We’re witnessing a long-term shift towards working from home. Nearly three in four CFOs plan to shift a portion of their on-site employees to permanent remote positions. Beyond public health and safety, there are several financial drivers incentivizing work from home.
- A reduction in operating expenses.
- Payroll savings associated with lower cost of living.
- Productivity gains.
- An expansion of the labor pool, including access to a global workforce.
We’re already seeing companies alter their leases and on-site contracts as part of a permanent adjustment. A recent Gartner survey revealed that in April of 2020, 13% of respondents had already made cuts to real estate expenses, with an additional 9% planning to do so in the near future.
This coincides with the cost saving efforts we’re seeing companies make in technology spend and other on-site overhead that have become less critical in a predominately distributed, work from home environment.
Multiplied across a workforce, savings associated with reduced operational expenses translates to significant numbers. According to Global Workplace Analytics, companies will save an average of $11,000 a year per employee when employees work from home at least part-time.
Rent and utility costs. Maintenance. Travel expenses. It all adds up, and not just for the employer.
The same Global Workplace Analytics report demonstrates cost savings for employees who work from home. This includes a reduction in transportation costs, fewer lunches bought out, and less need for professional wardrobe and accessories. Annually, employees who spend a portion of their week working from home are saving between $2,500 and $4,000.
But it’s more than just cost savings, employees who work from home are actually happier and more productive.
A Harvard Business Review study found a 4.4% increase in productivity when employees work from home. This boost comes from a variety of sources, including better work-life balance, a decrease in commute time, quieter noise levels, and fewer interruptions.
The shift towards a modern and distributed workforce is proving to be incredibly popular with employees. 44% of employees would take a pay cut to permanently work from home. One 2019 study shows that remote employees work an average of 1.4 days more than their office counterparts. Another shows a dramatic reduction in absenteeism.
The positive response from employees demonstrates a bigger benefit than a reduction in costs. It shows demand for a modern approach to work.
More from our Thoughts on Work Series
- What’s driving employers to remote work?
- Can work from home expand your talent pool?
- How much value can be created with remote work?
- Is the work from home economy here to stay?
- What’s the biggest obstacle to work from home?