Trouble for Companies Requiring Workers In-Office Full-Time

The beginning of 2023 brought the end of some remote-work policies as Disney, Starbucks, and Activision Blizzard all said they would require employees to come into the office more frequently.

Employees complained, and there was some anecdotal evidence that in-office mandates were costing those and other companies good workers, who voted with their feet and went elsewhere.

Now, the proof is getting stronger that a lack of flexibility can hurt in the long term. Companies with flexible work policies are growing more quickly than those that require people to be in the office full-time, according to The Flex Index, released July 18, which collects office requirements on more than 4,500 companies with 30,000 locations and that employ more than 100 million people globally.

Specifically, in the last year, companies—regardless of their size—that are fully flexible added jobs at more than twice the rate of companies that were full-time in office.

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“It seems pretty clear that the companies that are full time in-office are having a harder time attracting talent than the companies that offer some level of flexibility,” says Rob Sadow, CEO and co-founder of Scoop, the technology company that publishes the report.

Even companies that offer some level of flexibility, whether it be two or three days working from home, have grown more quickly than those that require full-time in-office. Among companies that have between 500 and 5,000 employees, for example, structured hybrid companies (i.e., that require employees to come in on some specific days, but not on others) grew headcount 4.6% over the year, while fully flexible companies of that size grew 4.5%. Full-time in-office companies of that size grew only 2.1%, by comparison.

But there’s a limit to what kind of hybrid arrangement employees seem willing to commit to. Companies that require 1-3 days in the office grew much faster than those that required four or five, the report found.

“Once you start getting closer to full-time in office, requiring four or five days, I think there’s a bright line starting to emerge for employees and for your ability to attract talent,” Sadow says.

Of course, headcount growth is not necessarily a proxy for a company’s financial health. But in this economy, with an extremely low unemployment rate and some industries still reporting wars over talent, the companies that are hiring are typically the ones growing revenue, Sadow says.

Atlassian is one company that has committed to being fully flexible. In August 2020, it announced its Team Anywhere policy, which allows employees to decide if they want to be in-office or not. Since then, the company has more than doubled in headcount, from 4,907 to 11,067. (Atlassian also laid off 500 employees in March because of the “difficult macroeconomic environment.”) “We’re doing [remote work] unequivocally and we’re winning faster than everybody else,” co-CEO Scott Farquhar told me recently. Atlassian still has offices, but it allows employees to decide when (and whether) they want to go in. About half of the company’s new hires live more than two hours from an office, which means they were in locations that Atlassian previously wouldn’t have been able to hire from. The company has also been able to increase diversity because it can hire people who live outside major cities; previously, its biggest U.S. office and headquarters was in the San Francisco Bay Area.

“Operating beyond the physical footprints of our offices means we can hire people we previously couldn’t,” Farquhar says, including underrepresented groups that prefer or need to work from home or a location where Atlassian doesn’t have offices. “Now we can hire them and provide a career that was previously unattainable because we’ve removed the restraints of physical location.” For instance, Atlassian struggled to hire Black talent in the San Francisco Bay Area but has found some success hiring Black talent in Atlanta, he says. In 2022, 5.4% of the people Atlassian hired were Black people based in the U.S., up from 2.4% in 2020. Similarly, 37.9% of the people Atlassian hired were women in 2022, up from 30.7% in 2020.

The company has found that flexibility allows people to move closer to family or to more affordable cities; many Atlassians who had been based in San Francisco moved to Seattle after it launched the Team Anywhere policy. The policy has also increased the number of disabled and veteran workers the company hired, since veterans tend to be less likely to live in the country’s most populous cities and disabled workers sometimes struggle with a commute or being required to sit at a desk all day.

Of course, allowing workers to be fully remote has its downsides. A study published earlier in July found that fully remote workers are about 10% less productive than workers who are in the office full-time. Fully remote workers can have trouble motivating themselves, the research suggested, and are sometimes more distracted at meetings because they are multi-tasking. That said, the same research shows that hybrid work has no association with lower productivity.

Farquhar, of Atlassian, says that the company has experimented with ways to keep productivity high and keep people connected, even if they’re rarely in an office. The company leans on “intentional togetherness,” which essentially means planning times where groups of workers are together in-person to socialize. Atlassian has found that there’s a spike in connectedness to the company after these offsites, and that fades after three or four months, by which time the company holds another offsite.

Veeva Systems is another company that decided to embrace remote work during the pandemic; the life sciences company announced a “Work Anywhere” policy that allows people to decide whether to work at home or in an office. The policy boosted recruiting, says chief people officer Vivian Welsh. Between July 2020 and April 2023, Veeva increased its headcount by 71%, and now has employees in 48 states (with New Mexico and North Dakota as the exceptions). “As some other companies in the industry have changed their policies” to require return to office, Welsh says, “we’ve noticed an increase in interest.”

Veeva also has policies aimed at keeping remote workers engaged; it has offsites of whole departments once a year, and “coworking weeks” in which the company sometimes pays for small teams to work together in a single office. It also requires employees to have video on for Zoom calls, open calendars so others can see what they’re doing, and to work during “core hours” so they are reachable even if they’re not in the office.

Difficulty hiring does not appear to have motivated companies that ended their fully remote companies to change their policies, but Sadow, of Scoop, says that this may change if the job market remains tight. People may stick with their current employer for a lot of intangible reasons, but when they’re deciding where they want to work next, they may be less willing to put up with stringent in-office companies. And if companies continue having trouble hiring, they may be forced to change.

Correction, July 19

The original version of this article mischaracterized the period during which Veeva’s headcount increased by 70% and to how many states it expanded; it grew to 48 states between July 2020 and April 2023, not to 50 between Q1 2020 and Q1 2024. It also mischaracterized how Veeva defines “coworking weeks”; during those periods, the company sometimes but not always pays for small teams to work together in an office.

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