Faced with health concerns and employee safety, many businesses shuttered their workplaces in March of 2020, and many haven’t gone back.
Gone are the days when organizations argued against remote work quality, productivity, and organizational culture concerns. The global pandemic has caused businesses across industries—even those traditionally or exclusively run from an office (financial services, legal services, management consulting, etc.) —to reconsider the business costs and benefits of permitting a partial or fully remote workforce.
In this article, we’ll dive into the cost of a remote workforce versus in-house employees.
Pandemic revealed the possibilities of remote work.
While many employers may have been concerned that jobs don’t translate to remote work, when put in a position where remote work was the only option, the pandemic revealed the possibilities. According to research, 56% of the U.S. workforce holds a job that is at least somewhat compatible with remote work.
Furthermore, feedback from employees favors remote work. McKinsey found that employees working remotely “see more positive effects on their daily work, are more engaged, and have a stronger sense of well-being than those in non-remote jobs with little flexibility do.”
This evidence regarding remote work has led companies to ask questions that weren’t a consideration before the pandemic, such as:
- Should our company renew our work site lease?
- Are there laws that allow us to break our lease because of the pandemic?
- What would be the cost savings if our company were to employ an entirely remote workforce?
These cost of remote work questions are important to consider as part of the process, especially now that more flexibility has been enabled and more employees have either already returned to work, or are able to.
3 key cost metrics to evaluate remote work options.
There are some employer savings related to remote work. Data indicates that when employees work remotely at least half the time, employer savings can be about $11,000 per employee. That same data shows employee savings between $2,500 - $4,000 a year.
As businesses examine if moving to more remote work options for the long term makes sense, what cost metrics should they analyze?
There are three key business costs of remote work and associated metrics businesses can evaluate:
1. Offices/On-Site Workspaces
With the creativity many businesses possess, it’s possible to do more with less space. When businesses are strategic about offering employees the option to work remotely, the reduced cost of on-site workspaces can create substantial savings—especially for businesses with multiple locations.
Increased productivity is another area where employers have seen benefits from remote work. Not only are workplace distractions reduced, but people are also happier and more engaged. These five productivity cost benefits illustrate some of the significant ways organizations have recouped costs with remote work:
- Businesses lose $600 billion a year in workplace distractions.
- Over two-thirds of employers report increased productivity among their telecommuters.
- Sun Microsystems’ experience suggests that employees spend 60% of the commuting time they save performing work for the company.
- AT&T employees work five more hours at home than their counterparts who work in the office.
To examine the costs more carefully, check out this Telework Savings Calculator.
3. Talent Acquisition and Retention
While some workers may worry that when they’re out of sight, they’re “out of mind,” it seems like especially over the past few years, remote work has become more common and many employees prefer it as an option.
- 1 in 4 employees has changed jobs to shorten their commute.
- Employees who work remotely are the most likely to strongly agree that their engagement needs are being met.
- Given the option, 99% of people surveyed said they would “choose to work remotely at least part-time for the rest of their careers.”
Not only can remote work help you retain current employees, but it also means you can hire the talent you may not have had access to in the past. Top talent may be hard to find, but expanding your search to include candidates outside of your location can significantly help your recruiting efforts.
Costs associated with remote work.
Many businesses have traditionally assumed they could only be successful with an on-site workforce. The pandemic has proven that theory wrong. Now more and more businesses are open to the possibilities and opportunities that can help them engage with employees in a new way that enhances their ability to recruit top talent and compete in the marketplace.
There are definitely cost savings associated with remote work, but to be efficient, a business may also incur some cost of employing remote employees. Before making a full switch, there are systems that can help.
As an employer, it’s critical that you invest in software that allows you to easily enter employee information in one place, help you post to job boards and stay compliant, and ditch time-consuming manual processes.
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