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Elon Musk’s In-Person Mandate for Tesla Makes Sense

Why this might actually be a good idea.

Key points

  • Most employees prefer to have the option to work from home or the office.
  • Mandating employees to work from the office might benefit organizations that seek cross-team collaboration and affective commitment.
  • Elon Musk is betting that mandating employees work from the office will benefit Tesla, even if some employees are frustrated.

Elon Musk is demanding that Tesla office workers return to in-person work. "If you don't show up, we will assume you have resigned,” cited Musk.

Competitors are poaching Tesla's employees, and future of work experts are opining that this will ultimately be a disastrous mandate. But is it possible that Musk might be making the right call?
Five factors create the ideal organizational conditions for requiring employees to work from a physical office. As it turns out, given the Tesla context, Musk might be onto something.

Below, I outline these five factors and describe why it's ideal for Tesla. Consider this an evidence-based guide for future conversations on in-person mandates.

A Need for Knowledge Sharing and Information

In what will undoubtedly be a landmark study on virtual work, a team of authors recently published an article in Nature that tracked the interaction patterns of over 61,000 Microsoft employees. These employees were using their own home-grown workplace analytics product, which anonymously tracks instant messages, emails, and scheduled and unscheduled meetings.

The findings illustrate that virtual employees spend more time working with “strong ties” (colleagues they regularly work with) and less time working with “weak ties” (colleagues they don’t regularly work with). Why is this problematic? Cross-team collaboration facilitates what’s called “knowledge sharing,” which is vital for ensuring that functional diversity translates into innovation.

Tesla sorely needs innovation. If they are going to continue to lead the way in electric vehicles, creating policies that facilitate organizational innovation will be paramount. But if your organization cares more about efficiency and is focused on conservative growth, such a mandate might be unnecessary.

A Culture Focused on Work Ethics

Organizational culture research illustrates that you should enact policies that attract and maintain the type of employees that you wish to employ. Musk is purposefully creating a culture that focuses on working hard and creating something amazing.

Musk doesn’t care if employees find it a chore to commute or manage colleagues’ impromptu interruptions. He wants people who will work through it because they want to be part of the mission. Alternatively, in-person mandates are a bad idea if you want to create a culture that centers around flexibility, work-life balance, or well-being.

A Need for Affective Commitment

Virtual employees tend to be slightly less committed to their organization than face-to-face employees. Virtual employees are more likely to have what is called continuance commitment. Work is a cost-benefit analysis, where one’s compensation and growth opportunities must be greater than one’s invested time and energy.

However, the performance-based implications of continuance commitment are inferior to affective commitment, which entails a sense of emotional attachment and an identity-based association with the organization. It’s much easier to facilitate affective commitment in person.

Tesla wants employees who don’t just build cars but also save the planet by going electric. This intense objective will arguably be easier in face-to-face environments. However, if your organization doesn’t have the potential for emotional, identity-based attachment, there’s nothing wrong with focusing on continuance commitment, in this case, through flexible work arrangements.

A Stable Talent Pipeline

One of the most important reasons why organizations are opting for virtual or hybrid work is because it significantly improves the pipeline of talent. Without geographical constraints, organizations get more applicants, who can be pickier about who they select.

But Tesla doesn’t face the same degree of challenge as most organizations when it comes to talent attraction. Droves of employees will gladly work face-to-face at Tesla to put on their vita that they’ve worked for an innovative entity led by one of the world’s richest people. They’re not selling a commodity; they’re selling the future of transportation. The talent pipeline might slow, but it will never dry up. But if you’re not in the world’s sexiest industry, offering up virtual and hybrid work options is a great way to increase your talent pool.

Equality Concerns

The final factor, equality, is the only one that Musk directly acknowledges in his organizational communique. He detests the idea that “office workers” can work from home while “factory workers” are hustling on the front lines. In Musk’s eyes, the hands-on factory workers are what is keeping the operation afloat.

For the factory workers who don’t have the luxury of attending Zoom calls from their couches they will undoubtedly appreciate the face-to-face policy. In turn, a core factor of Tesla’s business—building exceptional machines—will benefit from skilled labor that feels appreciated.

Most organizations going virtual don’t have the same bi-modal distribution of employees. Organizations that don’t have employees on the front line have less to worry about with respect to creating a culture war between two different types of employees.

Contingency Theory of Management

We can’t assume that all solutions work in all circumstances. The ideal answer depends upon the context. Tesla is a great example of an organization that aligns with all five factors that make in-person work a wise choice. Organizational leaders would be well-served to carefully consider these five factors as they consider future policies as it relates to work location.

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