How does working from home save companies money?
Remote working has been growing in popularity since the COVID-19 pandemic. According to the Office of National Statistics, the proportion of adults who did any work at home jumped from 27% in 2019 to 37% in 2020. Post-covid, a hybrid remote work model will be the focus of many businesses. More than 90% of employers are already considering giving their knowledge workers the flexibility to work where and when they are most productive in 2022.*
For employees, the benefits of working from home are obvious: they save the time they would have spent commuting, get the flexibility to balance work and personal responsibilities, and experience improved well-being. But what about employers? How does working from home save companies money?
How does working from home save companies money? 6 ways to consider
1. Lower overheads
An obvious benefit to having your employees work remotely is that you don't have to pay for office space. Your company saves money by not paying for property taxes or rent, Internet connections, equipment, electricity, air conditioning, drinking water, and other costs associated with having employees on site. Additionally, the business will not have to maintain the building's exterior by mowing the lawn or clearing ice from the car park.
On top of all this money that businesses save on office expenses, they also save even more money by having employees avoid the medical costs associated with working in an office setting. The total cost of workplace injuries in Britain in the 2018/2019 financial year was £5.6 billion. Employees usually bear most of these costs, but employers still pay about a third of them.
The savings realised from having a remote workforce are especially a big deal when running a small business with limited resources. Employers can use these savings elsewhere, ultimately helping the firm increase its profit margin.
2. Productivity gains
Working from home allows employees to be productive during hours that would normally be spent commuting to the office or making trips back and forth for forgotten items.
According to a study by a California-based company that tracked the work habits of 30,000 remote workers, working from home can increase productivity by up to 47%. The average worker starts work earlier and ends it later when working from home than from an office. They also get more done at home because they are more comfortable there and don't waste time chatting in the break room.
3. More efficient work processes
Sometimes it takes days or even weeks to set up a branch office or satellite location. It takes time to find office space, arrange furniture, and make sure everything is connected so that workers can get their jobs done effectively and efficiently without interruption.
In contrast, working from home means that everything is ready immediately upon hire—the employee only needs a computer, Internet connection, and power backup system to start working. Faster setups mean the company does not lose money to lost productivity.
Remote work also gives companies a bigger reason to automate their business processes. Employees working from home can't casually stroll to a co-worker's desk and ask for a project update. The company has to set up applications that show who is responsible for what task and their progress.
Automation, in turn, eliminates many manual tasks so employees can focus on things that bring the greatest value to the company. Tools like Credit Hound, for example, find new opportunities for businesses to collect debts and ensure invoices are paid on time, freeing up the time employees would use chasing after debts and resolving disputes.
4. Reduced employee turnover
Working from home puts employees in control of their schedules. This arrangement gives them greater flexibility with their time, making them less likely to burn out or quit their jobs. Employees are also less likely to complain about long hours or unreasonable deadlines if they work from home, which is good news for employers who want to avoid attrition.
Retaining employees reduces turnover costs in recruiting fees and lost productivity due to vacancies. In addition, many companies have to pay an employee's health and life insurance premiums while they are unemployed. Working from home can help retain employees and reduce or eliminate these costs.
5. Better access to top talent
Allowing employees to work from home can help attract top talent and give a company an edge over its competitors. Suppose an employer has demonstrated a willingness to provide a flexible work environment with autonomy. This willingness could make the difference between losing out on a top candidate who doesn't want an office job and hiring an excellent employee excited about working remotely. Top talent, of course, saves the company money by cutting training costs and delivering productivity gains.
A work-from-home arrangement also gives companies access to the top talent they might not be able to afford otherwise. If a company wants a specific type of person but can't afford to pay competitive wages, they can hire freelancers with specialized skills or people willing to do some work on the side when the company needs extra help. Since these freelancers are essentially independent contractors, the company does not need to provide benefits like health insurance or cover payroll taxes.
6. Save on wages
Companies like Google, Facebook, and Twitter are considering pay cuts for employees who choose to work remotely. Google recently rolled out a calculator that allows employees to see how working from different cities will affect their salaries. An employee who commutes from a nearby county to Google's Seattle office, for example, could forfeit 10% of their salary if they work remotely full-time.
These changes are controversial, but they have some merit. Employees working from home don't have to pay for fuel, parking or tolls because they are not driving to work. They don't need to buy business clothes; they can wear more casual clothing or even work in pyjamas if they want to. Working from home also allows employees to avoid paying for office supplies, childcare costs, and food at restaurants. They also get to earn more per hour since they are not spending hours in traffic every day going to and from work. Companies can roll out a fair plan to share these cost savings with employees.
How much money could a company offering remote working save?
It is hard to say exactly how much working from home saves a company, but it is easy to imagine that this model would be a saving grace for almost any business. From cutting down on office overheads and saving the company money in lower attrition to the obvious benefit of having more employees available at any time, remote working helps firms in more ways than one.
Ultimately, it comes down to a simple equation: employees who are comfortable and properly equipped to do their jobs are more productive than those who aren't. And when employee productivity goes up, a company's expenses typically go down.