Wharton@Work

April 2025 | 

Part 2: Back to the Office? High-Stakes RTO Mandates

Part 2: Back to the Office—or Not? The High-Stakes Game of RTO Mandates

A new round of return-to-office (RTO) mandates is rolling out, heating up the debate about its pros and cons. Some see RTO as a necessary reset to rebuild collaboration and boost productivity, while others view it as an outdated power move that ignores the realities of modern work. After speaking with three Wharton professors who each bring their own nuances to the discussion, it’s obvious that the issue defies simple solutions. In fact, it’s so complex that we have presented it in two parts: the case against returning to the office appeared in the March issue.

But while there are no easy answers, we’ve identified some of the key trade-offs — productivity versus efficiency, autonomy versus collaboration, cost savings versus talent retention. By unpacking these tensions, we can move beyond the headlines to what truly matters for companies, employees, and the future of work.

Our experts:

Matthew Bidwell, Xingmei Zhang and Yongge Dai Professor of Management, studies career paths, hiring practices, and how organizations balance internal promotion with external hiring.

Lindsey Cameron, assistant professor of management, examines the gig economy, remote work, and the impact of technology on modern workforce structures.

Peter Cappelli, George W. Taylor Professor of Management and director of Wharton’s Center for Human Resources, researches workplace dynamics, talent management, and the evolving nature of work. He is co-author of the forthcoming In Praise of the Office (UPenn Press, 2025).

Critics of RTO mandates insinuate — or state outright — that they’re really a power play rather than a necessary course correction. But concerns about productivity, innovation, and learning are real, say our experts. Professor Cameron explains, “There's a fair amount of talk about the productivity boost, with individuals saying they are much more efficient at home. But employers tell a different story, and a report by the Stanford Institute for Economic Policy Research (SIEPR) shows that there's a 10 to 20 percent decrease in productivity for fully remote work.”

On the power play side, Bidwell says, “A good question about the current mandates is, why now? I think a strong argument is that we have a weak labor market for white collar work. Two or three years ago, toward the tail end of the pandemic, we had tremendous attrition rates. Nobody could hire and nobody could hang onto their workers. We have a disconnect between employees who want and benefit from the flexibility of remote work and the companies that, to some extent, bear the cost of that flexibility. I think on average the gains to employees outweigh the costs to employers. There is a middle ground that ultimately makes people better off. But as the labor market has shifted, employers now feel they have the power to grab back some of those gains from employees.”

The Data Problem: Have Remote Work Benefits Been Overstated?

Arguments for remote work often rely on studies that didn’t capture its full impact. Many findings, for example, relied solely on workers’ perceptions or focused on a narrow subset of jobs that don’t translate more widely. But as companies reassess long-term performance, a more complex reality is emerging — one that reveals challenges in training, teamwork, and retention that were initially overlooked.

Cappelli says, “Early in the pandemic, most data on remote work came from self-reported surveys, where employees overwhelmingly responded positively. But those responses were likely influenced by the limited alternatives: face unemployment or risk exposure to COVID-19 in an office setting. Given these constraints, it’s no surprise that remote work was initially met with enthusiasm.”

The studies that showed positive effects from remote work were also incredibly limited. Cappelli notes that all of them “only looked at individual contributor jobs. One looked at patent office attorneys who don’t work with anybody else, and who were actually remote even before the pandemic. The other study was on travel agents in China, who also work independently. So, if you're an individual contributor, it might not matter that much. But we’re hearing even from call centers that when people work remotely, it takes longer to train them and it's easier to lose them because they've got no ties to anything except the piece of equipment.”

Power of Proximity: Why Workplace Relationships Matter

In any discussion of remote and hybrid work, the value of in-person connections should not be underestimated. The spontaneous exchanges that occur over coffee, the nuanced discussions in meeting rooms, and the camaraderie built through shared experiences foster a sense of unity and trust that virtual interactions often fail to replicate. These relationships drive collaboration, spark creativity, and enable mentorship, which are crucial for a dynamic and successful workplace. Encouraging employees to return to the office can reignite these essential bonds and reinvigorate the company's culture, ultimately enhancing productivity and long-term growth.

New research from Santander UK found that workplace friendships play a crucial role in both personal and professional well-being, with over a third of employees relying on colleagues for support. The research highlights a strong link between workplace relationships and career advancement, as 76 percent of respondents believe that having strong professional connections benefits their careers. Additionally, 72 percent reported feeling more motivated when they have friends at work.

Cappelli says these benefits are even more tangible than self-reported increases in motivation and professional wellbeing. “One argument for bringing more people back is that they need to reclaim what was lost in terms of relationships,” he says. “We’ve run down the stock of relationship capital. People don't know each other anymore. You can see this clearly with new hires who might take three months longer to figure out what's going on.”

“In the typical U.S. company, surprisingly, a third of the employees are new every year,” he continues. “Even if it was only 10 percent, and they're unproductive or less productive for two or three months longer, that's 2.5 percent of your payroll that you're blowing because your new hires don't know what they're doing for a longer period of time.”

RTO Complaints Are Loud, but Exits Are Quiet

“A year and a half ago,” says Cameron, “many people said they would not go back to the office. The research says they were willing to take a 25 percent pay cut or quit if they couldn’t work remotely. But in actuality, it’s a very tight labor market, particularly for tech. People might be disgruntled and disengaged, and that might hurt productivity and firm performance, but I don’t believe most people will actually quit.”

She continues, “Saying you'll just leave and get another job doesn’t take into account all the emotions and benefits that are better in a workplace. Plus, we really are dependent on these firms for livelihood. We don't have as much freedom as we think we have. That's the whole crux of my research. Companies that put a halt on remote work will likely see negative organizational effects such as a downturn in engagement, but it won't be turnover.”

Bidwell cites another recent study that supports Cameron’s assertion, showing that a hybrid compromise, in which workers come back to the office part-time, actually improves retention without damaging performance. The study also shows that about 20 percent of people prefer being in the office full-time, and may sort themselves into companies that provide less flexibility. “You could certainly imagine there are companies that offer only in-office work, and the people who prefer that go to those companies, while those who want more flexibility go to other companies that offer it. We could definitely see more of that kind of sorting.”

Ultimately, while some leaders argue that in-office work fosters collaboration, innovation, and a stronger sense of culture, research suggests that hybrid models can be just as effective — without harming productivity or career growth. The reality is that no single approach fits every company or employee. As organizations navigate the future of work, they may find that flexibility, rather than rigid mandates, is key to retention and engagement.