Working from home is turning into ‘return to the office or lose your bonus’

Companies did all they could to encourage their workers back to the office after the pandemic. There were free meals, unlimited snacks, pilates classes, social events, subsidised travel costs, and some offices even installed doggy daycare facilities for workers who got four-legged companions during lockdown.

But, despite such freebies, many workers continue to prefer to work from home at least some of the time – leading many executives to set aside the “carrots” of workplace incentives and reach for the “stick” to get workers back to the office.

Junior lawyers at London law firm A&O Shearman were recently warned that if they fail to comply with the company’s hybrid working policy of spending “at least 60%” of their time in the office their bonus eligibility for bonuses would be “affected”.

A&O Shearman, formed from the merger of London’s Allen & Overy and New York’s Shearman & Sterling, is the latest large company to tie office attendance to pay, promotions and bonuses. In some cases, workers have even been told if they don’t turn up to the office regularly they won’t have a job at all.

PwC has told its UK workers that they must spend at least 60% of their time in the office or at clients, and it would monitor their entry and exit to the office.

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London law firm Slaughter & May has also warned staff that it is tracking their attendance and “you should assume that if you are not in the office (or at a client, in court etc.) in line with the policy, this will be raised with you and you will be asked to comply”.

Such moves come despite Office for National Statistics (ONS) figures showing two in five UK workers enjoy a remote working arrangement, rising to two-thirds for people in management positions. Before COVID-19, just 4.7% of UK employees worked from home.

In the US, more than a quarter of workdays were done from home last year, up from one in 14 before the pandemic, according to WFH Research.

Former Marks & Spencer (MKS.L) CEO and ex-Asda chairman Lord Rose said that working from home was creating a generation “not doing proper work”. “We have regressed in this country in terms of working practices, productivity and in terms of the country’s wellbeing, I think, by 20 years in the last four,” he told the BBC.

Lloyds Banking Group (LLOY.L) – which owns Halifax, Lloyds and Bank of Scotland – earlier this year told senior managers that part of their bonuses would be withheld if they fail to work from the office at least two days a week. It cited the “behaviour” and “leadership” elements of its bonus plan to restrict the payment to those who failed to attend the office at least 40% of the time.

Bonuses are now embedded in the culture of not just banks and law firms, but across a vast range of industries. However, they were only introduced to the UK workforce relatively recently, compared to the US where JPMorgan (JPM) began giving employees a full-year’s pay as a Christmas present in 1902.

In the UK, bonuses boomed after the “big bang” deregulation of financial markets in 1986, as US banks dangled the prospect of vast annual bonuses and generous “golden hellos” to tempt top London bankers to join them.

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Bonuses had been limited by the EU’s “bonus cap” which limited payouts to a maximum of 200% of base salary since 2014. But post-Brexit, the UK government has allowed banks to set their own bonus terms.

The 2025 bonus round will be the first year of unregulated bonuses for most UK banks, with Goldman Sachs’ (GS) London bankers able to collect a maximum of 25-times their base salary.

JPMorgan chief executive Jamie Dimon has demanded that from the start of April all the bank’s worldwide staff return to the office five days a week. “Now is the right time to solidify our full-time in-office approach, we think it is the best way to run the company,” he said in an official announcement.

When challenged by angry staff at a town hall meeting, Dimon — who was paid $39m last year, including a $37.5m bonus — replied: ​​“I’ve had it with this stuff. I’ve been working seven days a goddamn week since COVID, and I come in, and where is everybody else?

“And don’t give me this s**t that work-from-home Friday works. I call a lot of people on Fridays, and there’s not a goddamn person you can get a hold of.”

Amazon (AMZN) ordered all its 1.5 million staff back five days a week from January. The head of Amazon Web Services, its cloud computing division, told employees that if they “don’t work well in that environment and don’t want to, that’s okay, there are other companies around”.

David Solomon, the boss of Goldman Sachs, ordered staff back full-time in 2021 and called working from home during the pandemic “an aberration”.

Computing giant Dell (DELL) last year warned employees that if they failed to come into the office at least three days a week they would be barred from promotion. “Choosing to be remote does indeed put career advancement at a standstill,” the company said in an internal memo.

However, many rank and file workers complain that while they are being forced back to the office their bosses are sending the diktats from home — and still collecting mega bonuses.

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Brian Niccol, the chief executive and chairman of Starbucks (SBUX), lives in California – over 1,000 miles away from Starbucks’ headquarters in Seattle. Starbucks is paying for “a small remote office” for him to work from near his home in Newport Beach, and when he commutes to the head office he does so in a private jet. Niccol was paid $96m for his first four months in the job, making him one of the US’s highest-paid executives.

Mark Ma, a University of Pittsburgh business professor who studies the impact of working from home on company performance and employee welfare, said most workers recognise that there are benefits from being in the office environment. “But many feel it is very top-down,” he told Yahoo Finance.

“The Starbucks CEO is demanding everyone be in the office, while he is working from California. Elon Musk has ordered all Tesla (TSLA) workers back to the office, but how often is he there? He seems to mostly be at the White House.

“It can seem like the top [executives] are enjoying a privilege they are taking away from rank and file employees.”

Ma says companies are increasingly reaching for the sticks of punishment as the carrots of incentives haven’t worked as well as expected. “We’ve been seeing much more use of sticks since the third quarter of last year when Amazon started to call people back. It could be that leaders of other companies see what others are doing and think ‘we should get our staff back too’.”

“Companies are mandating five-days a week in the office because they say it improves cooperation, creativity and profits,” Ma says. “But the pandemic showed that’s not necessarily true – people worked well remotely and companies kept hitting record profits. It proved it is possible to work from home and be just as, if not more, efficient.”

Ma’s research examining the effect of S&P 500 (^GSPC) companies’ return to office (RTO) mandates “did not find significant changes in firm performance in terms of profitability and stock market valuation”.

It did find that managers were using return-to-work mandates to “reassert control over employees and blame employees as a scapegoat for bad firm performance”, and that RTOs led to a “significant decline in employee job satisfaction”.

Ma warns that top executives, who often have spouses who don’t work or have household staff to assist with day-to-day chores, are greatly underestimating the value of workplace flexibility for employees.

“People have the experience from the pandemic that they can work just as effectively from home, and they really appreciate the flexibility.”

The value of remote working was perhaps shown most starkly by US employees of Dell, when they were warned they would not be eligible for promotion if they refused to come into the office. “Fifty per cent of them continued to work from home despite the threat,” Ma says. “That shows people really do value their flexibility, they are willing to give up career opportunities to maintain it.”

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Separate research by Ma found that on average workers were willing to give up 20% of their wages to avoid a schedule set by an employer, and 8% for the option to work from home.

Sankalp Chaturvedi, professor of organisational behaviour and leadership at Imperial College Business School, says companies are trying to get back to the status quo before the pandemic that work took place in the office. “But employees have got used to the flexibility the pandemic brought, and they don’t want to forget about it. They want it to be the new normal.”

He warned that threats and punishments are unlikely to achieve the outcomes that bosses want, and going too hard will lead companies to lose staff. “And it will likely be the best ones who will leave if they feel like they’re not being treated fairly and respectfully.”

Professor Randall Peterson, director of the Leadership Institute at the London Business School, said: “The threats are likely to get compliance, but without acceptance. That’s when staff will start thinking ‘I can get the flexibility I want elsewhere so why would I stay here unless they are going to pay me a ridiculous amount to be in the office every day’.”

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