The work from home debate is raging. Over the last few weeks we saw a number of companies, including JP Morgan and Spotify, calling their employees back. In spite of some pushback, the CEOs seems not to care. Even Apple is getting into the act.

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We now are seeing a new term: office maximalism.

Could this lead to an unseen loss of talent for some of these firms?

Let us start by saying that many firms are going to get talent. The fact they pay large salaries means they will always get people in the door. Also, due to the requirements, the people they are pulling in are likely to be talented.

This could be an invisible leak though.

Averages

Numbers are an interesting thing. We will use them to exemplify how things can be skewed with talent. If we reverse what we are doing here, we can see the impact.

Let us take the average net worth of 500 people. What would be an average for those people? For our purpose, we will say it is $1 million. Thus, the total is $500 million.

If we add another person to the mix, the average will change. How much depends upon the net worth of the person added. So, if the new person also has a $1 million net worth, the average is the same. However, if that person is $100L, the average will go down, but not very much.

Averages can get skewed though. If we take those same 500 people and add in Jeff Bezos, with a worth near $200 billion, we can see the average will skyrocket.

More on this in a bit.

Smaller Pools

Labor pools tend to be based upon supply and demand. Obviously, the harder a position is to fill, the more a company will have to pay up to get the right person. This is where tight labor markets benefit the employees.

Of course, the reverse is also true. When the labor market is loose, the employers have the advantage. There tends to be plenty of people to fill the jobs and the firms have the pick of the litter.

It is obvious that companies want the labor market as loose as it can possibly be. That is why it is interesting that they engage in this behavior. Taking the stance of "Office Maximalism" is putting them in a position where they are reducing the size of the labor pool.

Simply put, there are some workers out there who simply refuse to engage companies that require one to be in an office. In other words, this is taking those people out of circulation.

Here is where we see the averages enter the picture. Firms could get plenty of people to apply, who will not move the average much. However, what is one who will not apply because of the office requirement was Jeff Bezos? As we can see, the firm could lose out on one who could move the talent needle much higher.

While this might see a bit theoretical, there are a lot of industries where having one of the top people is worth more than 10 average people. Miss our on one of these types and there is a serious talent shortage.

Of course the company will fill the role with someone who is most likely talented. Yet here is where the talent drain is invisible. The firm does not know what it missed out on.

Believing People Of Equal Level Are The Same

Professional sports can be terrific metaphors for business. The parallels really exemplify what takes place.

In sports, we have what is called a free agent. This is a person who accumulates enough service time so that they are free to sign with any team they want. The different organizations will often try to clear payroll to take a stab at these player. In those with salary caps, there is often a max contract they can offer.

One would think that two players, both receiving max contracts are the same. This is not the case. In the NBA we had the situation with Kemba Walker and Kyrie Irving. On the surface, both look like similar players. After all, their basic statistics are alike.

For the Boston Celtics, the decision to move on from Irving and sign Walker seemed like swapping like for like. It was not. Irving was a much better player on the advanced metrics as well as able to attract other players who wanted to play with him.

Since this decision took place, the Celtics have been in turmoil. They even decided to move on from Walker, two years into the deal by trading him.

In business, we often are led to believe the same thing. After all, if we lose one PhD, simply replace it with another. Firms might be finding out that some employees are going to leave the organization over the requirement to be in the office.

While on the surface, this looks like no big deal since that MBA can be replace by another. The question is whether the company is swapping out an Irving for a Walker. Of course, the reverse could be true. A company could end up with a better employee although that is less likely. Highly talented people in any field tend to know their worth.

Hence, the odds are the firm is going to suffer a talent loss. This is something that most are not counting upon.

Which brings up the question as to whether "Office Maximalism" is really worth it? Why are firms intent on bringing back workers when many of them object to it?

This is something that we are going to have to watch. There might be a shift in the labor market taking place. In fact, it seems obvious that the labor pool is going to shrink for any firm requiring people to come into the office.

It is likely that companies have not thought in these terms. This is understandable since they never really had to. Sure there were times when the labor market was tight but not in this manner. We could see a large portion of the workforce opting out of potential jobs if office requirements are in place.

And this is something that companies might not be aware of for a while.

It could end up sneaking upon them.

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