In the interest of employee health and safety during the COVID-19 pandemic, many businesses have taken their operations remote. According to Forbes, more than half of employed Americans have transitioned to working from home since March 19.
This forced transition is serving as a necessary test for the viability of work-from-home as a permanent solution. While most arguments for telecommuting revolve around quality-of-life factors for employees (no commute time, increased productivity, fewer distractions), there are benefits to employers as well.
A study from Global Workplace Analytics shows that the average employers can save $11,000 per half-time employee per year when transitioning to a telecommuting work environment.
Where do those savings come from? Turns out, there are a large number of ways telecommuting financially benefits your business.
When you no longer need to maintain a physical office space, you remove all of those utility bills and facility upkeep costs that were bleeding you dry. Rent, electricity, heating/cooling, parking space lease, and coffee/water supply are all expenses of the past.
Where maintaining a virtual office costs $59-100 per employee per month (for online subscriptions, delivery of office supplies, etc.), a designated office suite costs an estimated $3000 per employee per month.
What’s more, whatever supplies and services employees need to provide themselves (such as WiFi, furniture, and tech) can often be written off as a deduction. They can even potentially deduct part of their mortgage interest and property taxes for their designated at-home office space, though a tax accountant should be consulted first.
If you still require a physical space to host the occasional meeting, most urban areas have co-working spaces that offer meeting rooms at a daily rate and provide all necessary amenities.
Decreased employee turnover
When telecommuting is an option, employee satisfaction can skyrocket, causing an increase in your business’ employee retention rates. Workers are no longer faced with some of the pressing reasons they leave their jobs, such as long commute times, need to relocate, or familial responsibilities. Working from home eliminates most of these concerns.
Hiring new employees costs businesses money — usually between $10,000-$30,000 due to recruiting and training costs. Some 46% of companies report that telecommuting has reduced employee attrition. Meanwhile, 95% admit that it’s had a high impact on employee retention.
What’s more, it takes new employees longer to attain the same level of profitability as veteran employees who understand procedures well and have more experience. This is especially true in sales, which leads us to the next point.
Improved productivity means improved profits
As employee satisfaction rates rise due to the peace-of-mind working from home provides, employees become more profitable. This is evident in a number of case-studies from large companies. For example:
- Cisco has reported an estimated $277 million per year in savings due to increased productivity from their work-from-home program.
- Alpine Access Remote Agents closed 30% more sales when they transitioned to work-from-home. Customer complaints also decreased by 90%.
- Sun Microsystems found that employees spend 60% of their typical commuting time working when they’re at home.
It’s a simple equation: improved work satisfaction equates to improved productivity. Improved productivity means more time spent performing work, and more time spent performing work means more money made for the company.
Another factor to take into consideration is the reduction in absenteeism. Reports show a 31% decline in time off requests when working from home is an option, which means a day typically spent contributing no productivity at all can still be profitable with work-from-home, even if that employee has other responsibilities to take care of.
While telecommuting policies must be considered on a case-by-case basis and aren’t feasible for all businesses, they can certainly be a money saver for those who have found themselves capable during this experiment. With many experts suggesting that the work-from-home lifestyle is here to stay even after COVID-related restrictions are lifted, it’s worth exploring the financial impacts of such a decision.