(Bloomberg) -- Three years after the pandemic closed down offices around the world, the remote-work revolution has morphed into a tug-of-war between frustrated bosses and fed-up staff.

While workers don’t want to give up flexibility, leaders want teams back to boost collaboration and avoid a productivity slump. The impasse is the latest phase in a high-stakes battle that’s putting careers, profits — and mental health — on the line. It’s also prompting conversations about how to move beyond binary debates over “working from home” and “return to the office.”

Some executives are losing patience with remote and hybrid working. “Things changed over the course of the pandemic,” said Martin Sorrell, founder of WPP Plc and chairman of S4 Capital Plc, who has performed an about-turn on the issue. “At the beginning, it worked well. Then the productivity levels and enthusiasm waned a bit and the lack of engagement on a face-to-face basis was an issue,” Sorrell said in an interview.

Sorrell, whose company employs almost 9,000 people in 32 countries, now fears that corporate culture is being eroded as workers stay at home. “If you are paying people to look at a screen, they’ll end up going to the highest bidder. There’s no glue.”

Corporate return-to-office mandates are multiplying, and they’re coming with extras. Google last week told staff to head into the office three days per week, with attendance to be taken into account during performance reviews. A union representing staff quickly pushed back against the ruling. IBM’s chief executive officer warned that it’s harder to get promoted if you’re not in the office, which his company requires three times a week. From September, BlackRock Inc. will only allow staff to work from home for one day a week.

Executives know that these rulings will likely mean losing some staff. AT&T, the largest US telecommunications company, expects to shed about 15,000 employees. On Wall Street, which has some of the most stringent in-office requirements, one in two people who work in finance would rather quit than spend more time in the office, according to Bloomberg’s latest Market Live Pulse survey. Just 20% of respondents globally prefer working from the office, the survey showed.

Few companies are insisting on a full-time return to the office, with most preferring hybrid models that allow some flexibility. Even backers of face-to-face contact are now thinking of ways to engage their teams. “You have to decentralize. What we’ve done is give the office heads the flexibility and authority to work out which system is best,” said Sorrell.

Still, half of UK businesses now say staff mental health has deteriorated since Covid, a recent PwC study showed. Ayming, a British business consultancy, concluded that motivation at work has been dropping over the last three years. 

“The problem isn’t that hybrid doesn’t work,” said Christine Armstrong, a UK-based workplace researcher, adding that it remains popular especially for parents or people with long commutes. “The problem is that most organizations haven’t done the work to make it work.”

Without guidance on when to go in, staff can easily spend days in the office on back-to-back video calls. That makes train tickets feel like a pointless expense, according to Armstrong. Mandating attendance with no set schedule, though — for example for key client meetings — means it’s equally hard to plan childcare, travel or other everyday tasks.

In theory, days spent in the office offer cultural benefits and greater opportunities to collaborate. That doesn’t always happen, Armstrong said.  “If it’s not well organized, when they do go in, they don’t get those things anyway.” She suggests that managers sit down with team members to discuss which situations require everyone in the office — for example welcoming a new hire — and agree to a schedule that fits everyone’s personal circumstances and expectations.

While bosses wrestle with how to manage hybrid workers, about a third of Americans whose jobs allow them to work from home still choose to do so all the time, according to a Pew Research Center survey in March. That’s down from 43% in January 2022 but much higher than before the pandemic, when the figure stood at 7%.

Against this backdrop there are signs that output is stagnating, with leaders unclear on how to motivate employees who choose to stay away. US productivity fell in the first quarter by more than forecast, even as working hours and pay increased, according to the Bureau of Labor Statistics. In May, US Surgeon General Vivek Murthy issued a report on what he termed the nation’s “ epidemic of loneliness,” comparing the harm that social isolation causes to the effect of smoking 15 cigarettes a day. 

Hannah Ingram, a marketing manager in Derbyshire, England, felt loneliness settling in after about 18 months of working from home, estimating that her productivity dropped by about a third once her children got home from school. “When I worked from home, I jumped straight from work to being a parent,” said Ingram, 34. “There is no gap, your thoughts are all over the place.”

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Jan-Emmanuel De Neve, professor of economics and behavioral science at the University of Oxford’s Saïd Business School, co-authored a 2019 study that showed that happy workers are more productive. Today he is concerned that too much working from home can have the opposite effect. “Your social capital, your intellectual capital, your sense of belonging are undermined over time,” while working remotely, he said. “The negatives of working from home only really creep up after a while.” 

Managers often don’t have the tools to even measure the work that’s produced at home. “People who work from home do a lot of invisible labor,” said Tessa West, a professor of psychology at New York University speaking at a MindGym conference in London. “That is eroding their sense of purpose because their manager literally doesn’t see them do it.”

Most existing HR processes are not fit for the hybrid era, as they rely on informal mechanisms — such as seeking out guidance from colleagues during day-to-day interactions, instead of blocking a Zoom meeting in someone’s calendar — according to Jonathan Best, chief customer officer at GoodShape, which advises companies on employee health and wellbeing. This is having an impact on team spirit and company culture while organizations scramble for new solutions.

Covid lockdowns made many employees realize that it’s better to feel lonely at home than come back to a “toxic work environment,” according to Caleb Parker, founder of Bold, a co-working company in London. Meanwhile, leaders are still clinging to old ways of working and lack experience managing hybrid teams. “What they grew up with, what they succeeded in their career, was everybody being in the same office,” Parker said. 

“It’s very uncomfortable to have to learn something new, especially when you’re already at the top.”

--With assistance from Jo Constantz and Andrew Atkinson.

©2023 Bloomberg L.P.