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Amazon tells managers they can now fire employees who won't come into the office 3 times a week
(www.businessinsider.com)
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this post was submitted on 20 Oct 2023
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I keep hearing people making this argument.
Is the assumption that Amazon is ignoring their finance dept and that this is driven by the sunk cost fallacy? “We dumped a bunch of money into this, therefore we should continue to move forward with it.”
I ask because the appraised value of property is based on what other’s will likely pay for it. If no one else is wants to pay a lot of money for my office space, it doesn’t matter if I have 1 employees or 10,000 employees in that building.
A lot of companies have long-term contracts for these office spaces that they can't get out of, so whether or not their workers are using the space, they have to pay for it. They should really just write it off as a loss, but I'm not too familiar with how that works. Maybe they can't.
They do write it off. The real estate theory of RTO doesn't hold water.
Yeah, that’s kind of what I was getting at with the “sunk cost” thing. “We’re stuck paying for it, so we should use it.”
Even if using it make people less productive, make recruiting harder, and forces tech companies to pay expensive regional Silicon Valley salaries.
I think you have the right idea but came to the wrong conclusion. Why would anyone buy office space if there is no value in employees coming to the office? Hint: they wouldn't.
Edited to add: these properties may become a liability on their books which would impact their ability to apply for or pay for loans, as well as other negatives for the company.
No company likes to have liabilities on the books, but to think that they would force an RTO for that reason alone doesn't pass the smell check. It's a more economical option to write off the loss and try your best to sublease the space, or attempt to get out of your lease early. That way, you're no longer stuck with the costs once it's done, and can make more money long-term.
We can also observe this happening in the real world: https://www.cnbc.com/2023/10/20/dropbox-hands-over-25percent-of-san-francisco-headquarters-back-to-landlord-.html
I doubt it's just a singular reason they are forcing return to office.
It's likely property value, micro managing , reducing head count and so on all play a role in jt
I am not saying they are whole valid reasons. I am just giving examples of some of the reasons they might want people back in.
I love remote work and hope I can stay in it