Andy Jassy, the chief executive of Amazon, wrote in a memo that “the advantages of being together in the office are significant.”
Credit...Hiroko Masuike/The New York Times

Executives and Research Disagree About Hybrid Work. Why?

Companies like Amazon have required a return to the office five days a week despite findings showing benefits to employers that allow some remote days.

by · NY Times

Amazon’s C.E.O., Andy Jassy, made waves last month when he demanded that all employees return to the office five days a week. The proclamation seemed to validate similar demands made by executives like JPMorgan Chase’s Jamie Dimon and Goldman Sachs’s David Solomon. And it naturally raised the question of whether others might follow suit. (It appears some have.)

But it also flew in the face of researchers and their studies that have found hybrid work benefits companies. Stanford’s Nick Bloom, for example, has found that employees who work two days a week at home are just as productive and less likely to quit. (Bloom, like others, speculated that Amazon’s pronouncement was really an attempt to reduce the work force without official layoffs.)

So why do so many employers that say they’re data-driven seem to move counter to science?

Executives are not convinced by the research. “It’s not like: ‘Aspirin definitely helps with headaches. It’s been proven again and again and again,’” Laszlo Bock, a former senior vice president for people operations at Google, told DealBook. “The academic studies that have been done, and there are not that many, show a range of outcomes — and they generally show a kind of neutral to slightly positive.”

Adam Grant, an organizational psychologist at Wharton, said he disagreed, pointing DealBook to a meta-analysis of 108 studies.

Some are just over it. Almost five years since the start of the pandemic, many C.E.O.s are ready to move on from an experiment they never wanted to start. “When we look back over the last five years, we continue to believe that the advantages of being together in the office are significant,” Jassy wrote in a memo about ending remote work at Amazon.

Grant says C.E.O.s may not always methodically control for whether an effect was caused by remote work, the pandemic or something else, as an academic researcher would.

They also may not want to find out that hybrid work is better.

“Leadership is a lot less fulfilling and a lot less fun when you’re doing it remotely,” Bock said.

They see their company as different. Many of the executives who have called employees back to the office point to the particularities of their business or industry that require in-person work.

That includes Jassy. “Our culture is unique,” he wrote in the memo.

This predisposition to dismiss outside data is common. “When we replicated studies in different industries, in different organizations, the patterns look pretty similar,” Grant said. “And when I talk to C.E.O.s, they all have the same struggles and challenges regardless of an industry.”

It’s not practical. Hybrid work may be technically the best route, but it’s also complicated to oversee. Time is money, and C.E.O.s may not want to spend theirs deliberating over a decision about bringing workers back — or figuring out how to manage a hybrid workplace.

But that, Grant argues, may be missing the point.

“There’s a premium on decisiveness in the business world,” he said. But “if you’re making a highly consequential, irreversible decision, you are supposed to slow down as much as possible.”

— Lauren Hirsch

IN CASE YOU MISSED IT

Big banks reported better-than-expected results to kick off earnings season. JPMorgan Chase and Wells Fargo beat analysts’ forecasts even as worries persist about the health of the economy. The results boosted the companies’ share prices, but Jamie Dimon, JPMorgan’s C.E.O., warned that growing geopolitical risks in the Middle East and Ukraine could hurt the global economy.

The Justice Department weighs trying to break up Google. Regulators laid out potential remedies after the company was declared “a monopolist” in online search, including forcing the technology group to spin off one of its businesses. But any move to force Google to split could be difficult to achieve, with legal experts noting that the Justice Department would need to prove that other changes would not solve the problem.

Hurricane Milton pummeled Florida, causing billions of dollars in damage. The storm left more than 2.5 million people without power after rolling through the state.

BlackRock’s Rick Rieder wants more rate cuts, for everyone’s sake

By Talmon Joseph Smith

Fall, and the fourth quarter for corporate America, has only just begun. But the financial world has already gone through several seasons: from fears of an economic slowdown to relieved optimism about the labor market — and now some worries over whether inflation is fully vanquished.

Rick Rieder leads the global asset allocation team at BlackRock, which reported on Friday that it had brought in $221 billion during the third quarter, its most ever, and that its total assets under management had reached $11.5 trillion. He feels that the overall picture — and correct course of action — is already clear. In his eyes, inflation is largely resolved and the Fed needs to keep cutting rates, even if recession risks remain low.

In a conversation with The Times’s Talmon Joseph Smith at BlackRock’s Hudson Yards headquarters, Mr. Rieder doubled down on his outlook. This interview has been edited and condensed for clarity.

You have said that it might be better to think of the U.S. economy as a satellite, sort of always in orbit, rather than as a plane approaching a hard or soft landing. Some business-cycle traditionalists shake their heads at that.

Satellites don’t land. They just get tired over time, and they need a bit more energy. I really believe in this. The Fed raises rates 500 basis points and it doesn’t make a difference, and it’s because the service economy is not cyclical. Goods are hugely cyclical.

But the reason why I think the Fed’s still going to cut rates more is this. Look at what’s happening to low-income people. Look at credit card delinquencies, auto loan delinquencies, mortgage rates. You’ve got to get that rate down.

Some people who don’t think the Fed needs to cut at all echo your service economy point, arguing it can actually keep coasting along without further cuts.

I think you have a two-tiered economy. Companies are doing great. They termed all their debt out already. Baby boomers, higher income, doing great.

For the rest of the country, you have no cash, but the money is in your house. So if we keep the mortgage rate around 7 percent, what happens is homes are unaffordable and there’s not enough inventory. If the Fed brings the rate down, you stop brutalizing the low income and small businesses. People ask: Isn’t inflation still high? No, shelter inflation is the only thing that’s high. And it’s high because there’s not enough homes on the market.

Well, then, how fast should they cut and how much, in your view?

I think they should go another 25 basis points in November. I think they’ll go 25 in December. And then I don’t think we need to go that far after.

What do you think about housing supply now being a major presidential campaign issue?

I think some of the policy proposals that would create incentives for home building — and first-time home buyer incentives — are really attractive. It brings down rent prices and addresses the inventory problem.

What do you think of the ongoing A.I. race?

We are going to go through this incredible mountain of spending on A.I. and infrastructure. You get to the other side, and then, boom, the next five, 10, 20 years, you reap the benefits of it — with labor costs being the primary form.

I’ve seen studies showing 30 percent to 60 percent of jobs can be augmented or replaced. And I think people underestimate it.

Do you fear that after that peak spending on A.I., we will have a dot-com-bubble-like crash when that wheel stops spinning?

If you said to me today would I still invest in tech, I don’t think the multiples on tech stocks are that high. Those companies will become a bigger and bigger part of the corporate universe. I just think that keeps going.

It’s hard from an asset-allocation point of view. How much do you want to have in seven stocks?

The activist at Pfizer’s gates

By Michael J. de la Merced

Few activist investors nowadays are as ambitious, or as busy, as Starboard Value. The hedge fund is pushing for change at Pfizer while also trying to shake up News Corp, Match and others.

While Starboard has had quiet successes, the firm has also waged many memorably public, heated battles. It’s not clear yet which way the Pfizer campaign will go, but if it becomes a drag-out fight, investors can expect some zingers. Here’s a sampling from previous battles.

Darden: In one of Starboard’s most famous fights, it sought to completely replace the restaurant operator’s board. The hedge fund argued in 2014 that Darden, which owns Olive Garden and other chains, was being mismanaged and — in a nearly 300-page presentation that has become the stuff of Wall Street legend — accused it of churning out substandard pasta:

Shockingly, Olive Garden no longer salts the water it uses to boil the pasta, merely to get a longer warranty on its pots. This appalling decision shows just how little regard management has for delivering a quality experience to guests.

Starboard succeeded in kicking out all of Darden’s directors, a rare accomplishment by any activist. (But Darden did not start salting its pasta water.)

Yahoo: Starboard got involved in the embattled web pioneer amid its long business struggles under Marissa Mayer, its C.E.O. Mayer reportedly struck a secret agreement with Starboard in 2015 to limit costs at Yahoo, in exchange for the hedge fund’s withdrawal of its demand for board seats.

But spending at Yahoo instead grew, and the company said it planned to spin off its huge and incredibly valuable stake in the Chinese internet giant Alibaba. An indignant Starboard then sought to overthrow most of the board:

For over a year, we have attempted to work constructively with management and the board of Yahoo. We have tried extremely hard to work “behind the scenes.” We have grown increasingly frustrated.

Yahoo eventually settled with Starboard, giving the hedge fund four board seats.

Thanks for reading! We’ll see you tomorrow.

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