discipline amongst the army at large and to demoralise the enemy
Though one notable difference is that with layoffs it's an excuse to drop so-called poor performers, but I believe decimation was more or less random i.e. drawing straws.
Way too much friendship and "office politics" involved in who to pick anyways to be better than random.
Last in first out is probably good too.
This is such a lost opportunity for MAGMA (Meta, Amazon, Google, Microsoft, Apple)
And it is easier for corporations to discharge the bottom feeders if and when they need to improve their bottom line.
Anything larger is desperate.
Anything smaller doesn’t really move the needle that much beyond normal churn.
Is there any common tooling to do that kind of financial modeling other than spreadsheets?
What does this even mean? How would "activist" employees change the company directions and its finances?
Apart from completely illegal stuff, all of these platforms more or less just let whatever fly until the Trump era began.
nobody's firing productive workers.
Remind me why Twitter is trying to rehire workers they let go, within a week?
https://mobile.twitter.com/RichardHanania/status/15911538663...
Good luck. If you think CEO's give a damn about success you really don't know what the job of executives is for.
