Is a Remote Workplace Better for the Bottom Line?

Is a Remote Workplace Better for the Bottom Line?

This article was updated on July 4, 2018.

The remote workplace trend is on the rise. According to Gallup, 37 percent of the U.S. workforce already telecommute at least part of the time. Around the world, workers are increasingly accessing remote work arrangements for both American and global businesses.

Forbes reports that remote workers are happier and more productive. The case made by author Scott Berkun in his book, "The Year Without Pants: and the Future of Work" is that flexible work arrangements and fully virtual teams can get more done without the impediments of traditional offices, long commutes and major infrastructure investments.

However, recent moves by major organizations suggest the case may not be so black and white. What do finance leaders need to know about the business case for going fully remote — and when a physical office may provide a bottom line advantage?

The Costs and Benefits of Managing a Remote Workforce

Bain & Company has discussed the theory of spatial economics, finding that as the cost of moving information, people and goods declines, it's changing the way organizations do business. HR Dive notes that scaling a remote workforce should be viewed as a business strategy, rather than a perk. It allows businesses to focus their human capital investments for maximum returns in salaries and attracting top talent, rather than in infrastructure, office space and parking.

Remote workers let organizations focus on attracting the top talent for a role, whether they're located in Kentucky, Mumbai, or Paris — without expensive relocation packages. According to the ADP Research Institute® report, The Evolution of Work: The Changing Nature of the Global Workplace, 95 percent of employees believe they will be able to work from anywhere in the world. In certain cases, there may also be cost savings associated with remote workers who bring important skills to the table at lower costs because of where they're located. In many cases, these costs savings may be most appropriate when a role is operational.

Understanding the Value of Collaboration

To put the broader discussion of remote work into context, it's important to understand the value of collaboration. Major firms, such as IBM, have been reigning back on remote work arrangements. One of the reasons, suggests Quartz, is to foster more innovation. "It turns out the value of innovation is so strong that it trumps any productivity gain," reports Quartz. While IBM currently makes approximately $200,000 per employee, businesses like Google and Facebook make closer to $2 million per employee, notes Quartz.

Business Insider notes that Steve Jobs believed that office designs should foster chance meetings and as a result spark innovation. Many businesses have started to focus the future of work more on redefining traditional office designs, and many are pulling back on remote work and offices. The Wall Street Journal reports that while open office designs may cost as much as 50 percent less per person than traditional layouts, many organizations are choosing more traditional layouts in response to drops in productivity and employee complaints. Office designs that balance shared space and quiet, private space may offer the right alchemy for innovation and doing deeper work.

Mapping Choices to Your Business Goals

Ultimately, "The Year Without Pants: and the Future of Work" shows that it's possible to increase productivity and shed some of the traditional approaches to work structures. A remote workplace can be a smart choice for attracting talent that wants flexibility, and managing both human capital costs and infrastructure expenses. As Berkun notes, it's possible to foster collaboration with regular retreats and collaborative technology.

At the same time, while harder to measure, there's a real value that's associated with face-to-face collaboration — and this value may be found in innovation. When firms are trying to push the boundaries of what's possible with technology, or redesign their whole business, having teams that work closely together physically day in and day out might be the right choice. It's important to evaluate your business goals and your culture when determining if remote work or an in-person work model is the right staffing model for the next phase in your organization's development.