'Trust is degrading': Return-to-offices policies eroding working social contracts say HR leaders

Is it easier to fire staff when they are working remotely? Ken Griffin, chief executive of hedge fund giant Citadel, certainly thinks so as he explained during an interview with Bloomberg last month.

In Griffin’s view remote, or even hybrid, working models cause the “cultural or social contract that holds people together in a company” to become “unquestionably weaker.”

“That worries me in terms of willingness of corporate America to make cuts in the workforce.”

The stories Griffin mentions of bosses laying off hundreds, if not thousands, of staff via Zoom calls have garnered significant headlines, while other corporate giants, like Amazon, have attracted criticism for their own heavy-handed approach to getting staff into the office full-time.

Alongside other household technology names that have taken a hardline stance on remote working, titans of the US financial world have made similar demands.

JPMorgan, Bank of America and Goldman Sachs have all implemented, to varying degrees, strict return-to-office rules, much to the chagrin of those impacted – particularly staff who joined the institutions during COVID lockdowns.

KPMG’s CEO Outlook report, published in October, painted a similar picture from business leaders on the issue, with two in three chief executives expecting a full return-to-office by 2026.

But what does this mean for the social contract that Griffin highlights? Is the sustained demand for remote working among employees a genuine danger to that implicit agreement, or was it a coded message from the Wall Street bosses as a means to their desired end?

“Too many leaders will pay lip-service to employee experience while actively avoiding listening to what their employees want and need from the workplace,” Forrester VP principal analyst, JP Gownder tells UNLEASH, adding that when employers don’t listen to staff “trust tends to degrade.”

Trust is a keystone of any social contract

Hardline messaging or abrasive language from business on a topic like remote working will quickly erode the trust that forms the foundations of social contracts, which are often unwritten agreements between both parties, HR thought leaders tell UNLEASH.

“Anytime an employer is unduly flexing on their team it damages the social contract, so the real question is whether a return to office is necessary for continued operations,” says Robert Kaskel, chief people officer at Checkr.

He adds that a return to the office isn’t necessary “for the most part” as we have “collectively rewritten those working social contracts”.

Employees now expect flexibility, and employers must ask themselves if returning to the office is the hill they (and their working relationships) should die on.”Employees now expect flexibility, and employers must ask themselves if returning to the office is the hill they (and their working relationships) should die on.”

Danielle Hipwell, director of people experience at Customer.io, tells UNLEASH that a decision for workers to come back to the office “for valid reasons” must be clearly communicated – otherwise trust will be negatively impacted.

“When employers clearly articulate policy changes, explain the rationale behind them, and highlight potential benefits, it works to build trust,” she says.

“Transparent communication fosters a positive and healthy work environment and ensures that employees feel respected and informed.”

While transitions of corporate policy will include “growing pains” Hipwell adds, but ambushing employees with “sudden demands” will invariably damage the employer-employee relationship.

This can lead to a significant loss of autonomy, increased financial burden, and heightened resentment, according to data surfaced by coaching provider BetterUp. This not only erodes the trust element of the social contract, but also damages employee experience and wellbeing.

“It's a critical concern that demands a more empathetic and communicative approach to navigate this transition from the employer’s end, with a failure to do so threatening talent retention, creating a strained employer-employee relationship, spiking turnover rates, and decreasing overall job satisfaction,” says Dr. Erin Eatough, director, Labs – Go-to-Market at BetterUp.

Workers will put their wellbeing above corporate wants

According to Gartner research, the primary concerns among business leaders over hybrid or remote working models is a negative effect on collaboration, culture, creativity and engagement – all of which impacts productivity.

However, despite believing that moving back on-site will address these issues “mandating an office-centric approach to working is a mistake and overlooks the numerous benefits of hybrid work,” says Caitlin Duffy, director in the Gartner HR practice.

In addition to cost and DE&I related benefits, this can include “greater opportunities for employee flexibility and rest” which positively impacts on employee wellbeing. While RTO mandates do not necessarily signal an end to wellbeing as a priority for organizations, leaders must at least acknowledge it will be impacted.

“Whether leaders realize it or not, employee wellbeing will always be an important factor for companies as they develop a high-performance workforce culture,” says Eatough.

It may sound counter-intuitive, but science tells us that wellbeing is actually the core driver of sustainable performance and modern leaders need to recognize this in order to see their workforces thrive.”It may sound counter-intuitive, but science tells us that wellbeing is actually the core driver of sustainable performance and modern leaders need to recognize this in order to see their workforces thrive.”

Kaskel adds that although “future-oriented” employers will continue to prioritize employee wellbeing, this requires long-term commitment from organizations – one of the fundamental aspects most employees will expect of that social contract with their employer.

“The reality is that without maintaining those efforts, employees disengage, and the workplace suffers, so smart employers won’t undermine their previous efforts,” he says.

As evidenced by the ‘Great Resignation’, employee wellbeing and satisfaction is a key driver of staff retention. Workers who feel they have been mistreated by policy U-turns or executive arrogance will vote with their feet, although the labor market is a different beast now than it was the best part of three years ago.

“Retention will suffer, but possibly less if we enter an employer’s market once again,” Kaskel says.

“Still, those new candidates will come to the table expecting flexibility and ready to wait for the right opportunity to come along.”

Eaton highlights that the Great Resignation has led to heightened expectations among staff for transparency from employers, while the “observed resentment, financial strain, and loss of autonomy” could threaten to “spark another major workforce movement.”

She also highlights the impact of this on line managers, who are most likely to face the immediate consequences of talent attrition and be responsible for mitigation where possible. They may also suffer in terms of experience and wellbeing if not properly supported to manage such a change effectively.

One side will have to blink first on this issue

Gartner’s research also shows how hybrid working models are yielding positive results for both employees and employers.

Among employees with “radical flexibility”, 53% reported a high degree of connectedness, whereas just 18% of those with low flexibility did so, Gartner found, while employees who are allowed to decide when they work are 2.3x more likely to achieve higher performance than employees without autonomy.

However, Duffy highlights that the challenge many leaders face is not necessarily simply implementing a hybrid model but not optimizing it fully.

“For example, a weakened workplace culture is not the result of having fewer employees on-site, but a failure to intentionally build culture connectedness into the hybrid workplace.”

Forrester’s Gownder says that how employers choose to implement hybrid work matters and will impact on the social contract.

For example, policies that require “strict quotas” of days in the office that “tracks badge swipes won't drive trust and employee experience as much as one that offers more latitude and judgment on the part of both employees and their managers.”

Ultimately, we envision a world in which employers who promote effective hybrid policies have higher employee retention, more productivity, and better employee engagement.”Ultimately, we envision a world in which employers who promote effective hybrid policies have higher employee retention, more productivity, and better employee engagement.”

But today, he says, that isn’t happening: “Adherence to hybrid work policies remains low, employees feel alienated, and many employees are seeking full-time remote job options.”

Despite the nuances of the issue, one thing appears certain: bosses that exploit remote working to fire cohorts of staff or that mandate strict return to office policies without viable justification are likely to draw headlines for the wrong reasons.

After all, social contracts work both ways.