OPINION: Going forward, Tesla will be a more profitable firm if it offers the WFH and hybrid-WFH option. The workaholic Elon Musk is too smart to assume that his firm’s workers are clones of him.
Tesla CEO Elon Musk has ordered the firm’s workers to return to the office. Musk has a strong incentive to take actions that he believes increases the long term value of his firm. His personal wealth is tied to Tesla’s stock price.
Tesla has succeeded in designing and mass-producing electric vehicles, but the firm faces increased competition from General Motors GM, -1.06%, Ford F, -0.95% and other car makers. To maintain its edge, Tesla must continue to innovate. And that happens best with in-person meetings. But what’s good for Tesla may not be good for every company. Tesla is a young firm that features a young, mostly male applied-science workforce. Such individuals do not have the same at-home responsibilities as the typical American worker. Young workers tend to want to be back at the office! This means that the Musk mandate does not impose the same costs that would occur if the average American firm ordered a return to work.
Tesla should want to avoid a workforce retention and training challenge as well as risk losing intellectual property to rival firms. People are the main resource of America’s superstar firms. To attract and retain talent without paying huge wage or stock options premiums, employers can offer better working conditions. WFH is such a job perk. If workers can live where they want to live, they will likely be in better mental and physical health and they will suffer from less burnout.
Musk is certainly correct that face-to-face interaction raises worker productivity, but he should consider the quality-versus-quantity trade-off. If workers spend less time in the office, the quantity of interaction will go down but the quality of interaction will rise. Midlevel managers will have strong incentives to design group meetings to facilitate these interactions. Experimentation through A/B testing will help to optimize this adjustment process.
Going forward, Tesla will be a more profitable firm if it offers the WFH and hybrid-WFH option. The workaholic Elon Musk is too smart to assume that his firm’s workers are clones of him.
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