Why back to the office mandates aren’t working

This is an audio transcript of the Working It podcast episode: ‘Why back to the office mandates aren’t working’

Scott Galloway
What I tell young people is get into the office; that socialisation and the opportunity to connect relationships, which are fundamental to emotional growth and mental wellness is key. And a great place to make those connections is this gathering space called the office.

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Isabel Berwick
Hello and welcome to Working It from the Financial Times. I’m Isabel Berwick. In this episode, we’re asking, are offices actually good for us? ’Cause the office has had a really bad press since the pandemic, sent millions of us back to our homes where we all work pretty effectively. Finance firms such as BlackRock, JPMorgan and Goldman Sachs have been urging staff to show up more regularly at the office. But mandates like this are often unpopular. But what if we flip the narrative and talk about why the office is helpful? It can boost human connection and creativity. It helps people learn on the job and it cuts loneliness. Scott Galloway, professor of marketing at NYU Business School, who we heard at the start of the show, believes that offices can be very good for us. So when we spoke recently I asked him, why is it so hard for companies to get everyone back in, despite some tough talk from CEOs?

Scott Galloway
Well, they’re trying to get tough and it hasn’t worked. You know, show me a CEO who’s mandated return to office, I’ll show you someone who’s generally got the money to live near work, has a support system at home and was successful in the before times, quite frankly. And also is in a business to their credit that was largely built on culture that doesn’t have a lot of differentiation other than people and their ideas and their creativity. So financial services run by men and they’re usually in their 60s who believe that you need to be next to each other. But there’s been the pushback or the resistance has been more formidable than these. These mandates have been ineffective, quite frankly.

Isabel Berwick
Yes, I think they have been ineffective. I mean, there’s lots of people just refusing to go in. But is that happening in the financial, I mean if you work for Goldman’s, you’re gonna do what they say essentially, aren’t you?

Scott Galloway
Goldman has the power, though, ’cause Goldman pays more. I mean, Goldman has the ability — if you’re a 27-year-old associate out of business school and you’re making $300,000 or $400,000, which is an unusual Goldman. The implicit agreement between Goldman and its employees is, we’re gonna overcompensate you. And quite frankly, you’re not going to have any life outside of Goldman. The majority of organisations in America don’t have that type of agreement. You know, the navy can mandate. When you sign up for the armed services, you give up a lot. And you know that if they say you’re here at 6am, you’re gonna be there at 6am. Goldman is somewhere between the navy and the rest of corporate America. The majority of corporate America doesn’t have the compensation or the kind of the cultural license for return-to-work mandate.

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Isabel Berwick
My colleague Andrew Edgecliffe-Johnson, the FT’s US business editor based in New York, has been watching these developments in the corporate world. Andrew, you’ve been writing recently about how CEOs reacted to a warning from America’s surgeon general that the world’s facing a crisis of disconnection and loneliness. What were the CEOs saying?

Andrew Edgecliffe-Johnson
Well, we’ve heard CEOs like Laxman Narasimhan, the new CEO of Starbucks, saying that we’ve got this crisis of disconnection, division, polarisation, and that you can trace a lot of this back to the fact that people are just atomised, they’re not together anymore in the same way that they used to be. And they’re responding to this 82-page advisory that came out from the US surgeon general recently on what he called a public health crisis, an epidemic of loneliness and isolation. And a big part of that report was targeted to bosses saying that social isolation can damage employees’ performance and their satisfaction at work. It drives up absenteeism and that can cost billions of dollars a year. He estimated $154bn a year. And on the flip side, if you are getting supportive and inclusive relationships at work, that’s associated with higher job satisfaction and innovation, which is what CEOs desperately want to see from their people, because they’re watching the surveys and they see the people feel less affinity than they used to with their employer.

Isabel Berwick
So is there something genuine at the heart of this? Because I know you talked to one of the co-founders of Airbnb recently, and he was talking about this need for people to reconnect. You know, is it just a marketing ploy or is there something quite genuine there?

Andrew Edgecliffe-Johnson
Yeah, talking to Brian Chesky, he certainly sounded genuine. He seemed quite concerned about this. But at the same time, I argued in my column that CEOs like this are spending a bit too much time looking at this as a marketing opportunity, trying to pitch what they already do. You know, they’re selling people shared houses or selling them a coffee, which is handed over with a smile in the morning with your name written on it, as some sort of solution to this crisis of disconnection. Whereas I argue they can have more control over this loneliness epidemic just by thinking about the day-to-day experience of their own teams inside their workforces.

Isabel Berwick
I asked Scott Galloway whether CEOs are using these new warnings about loneliness as a way to get people back in the office.

Scott Galloway
Yeah, but they’re not concerned about the condition of your soul or loneliness. They might use that as cloud cover to get people back into the office. But that’s not their job, not the wellness of their employer. You’d like to think they’re concerned about it, but that’s not at the end of the day, how they’re compensated, so that doesn’t really drive their behaviour. There is a larger societal issue and that is remote work offers a huge unlock for caregivers — people taking care of kids, parents, their own mental or physical health — and there should be accommodations and we should take advantage of the new technologies to afford those people more flexibility.

Having said that, for young people, the office is a feature, not a bug. A third of relationships begin at work. We don’t like to talk about that because people immediately assume work and relationships are toxic or somehow, an abuse of power, and that is usually not the case. It’s where you make friends. It’s where young people, especially men, develop certain social skills and the ability to read a room that they might not otherwise get sitting at home. What I tell young people is get into the office so that socialisation and the opportunity to connect relationships, which are fundamental to emotional growth and mental wellness, is key. And a great place to make those connections is this gathering space called the office.

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Isabel Berwick
So, Andrew, it seems there are some strong reasons why spending at least part of the week in the office is a good thing for many people. You know, for connection reasons more than anything, maybe. But that message doesn’t seem to be getting through to workers. Why is it? Is it the way that CEOs are kind of framing it?

Andrew Edgecliffe-Johnson
Well, I think some of it is the topics that you’ve discussed, you know, many, many times about the genuine need for flexibility in people’s working lives. You know, the need for childcare, for, to be close to elderly relatives who need care. But I don’t think we should forget the commute. I think people are choosing to avoid that if they can.

Isabel Berwick
So New York’s particularly bad actually; occupancy rates are still under 50 per cent. I mean, how has that changed the city or, you know, how one does business there?

Andrew Edgecliffe-Johnson
Yes. So it’s worth saying that there’s quite a wide variety in those occupancy rates. So it’s about 60 per cent in Austin, it’s closer to 40 per cent in Philadelphia. But there are certainly still neighbourhoods of New York City which feel a little emptier during the weekday at the least. And it’s not the kind of tumbleweed vision that it was a couple of years ago by any means. But the sandwich shops are struggling. But New York’s an interesting mix. You know, some of the big businesses in town are the commercial real estate industry where their offices are sort of 80 per cent full right now. And the banks and the big investment firms are pushing pretty hard now to get more and more people back. So this is not the same for every industry. But in industries like ours, creative industries, a lot of people have fallen back on the video calls, on the remote working that we got used to early in the pandemic.

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Isabel Berwick
Many large companies have been offering perks or inducements to get people back in the office. So l asked Scott what he thought were the most useful things employers can offer. Is it just about free food or is there something more profound about making the office itself an attractive place to be?

Scott Galloway
I mean, it sounds pretty basic, but I was just at Expedia in Seattle, and it struck me that Barry Diller has always overinvested in the physical space itself. It’s a beautiful space that it kind of catalyses or encourages connection and places to go outside and be with someone else and have a coffee. And if you really look at the most progressive, well, resource companies, they’re investing more in office space. Now, they might have less gross office space, but the amount of investment they’re making in the per square foot and use of office space has gone up, I mean, and some offices have become nicer places to hang out. And food is kind of the easy one. But a place that again, facilitates connection makes it easier to stick around for half an hour after work and catch up with a friend. The number one predictor of retention across employees. And it’s much easier to retain an employee than go find a new good one. The number one source of retention or indicator or signal is whether or not the person has a friend at work. If someone has a good friend at work, they’re dramatically less likely to leave the organisation. So quite frankly, just creating an environment that facilitates friendships.

Isabel Berwick
Yeah, no, I totally agree with that. And is there a generational piece here? Like you, you spoke about young men in particular. I’m interested that a lot of Gen Z do want to work remotely. Are they sort of not acting in their own best interests?

Scott Galloway
Well, yeah. I mean, it’s almost as bad as spending too much time on Instagram. One in seven men don’t have a single friend. People are having a tougher time finding potential romantic partners. There’s less household formation. There’s a decline in birth rates. So the question is, where do we meet people? Where do we meet mentors? Where do we meet friends? Where do we meet mates? And your mental wellness is directly correlated to the number of random and purposeful interactions you have with another mammal called another person. And when you take out a huge source of those random, unsupervised interactions, you know, interactions of serendipity, but within a group of people that have sort of been pre-cleared, if you will, similar to you, you have a shared purpose with them, you’re working for a company — it’s a wonderful place to make friends. And we are becoming an asocial species. We’re raising a generation of people who are engaging in low-risk means of socialisation, whether it’s playing video games, multiplayer video games, or talking to people on Snap or believing that they’re establishing friendships online. What we have is a lot of friends, but we’re not experiencing friendship. And I think it’s taking a huge toll on the mental health of young people. And it’s difficult to get your butt up every morning, put on a tie, blow dry your hair, put on a pantsuit, look reasonable, get on municipal transportation and get into work. And you know what? It’s worth it, especially for young people. Before you collect dogs and kids, get into the office.

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Isabel Berwick
So Andrew, Scott’s very keen on the importance of friendships at work. Do CEOs often talk about encouraging staff to make friends? I’ve always thought it’s a very under-appreciated cornerstone of corporate life.

Andrew Edgecliffe-Johnson
I think you’re right. I don’t hear CEOs talk about this very often, although they’ll often admit that many of their own friends they made through their careers. But in a way, I don’t think it’s the CEO’s job to make us make friends at work. I think that is something much more organic. I think you can help with a little bit with things like office layout. You can certainly help it by subsidising the kind of informal get-togethers at lunch, in a pub, over coffee, whatever. But you deepen those bonds with your colleagues. But I don’t think there’s that much else CEOs can be doing.

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Isabel Berwick
I asked Scott Galloway whether he thinks that full-time office presence is a thing of the past for many companies.

Scott Galloway
Whenever we’re dealing with a complex issue, we like to distil it down to zeros and ones because that’s the easiest way to process information. So the dialogue has been something along the lines of what would be all remote or will we be all back in person like the before times? And the reality is 90 per cent of companies will be somewhere in between where they’ll say, OK, these two or three days a week, we would like you back in the office. These are the important days to be here. And there’ll be certain exceptions for people who have needs outside of work and we should be sensitive to that. Or it’s just too difficult for them to be in work. Maybe dealing with a sick child. But I would bet the majority of companies are gonna be somewhere between two and four days a week back in this thing called an office. You’re already seeing it in Europe. In Europe, occupancy rates in offices are back to 70 per cent. In the US, I think it’s more like 50 per cent. But I think you’ll see it go up. But we’re not going back to zero or one.

Isabel Berwick
So why is there a split between the US and Europe in terms of how people go back to the offices? Because labour laws are much weaker in the States and people are staying away?

Scott Galloway
That’s a correct question. I’m not sure I have an answer backed by research. I would speculate that America’s geography is broader and that housing price increases have led to a lot of people who, their commute time has become irrationally long or a real obstacle. I don’t know if it’s, we adopt a technology faster such that remote workers are more efficient. I don’t know what it is — a sense of individualism where people are more apt to not comply, if you will. It’s an interesting point. I wonder if it comes down to something very boring like geography with the average commute in the US is just longer.

Isabel Berwick
Yes. I was wondering also about workplace culture. And, you know, the lunch is important in France and Spain; seeing your colleagues not so much in London, but that’s interesting. And I was just wondering if there’s anything that we older workers could learn from what younger people are bringing into the workplace. Hopefully they are coming in. But, you know, what are the qualities that you’re seeing among younger people that you work with and teach?

Scott Galloway
Well, it’s easy to be cynical about young people, to say that they’re expectant or they don’t work as hard. And I haven’t found that. I mean, granted, the kind of companies I work in and run typically attract sort of very ambitious information-age talent. But I find that every year younger people get more facile with technology. Quite frankly, they’re more socially conscious. And so I think we have a lot to learn from them and they have a lot to learn from us. And also there are certain fraternal, maternal, fraternal feelings that you can express at work. It is enjoyable to mentor somebody. It’s enjoyable to be around young people. They take an interest in you and that you can learn and guide. These are rewarding human emotions that go beyond trying to get shareholder return out of an individual who reports to you. The mixing of generations, it calls on a lot of very emotionally gratifying things. We talk about the importance of finding mentors. A lot of us have advice to give them or concern or well regard or quite frankly, love to give. We just don’t know where to put it. There are a lot of young people at work you can meet that you can guide, that you can help. It’s healthy for us. It’s healthy for an older generation. And quite frankly, they’ll also help you figure out how to log into TikTok and use the damn thing.

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Isabel Berwick
My thanks to Scott Galloway and Andrew Edgecliffe-Johnson for this week’s episode. If you’re enjoying the podcast, we’d really appreciate it if you left us a rating and review on Apple Podcasts. And please do get in touch. I’m isabel.berwick@ft.com, or find me on LinkedIn. If you’re an FT subscriber, please sign up for our Working It newsletter. We’ve got the best workplace and management stories from across the FT plus my office therapy advice column. Sign up at FT.com/newsletters. This episode of Working It was produced by Audrey Tinline. The executive producer is Manuela Saragosa, with mix from Jake Fielding. Cheryl Brumley is the FT’s global head of audio. Thanks for listening.