Covering return-to-office costs: Does it make sense?

With the debate still raging about the return to the office and the hybrid work model, many employers and HR leaders are trying to decide if they should take a carrot or stick approach.

Is it better to mandate a return to the workplace through stern messaging and tracking employee attendance, or is it better to provide incentives such as free lunches and parking subsidies?

A recent survey of Canadian employees suggests the latter would be a welcome initiative. Many workers want employers to fully fund parking (71%) and clothing (58%), though they are less adamant when it comes to toll roads (36%), public transportation (33%), food (28%) and gas (22%).

On the other hand, about one-quarter would be happy cost-sharing these expenses, finds the Capterra survey of 250 Canadians.

“The transition to remote work during the pandemic really made people realize how much they were spending to commute to work before,” says Brian Westfall, principal analyst at Capterra.

“Now that employees are going back to the office more, and inflation has caused their costs to increase, they’re hyper aware of how much it’s cutting into their paycheck to be there. That’s why they’re looking to their employer for relief.”

Why employees want costs covered

Prior to the pandemic, the number of people working from home or remote workers was of course much less than during and after the pandemic.

“Before, it made sense for people, I guess, to just pay for their own transportation, for their parking fees, and all that kind of stuff,” says Jean-Nicolas Reyt, associate professor of organizational behaviour at the Desautels Faculty of Management at McGill University.

“But now, the status quo is different,” he says. “They believe that if… organizations are going to require people to work from the office, they should pitch in.”

And of course the cost of living is a major factor, as many people have not received the types of raises that will compensate for inflation, says Reyt.

“Technically, it means companies are asking employees to accept a decrease in salary, like a demotion or something.”

A lot of people are citing both the monetary costs and mental effort of a return to the office, such as parking and traffic jams, says Gilles Levasseur, part-time professor at the Telfer School of Management at the University of Ottawa — and that’s exacerbated when they know they can work well from home.

“A lot of people in the past would spend money on car gas, parking and all the dress code that is required. [Now] they've learned to cut out these types of elements,” he says.

“That has become a way of gaining some financial benefits in a world where a lot of [costs] have increased. So it's way of [achieving] savings.”

What costs should be covered in return to office?

If you’re looking to motivate your workforce to return to the office, you may need to share at least some of these costs with your employees, according to Westfall. And that could start with covering food items.

“Groceries were the biggest inflation pain point in our survey, and 84% of Canadian employees told us they’d enjoy working in the office more if they had access to free or subsidized food. If companies want employees to happily come to work, providing food or reimbursing food expenses will go a long way.”

And having flexible policies can ensure cost sharing is fair, he says.

“Commuter stipends are a good example of this. If you only cover the costs of public transportation, then employees that travel by car will feel left out. Having a commuter stipend with a set limit that employees can apply towards any costs associated with their preferred mode of transportation ensures equity.”

Does cost sharing make sense?

But there’s a lot of theory about what motivates people, such as what people actually need versus what they want, says Reyt. To really motivate people to do something, you have to explain to them why it's important, and why it fits a broader goal, he says.

“By just paying… transportation fees or parking fees or that sort of stuff, it's not going to motivate anyone — it's just something that employees feel is deserved. And if they don't have it, they're just going to think it's messed up and they're going to be demotivated.

“So, there's really this distinction between what's a motivator and what's a demotivator.”

Many people want to be reimbursed because they feel the push to get back to the office is unfair and unwarranted, says Reyt.

“So, they just say, ‘Well, if you're going to force me to do this, at least you could pay for my parking spot.’ But nobody's going to say, I'm so motivated to go to go to the office [because] they're paying for my parking spot.’”

Downsides to financial reimbursements

The other problem with financial compensation is employees will need to declare these items as a taxable benefit, says Levasseur.

As an alternative, employers could boost wages to cover the rising cost of living, he says. But often it’s the intangible offerings that have a greater impact, such as telework, he says.

“The material one is good, but it dries up; the intangible one is the one that will have more impact."

Another challenge? Financial incentives can lose their appeal over time, says Levasseur.

“Yes, it's a good initiative to start, but… [then] you’ve got to ask yourself… ‘How much will it really impact after two, three years?’ Because people get accustomed to it, like anything else.

“So, if you take it away, well, it will frustrate employees, because they'll say, ‘We used to have that, now we don't, they're cutting again.’ So you’ve got to be very careful.”

Employers need to make sure employees understand that these benefits are being given for temporary time, he says, because the employer is still the one calling the shots.

“By trying to do these compromises, you cannot forget that the employer is still the boss in the shop. A lot of people tried to renegotiate a lot of things…  especially millennials or generation Y and Z because they're accustomed to being in their little world,” says Levasseur, but employers are focused on boosting productivity levels, which are lower in Canada compared to countries such as the U.S.

Risks of RTW mandates

Of course, the overall debate about return to office mandates is ongoing. A lot of people feel that the mandates of going back to the office don't make a lot of sense, says Reyt.

“I don't care if people work from home or the office or whatever, but I have to say that I'm pretty shocked at how little reasoning there is to explain why people should be working from an office. A lot of times it's very mushy, it's very abstract,” he says.

“You have CEOs who say things like ‘It’s better for the culture’ — but is it?”

A lot of employees feel that it’s unfair to have to work from the office when working from home has provided them with greater work-life balance, mental health, time management and productivity, says Reyt.

But often trust is an issue from leadership.

“I remember there was a CEO who was telling me… ‘How can I make sure that my employees are not having three jobs?’... And it was funny to me because I was like, ‘If they can do three jobs and you're not even aware of it, you have bigger problems’ because this is a performance management problem.”

Employers forcing the return to office might want to remember that many people are comfortable switching jobs — especially those in the new generations — and they may lose top performers, says Reyt.

“It's fine for an organization to decide that they want everybody to come back, but they really have to convince everybody that it's the right thing to do. Otherwise, they're going to have a lot of issues with people quitting, and all sorts of other counterproductive behaviours… people basically grow frustrated and resentful.”

Many companies are trying to regain that “power” they had pre-pandemic, he says, “but the market is restructuring itself, and if you're an organization that has half a brain, you will not do that.”

Communicating return to office reasoning

While it’s tempting for companies to force the issue right now, that’s not going to improve engagement or job satisfaction, says Westfall.

“If you say employees have to come to the office ‘just because’ or because ‘that’s the way it’s always been,’ it’s not going to go over well,” he says.

“There are legitimate reasons why being in the office is better than being at home (like fostering in-person collaboration). Companies that want employees in the office more should focus on these ‘carrots.’”

Communication is critical with any return-to-office mandate, says Westfall, especially if you don’t have the budget to give raises or subsidize work costs.

“Financial wellness benefits can at least help employees better budget the income they have to help with work costs, so communicating that is critical.”