In apparent reversal, Charles Schwab Corp. is telling thousands of staffers in five cities to work from home -- six more cities, including its old San Francisco headquarters, are on the chopping block

Charles Schwab Corp. has selectively reversed a policy it announced only two weeks ago and ordered thousands of staffers to work from home. Thousands more have been put on notice.

The Westlake, Texas, company – under pressure from a massive unrealized loss in its bank subsidiary -- said in a memo obtained by RIABiz that offices would close as of Oct. 1, in Atlanta, San Diego, St. Louis, Tampa and San Antonio, Texas.

The firm also told employees that offices are being downsized in Boston, Chicago, Henderson, Nev., Jersey City, NJ, and San Francisco, either in the same spot or nearby. 

“We have evaluated our real estate footprint,” the email states.  “… Decisions were generally made based on a combination of real state cost relative to estimated future-in-office attendance by employees.” 

The email memo, sent June 30, stated all staffers in the affected offices would retain their full-time jobs whether their location is closed or downsized.

On June 15, Schwab announced it was ending its work-from-home policy for cultural reasons and requiring staff to return to the office. See: Citing concern for its 'uniquely rich culture,' Charles Schwab Corp. is curbing remote work, according to an internal memo, causing some to grouse about returning to the office, despite COVID's official end

Schwab's spokespersons did not reply to emails seeking comment for this story. 

Fostering productivity

These paradoxical decisions – all about culture and all about overhead – are a symptom of the pressure of running a company in 2023, says Cecile Munoz, president of U.S. Executive Search & Consulting in Los Angeles. 

“These are not linear decisions, nor are made easily. Complex decisions in today’s highly turbulent market demand a holistic thoughtfulness in controlling costs against growing profits,” Munoz says. 

“Having offices in both Los Angeles and New York, I personally wrestle with the question of to-be or not-be in office.

This is not a pure cost-per-square-footage question. It is about finding  a methodology, creating a policy and executing against it in a way that fosters an environment where productive people thrive.”

Under pressure

Since Schwab Bank got caught in a classic interest rate squeeze caused by the Fed's rapid-fire interest rate hikes, the company has been seeking ways to chop billions of dollars in overhead.

The company estimated it was saddled with $13 billion in unrealized paper losses, causing its stock to swoon. A similar squeeze caused the collapse of Silicon Valley Bank.  

But CEO Walt Bettinger assured Wall Street Schwab had enough cash on hand to weather the squeeze. 

Shares have recovered from their 52-week low of $45 and closed today at $58.41, up 83 cents or 1.44%, outpacing the S&P 500's daily gain of 0.74%.  But shares are well off their 52-week high of $86.63.

As of today's market open, Schwab had gained 5.17% in the past month. In contrast, the finance sector gained 2.29%, while the S&P 500 gained 3.34%, according to Zacks. 

Scbwab will be under the gun to show improvement during its next earnings report, expected next week (July 18).  See: Schwab assures it has financial muscle to shrug off billions of dollars in unrealized bank losses, but interest rate blunder exposes vulnerability if Fed hikes continue

“We continue to believe that teamwork and culture are enhanced with regular time in the office, as is career development for aspiring leaders," Schwab stated in the email. 

"In that spirit, our plan will strive to provide space for many of the employees assigned to these locations who have not requested an exception," the email says.

Closing doors

In major moves, Schwab's former San Francisco headquarters at 211 Main Street will reduce its floor or “close the office and relocate to a smaller location in the same general geography." 

In 2016, it renewed its lease for ten years at that address for 417,266 square feet, comparable to 10 acres.

The firm's Chicago offices at 150 S. Wacker Drive and 600 W. Chicago Avenue, will change, but the firm declined to disclose specifics in the email. 

“All employees assigned to these locations, except Executive Council members, will be eligible to work remotely full-time when the buildings are downsized/relocated or on Oct. 1, whichever date comes first,” the missive states.

A spokesperson told CityWire the office closures impact about 5% of company staff, ‘and on a busy day less than 50% may physically be in one of these offices.’ 

In its June 30, memo, the company wanted employees to have this information as the “workplace exception requests move towards the approval stage.” 

“We felt it was important that colleagues understand our real state decisions, so they can be incorporated into the exception request approval process as enterprise leadership takes the next step," the memo states.

The staffers whose offices are closing or consolidating won't be part of the number of employees who are granted exceptions. 

Back to the future

On June 15, Schwab seemed concerned that home offices were bad for productivity when it announced it was cracking down on employees working from home - one month after the COVID pandemic officially ended.

Starting Oct 1, the official policy will require a minimum of three days a week in the office for everyone, five days for top executives and four for managing directors and new hires. 

Tuesday and Friday have been designated as work-at-home days, according to the first memo, also obtained and first reported by RIABiz.   

At the time, however, it agreed to grant a few exceptions.

The company said only a certain number of employees would be granted exceptions to work remotely. 

But the most recent memo says staffers who work at these spots and are now working remotely won't “count against our exception limits.”