4 minute read by Elizabeth Lyons and Joshua Zivin

As working from shared offices is becoming safer, employers across the country are requesting or, in the case of Musk, demanding that employees return to in person work. Many similar companies have gone in a different direction and made remote work permanent. In the tightest labor market since World War II, employee demands for remote and hybrid work options, and managers’ fear of how to manage these new work arrangements may explain the different responses.

Our experience working with employers at the HR company we founded in 2020 shows that non-managers value remote work more than managers do. Managing without the benefit of in person interactions and observations requires different practices and skills than those used in traditional management. According to Musk’s email, the company would have failed without his constant physical presence. Managers worry about how to motivate and incentivize their remote workforces, and this is consistent with what we have heard many times. There are valid concerns that traditional management tools may not work as well in a new workplace environment. The lack of managerial imagination conveyed in the email to the employees came from the captain of innovation.

Forced workers to come into the office allows managers to return to their pre-March 2020 management guidelines, but it also reduces job satisfaction among employees who value remote work, and in many cases retention. It’s not clear how sustainable a return to office will be in the long run. To see how risky Musk’s inflexibility is, you need to look at recent experience at Apple.

The insights from our data and analytic tools can help employers attract, manage, and retain talent. The hysteria about demand for remote work is overstated. Many workers and women value flexible hours more than they do fully remote work. Many workers are happy to show up to the office at times when they can work from home, as long as they never have to show up to the office at all. Flex schedules allow workers to work from home, but they still allow for frequent in-person interactions. For employers who want to benefit from offering remote work options, we found that workers value three remote days per week as much as they value four and not much more than they do two.

Workers consistently receive job satisfaction gains from non-traditional, flexible work arrangements and most prefer a hybrid work arrangement that is less disruptive than the all-or-nothing caricature of remote work that unsettles CEOs like Musk and creates lots of media attention.

Many managers worry that their employees are less productive when they are out of the office. The majority of remote workers are productive even if they don’t have the same work schedules that they would in the office. Monitoring in the workplace has always been too input focused with an effectiveness that is often illusory, and in this new era managers must increasingly turn to output-based metrics for gauging performance.

There is a lack of connection between teammates and the organization that is the most important risk of remote work. Lack of connection can affect the effectiveness of teams and cause workers to quit. There are trade-offs in any mode of work, and managers must learn how to reduce the downsides of remote and hybrid work just as they learned to reduce the drawbacks of in-person

Learning new ways of managing and coordinating can take time and cause uncertainty. In our opinion, ignoring the realities of the current labor market that necessitate new approaches to management is far riskier than ignoring them. Successful workforce management in the post-COVID world requires new tools and new science in the way that technological advances require firms to learn and adapt. Competitive advantages will be held by the organizations that respond to workforce changes by embracing new management practices. Musk might soon discover the challenges of applying old world thinking to a new world order.

The professor of economics at the UC San Diego School of Global Policy & Strategy is a co-owner of Amplisal.

Elizabeth Lyons is an associate professor of management at the UC San Diego School of Global Policy & Strategy.