Amazon exec says it’s time for workers to ‘disagree and commit’ to office return — “I don’t have data to back it up, but I know it’s better.”::“We’re here, we’re back. It’s working,” an Amazon Studios head said in a meeting, before acknowledging a lack of evidence.
That’s still sunk cost fallacy. If they’ve already paid, it doesn’t matter. In fact, they’d probably save money on maintenance and overhead by keeping the office empty (or even subletting it or something).
But that would require them to admit they were wrong and not prescient.
Corporations base so many decisions on sunk cost.
They don’t have leases. They own that real estate. So its value is a considerable line item in the company’s value. If they get people in office, it’s a boost to the company’s value. The property is hit yet sunk in their eyes.
Yes, that’s the sunk cost. It’s fallacious to believe that: just because you’ve already paid for the real estate in an attempt to earn money in the long term, it’s necessarily more profitable to see that plan to the end regardless of changes in circumstances. More often than not, it’s better to just cut your losses.
I don’t really understand what this means… We’re talking about those people doing that same work, but from home. They’re still doing the same amount (if not more due to higher efficiency) of work. Only now you don’t need to pay the salaries of maintenance, janitorial staff, security, etc., which would be a savings and help recoup some of the losses.
Or, like I said, if they own the building, they could lease out part of it or all of it themselves while their employees do their work from home.
The people who claim “real estate value!” have just latched onto the simplest reason they can which aligns with their worldview.
The reasons I suspect companies are forcing return to office are more:
If getting people back into work makes your property more valuable that the productive losses, it’s not a sunk cost. The leaders might be doing their math wrong, but they are not necessarily making a sunk cost fallacy here.
However, i do agree it’s likely a choice driven by power and personalities, not money. I suspect a lot of talk about how remote workers can be abused and controlled has happened.