Flexible Workplaces Outperform Strict RTO Policies: A Study That Could Change Everything

The Financial Upside of Flexible Work

Even as Starbucks CEO Brian Niccol threatens to fire workers who resist returning to the office, and Amazon enforces strict five-day-a-week policies, a new study suggests that companies embracing flexible work are seeing better stock performance.

A working paper from Gabriele Lattanzio, an assistant professor at the University of Melbourne, indicates that organizations recognized for offering flexible work options have higher short- and long-term share prices than their industry peers. By analyzing FlexJobs's “100 Best Companies for Remote Working Jobs” lists from 2014 to 2020, Lattanzio found that the stock prices of these companies reacted positively to their reputation for flexible work, outperforming competitors post-list release.

The Long-Term Benefits

Long-term, companies on these lists not only met but often exceeded analyst expectations, resulting in surprising positive earnings and significant share price increases. This study is groundbreaking in linking flexible work with long-term stock returns, factoring in external risks.

Mark Ma, an associate professor at the University of Pittsburgh, challenges the notion that remote work dampens share prices, emphasizing that emerging data contradicts the beliefs of some CEOs.

A Shift in the Return-to-Office Debate

With new research demonstrating the financial advantages of flexible work, there’s potential for a shift in the RTO debate. Ma's findings align with Lattanzio’s, revealing that companies enforcing RTO mandates, like Nike and UPS, have underperformed compared to those offering flexible work arrangements. In fact, companies with strict mandates averaged 15% lower stock returns than their flexible counterparts.

The Future Outlook

As evidence mounts against the efficacy of strictly in-person work, changes in corporate attitudes towards remote work could be on the horizon. A recent KPMG survey indicated that only one-third of U.S. executives expect a complete return to the office over the next three years, suggesting a potential shift in corporate strategies as they recognize the impact on their bottom line.

“Over the next one or two years, all these effects will start to show up in firms’ bottom lines,” Ma remarked, signaling a potential shift in how companies approach remote work policies.