Caterpillar is taking a wrecking ball to its hybrid work policy as the construction equipment giant prepares to call the bulk of its global workforce back for a full, five-day workweek.
The Irving, Texas-based company will soon require all of its U.S. corporate workers to commute to an office Monday through Friday, Caterpillar's final step toward joining other employers across the country in getting rid of pandemic-era flexibility.
The escalated mandate is scheduled to take effect in June. It's an extension of one the equipment maker rolled out earlier this year for employees in its Resource Industries division. The new policy, detailed in a memo the company sent out last week, will effectively terminate a hybrid model it adopted at the beginning of last year and that has produced "varying results."
"In these uncertain times, it's more important than ever that we are collaborating with a sense of urgency to meet our customers' expectations while driving efficiencies in everything we do," Caterpillar executives wrote in the memo viewed by CoStar News. "Given the current environment, we believe it is necessary to return to a Monday through Friday, five-days-in-the-office work model."
What's more, executives warned that "adherence to the five-day work model is required," and employees' attendance will be factored into performance reviews.
Caterpillar, the world's largest maker of construction, mining and industrial equipment, has an expansive real estate footprint that spans nearly 60 million square feet around the world, according to CoStar data. While much of that is industrial, it occupies more than 2 million square feet of office space with its largest hubs scattered across the Chicago area, in Nashville, Tennessee, and around its headquarters at 5205 N. O'Connor Blvd. in Irving.
Representatives for the company did not respond to CoStar News' requests for comment.
Emphasis on 'face to face'
From corporate giants to smaller professional services firms, employers across the country are stepping up their in-person requirements to move past the pandemic-related shift toward increased flexible work arrangements.
Among Fortune 500 companies — of which Caterpillar recently ranked 59th — more than half have implemented policies requiring employees to work from an office at least three days a week. However, the number of corporate giants stepping up their in-person mandates has spiked in recent months, with roughly 25 of the largest companies by revenue now demanding Monday-through-Friday workweeks.
Detroit auto giant Stellantis last month called its employees back for up to five days. Home Depot's corporate employees will be commuting throughout the workweek starting in June. And lackluster attendance at its San Francisco headquarters pushed global retailer Gap Inc. to begin rolling back its flexibility and preparation for a return to a full five-day workweek by September this year.
“Being together in person enhances our ability to innovate, collaborate and make quick decisions,” Caterpillar executives wrote. "Over the past few years, we have demonstrated that we can work in a variety of ways to deliver results. At the same time, we know the importance of collaborating in person and engaging with colleagues face to face.”
Escalated mandates have fueled optimism among national office landlords looking to retain their portfolio occupancy as tenants slashed real estate to both trim costs and adjust to flexible, post-pandemic work policies.
The combination of depressed demand, stagnant leasing and ongoing flexible work helped push the national office vacancy rate to a record high of about 14%, according to CoStar data. Tenants have collectively handed back roughly 210 million square feet of office space since the start of 2020, with tepid demand expected to prolong any effort to revert to pre-pandemic levels of occupancy.