Elon Musk’s Big Bet Against Remote Work: Will Tesla Win?

Elon Musk’s June 1 email to Tesla employees was titled, “To Be Super Clear.” His directive left no room for speculation: Everyone, at every level, was ordered to work a minimum of 40 hours per week, in-person, at the office. “Moreover,” he explained, “the office must be where your actual colleagues are located, not some remote pseudo office. If you don’t show up, we will assume you have resigned.”

Is Musk on to something, betting that pre-pandemic ideas about productivity and collaboration still hold true? If that’s the case, researchers, and other Big Tech employers, have yet to catch up. Airbnb, Alphabet, Amazon, Meta, and Twitter are among dozens of tech companies allowing at least part-time remote work. As the Great Resignation continues, and the gap between supply and demand for high-quality human capital widens, flexibility incentives have emerged as a critical tactic for winning the competitive talent war. Microsoft’s 2022 Work Trend Index indicates that the majority of tech companies—and not Tesla—are on the right track: Based on a study over 31,000 employees around the world, it found that 52% are considering switching to a full-time remote or hybrid job this year. “We’re not the same people that went home to work in early 2020,” the study notes. “Employees everywhere are rethinking their ‘worth it’ equation and are voting with their feet.”

Other studies take deeper dives into the benefits of hybrid and remote work, most of which are very familiar to those Tesla employees who have been working from home and could continue to do so – even if just a few days a week. A Stanford study on remote work followed 16,000 workers over nine months and noted a performance increase of 13 percent. The Remote Collaborative Worker Survey, published by the Society for Human Resource Management, found that 77 percent of those surveyed reported greater productivity while working remotely.

But it’s not just productivity that improves. Remote workers are better able to juggle the competing demands of work and child- and eldercare. With the cost of such care skyrocketing, demand far outweighing supply in most of the country, and frequent pandemic-related closures still the norm, being at home to care for family members is becoming a “must have” for many workers. This side benefit of remote work contributes to lower stress levels, and recent studies have also uncovered other health-related outcomes, including time and psychological benefits gained by not commuting. Researchers found, for example, that remote employees exercise almost three hours a week, which is 25 minutes more than their office-based colleagues.

Those kinds of benefits, which can vastly improve the health and well-being of workers, don’t seem to be on Elon Musk’s radar. His recent praise for Chinese workers who are “burning the 3am oil,” as opposed to their American counterparts who “are trying to avoid going to work at all” belies the truth about what’s really going on in Tesla’s Chinese factories. In the Shanghai “Giga-factory,” workers are forbidden from leaving due to a pandemic lockdown, working 12-hour shifts six days a week and sleeping on the factory floor. Western workers—and current labor laws—would obviously never accept conditions remotely resembling those allowed in China, no matter how good Musk thinks they are for the company.

It’s too soon to know what effects the order ending remote work will generate, although there is already resistance from Tesla’s 4000 workers in Germany. There is certainly a chance the emails were just another disruptive stunt by a leader famous for them (witness his June 2 missive calling for a Tesla staff cut of about 10% because he has a “super bad feeling” about the economy—coming as a complete surprise to analysts and shareholders who expect significant growth this year and his 2018 public musings about taking Tesla private at $420 a share, a clear reference to cannabis culture). There’s no doubt Musk is under pressure, with Tesla stock (where the majority of his wealth is tied up) down 22% since the now-stalled deal to acquire Twitter was announced, and supply shortages and factory shutdowns slowing production. He is also facing new scrutiny of the Twitter deal from a nation security standpoint, since the Chinese government which controls much of Tesla’s supply chain, holds so much leverage over his wealth.

What at least a decade of studies indicate, though, is that Musk should expect a forced return to the office to generate some immediate resignations, loss of key talent over time, and diminished productivity and morale— results that are radically inconsistent with his presumed objectives. As Wharton management professor and HR expert Matthew Bidwell notes, “I don’t think Musk is alone in thinking that organizations might work better when people are in the same place. The difficult question is whether the benefit to the company of bringing people back in is going to outweigh the costs to employees. Telling people who want to work from home that they should ‘pretend to work somewhere else’ is a great zinger. But if I was a Tesla employee who had worked hard from home through the pandemic to help keep things running, I’m not sure I’d see the funny side.”

Musk’s ultimatum makes it “super clear” that he’s not trying to be funny, and that he understands very little about remote and hybrid work and the Tesla employees who make his business a success.