• Wed. May 29th, 2024

Race to Profitability Prompts New Lyft CEO To Curb Company’s Era of Remote Work

Bynewsmagzines

May 1, 2023
Ride-hailing company Lyft is calling all of its employees back to an office, ending its pandemic-era work policy. (Getty Images)

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Ride-hailing giant Lyft is ending its pandemic-related “fully flexible” work policy after several rounds of layoffs and an ongoing struggle to turn a profit.

Only a day after announcing plans to lay off more than 1,000 workers, Lyft CEO David Risher told employees they would be required to come back into the office at least three days a week. The order reverses a policy the San Francisco-based company implemented roughly a year ago that provided workers the choice of where to live and where to work.

“Things just move faster when you’re face to face,” Risher told the New York Times on Friday. He added that remote work in the tech industry had come at a cost, leading to isolation and eroding culture. “There’s a real feeling of satisfaction that comes from working together at a whiteboard on a problem.”

The new in-person mandate is expected to take effect this fall, a Lyft spokesperson confirmed to CoStar News. The plan would require workers to come in Mondays, Wednesdays and Thursdays — with Tuesdays strongly recommended — beginning after Labor Day. Employees would be able to work remotely for one month of each year, and those who live too far from a company outpost will not be required to relocate.

The decision marks “the first steps in a plan for a flexible model with more regular in-office work,” the Lyft spokesperson said.

Lyft is the latest global tech company to tighten the reins on its remote and hybrid-work policy as the labor market among companies including Meta, Google, Salesforce and Amazon becomes increasingly challenged. Many tech companies have implemented hiring freezes or layoffs to grapple with the sudden slowing from their pandemic-era growth spurts.

Nearly every major tech company have also made deep cuts to their once-vast real estate portfolios, shutting office locations, subleasing unwanted space, terminating prelease agreements and walking away from future investments as they prepare for economic headwinds that analysts say might result in a recession.

For Lyft, those headwinds have pushed its stock price below $10 a share, down from a peak of $78. The company, which is releasing its financial results this week, its expected to once again miss analysts’ expectations, reporting $975 million for the most recent quarter rather than the $1.1 billion investors have been hoping.

The latest round of layoffs, which would cut 26% of its workforce and eliminate about 250 open positions, lands several months after the company let go of roughly 700 employees amid rising inflation and fears of a looming recession.

Last summer Lyft decided to sublease roughly half of its office space at its San Francisco headquarters at 185 Berry St. and elsewhere in Seattle; New York City; and Nashville, Tennessee. The four offices combined span about 615,000 square feet, about 45% of which was put up for grabs.

It isn’t yet clear how the ongoing layoffs and Lyft’s return-to-office policy will coincide to impact its future real estate decisions. Lyft leased space for 71 offices around the world by the end of last year, according to Securities and Exchange Commission filings. The terms for those deals range between as few as two months to as long as 10 years.

The Lyft CEO, which took over late last month, said the in-person policies were an opportunity to have a “cultural reset, particularly around decision-making.”

Lyft employed roughly 4,000 people prior to the latest layoff news.

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