Musk’s back to the office policy could cost him some talent

Elon Musk’s demand that Tesla Inc staff stop “phoning it in” and get back to the office has thrust the world’s richest person into the noisy debate over the future of work, and shows again that some CEOs remain tone-deaf to employees’ growing demands for flexibility.

“Everyone at Tesla is required to spend a minimum of 40 hours in the office per week,” Musk wrote in a message addressed to employees at the electric-car maker. That “must be where your actual colleagues are located, not some remote pseudo office. If you don’t show up, we will assume you have resigned. The more senior you are, the more visible must be your presence.”

But that mandate might not be acceptable to some at Tesla, and will certainly spook staffers at Twitter Inc, which Musk is seeking to acquire, who have enjoyed a work-from-anywhere policy throughout the pandemic. In today’s tight labor market, with salaries soaring and workers quitting at a record clip, Musk’s policy could also cost him some talent.

“Companies that demand that their employees come back to the office are likely to face a set of problems,” said Brian Kropp, head of human resources research at Gartner Inc, a technology consulting company. “They will either have access to a smaller talent pool or will have to pay a compensation premium to force employees to come back.”

More than two out of three so-called knowledge workers – data scientists, engineers, graphic designers – prefer hybrid work, according to an ongoing survey of more than 10,000 white-collar workers from Future Forum. The research consortium is backed by Slack Technologies, a unit of Salesforce Inc. that offers a popular workplace communications service.

Empty offices

Just 19% of executives are working from the office five days a week, compared with 35% of non-execs, Future Forum found. Those who are in the office full time report higher levels of stress and anxiety, and more than half would prefer to work flexibly at least part of the time.

Tesla’s chief executive officer isn’t having that. In his return-to-office memo, Musk said Tesla would have “long ago gone bankrupt” if he hadn’t “lived in the factory so much — so that those on the line could see me working alongside them.”

He also ridiculed companies with more flexible workplace policies, saying “when was the last time they shipped a great product? It’s been a while.”

Carmakers, along with retailers and other firms with a mix of white-collar and frontline workers, walk a fine line when they extend flexibility to some employees and not to others.

The pandemic laid bare how dependent society is on the physical presence of blue-collar workers in hospitals, meatpacking plants and grocery stores. The idea of white-collar employees logging in safely at home, while lower-paid employees risked their health to show up in person, has been an added source of resentment in an already stratified US economy.

Going it alone

Musk’s office mandate contrasts with some auto-industry rivals. Ford Motor Co in April adopted a “flexible hybrid” model where some salaried staffers mainly come in for collaborative work and otherwise work from home.

General Motors Co has a “work appropriately” strategy that lets white-collar workers log in remotely, rather than coming in every day. Mitsubishi Motors North America Inc offers its corporate employees the option to work from home all the time.

Musk’s dismissal of remote work, which he dismissed as “pretend,” illustrates a commonly held perception among bosses that remote workers aren’t as productive, innovative or collaborative as those in the office.

Goldman Sachs Group Inc CEO David Solomon last year called remote work an “aberration,” while Morgan Stanley CEO James Gorman expressed frustration that New Yorkers were visiting the city’s restaurants but avoiding their offices.

Research from Nicholas Bloom at Stanford University and other academics has shown that remote workers are just as productive, and typically more satisfied, than office workers.

Twitter’s Take

Musk’s ultimatum also runs counter to current policy at Twitter, which is one of the most prominent tech companies to let most employees work from home permanently.

“If our employees are in a role and situation that enables them to work from home and they want to continue to do so forever, we will make that happen,” Twitter said last year.

Half of the world’s workers do so remotely or in a hybrid setup, up from 9% prior to the Covid-19 pandemic, according to a global study of employers by Willis Towers Watson, a risk-management and human-resources firm.

“The widespread adoption of these work arrangements during the pandemic has challenged some of myths that have accompanied remote work over the years, namely that people cannot be productive working remotely, which has fed into greater openness and acceptance,” said Brad Bell, director of the Center for Advanced Human Resource Studies at Cornell University. At Tesla, though, “clearly that is not true.”


Read: Decline of the office, rise of work from home

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Musk’s back to the office policy could cost him some talent