Back to the office

Back to the office

Prior to COVID, there were only 3 companies in tech that reached any real scale as remote first companies - Automattic, Gitlab, and Zapier [1]. During COVID companies were forced to work remote. Many companies are now going back into the office and companies are navigating this transition in real time.

This post summarizes conversations with ~10 growth stage founders, CEOs, and companies about their go back to office approaches and attempted to summarize common takeaways below. This post is not about whether going back in is the right decision for a given company[2]. Rather, it attempts to capture some of the tactical considerations to go back in, if one chooses to do so. The focus is also on mid to late stage companies as back to office for an early stage 5 person company tends to be straightforward.

# of days back

Companies are ranging from 2 to 5 days a week already back in the office, with many clustering at ~3 days. A subset of companies plan to go all the way back to 5 days but are doing it in a stepwise fashion. Other intend to stay at 3 days a week ongoing. Companies that have already been going back 5 days a week for 5-6 months now and said it was a smooth transition. The key on choosing days includes:

1. Make the days in the office the “meeting days” for the company. Try to cluster meetings, social activities, etc. on the days in.

2. Have everyone come in on the same days. Smaller companies have everyone come in on the same days. Some larger companies split days in by team or product organization while trying to ensure that everyone that is working multifunctionally on the same products all come in on the same days of the week. This makes coordination, collaboration, and relationship building easier.

Does everyone go back?

Even before COVID, there were certain functional areas that were always remote - for example field sales where a major component of the role is in person customer visits (The old saying on field sales is that the customer site is their office. If a field sales rep is sitting at home all day versus visiting customer sites, they may not be doing their job, even if the role is definitionally largely remote). Similarly, there were often exceptions pre-COVID for either exceptional employees, or in some cases most of the hiring occurred at a few main offices with remote being considered “its own office” of sorts.

In general, many companies are moving the functional areas that used to be in office back in office, and those that were always remote stay remote. The two things many CEOs emphasize in going back are (1) consistency and (2) incentives.

1. Consistency. Make a rule and stick to it. Many CEOs deal directly with exceptions on remote work - which minimizes the set of people asking for an exception. If the person is exceptional enough to be exempted from a specific office policy, the CEO should know them and directly approve it. Similarly, specific rules are set on distance from an office before you are eligible for remote - for example some companies set a 40 mile boundary from the office. If you are within 40 miles, you need to commute in on the days the company is in office.

2. Incentives. Alongside consistency in approach, you need to align incentives to go back in the office. Some companies often have a 10-20% pay bump/reduction for in office versus remote. This could either mean increasing pay for people who are in office, or more often reducing it for people who work remote as cost of living is lower outside of major hubs. This creates an incentive for being in-office, while also adjusting for cost of living outside of major metros. It also increase friction for people to flip flop back and forth between the modalities. An employee is either remote, or they are not. Most companies are trying to prevent people from claiming they should be remote if they are out of criteria (distance, salary, exceptionalism etc) - see consistency above.

Some companies are also moving towards providing a warning and then laying off employees who do not follow the policy of coming back in when they are asked to. Many companies are already feeling overstaffed by 10-20% due to unbridled hiring during COVID, and this is a way to reduce headcount while also resetting expectations and culture. Given the likely macro market downside in the next few quarters, one can expect more layoffs and the tightening of belts at companies in the coming year irregardless of in-office policies [3].

Thus far, companies surveyed have suggested 95%+ of employees go along with whatever rules are set for back to office. There will often be a small hypervocal minority that aggressively fights going back into the office. A few companies I spoke to have looked at the performance of these people and let them go. Aggressive pushback on back to office has anecdotally tended to correlate with poor performers more generally.

No company I have spoken to has seen mass quitting or resignations, irrespective of the specific policy. So, while there may be a bit of noise about going back in-office, employee bases and companies seem to largely adjust just fine. This of course could be modulated by expectations set with employees versus new policies. For example, if everyone on a team moved across the country to live with their in-laws and suddenly your company decides everyone needs to work out of SF, there may be more resignations.

Remote by geo

Some geos have snapped back to in-office versus remote more easily. 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, % of MAMAA[3] employees in a region to set regional tone, and SF Bay Area departments of public health decisions to keep shut roughly for all of COVID (while the rest of the western world largely reopened) as part of the reason. This is likely to normalize over time.

CEO disposition & company stage

The biggest modifiers on back to the office are company stage, and CEO disposition. In general, a subset of CEO really enjoy the new lifestyle of remote work from wherever. The larger the employee headcount and the later stage the company, the more likely the CEO is to be on the road with customers, or at various offices around the world over time, making their physical location less certain at any given moment to begin with. Of course, some CEOs have been doing this for years - for example Marc Benniof was known to spend a significant amount of time in Hawaii even pre-COVID (and Salesforce has done well over that period).

Some CEOs also feel uncomfortable with many in office interactions and the occasional celebrity-like swarming by employees. Introverted CEOs seem partially more likely to keep remote policies in place than more extroverted ones.

For mid-stage companies, the CEO is likely to still be engaged with a reasonably large % of the company employee base, making remote work have larger costs for CEO-others interactions then for some later stage companies[4]. 

Offsites in the office

Any form of remote work or distributed teams increases the need for onsite meetings and gatherings, at least quarterly. Many companies are now implementing a policy that most offsites need to take place at one of the company’s offices, versus at a third party site, resort, or conference center. This helps cause cultural and team mixing, and anchors remote workers back to primary office sites and HQs. Many companies are redesigning larger offices as partial “conference centers”, where teams can come back for their offsites.

Inflation and salary

As a side note, given the frequent run ups in salary over the last 2 years during COVID era exuberance, many companies are not doing(or doing more minimal) inflation-based adjustments this year. This effectively deflates salaries. As companies move to cut costs, the squeaky wheels on back to office or other company issues may start to find themselves less empowered.

Notes

[1] Where scale is at least a few hundred people.

[2] In general, the more new ideas, products, and teams are being built, the more in-person interactions help a lot.

[3] The potential confounders, as always, are the MAMAA companies (Microsoft, Alphabet, Meta, Apple, Amazon) who keep growing salaries, benefits, and entitlement in their employee bases. However, many of these companies are saying they will slow or freeze hiring, or cut perks, so there is some chance they serve as less of a buffer on industry change for the next few quarters.