Commentary: Starbucks return-to-office is another corporate double standard

NEW YORK: New Starbucks CEO Brian Niccol sent a stern warning to employees this week: Get back to the office three days a week or risk termination.

Pity the internal comms people who had to pass on that message with a straight face. The decree comes only two months after the company hired Niccol with a contract that lets him keep his main residence in Newport Beach, California, rather than relocate to Starbucks headquarters in Seattle.

Starbucks has said that Niccol will spend “a majority of his time” visiting stores or at the company’s Seattle office, despite living 1,600km away.

But while he may technically be meeting the hybrid rules, a key detail is left unsaid: He’ll be able to do it with the help of the company’s private jet and a monstrous pay package that allows him to throw money at whatever other inconveniences arise. He won’t have to worry about his remote office in Newport Beach, however; Starbucks will foot the bill for that, along with the cost of an on-site personal assistant of his choosing.

Meanwhile, Starbucks has touted that it provides subsidised transit, shuttles to public transportation, free electric-vehicle charging and bike lockers in order to entice the rank and file to get back to the office. These are nice benefits but look measly alongside Niccol’s company-funded commute by corporate jet.

The Starbucks board agreed to Niccol’s work arrangement as part of a larger deal designed to lure him away from Chipotle Mexican Grill to save the struggling coffee giant. If Niccol’s compensation package is paid out in full, he will be among the highest-paid CEOs in America.

That will likely earn Starbucks a prime perch on the list of companies with the greatest CEO-to-worker-pay ratios - the classic measurement of the disparity between CEOs and their employees. It’s a metric that has soared over the last 60 years.

According to the Economic Policy Institute, the average CEO-to-worker pay ratio at the 350 largest publicly owned US companies was about 344-to-one in 2022, the most recent year available. In other words, it would take almost 350 years for a regular employee to match what their CEO made in just a single year. In 1965, the ratio was 21-to-one.

FLEXIBILITY GAP BETWEEN EMPLOYEES AND THE BIG BOSS

But the benefits being afforded to Niccol highlight how, in the post-pandemic era, a new form of disparity is on the rise. As more companies require their employees return to the old way of working (aka butts in seats), CEOs are being allowed more leeway in how and where they do their jobs.

By perpetuating this flexibility gap between employees and the big boss, companies are giving the impression that management is both out of touch and above the rules, while also replicating broader society’s growing inequality within their own organizations.

Some of the biggest employers in the US have been cracking down the hardest on employees. At Amazon.com, workers have been called back to the office five days a week. Walmart is requiring thousands of remote employees relocate to corporate hubs and primarily its Bentonville, Arkansas, headquarters.

3M’s new CEO has overhauled the company’s “remote friendly” policy. Dell Technologies told remote workers in February they wouldn’t get promoted, before requiring all salespeople back to the office full- time last month.

Meanwhile, CEOs are benefitting from the inverse shift. The same week that Starbucks announced Niccol’s appointment, Victoria’s Secret hired a new boss who it said would remain in New York while it paid for her travel to the company’s Columbus, Ohio, headquarters.

Bumble’s CEO, on the job since January, works in Cambridge, Massachusetts, rather than the company’s Austin HQ. Notoriously, Boeing’s former CEO David Calhoun, who started during the pandemic, never relocated to the company’s Arlington, Virginia, office, instead commuting from his homes in New Hampshire and South Carolina by private jet.

TOUGH PILL TO SWALLOW

Companies are picking and choosing which data they cite or ignore to justify their policies. Executives point to studies that show the benefits of in-office collaboration to support new RTO policies - then willfully ignore research that shows supercommuting chief executives underperform.

One paper found the decline in performance was even stronger for long-distance CEOs who lived near a premium golf course, resided in a beach home or owned a yacht.

These two trends - return-to-office mandates for laypeople and the rise in CEO supercommuting - are both most visible when companies are struggling, or at least under investor pressure.

When results are poor, demanding that workers get back to their desks is a fast and easy way CEOs can show they are taking action (side benefit: RTOs can reduce headcount without the need to pay the severance that comes with layoffs). But if things get bad enough for a management overhaul, a CEO candidate will have more leverage to demand their own flexible work arrangement and a board more likely to grant it out of desperation.

These dynamics were very likely at play at Starbucks when the company hired Niccol, and he made the subsequent call to crack down on remote work.

But the flexibility gap doesn’t need to involve a private jet for employees to feel resentful. Those who look the least like a typical CEO - working mothers and people with disabilities - benefited the most from the flexibility that came with remote and hybrid work during the pandemic. That’s what’s made it a particularly tough pill to swallow that CEOs, who arguably need it the least, are the ones who get to keep it.