By Dr. John Sullivan and Michael Cox
We are experiencing what I call “The grand WFH experiment.” Initially, the Working From Home (WFH) critics were heavily favored. However, because of its powerful business case, WFH is now destined to become “the new corporate normal.”
I have been writing about the tremendous ROI of remote work for nearly a decade. And for decades, corporate managers have almost uniformly resisted approving most remote work. In our experience, this resistance has been primarily because managers are so accustomed to having face-to-face employees. Also, because they didn’t want to have to learn the new remote management approach. Many seem to hold a subconscious belief that physically watching your employees work somehow reduces their loafing. Of course, almost all the resistance and support have been emotional. No one in HR has taken the time to either quantify the productivity benefits or to calculate the ROI of remote work.
Before And After WFH Performance Data Has Changed Many Opinions
The most significant major changes in remote work over the last few years have been in the opposite direction. Major users like IBM and Best Buy dramatically reduced their effort. Then came the unexpected “shelter in place orders” associated with the pandemic. It would be inappropriate to label it as a bright spot. The fact is that these orders did encourage 57% of employers to begin offering WFH or flex work options.
Fortunately, during this surge in remote work, many firms for the first time utilized metrics. For the first time, this allowed for easy comparisons of “before and after” performance differences in both productivity gains and cost savings. For example, “Our bias against working from home has been completely exploded.” CEO Rich Barton made its impact clear “My personal opinions about WFH have been turned upside down over the past 2 months. I expect this will have a lasting influence on the future of work … and home.” In a very public, now famous “forever declaration”, the CEO of Twitter Jack Dorsey announced, “If our employees are in a role and situation that enables them to work from home and they want to continue to do so forever, we will make that happen.” In another example, the Chief People Officer of San Francisco-based DocuSign noted, “Working from home is a great thing for the company and for the employees who don’t want to get back in cars and commute for two hours. That’s lost productivity. I see it (remote work) happening way more often in the future.” This positive outlook is also shared by CFO’s. A survey by Gartner found that 74% of CFO’s expect some of their employees who were forced to work from home to continue working remotely after the pandemic ends. Other major corporations like Microsoft, Facebook, Google, Nationwide, and Apple have also reviewed their WFH data and made decisions to continue most remote work until at least the fall. I predict they all will soon become advocates of “forever WFH” when they make the shift to remote work permanent.
The Top 10 Compelling Business Case Arguments For A WFH Workforce
We have calculated that shifting to a WFH model in most large corporations would literally involve hundreds of millions of dollars in benefits. Those benefits would occur across several business impact categories including improvements in workforce productivity, innovation, recruiting, and retention. Significant overhead savings would result from reducing expensive office space. So, if you’re considering championing a move to WFH at your Corporation, here are the arguments that have proved to be effective.
- Almost every employee adapts – even though it has only been supported by anecdotal comments. One of the most common negative arguments is that most employees simply don’t have the skills, the temperament, or the capabilities to work at home. However, during the current forced work-at-home approach, there have been universally positive experiences that multiple companies have reported. It appears that with the right support, almost every employee and manager has been able to quickly adapt to remote work. Rather than having to possess a fixed set of universal traits, almost everyone has been able to adapt. Which bodes well for greatly expanding the WFH practice. Even the loneliness and the sense of isolation that some have reported previously seem to fade away once, literally, everyone began to work remotely.
- Expect an increase in productivity. Several publicly reported cases provide data showing that rather than losing productivity, productivity is increased under remote work. For example, for decades the “results-only work environment” autonomous approach piloted by Best Buy produced productivity increases by up to 35%. American Express reported in one documented, side-by-side comparison case, that their remote workers handled 26% more calls and produced 43% more business than their office-based counterparts. In some people management areas, it takes little effort to increase productivity under remote work. For example, the common entire day absenteeism that often damages productivity with most “come to the office” workers shrink dramatically when you work at home. Of course, the loss of productivity that occurs at the office whenever your employees are worried about catching COVID-19. Many assume that productivity will suffer when you are working at home because there are so many distractions. It turns out in many cases employees are much more distracted in an open workspace, where unlike in your den, there is no door to shut.
- The global handoff of projects allows for 24/7 operations. The output from a single facility is limited because most of the team go home at closing time. Keeping them working late is problematic because of overtime costs and employee fatigue. However, when parts of your team are remote workers operating in different time zones around the world, you can increase the amount of time devoted to a project by two-thirds using what are known as “global handoffs.” Planned handoffs between time zones allow project work to be “handed off” to team members working during their traditional hours in a follow-up time zone. After eight hours of additional work, the project work is again handed off to a final time zone. The result is that this project is continually worked on 24/7 without the need for late-night shift work or overtime. Essentially getting the overall project work done in one-third of the calendar time.
- WFH adds an easy to engage overflow capacity. In today’s turbulent world, there may be multiple times during a single business quarter where you need to rapidly add workforce capacity to handle an upturn in business. During the same quarter, you need to have the capability of painlessly reducing labor costs as demand suddenly decreases. For example, this approach for adding capacity occurs at JetBlue’s virtual call center. Where working from home employees are taught to expect these fluctuations. So, additional call center employees can be quickly and easily tasked with added or reduced hours. Under this remote flexible-hours model, a sudden increase in demand can be effortlessly handled without the need for any permanent hiring or layoffs.
- WFH significantly expands your recruiting pipeline. Often the largest impact from remote work occurs in the recruiting area. This is especially important because over the last few years recruiting skilled talent has been a worldwide search for new talent. Localized geographic talent or skills shortages literally evaporate when you allowed new hires to work from their home anywhere in the world. In fact, your talent pool will expand exponentially once you stop looking for your needed skills primarily within a commuting distance. Yes, allowing the recruit to work at home allows you to target every qualified person in the world (who also speaks English). They don’t have to live close or relocate. Allowing WFH coupled with truly global recruiting assures that you will at least double your applicants. Allowing new hires to work where they currently live will eliminate relocation issues and costs. Not having to move will also eliminate immigration issues. In addition to eliminating the need to relocate, it’s important to realize that offering the ability to work at home can by itself be a major attraction factor. One study by Owl Labs found that more than 25% of workers would take a 10% pay cut in exchange for the option to work remotely. Finally, it’s also important to note that letting college new hires work from home greatly expands the number of universities that you can remotely recruit from.
- Employees can choose to live in safer and more desirable areas. When employees know that they have a secure work at home job, many may decide to move to a more desirable location. For example, if your employees or recruits that are worried about catching the COVID-19 virus, they can now choose to move away from a previously desirable big-city to the now less virus prone open spaces. After relocating, no longer having to endure a virus-infected mass transit ride every day may have the side benefit of reducing their stress and increasing their productivity. New hires can stay wherever they currently live. However, any employee that suddenly becomes unhappy with their physical location can choose to move to more desirable communities. This might include areas closer to their relatives, with better schools, with less crime, and congestion or simply a great place to raise their kids or eventually retire. Others can now freely move to their “always dreamed about location” close to skiing, on a lake, or in the wine country.
- WFH employees can experience a higher relative pay without a salary increase. In addition to moving to a better community, those that work at home now could move to a low cost of living area. Relocating to a low cost of living area allows an employee to see their salary go much further and at the same time, it releases some of the pressure on the company to pay more. You can educate work at home employees about the low cost of living areas they can easily relocate to. So, those that are struggling economically learn that after selling their current overpriced house, they can pay their one-time moving costs, and still have enough money left over to buy a bigger house. For those that are currently working in California or New York, it means that they can move to an adjacent state and therefore avoid years of income and high property taxes. And, for those new work at home employees that don’t want to relocate, the company must make them aware that no longer having to commute and dress up for the office will have the net effect of increasing their spendable income. WFH employees will soon save significant monies from their commute (car insurance, gas, parking, and mass transit fees). But they will also save on Starbucks runs, restaurant meals, laundry, and fashionable clothes. One estimate of the likely WFH savings is between $5000 and $8000 per year.
- Higher retention rates among WFH employees. Once employees settle into a remote work job, their retention rates often soar. Because it will be extremely hard to find a similar job that fully supports working from home. They may also stay longer because they are now experiencing less stress without their previous commute and virus issues or because they are enjoying more time with their family. One Cisco report showed that “telecommuting can also lead to higher employee retention rates” (91 percent of respondents rated telecommuting as somewhat or very important to their overall satisfaction).” Currently, Gallup reports that 60% of US workers who have been doing their jobs from home would prefer to continue to work remotely as much as possible.
- With the right tools, innovation can also increase. A reduction in the traditional serendipitous meetings that have only occurred in the office will eventually negatively impact collaboration and innovation. As a remote alternative, one firm, Zapier uses Donut, a Slack application, “that randomly pairs teammates and co-workers to discuss random topics which may lead to new product features or fun.” Scheduling regular collaboration and whiteboard problem-solving meetings may also serve as an effective substitute. You might also increase collaboration by allowing WFH workers to visit local co-working sites because it can replace some of their lost collaboration and feeling of community. Firms like Microsoft are now providing satellite offices, which allow employees to work for a short time (on secure servers) in a company-controlled business office that is located close to where they live. WFH workers’ flexible schedule normally allows them to focus their innovation efforts on the specific times and places where they discover that they generate the most innovative ideas. And, because the brain’s performance peaks at different times of the day, flexible remote work also allows each employee to schedule their regular workload during the unique hours when they are the most productive.
- Global diversity improves your financial performance and innovation. The ability to recruit in geographic areas around the world that have large diverse populations can make reaching your diversity goals much easier. A diverse workforce is important because research from McKinsey revealed that companies with the highest racial and ethnic diversity are more likely to produce higher than average industry financial returns. An NC State study found that a diverse workforce is more innovative because it “performs better at developing innovative products and services.” These business impacts from diversity occur when you hire diverse and international workers that mirror your customer base. The understanding and empathy for your customers’ needs will likely result in improved product development, customer service, and sales. One final diversity benefit is that you can more easily hire more handicapped WFH workers. The home is likely already modified so that they can be immediately productive.
The ROI Calculation Must Include The Millions Saved On Overhead Costs
In addition to the top 10 benefits, listed above, covering the areas of productivity, innovation, and people management: working from home means having 50% fewer employees physically working in headquarters buildings, instantly reducing your need for real estate. In fact, Gartner estimates that when you have a significant number of employees working at home, companies can save 20% on real estate costs alone. A reduced corporate workforce means significant savings also from reduced lease payments, property taxes, and even some payroll taxes. Less money spent on providing parking, utilities, food, office reconfiguring, security, and frequent testing for the virus. Attracting a local workforce is no longer a major issue. The COO will quickly learn that the physical facilities that now must be located in major cities, can instead be in other lower-cost areas with more lax employment laws and fewer unions. One firm estimated “a savings of $100,000 for each non-local employee that it didn’t have to relocate and work in one of its buildings.”
A Few Additional Miscellaneous Benefits From WFH
In addition to the major benefits and cost savings listed above, some additional significant benefits are still worth noting. They include:
- WFH can cause work/life balance to improve. Remote employees with flexible schedules can usually work around family responsibilities. In most cases, you can expect WFH workers to spend more time with their family. Eliminating multiple hours of commuting also gives the remote employee more hours with their family. At the end of the day, after family activities are completed many WFH employees are willing to continue to respond to messages, essentially expanding the time that a worker is available. In fact, Cisco reported that 60% of the time saved by telecommuting is spent working (a net gain in productivity) while only 40% is spent on personal time.
- WFH has a positive environmental impact. Global Workforce Analytics estimated that working from home each week can reduce emissions by 108 million tons every year.
- Expect no drop in communications. On a large physical campus, data reveals that actual face-to-face meetings are often, unfortunately, quite rare. However, with the wealth of new electronic communications tools like Google Meet, Microsoft Teams, Slack, and Zoom there need not be any reduction in communications between teammates and teams. Cisco reported that during “telecommuting, 83% of employees reported that their ability to communicate and collaborate with co-workers was the same as, if not better.”
- Face-to-face meetings are still possible. Working at home or working globally does not mean the end of non-zoom meetings. Fortunately, occasional face-to-face meetings can be scheduled at events that most already attend. Including – product reveals, industry events, and functional conventions. Occasionally, meetings can be held at airports that happened to be close by. Many firms are still willing to pay for once a year for face-to-face team meetings. Qualio, for example with 30 global employees, uses its office budget to meet a few times each year in different and exciting cities.
- Remote learning can be maintained. The need for effective learning, sharing, and training is even more important for remote workers. Most of the learning must be electronic, even for those that physically come to work. For example, part-time remote/virtual project work has proven to be more effective than classroom training. Customized Zoom interactive webinars can also be impactful. Salesforce transformed their in-person executive development into a remote experience and Google has been using virtual peer-to-peer learning for years.
- Remote career progression must be a focus. A company that relies heavily on WFH employees needs to proactively avoid developing a bias against employees that are not located in a headquarters building. To ensure an equal opportunity for career progression, metrics must be developed so ideas from remote workers are fully listened to. Career progress also needs to be monitored mostly to ensure that remote workers have the same promotional and growth opportunities.
When we are calculating the ROI of remote work programs, it quickly becomes obvious that the reduction in real estate and overhead expenses alone more than offsets the minimal costs associated with setting up a complete work from home program. If you hire the right workers and managers, you can easily expect a 20% increase in WFH employee productivity. There will be startling estimates like these at numerous companies that have been forced into giving remote work a high-volume try. We anticipate that for the foreseeable future everyone can expect a constant stream of announcements over the next few months covering the numerous major firms that have decided to extend, or that are converting their work at home program to “forever.” We are also excited about the amount of data, technology, and budget that are being applied to all of the remaining WFH weaknesses areas like data security and maintaining the corporate culture. With the application of this data-driven methodology, you should anticipate that the WFH model will become “the benchmark standard within two years.”
Author’s Note: If this article stimulated your thinking and provided you with actionable tips, please take a moment to follow and/or connect with Dr. Sullivan on LinkedIn and subscribe to his weekly Talent Newsletter.
Image from Pixabay.