Lyft Employees Told to Return to Office as New C.E.O. Lays Out Vision

The company is struggling and laid off 1100 people. The remaining workers are being told to prepare for changes.

Lyft Employees Told to Return to Office as New C.E.O. Lays Out Vision

Since the pandemic started, Lyft workers have been able work remotely. They can log into videoconferences at home and spread out across the country, just like other tech workers. The company announced this policy last year by telling its staff that the work would be "fully flexable" and leasing floors in their offices.

No more. David Risher told the employees at an all-hands on Friday that, beginning this fall, they will be required to return to the office three days per week. This was the first major change he made since joining the company this month. It came a day after the layoff of 26 percent of Lyft’s workforce.

In an interview, Mr. Risher stated that "things move faster when we're face-to-face." He said that remote work in the tech sector had a price, resulting in isolation and erosion of culture. Working together on a whiteboard to solve a problem can be a great way to feel satisfied.

This decision, along with layoffs, and other changes, marks the beginning of a brand new chapter for Lyft. This could be an indication of how some tech firms, especially those that are struggling, may change their mind about flexibility in terms of where employees work. As has happened at Disney and Apple, nudges to work in the office may soon become demands.

Bob Sutton is an organizational psychologist at Stanford. He said that while in-person collaboration can help with creativity, and other aspects of the job, some companies may be pushing for this return to work to better supervise their employees.

"When top executives are under financial pressure, the classic threat-rigidity effect kicks in. Beyond possible benefits for collaboration, communication and creativity, they also feel compelled by their own illusion of power," said Mr. Sutton.

Lyft, which had been lagging behind Uber in the race to recover from the pandemic, posted unsettling financial results in late February. Logan Green and John Zimmer announced their resignations the following month.

Mr. Risher has outlined a plan for Lyft to reduce costs, improve the quality of its core product, and lower the price.

Lyft workers have complained about the fact that layoffs seem to be disproportionately affecting divisions that are not in the ride-hailing industry, such as those that rent cars to their gig drivers or bikes and scooters to customers. Mr. Risher claimed that the cuts affected all departments.

He said that the savings from layoffs will go towards lower prices for riders, and higher earnings for the drivers.

He said that the next phase of his strategy is to remind passengers that Lyft can be a viable alternative for Uber. Risher says he will introduce new products in the summer to boost interest. He said that he could team up with businesses to offer Lyft rides for their employees who commute to work.

It will be a difficult road ahead for the company. Lyft's employees are used to working at home and many were hesitant to return to the office. Uber continues to be ahead of Lyft, as it has a global business that includes ride-hailing and food delivery.

Lyft stock is currently trading at $10 per share, down $78 from its peak. Some have speculated it could be a target for acquisition. Next week, the company will announce its financial results. It expects to generate $975 million of revenue. This is lower than what investors had expected earlier in the year. It is still not profitable.

On Thursday, Mr. Risher made a few other announcements. He discontinued products that focused on car rental, shared rides, and luxury rides. Kristin Severchek, who was the head of Business Affairs, was promoted to President.

According to a source familiar with the plan, Lyft planned to inform its employees that they would be receiving less stock this year.

Risher stated that the return to office plan would require workers to report to work Mondays, Tuesdays, and Thursdays. The plan allows people to work remotely one month a year. Those who live far away from offices will not be required to attend.

Mr. Risher described the situation as an "opportunity to reset culture, especially around decision-making."

He said that Lyft's early ride-hailing service was successful, but the idea of Mr. Green's and Mr. Zimmer to build a network with products that focused on bikes, scooters, parking, and rental cars "didn't resonate with people". The company has reduced these offerings, but still offers bikes and scooters.

"Now, my focus has shifted to saying that there is still a lot of innovation in ride-sharing alone. People want to live their lives and we can assist them," said Mr. Risher. "And maybe over time, we could build something back on top."