The global Covid-19 pandemic was a massive shock to the world that required unprecedented changes to our way of life. At the onset of the pandemic, without a vaccine or cure, containing the spread of the virus was paramount. It forced governments to close their international borders, impose stringent stay-at-home orders and severely restrict movements of the people. Now, nearly five years down the road, we have wholeheartedly returned to our pre-pandemic lifestyles — except in one aspect: a full-time return to office (RTO).
During the height of the pandemic, the ability to work remotely or work from home (WFH) was a godsend, enabled by technological advancements in more recent years. Just imagine if the pandemic had happened a mere decade ago, when high-speed broadband coverage and access, and ownership of smartphones, desktops and laptops were far less prevalent. Our ability to swiftly switch to remote work offered at least some semblance of normalcy during an abnormal time. It was vital in keeping businesses operating, maintaining a certain level of productivity, protecting jobs and livelihoods for much of the population and, overall, mitigated the worst of the potential economic impact.
Even after economies reopened, the hybrid work model — a combination of WFH and days in office — persisted. Increasingly, though, employers are demanding that their staff return to the office full time, five days a week. But employees are pushing back — hard. Many, particularly the younger generation, have come to believe that WFH should now be part of the new, post-pandemic, norm. A recent Randstad (a reputable and well-established global human resources and staffing company) survey indicates that nearly half of Gen Z and millennials would resign if required to work more frequently in the office. Our question is, while WFH was the most productive (really, only) option during the pandemic, is this still the case in a post-pandemic world? We think not.
The beginning of the end for WFH?
The best “proof”, we think, is the fact that businesses — across multiple sectors including JPMorgan Chase, Goldman Sachs, Tesla, Apple, Disney, UPS, ExxonMobil, Oracle, Netflix and two of the biggest private sector employers in the world, Walmart and Amazon — are putting their foot down to end remote/ hybrid work policies.
The logic to us is simple. These businesses are profit-maximising entities. If WFH is still the most productive approach, they would continue to embrace it, especially since it could make their companies less attractive to prospective talent and risks alienating existing workers. Companies must therefore believe strongly that RTO is the most competitive work structure.
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Human beings are social animals. We crave face-to-face interactions, interpersonal connections and relationships, cooperation and sense of belonging, which are in fact key reasons for the evolutionary success of our species. Case in point: We saw mass protests around the world just months into strict lockdowns. And consumers have, even now, continued to splurge on out-of-home experiences, revenge travel and entertainment, to make up for lost time.
Why, then, are workers so adamant about locking themselves in a room all day instead of collaborating and socialising with colleagues in the office? It is certainly not because of infection anxiety, which did hurt productivity during the pandemic due to fear and stress. The reasons we believe must then be about comfort, convenience, flexibility and perhaps even opportunities for “side hustles” (to earn supplemental incomes).
Discipline, accountability, communication … and equity
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Yes, anecdotal evidence suggests there was initially a spike in worker productivity during the early days of the pandemic. Why? Because there really were limited distractions during lockdowns. People could not go out, anyway, and as a result many started working longer hours. There was a sudden severe lack of social contact and telecommuting at least allowed virtual connectivity. Besides, quirky at-home work stations were all the rage back then. But the novelty and hype have surely worn off — just look at the share price for Zoom Video Communications. Indeed, productivity has fallen sharply since then — owing primarily to distractions and lack of discipline and accountability.
Take, for instance, the simple act of waking up early and dressing for work versus the opportunity to sleep in and staying in your pyjamas all day. Would you be in the best frame of mind to be very productive? What about if your child or parents ask for a short 10 to 20 minutes of your time? Would you not take a break to entertain them? How about taking a break to drop your children off at school and then another one to pick them up after? Spend 20 minutes cleaning up an “accident” by your dog? Running out to do a quick errand, just around the corner? Would you still be working past 6pm instead of going out with friends and family, now that you are able to move around freely? Let’s not kid ourselves.
One wouldn’t need surveys — such as the one conducted by Workhuman, a capital management software solutions firm, that found 38% of C-suite executives, 37% of managers and an average of 33% of all respondents admitted to faking work activity — to tell us this. After all, there are no colleagues in the next workstation or room to hold you accountable. Back in May 2024, financial institution Wells Fargo fired more than a dozen employees for using “mouse jigglers” to simulate keyboard activity and mouse movements on their work computers.
In a recent Massachusetts Institute of Technology (MIT) study, newly employed workers in India, who were working on-site, were offered the chance to switch to remote work. The findings showed that, among the workers that made the shift from working in-person to a remote structure, productivity dropped by almost 18%, underscoring the challenges that organisations face in maintaining performance under a remote work structure.
More importantly, in-person work environment fosters stronger connections that enhances team spirit and corporate culture, as well as more efficient and effective exchange of ideas and collaboration that spurs innovation and productivity. We would testify to this, based on our own experience. Remote-home environments could also compromise information-data protection in terms of cyber or physical security.
Amazon.com CEO Andy Jassy sums it up well in his memo on the new policy to the company’s employees: “We’ve observed that it’s easier for our teammates to learn, model, practice and strengthen our culture ... Collaborating, brainstorming and inventing are simpler and more effective; teaching and learning from one another are more seamless; and teams tend to be better connected to one another … If anything, the last 15 months we’ve been back in the office at least three days a week has strengthened our conviction about the benefits [of in-person work].”
Clearly, it’s not just the corporates that will gain from return to office. In-person work makes for a more productive worker — for instance, “Zoom fatigue” is a real and common issue that negatively affects productivity — and helps build personal rapport and networking opportunities that will be beneficial to career progression. Mentorship and learning are more effective through face-to-face interactions. Older employees tend to be more inclined to engage in conversation and creative discussion when they do not have to navigate the occasionally confusing digital world. All these translates into tangible payoffs.
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Research by economists from the University of Nottingham, University of Sheffield and King’s College London conducted this year shows a “significant remote work wage penalty”. Workers working from home for a few days a week saw 2% to 7% slower wage growth than their in-person counterparts.
There is also the issue of equity. Not all workers can WFH. There are far more jobs that necessitate physical presence, such as those in manufacturing plants, retail and food and beverage outlets. Is it fair that those who earn significantly less and often work much harder than executives are denied the option to work from home? There is no question that WFH arrangements disproportionately benefit those in higher-income, knowledge-based jobs.
In addition, not all employees have the same access to the resources (space, broadband access, equipment) required to effectively WFH — even if they could. Return to office levels the playing field, allowing every worker the same access to resources.
To be sure, having the option of hybrid-remote work can create a more inclusive work environment. For instance, the US has seen more people with disabilities and those with child-parent caregiving responsibilities entering the workforce. Businesses would have a much wider pool of talent to recruit not only those across the country but also from abroad.
Singapore recently issued a set of new Tripartite Guidelines on Flexible Work Arrangement Requests, where employers must put in place a process for workers to submit a formal request for flexible work arrangements, effective from Dec 1, 2024. The employer is required to consider it “properly” and communicate its decision in writing to approve or reject the request within two months. Obviously, there are jobs where remote work is the best option — for example, artists or authors who typically work alone in their studio-homes. This was the norm even prior to the pandemic. For the majority of jobs, however, the benefits from working in-person in a collaborative office environment far outweigh that of WFH.
It is way past time to end expectations for WFH in a normalised post-pandemic world. To quote JPMorgan CEO Jamie Dimon: “I completely understand why someone doesn’t want to commute an hour and a half every day, totally got it … Doesn’t mean they have to have a job here either.”
Every decision in life requires a trade-off. WFH or RTO is no different. Workers are free to choose the job they want or quit if they are dissatisfied. Similarly, employers must have the right to adopt the work structure and hire the talents that best suits their goals. It is hubris for public policy to presume what’s best or make this decision on any one party’s behalf.
The Malaysian Portfolio gained 0.2% for the week ended Oct 22. Gamuda (+4.4%) and UOA Development (+3.8%) were the two gainers for the week, while the biggest losers include Insas Bhd — Warrants C (-2.5%), IOI Properties Group (-2.1%) and United Plantations (-1.4%). Total portfolio returns now stand at 202.5% since inception. This portfolio continues to outperform the benchmark FBM KLCI, which is down 10.2% over the same period by a long, long way.
The Absolute Returns Portfolio, on the other hand, fell 0.6% last week, paring total returns since inception to 13.5%. The top three gainers were Airbus (+3.3%), Tencent Holdings (+1.4%) and CrowdStrike (+0.7%), while the biggest losers were D R Horton (-6.3%), Itochu (-1.4%) and CRH (-1.1%).
Disclaimer: This is a personal portfolio for information purposes only and does not constitute a recommendation or solicitation or expression of views to influence readers to buy/sell stocks, including the particular stocks mentioned herein. It does not take into account an individual investor’s particular financial situation, investment objectives, investment horizon, risk profile and/ or risk preference. Our shareholders, directors and employees may have positions in or may be materially interested in any of the stocks. We may also have or have had dealings with or may provide or have provided content services to the companies mentioned in the reports.
