Is Return-to-Office creating employee churn and widening the talent gap?

Does RTO make it difficult for recruiters to attract candidates?

Although the Covid pandemic seems to be fading away, it does indeed have a long tail, and it’s not limited to the physiological effects of the disease. In the wake of the global outbreak Return-to-Office (RTO) policies have become a focus of debate in the jobs market.

As the impacts of the pandemic linger, in many developed nations there is a need for wholesale economic growth. However, the context has rapidly moved on. From inflation and the cost of living crisis, to economic war and armed conflict, we’re faced with a climate of global uncertainty. 

One of the biggest factors that might drag down on the ambition for economic growth is the talent gap. The symptoms were apparent before Covid and the gulf has widened as factors such as burnout, personal commitments and The Great Resignation caused employees to leave full time permanent work.

Companies that had quickly implemented remote working technologies and practices to enable them to continue to function during lockdowns, are now grappling with whether to keep flexible working arrangements in place or to require employees to RTO. The article ‘Amazon tells staff to get back to office five days a week’ is a high profile example where the decision has been made.

The allure of remote and hybrid working practices

There is a suspicion that RTO policies are contributing to employee churn, widening the talent gap and making life more difficult for agencies recruiting roles where hybrid and remote working are not options. Here are some of the most significant talking points surrounding this issue:

Employee preferences for flexibility

Many employees have grown accustomed to the flexibility that remote work provides. Many favour hybrid or fully remote work due to benefits such as better work-life balance, reduced commuting costs, and increased productivity. RTO policies that compel employees to return to offices full-time or on strict schedules are often a source of dissatisfaction, especially among workers who have thrived professionally and personally working from home.

Employees may look for opportunities elsewhere should they be forced back into the office. The global shift to remote work has created increased job opportunities, enabling workers to apply for positions in companies that offer remote or hybrid options, and increasing churn rates for companies enforcing strict RTO policies.

Generational differences

Younger generations, such as Millennials and Gen Z, often prioritise work-life balance and workplace flexibility more than previous generations. Companies mandating full-time office work may alienate younger talent, who often express the desire to seek jobs that offer purpose, autonomy, and flexibility. As a result, firms enforcing RTO may inadvertently limit their appeal to this key talent pool.

Older workers that have reduced family and lifestyle commitments may simply find it easier to accept strict office attendance schedules that are weighted to favour the preferences of employers.

Restricted geography from which to draw talent

Remote work allows companies to tap into a global talent pool, but strict RTO policies restrict hiring to candidates that are within commutable geographic locations. This limits the diversity and range of available talent. Organisations requiring in-office work lose out on capable candidates who are unwilling or unable to relocate to a commutable area, further widening the talent gap.

Dissatisfaction is driving employee churn

For some employees, returning to the office may feel like a backward step, particularly if they experienced increased productivity or better work-life integration while working remotely. Dissatisfaction with RTO directives can lead to higher turnover, especially if employees sense a cultural divergence from what younger generations of employees want. This may disproportionately impact companies in industries where competition for talent is fiercest, making high rates of staff turnover especially costly.

Reskilling and upskilling challenges

The pandemic shifted the demand for certain skill sets, emphasising the adoption of tech tools to enable working-from-home (WFH) and encouraging digital literacy, adaptability, and self-management of workers. In effect, remote work has enabled companies to develop workforces with better technology skills and personal discipline.

RTO might limit the opportunities employees have to continue reskilling, particularly if companies don’t offer the same level of investment in remote learning or tech-driven tools. This could slow down internal skill development and widen the talent gap for future needs, or indeed drive churn as employees look for more progressive employers.

Cost implications 

Organisations enforcing RTO policies are also likely to face higher costs, such as maintaining and equipping larger office estates, paying higher salaries or other incentives to encourage workers to RTO. This could create a situation where companies are paying more while failing to retain or attract the necessary talent, a situation that might see them become uncompetitive. 

Rigid adherence to RTO or progressive flexible working?

Ultimately, the unavoidable conclusion is that businesses that insist on RTO working arrangements may struggle to compete with companies that offer more progressive, flexible arrangements.

Companies with rigid RTO policies may also find it harder to attract top talent. The pandemic accelerated the normalisation of remote work, and candidates now have higher expectations for flexibility. 

In a competitive jobs market, this is likely to widen the talent gap, as it disadvantages those that want employees to RTO. Some of the most skilled professionals prize autonomy in their working locations arrangements and know that their skills are in high demand. Not only can they name their price, but they can also dictate their conditions.

How can recruiters and employers cope with this new reality?

As with so many things, the ‘one size fits all’ approach that comes from blanket policies often doesn’t suit everybody. A smarter approach, of understanding the needs of each individual and finding a balance that benefits employer and employee is the best way forward. Creating or increasing opportunities for freelance and contract workers may be an option for some. 

The best advice to recruiters is to work with employers to strike a balance. Provide the flexibility to work with the preferences of each candidate, allowing the prioritisation of employee welfare in cases where that is appropriate.

Companies that resist adapting to this new reality run the risk of falling behind, with all the implications that may have for future success and prosperity.

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