Cost of Remote Workforce Versus In-house Employees

 
 

Office buildings in major cities now resemble the ghost towns of old-time western movies. Faced with health concerns and employee safety, most companies shuttered their offices in March of 2020, and many haven’t gone back.

 

It’s a far cry from the days when organizations argued against remote because of work quality, productivity, and organizational culture concerns. Covid-19 has forced businesses across industries—even those traditionally or exclusively run from an office (financial services, healthcare, software development)—to reconsider the business costs / benefits of permitting a partial or fully remote workforce. Based on a recent survey and research, the team at Global Workplace Analytics estimates that “we will see 25-30% of the workforce working at home on a multiple-days-a-week basis by the end of 2021.” 

 

Pandemic reveals the possibilities of remote work

While 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. Now research shows that  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.”

 

The new evidence regarding remote work is leading 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 Covid-19?

  • 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 once the pandemic lifts and more employees are able to return to work.

 

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 the same data shows employee savings between $2,500 - $4,000 a year.

 

As organizations 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 organizations can evaluate if remote will help you realize benefits.

 

1.   Office space 

When organizations are creative, it’s possible to do more with less space. Occupancy studies highlight inefficient use of space, with employees at their desk a mere 40%  of the time. With this type of data in mind, it’s not surprising that  KPMG reports that nearly 70% of large-company CEOs plan to downsize their office space. When organizations are strategic about offering employees the option to work remotely, the reduced cost of office space can create substantial savings—especially for organizations with multiple locations.

 

2.   Productivity 

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:

  1. Best Buy, British Telecom, and Dow Chemical--among others--have found that teleworkers are 35-40% more productive.

  2. Businesses lose $600 billion a year in workplace distractions.

  3. Over two-thirds of employers report increased productivity among their telecommuters.

  4. Sun Microsystems’ experience suggests that employees spend 60% of the commuting time they save performing work for the company.

  5. 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 Covid-19 has made remote work a reality that many employees prefer and want to continue, even after the pandemic subsides. 

 

Not only can remote work help you retain current employees, but it also means you can hire 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.

 

As you consider the benefits of a remote workforce, keep turnover in mind. After the pandemic, could you risk losing your top employees if you remove the option to work remotely? Will it be difficult to find candidates to replace them? If top employers in your industry continue to offer remote options, you may incur turnover costs if your strategy isn’t aligned with the industry.

 

Costs associated with remote work

 

There are definitely cost savings associated with remote work, but to be efficient, an organization may also incur some cost of employing remote employees. Before making a full switch, there are systems required to effectively manage a remote team and workforce. 

 

One need is a human capital management (HCM) system. An HCM is a central location for workforce data that also provides HR and business leaders with the strategic and detailed reporting and analytics required to decide whether to transition to a remote workforce. 

 

Once that decision is made, an HCM provides essential integrated tools for better managing a remote workforce, such as:

  • Integrated payroll and tax functions to account for local/regional tax rules that come with a dispersed workforce.

  • Benefits enrollment support that’s available to employees and administrators, regardless of their location.

  • Learning management system and 1:1 engagement tools that managers can use to ensure employees have the information and learning resources they need to get the job done.

 

Check out this article for other tools you may want to consider when adopting a remote workforce strategy.

 

Many organizations have traditionally assumed they could only be successful with an on-site, in-office workforce, often because middle managers didn't trust their employees. The pandemic has proven that theory wrong. Now organizations 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. 


If you want the transition to long-term remote work to be as smooth as possible, you need a cloud-based, modern HCM that will support your organization for the changes the future will bring. Contact us today or schedule a demo to learn more about how SyncHR solutions can help prepare you realize the benefits of a remote workforce and prepare for the next phase of remote work.

 

 

 

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Liz Sheffield

Liz Sheffield

Liz Sheffield is a writer and communicator based in Seattle, WA. She specializes in writing about topics related to HR and the people side of the business. Her areas of interest include HR Tech, HCM, leadership, training and development, employee engagement, culture, and recognition. Sheffield brings more than a decade of corporate experience in HR.

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