Microsoft is officially sending employees back to the office
businessinsider.com426 points by alloyed 4 days ago
426 points by alloyed 4 days ago
At $org, we too are undertaking a mandatory RTO order, enforced with door access logs.
People are up in arms, particularly those in our smaller locales, where the offices we have are perfunctory at best.
The rationale is the usual one: collaboration, watercooler chat, unspecific evidence / "research" about productivity (that we are told definitely exists, but is yet to be shared).
I remain baffled by executives' obsession with RTO... C suites are committed to spending as much as possible on real estate and geographically limiting their talent pool. Whilst making workers more tired and less productive.
I still have no idea where it comes from. My best guess is that nobody at that level wants to break ranks with the "collective wisdom" of "investors", which creates a kind of groupthink.
(An RTO mandate is also an excellent thing for a CEO to show investors they are doing, if they are not making money and lack better ideas.)
RTO mandates are about many things, but actual business value of being in the office to the business doing the mandate is low on the list. Among the things it is about:
(1) Executives with emotional attachment to certain leadership styles that are enabled by physical presence,
(2) Interest in the investor class for the commercial real estate market. The business impacted may not be invested in it, but the businesses’ shareholders in sufficient numbers probably are, and so are the influential constituents of the politicians they want favors from, in a time of increasingly naked political corruption and cronyism.
(3) Backdoor layoffs. RTO is unpopular with large swathes of the work force, and people will quit because of it. That’s good for a firm likely to be cutting positions anyway; there’s no need for severance, regardles of scale there’s no WARN Act notice requirement, and if you still have to cut more positions afterwards, it makes it less likely that those cuts will hit WARN Act thresholds. And while the people that quit may not be the ones it would be your first choice to cut, they are the ones that would be most likely to quit in the kind of less-employee-friendly and financially leaner (in real terms) times likely to exist for a while after cuts.
It is hilarious that people think the second largest company on the planet, with a market cap over $5 trillion, spends even one second worry about the profit margins of commercial real estate companies, makes any decisions based on that, or is somehow cowed by their alleged political power despite being much, much, much smaller than Microsoft.
I was very clear, I thought, when I said “RTO mandates are about...”, that I was not saying “All of these factors are relevant to Microsoft”.
With Microsoft its probably mostly (3), with maybe some degree of (2), with (1) maybe, especially in the political salience, being a plus in the eyes of some decision-makers but not really driving the decision.
There are firms (and public agencies) where the relationship between those factors is very different in driving RTO mandates.
No CEO cares about commercial real estate profits. It isn't a factor in any major company decision.
Why not extend the baseless paranoia and say it is because they want to see auto company profits go up? And also support petroleum companies?
Or is it just real estate that is boogeyman secretly running the country behind the scenes?
The City of Philadelphia sent all of its workers back to the office with an explicit statement from the Mayor about struggling commercial office real estate in the city center. They may not be "running the country" but they are definitely heavyweight players in the market.
Businesses care about commercial real estate as much a renters care about landlords.
This commercial real estate take is so backwards you have to wonder if it's a plant to make the anti-RTO movement look like idiots.
There was no such explicit statement from the mayor that it was because of real estate.
https://www.phila.gov/2024-05-20-statement-from-mayor-cherel...
Umm, yeah, because city executives whose “organizations” are funded by local taxes, especially commercial real estate taxes care about it.
That says nothing about why CEOs of thousands of private firms who have nothing to do with real estate firms would care about those other companies’ profits.
> No CEO cares about commercial real estate profits. It isn't a factor in any major company decision.
No spherical CEO in a vacuum, maybe.
Cfo and shareholder do care about value of their building as these are on the balance sheet as asset and large swings can impact the metrics by which the market evaluates the companies.
I worked for a large company that did just that. They reduced the number of buildings they had to shrink costs, and get rid of employees without 'firing' them. MSFT does not strike me as a company that does not understand cost per employee. Why would you think the cost per employee does not come into the picture? I am just curious about that PoV as it is basically grilled into all MBAs and part of financial calculations of most businesses.
May you explain why ruthlessly profit driven CEOs of megacorporations don't care about the commercial value of the real estate they own?
Because who are the profit driven CEOs (are there any other CEOs?) sell their buildings to? The value of their building affects the profit via the depreciation expense. Which is to say the more buildings you have for RTO the bigger the expense-and thus the lower the profit for the profit maximizing CEOs.
From a profit only perspective RTO makes sense only if the cities gave businesses tax breaks tied to business occupancy (the city’s math is they will get some of these taxes back when employees go and spend money in the city). And maybe cities are threatening to stop these taxes back until RTO.
In Microsoft’s case though people only spend some money at the cafeteria-because there is nothing else to spend money on their campus. How big could that tax break could be?
This RTO request from Microsoft does not make much sense.
You should also consider property taxes from where the employees live. In MS's case, plenty of the employees own or rent in the same town, or nearby. At least as a calculation/consideration of tax breaks. I can say that if it weren't for Intel, Wells Fargo and others deciding to build/employ in Chandler, AZ the town wouldn't be half that size in terms of residential population. I'm sure the same is true even for bigger cities relative to business size.
How would this be an incentive for Microsoft to require RTO though? Even if Microsoft would receive tax breaks from the city because employees own property and pay property taxes - the city would get the same amount of property taxes if employees work from home. Microsoft would receive the same tax breaks.
AFAIK Microsoft mandated RTO only for employees that live within 50 miles of an office. So far Microsoft does not require employees to move to a city - and bolster the property taxes the city collects.
I still do not understand the logic behind RTO.