With many companies requiring a full five-day work week in the office, the message is clear: Employers think it’s time to reconnect in person.

Over the last few years, flexibility has quietly become part of the total rewards package. Remote and hybrid work changed how employees evaluated their jobs: how much time they spent commuting, how they structured their days, how they balanced caregiving and personal responsibilities, and even how far their pay went. There are inherent benefits for employees being back in the office such as easier collaboration, culture of innovation, and career development, but when flexibility is removed employees see it as a loss.

That doesn’t mean RTO strategies are wrong, but without addressing it, organizations risk missing a critical opportunity to reassess and rebalance their total rewards.

The quiet shift: flex work became a reward (whether employers intended it or not)

Flexible work began as a crisis response, but it has since evolved into something much bigger. Over time, remote and hybrid work stopped being seen as temporary accommodations and started functioning like a reward that employees factored into their overall compensation.

It’s all because flexibility changed the work–life balance of the employee in tangible ways:

• Lower costs: Fewer commuting expenses, less spending on parking or professional wardrobes
• Time gains: Hours reclaimed from daily commutes
• Greater autonomy: More control over when and how work gets done
• Improved work–life integration: Valued especially by caregivers and employees managing complex personal demands
• Expanded access to opportunity: Opening roles to geographically dispersed talent and supporting neurodiverse employees who may thrive outside traditional office environments

Ultimately, employees didn’t view flexibility as a perk, but rather as part of the deal. Even when flex work wasn’t labeled as a benefit, employees factored it in. It became embedded in their personal value equation alongside base pay, incentives, and benefits. For some, flexibility outweighed modest salary differences. For others, it made demanding roles sustainable in ways they hadn’t been before.

This matters because total rewards aren’t defined solely by what employers document. It’s defined by what employees experience. When flexibility became normalized, it shifted expectations. Once those expectations are set, it’s hard to change them without consequence.

Return to office as a net loss: what employees are losing

When organizations announce RTO mandates, employees feel what they’re losing. Those losses typically fall into four categories, as outlined below.

1. Financial loss

Commuting costs return when going back to the office, including fuel, transit passes, and parking. Daily meals become more expensive when they eat out. Wardrobe costs reappear. In some cases, employees who relocated during remote work periods face longer commutes or even relocation decisions. These are real, out-of-pocket expenses that effectively reduce take-home pay.

2. Time loss

Commute time is unpaid time. For many employees, returning to the office adds 5–10 hours into the workweek with no corresponding increase in compensation. Under flex work, employees could choose to spend that time working, resting, caregiving, or simply living.

3. Wellbeing loss

More rigid schedules can increase stress and fatigue, especially for employees juggling caregiving responsibilities or health needs. Even highly engaged employees can feel the strain of reduced flexibility.

4. Autonomy loss

Perhaps most emotionally charged is the loss of control. RTO policies often feel like a step backward in trust, even when leaders don’t intend them to be.

Importantly, many employees will comply with RTO requirements. Acceptance, however, isn’t the same as enthusiasm. When employees feel they’re absorbing the full cost of the change, resentment can quietly build, affecting engagement, effort, and retention over time.

Why “nothing changes except location” is a risky assumption

One of the most common refrains leaders use when announcing RTO policies is: “The work hasn’t changed, just where it happens.” From an operational standpoint, that may feel true. From an employee’s perspective, it rarely is.

Employees experience RTO as a change to the rewards contract. The terms of work (time required, costs incurred, and flexibility granted) differ. When those terms change, even with good business reasons, trust can erode. This matters because engagement isn’t driven solely by pay and benefits. It’s driven by whether employees believe the overall exchange is still fair. Mercer’s 2026 Inside Employees’ Minds survey found that hybrid workers are more likely than fully remote workers to feel compensated fairly for their work and be proud to work for their organization.

We love data here at Mercer, so let’s have the numbers speak for themselves. Mercer’s Inside Employees’ Minds Survey found that only 11% of workers said they would choose to work on-site full time. While 30% want to be fully remote, 44% prefer some hybrid combination of remote and on-site work (the remainder were people who could not perform their jobs remotely).

That gap is where dissatisfaction takes root.

It’s also where risk concentrates unevenly. High performers, critical skill holders, and employees in competitive labor markets tend to have more options. They’re often the first to reassess whether the revised value proposition still works for them. Meanwhile, those who stay may comply, but at a lower level of discretionary effort or with diminished trust.

This is why RTO strategies appear to work on the surface, while quietly undermining employee engagement and increasing turnover rates. The issue isn’t the policy itself; it’s the assumption that total rewards don’t need to change alongside it.

Rebalancing the total rewards equation: employer options

Rebalancing total rewards in the context of RTO isn’t about entitlement or appeasement. It’s about intentional choice architecture, which consists of deciding how the organization wants to offset what’s being removed and reinforce what employees gain in return.

There is no universal solution, but there are clear categories of levers employers can consider.

1. Financial offsets

When returning to the office introduces new, unavoidable costs, some organizations choose to acknowledge that directly. Options include commuter stipends, transportation benefits, or parking subsidies.

In certain markets, location-based pay adjustments may be appropriate, particularly for employees who relocated during remote work periods. Other organizations may explore one-time transition bonuses or allowances to help employees absorb the initial impact of change. The goal isn’t to reimburse every dollar, but to signal awareness and shared responsibility for the shift’s costs.

2. Time and flexibility trade-offs

If flexibility is reduced, predictability is a must. More consistent schedules, clearer expectations about in-office days, or greater flexibility within office hours can help employees regain a sense of control.

Some organizations experiment with compressed workweeks, early-release days, or additional personal time-off to counterbalance longer days and commutes. Even modest adjustments matter when they help to restore the autonomy that employees feel they’ve lost.

3. Wellbeing and experience enhancement

Not all perks are created equal. Expanded mental health benefits, caregiving support, or on-site services that meaningfully simplify the workday can improve the experience of being in the office. Also, better-designed workspaces can support focus, collaboration, and comfort. Here, alignment is key. Enhancements should address real pain points, not just look good on paper.

4. Career and development value

For some employees, the strongest justification for returning to the office is growth. Increased access to learning opportunities, mentoring, leadership visibility, and clearer pathways for advancement can shift the narrative from “what I’m losing” to “what I’m gaining.” But that value must be articulated and delivered, not just assumed. Employees need to understand how being present connects to their long-term career outcomes.

One size will not fit all: segmenting the workforce

One way an RTO strategy could feel unfair is to treat every employee the same. Uniform RTO policies paired with uniform total rewards often look equitable, but they rarely feel that way in practice. The reality is that different employee groups experience the costs and benefits of RTO very differently.

Segmentation doesn’t mean favoritism. When grounded in business strategy and workforce data, it’s a way to allocate rewards where they matter most.

Organizations can start by examining differences across:

• Role criticality: Some roles depend heavily on in-person collaboration or access to physical resources; others don’t.
• Career stage: Early-career employees may value visibility, mentoring, and learning more than flexibility, while mid-career employees often place a higher premium on autonomy and work–life integration.
• Life stage: Caregivers, employees managing health needs, or those with long commutes experience RTO costs more significantly.
• Labor market competitiveness: Roles with scarce or in-demand skills carry a higher attrition risk if the value exchange deteriorates.

A single RTO policy can still exist, but the surrounding rewards don’t need to be identical. Differentiated support, flexibility, or financial offsets can coexist with consistent expectations when the rationale is clear and aligned to business needs.

This is where employee feedback becomes especially valuable. Broad averages can mask meaningful differences in what employees value. Segment-level insight helps organizations understand where targeted investments will have the greatest impact, and where they won’t.

Making the value exchange explicit

Perhaps the most important step in rebalancing total rewards while implementing an RTO strategy isn’t financial or structural, but communicative. Employees don’t expect perfection. They do expect honesty.

When organizations acknowledge what’s being taken away, rather than minimizing it, they build credibility. When leaders clearly articulate what’s being added, improved, or prioritized in return, employees are more likely to see the change as thoughtful rather than dismissive.

Making the value exchange explicit means:

• Naming the trade-offs, not pretending they don’t exist
• Explaining why the organization made its RTO decision
• Clarifying how total rewards have been rebalanced to support employees under the new model
• Reinforcing how the revised approach supports both business outcomes and employee sustainability

An RTO mandate paired with unchanged rewards and vague messaging creates confusion. A mandate paired with clear offsets, intentional design choices, and data-backed rationale creates alignment with employees.

This is where tools like salary surveys, employee research, and reward optimization models become essential. They allow organizations to test assumptions, quantify trade-offs, and communicate decisions with confidence. Instead of relying on instinct or precedent, leaders can explain how choices were informed by what employees value most.

RTO is a strategy choice, and total rewards make it sustainable

RTO decisions don’t fail because of policy alone. They fail because of unaddressed trade-offs. When flexibility is removed or reduced, employees feel the impact financially, emotionally, and practically. Organizations that ignore those impacts risk weakening trust, engagement, and retention over time, even if their RTO strategy makes sense from a business perspective.

The employers navigating this moment most effectively aren’t trying to recreate the past or promise unlimited flexibility. Instead, they’re acknowledging that the value exchange has changed and are responding with intention.

That work is difficult to do without data. Salary surveys provide critical market context. Employee research reveals what different segments of the workforce value. Also, tools like the Mercer Rewards Optimizer help leaders design portfolios that align with business goals and employee expectations.

If your company is considering full-time return to the office, we’d love to help you optimize your total rewards strategy. Contact us at surveys@mercer.com or by calling 866-605-1031.

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