As big businesses get aggressive with RTO, this may be the perfect time for smaller companies to scoop up workers

Business Insider

21-07-2025

If David were taking on Goliath today, he might do it from home.
Startups and smaller companies offering flexible work arrangements could better challenge larger rivals less willing to let employees log on from home, and many may already be doing so, workplace researchers told Business Insider.
"It's a great way for small companies to compete with big companies for talent," said Nicole Kyle, who studies the future of work, about giving workers greater autonomy.
Nick Bloom, an economics professor at Stanford University who studies remote work, told BI that his research shows that in January 2023, 27.2% of fully paid working days were from home. By June 2025, the rate had edged up to 27.9%. That's mostly thanks to smaller companies and startups, he said.
It comes as some of the biggest names in corporate America have gone all in on time in the office. Amazon, Goldman Sachs, and JPMorgan require five days, while Starbucks said last week that it would bump its RTO mandate to four days from three.
Researchers told BI that doing the opposite could help smaller firms compete for talent and cut costs.
Many young workers focus on flexibility because juggling the demands of work and life tends to get easier as people age, said Ellen Ernst Kossek, a professor emerita of management at Purdue University who has researched work-life balance challenges.
In a decadeslong study involving several hundred thousand workers, she found that people under 30, compared to older age groups, report more work and life conflict overall. That goes beyond family duties and includes time for exercise, domestic tasks, caring for pets, and just being alone.
In-demand workers could choose flexibility
Rather than across-the-board mandates, Kossek said, employers should construct a human resources strategy that accommodates an organization's needs and those of its workers.
"We've got to balance employer and employee interests, or nobody's going to want to work for big companies," Kossek said.
While fresh grads in need of mentorship and empty-nesters inching toward retirement are often more inclined to enjoy going to the office, people of prime working age who are both experienced and relatively young — between 30 and 50 years old — are attracted to more flexibility, especially in tech industries, Stanford's Bloom said.
Someone leaving school with a master's degree in computer science and a specialty in AI would fall into "one of the hottest talent pools out there," he said. If the grad had competing job offers and one employer allowed someone to work from home twice a week and one didn't, it would likely be an easy choice, Bloom said.
Because caregiving responsibilities more often fall to women than men, rigid RTO requirements tend to lead to a paucity of women in the upper ranks of some prestige industries, he said.
"It's pretty hard to argue that having 90% men in a firm is great for business, which is the case for many tech and finance companies now," Bloom said.
Big businesses are under pressure
In a year of tariff whiplash, many businesses are facing rising costs, and remote work can be an easy scapegoat for lackluster performance, Mark Ma, a University of Pittsburgh business professor, told BI.
"A jerk-knee reaction is to blame remote work and call employees back to the office," Ma said.
Although the US stock indexes have been notching record highs, Ma said that if investors grow worried, for example, that tariffs will eat into corporate profits, more companies could feel compelled to issue RTO mandates.
Starbucks, which said in a recent email to staff that it would increase its RTO mandate to four days from three starting in October, saw its stock fall earlier in 2025, though it's now up slightly for the year.
CEO Brian Niccol, who joined the Seattle coffee chain in the final months of 2024, wrote in the memo that having people together in person lets workers "share ideas more effectively, creatively solve hard problems, and move much faster."
Kyle, who is a cofounder of CMP Research, told BI that certain types of work are often better done when colleagues are together, though not all work falls into this category. Flexibility can allow teams to best design their workflows, she said.
Bloom, from Stanford, said that smaller and newer companies are more likely to embrace remote work and tend to grow faster. In contrast, older and larger firms are leaning more toward office-based work and typically see slower expansion.
"Enforcing RTOs is kind of like saying we as a company have decided to cancel the corporate jet and halve all travel allowances," he said.
Just like draconian cost cuts can signal trouble, a sudden RTO push could make investors nervous, Bloom said.
Flexible work could reduce costs
Smaller companies unable to offer paychecks equal to those in Magnificent Seven tech firms may be in luck if they offer more flexible work as a perk, said Ma.
He said that allowing employees to work from home can allow workers to spend less on transportation and meals. At the same time, companies may even negotiate a salary cut with employees in exchange for greater flexibility. That could help companies hang onto workers.
Bloom said that the ability to work from home two to three days a week could be worth as much as an 8% pay increase, which is "a meaningful amount" for higher-level managers who make six figures.
Workers who have a hybrid setup tend to leave at lower rates, he said. That can be a big savings for companies.
"Every person that quits costs a company a fortune because you've got to go out, advertise, reinterview, onboard, retrain — and you're still looking at six months until someone is as up to speed as the person who just quit," Bloom said.