When Apple, Microsoft and SpaceX mandated a return to the office post-Covid, they copped serious consequences

When Apple, Microsoft and SpaceX mandated a return to the office post-Covid, they copped serious consequences

As organisations battle to bring an end to Covid-era remote working arrangements, new research reveals some of the world’s biggest tech companies saw an exodus of senior talent when they mandated a return to the office.

And in many cases, those valuable and difficult-to-replace senior workers went straight to direct competitors that offer more flexible conditions.

Experts say the findings should serve as a warning to companies across the board that are taking forceful measures to get staff back to the office.

The study by researchers at the University of Chicago and University of Michigan examined employee turnover at Apple, Microsoft and SpaceX after each company made changes to remote work policies.

It found a strong correlation between senior employees leaving and the implementation of mandates, with Elon Musk’s SpaceX suffering a 15 per cent decline in top talent.

Microsoft experienced a five per cent reduction in senior staff while Apple saw a four per cent exit rate, the research revealed.

Apple and Microsoft both mandated a hybrid work model, requiring staff to be in the office part of the time, as the Covid pandemic wound down. In stark contrast, SpaceX forced its workers to get back to the office full-time, removing provisions for remote work.

On top of those potentially damaging losses, the researchers found that many of those quitting workers went to work for direct competitors like Amazon, Meta and Dell.

‘Strong negative effects’

The study noted evidence that “return-to-office mandates… had a negative effect on the tenure and seniority” of workforces.

“In particular, we find the strongest negative effects at the top of the respective distributions, implying a more pronounced exodus of relatively senior personnel,” it read.

“Taken together, our findings imply that return to office mandates can imply significant human capital costs in terms of output, productivity, innovation, and competitiveness for the companies that implement them.”

The study examined resume data from People Data Labs, matching 260 million CVs to company data at Apple, Microsoft and SpaceX.

That trio comprises 30 per cent of the global tech industry’s revenue and about two per cent of the total technology sector workforce.

“Senior employees and those that have been at a company for a long time possess invaluable human capital and tend to have elevated productivity levels, which they take with them when leaving the company,” the study noted.

“They also represent a significant investment in terms of hiring and training costs.”

Harmful economic impacts

A growing number of Australian companies are taking stronger steps to get their workers back to physical offices, at least in part.

Leonora Risse, an associate professor of economics at the University of Canberra believes that approach is unnecessary – and could have economic consequences for us all.

“Fewer people, especially women and parents with young children, would put themselves forward for work,” Ms Risse wrote in analysis for The Conversation.

“The pool of skills that employers are looking for would shrink. And job-matching in the labour market becomes less efficient.

“The result would be more Australians unemployed, and more Australians dropping out of the paid workforce, than if we had continued to embrace working from home.”

Last year, more Aussies were in paid work than ever before – about 64 per cent of the population – and while unemployment is on the rise, it remains historically low.

But the unemployment rate among women in particular is low, while workforce participation is high.

“The proportion of mothers with children under five working at least partly from home has leapt from 31 per cent to 43 per cent,” Ms Risse said.

“It’s working from home – actually, working from anywhere – that has been the game-changer, as the most enduring change to the way we work to have come out of the pandemic.”

The benefits of working from home for the economy are fewer obstacles in matching jobseekers to employers, she said, with distance and location no longer deal-breakers.

“Better job-matching means less unemployment, and the heightened prospect of finding a good job match encourages jobseekers who in earlier times might have given up.”

Hybrid equals happier

The ability to work remotely comes with health benefits for staff, Libby Sander, assistant professor of organisational behaviour at Bond Business School, said.

“Research indicates a combination of commuting, cost of living pressures, noisy open-plan offices, work culture, interruptions, decreased autonomy and co-worker relations are contributing to workers feeling more stressed,” Ms Sander wrote for The Conversation.

Gallup’s State of the Global Workplace report for 2023 found Australia has the second-highest level of stress in the world.

Ms Sander contributed to research published by Cambridge University that found noisy open-plan offices contribute to a 25 per cent increase in negative mood and a 34 per cent lift in reported increased stress.

“In addition to making employees more stressed and cranky, noisy open-plan offices reduce performance,” she said.

Earlier this year, analysis by researchers at the University of Pittsburgh found forced returns to the office lead to a fall in job satisfaction and had no positive effect on company performance.

The study of 137 top American companies found mandates tended to be made by organisations that were performing poorly, but there had been no turnaround in the short-term after staff were made to come back.

But happiness in the workplace had suffered “significantly” as a result, the researchers noted.

Bosses regain the upper hand

Despite the research findings, cooling labour markets could give employers back the power after years of staff shortages made hiring an incredibly difficult prospect for many industries.

The Commonwealth Bank, Optus, ANZ, Suncorp and Origin Energy are some of the local organisations that are cracking down on informal hybrid work arrangements.

Around this time a year ago, the number of advertised roles on job search site SEEK that made a specific mention of hybrid work allowances was about 11 per cent.

By December, that number had dipped to 9.4 per cent and experts expect a continued decline as unemployment rises.

“The cooling labour market likely does mean that employers have a bit more ability to try and bring people back to the office where they can,” SEEK senior economist Matt Cowgill told ABC News.

The latest data from the Australian Bureau of Statistics shows conditions in labour markets weakened in April, with seasonally adjusted unemployment rising from 3.9 per cent to 4.1 per cent.

“The latest unemployment rate forecasts included in the Budget papers indicate an unemployment rate of 4.5 per cent by June 2025, which is broadly in line with RBA forecasts,”

Anneke Thompson, chief economist at CreditorWatch, said.

Ms Thompson said the firm’s latest Business Risk Index data showed a rise in the number of business-to-business trade payment defaults.

“And in fact, these have sat at record levels for three months now,” she said.

“While not directly reflective of employment, it is likely that businesses that are unable to pay their bills on time will be decreasing their employment levels.”