A case study on Spotify's remote first work policy.
An Analysis of Spotify CHRO Katarina Berg's rebuttal to calls for a return to office for its employees stating "You can’t spend a lot of time hiring grownups and then treat them like children"
Remote work due to the Covid-19 pandemic was hastily planned with some companies adapting to the new normal better than others. Even after the lifting of mandated lockdowns, many large companies chose to continue the remote model or at the least transition to a hybrid model. The latter was seen as a necessity with most employees almost demanding a better work life balance now that they knew that productivity and efficiency was not only possible but both thrived under a remote/hybrid model. However, as time has passed, companies are choosing to forego their earlier decisions along with employee wants and moving employees back into the office. The trend started with large consulting and executive search firms alongside financial institutions but has found its way to tech giants who seemingly have everything to benefit from the post pandemic models. This leads to the perplexing question as to why companies are forcing employees to return to the office when data indicates that for productivity, efficiency and attrition a remote/hybrid model is the ideal one without even going into the other benefits of remote work.
The first explanation for the above question lies in the costs associated with remote work. To be more specific, the large fixed costs associated with the large buildings and offices these companies have. But it has more to do than the opportunity costs of having empty buildings as there is a larger cost with having employees in office! From electricity to meal costs and everything in between it is actually much more expensive than to have an empty office but the optics associated with having an empty space underscores every shortcoming of the business. The next overarching explanation is, too not mince my words, incompetence on the part of the organization. I use the word incompetence to highlight organizational failure in two separate ways - ability to create culture and ability to have control.
A common reason cited for the return to in person work is the difficulty to create an effective corporate culture, a cornerstone for any successful organization. Although valid that the methods to establish a good culture is different in a remote model the key is the same - effective communication. There is an argument to be made that creating culture is actually easier in a remote world as the employees are undoubtedly happier, the failure is in identifying the right balance in the initial hiring and onboarding phase. This makes the job of the HR department crucial not only in hiring the correct people keeping in mind the remote nature of work but also to keep departments/teams lean to ensure effective communication. Many startups who would benefit tremendously by remote work are choosing to be in person due to failure in realising the possibility of a strong remote culture. Startups often don’t have the benefit of an established HR team and should ideally work with a seasoned recruitment partner such as Rempact to build out their teams.
Spotify
The CHRO of the audio streaming giant Katarina Berg stated in an October 2024 interview that “You can’t spend a lot of time hiring grownups then treat them like children” as a defense of its decision to stick with their popular remote only model of work. Spotify made the decision to stay completely remote in 2021 and saw productivity increase and attrition decrease to below 15%. The company laid off 17% of their workforce in December 2023 (about 1500 employees) due to overstaffing of departments with most workers doing support work. Although there were concerns as to how the remaining employees would fare but the company’s financials as well as share price have soared in the one year since with attrition staying low - indicating that the culture is staying in tact. Spotify’s example also proves the aforementioned question of control, the statement that they treat their employees as grownups has to do with their ability to delegate and trust their employees with being productive. They foster a culture where micromanaging is looked down upon allowing employees to take more ownership and responsibility. This is something engrained into the organization and the plaudits for the same should be given to Katarina Berg’s HR team for their astute hiring and organizational planning. The Spotify example is one that can be mirrored by other large tech players by putting a deeper emphasis on early markers of culture alongside putting more trust into their employees activities. Startup founders should take inspiration from Spotify by putting faith into their own managerial and communication skills to lead their remote team effectively where they have much more control on tasks and communication compared to a giant like Spotify who is effectively doing the same with 5000+ employees.
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