Analysis of Costs and Benefits
If you’re like most people in 2020, you probably had to start working from home unless you were an essential service worker or in a type of job that could not be done remotely. If you were thinking about making the most to work remotely because you can’t stand battling rush hour traffic anymore and you’re looking for greater flexibility, no doubt you would have made a list of the pros and cons to support your decision. But have you considered the financial aspects of working from home? This applies to both employers and employees. Besides the salary, what are the day-to-day costs or smaller expenses you might be looking at if you decided to work remotely and give up the traditional office job life once and for all?
Work From Home Statistics You Can’t Ignore
Given the very real possibility that remote working is going to be a permanent part of the future job market moving forward, it’s a good idea to know what to expect for both employers and employees alike. The numbers below certainly seem to be in favor of both parties and serve as proof that remote working definitely has a positive impact for both the business and the staff:
- U.S companies in 2018 saved an estimated $ 5 billion in costs with remote employees, and this was only with part-time workers. The savings factored in the diminished need for overhead, operating expenses, and real estate.
- PGI News reported that the average savings for an employer in terms of real-estate was an estimated $ 10, 000 per employee annually if they hired remote employees full-time.
- Global IT Recruiting company TECLA reported that work from home employees saved an average of $ 7,000 annually. The bulk of these savings came from not having to spend on food, clothing, commuting, and child care for those who had kids.
- OWLLabs reported in 2019 that remote working employees who worked from the comfort of their home at least once every month were 24% more likely to feel productive and happier at their work. Greater flexibility, better control over the way they worked, and their work environment, and not commuting to work played a big role in reducing the levels of stress they felt.
- An impressive increase in productivity among the staff who worked from home. A Stanford University study of 500 people who were both working traditionally and remotely revealed that productivity levels among remote employees are equivalent to a full day’s work every week.
- There was 50% less attrition among remote workers, according to Stanford University researchers.
- Fudera reported that among the younger workforce, 68% of those surveyed said the ability to work remotely impacted their decision about whether to take up a job offer with a company or not.
- An Upwork report claims that by 2028, at least 73% of teams in businesses are going to have remote employees, especially with the demand being bolstered by the younger generation who are increasingly valuing work-life balance and flexibility. With the COVID-19 situation, it’s likely that reality is going to be sooner than expected.
- The American Psychological Association reports that employees could easily reduce the amount of stress they felt if they had more control, and boost their motivation and growth as a result. Employees who enjoyed better work-life balance found more time to exercise, eat right, feel happier, and generally have a better outlook on life overall.
- Remote working is gaining traction, and in the last 10 years alone, it has grown by an incredible 91%, based on a FlexJobs and Global Workplace Analytics survey.
- Less need for Sick Day leave entitlements since remote employees are less likely to call in sick.
- Global talent pool means greater company diversity as the lines between culture, geographic location, race, ethnicity, and identity become blurred.
- Working remotely is reducing the gender gap in the fields of technology, according to one U.K study. Out of the women surveyed who worked in the tech field in the study, 76% said the option to work remotely was necessary to retain and attract females in this industry.
- Remote work increases the possibility for employees over 50 to continue in the workforce instead of being forced to go into retirement because they have no choice. This had a positive impact on the more senior staff, and companies could still benefit from their experience and by putting their skills to good use.
- It’s a well-known fact that telecommuting means a decrease in greenhouse gas emissions, which is good news for the environment.
Remote working options are flourishing, and based on Buffer’s 2019 State of Remote Work report; remote work is not going away anytime soon. In fact, it’s here to stay for good as 99% out of the 2,500 remote working employees who were surveyed said they wanted the option to work from home some of the time for the remainder of their career years.
Advantages and Disadvantages for the Company
When employees come to a physical office space to work, it is the company that foots the majority of the bill. They pay the rental, they pay the utilities, they provide the employees with the equipment needed to do work, they provide the office supplies, including snacks in the break room, and they pay for the internet needed to get the job done. That’s part of the package. With remote working, there’s no doubt that employers definitely save quite a bit in terms of not having to rent a physical office space and all the other associated costs that go along with it. But what about the expenses that are associated with remote working? Who pays for the employee’s internet? Computer or laptop? What about the equipment needed, like a suitable desk and a comfortable chair to sit in for long hours? The employee is still getting the job done, but this time the office has moved into their homes. They’re doing everything they would otherwise be doing in an office space, except they’re doing it from home. So, is the employer expected to provide some funding to cover the necessary work-related expenses? And if so, do the employees need to take a pay cut? Those are a few of the questions that both parties should be thinking about before making the transition to full-time remote work.
Remote working is no longer considered an extra perk or benefit of the job reserved only for a select few who have earned the right to work from home after several years of service. Remote working is now the norm, and one study even shows proof that the number of teams who are quickly become fully virtual is on the rise. The year 2020, when organizations globally took to working remotely at the same time, was all the proof we needed to see that remote working is absolutely possible, and even better, it doesn’t compromise on productivity either.
Stress has become such a common occurrence that a lot of us don’t remember what it was like to live stress-free anymore. It is not uncommon these days for many to experience stress daily. Some people have found ways to regulate their stress and keep it under control, while others quickly unravel and go off the deep end as soon as they begin to feel the first signs of stress. Stress is a silent killer, and nowhere is this example perfectly illustrated than when we are overworked. Being overworked can take a tremendous toll on the body, mentally and physically. We may not feel it while we’re working, but when it hits you, it hits hard. One day you wake up and realize you’re dealing with a bad case of fatigued, completely exhausted, and burned out because you’ve been overworked for far too long. Stress, as we all know, is a contributing factor to a wide array of health concerns. The way society works these days; it’s hard not to feel overwhelmed now and then. Juggling family life, social life, a career, your finances, planning for the future, it’s almost too easy to get stressed these days. Stress is always going to be a part of life, so the way you learn to handle it is what truly matters. One way is by minimizing the stress that you feel while you’re at work and with remote working, the greater degree of work-life balance is going to be of tremendous help.
By now, it’s been established that the benefits of working from home include:
- Better work-life balance
- Time and money saved not having to commute to and from the office
- Ability to work anywhere you want
- Ability to work while you travel
But regardless of where and when you choose to work, certain things remain consistent. Like the need for the proper equipment to get the job done. Ordinarily in an office, all the necessary tools would be provided by the employer within the office itself, but what happens when the workforce is not remote? With remote work now on the rise, companies need to address the burning question of what are the cost benefits that stand to be gain that makes this type of work arrangement worthwhile for both parties. Remote employees can choose to carry out their tasks from one of three options. They either work at home, at a co-working space, or a coffee shop, library, and any other location they might find it easy to concentrate for a change of scenery. Some employees might even work while they travel to different countries and vacation simultaneously. These individuals are called digital nomads. Remote employees are still expected to work at the same time and maintain the same work hours as their on-site peers, but the reality is most of these employees enjoy flexible work hours as long as the job gets done and they attend the meetings they are supposed to. Every remote working employee is going to need three basic essentials when they work remotely:
- Proper furniture
- Necessary software and tools that all employees of the company need to use
So, to what extent is a company expect to foot the cost of the expenses? Does this same arrangement apply to freelancers since remote work and freelancing tend to overlap in certain areas? Ah yes, this very subtle difference needs to be addressed because while most freelancers perform their duties remotely, NOT all remote employees are freelancers. Remote working means you’re employed full-time with one specific company as opposed to working per project the way freelancers do. Being independent, freelancers tend to foot their own bill, but this arrangement does not necessarily apply to a remote worker. Certain expenses are covered by the company for their employees who work remotely full-time, but it depends entirely on the industry and the company in question. Each company is going to have its own policy and way of doing things, so one remote worker’s arrangement is not necessarily going to be the same as someone else. Here are some of the costs companies might be looking at when dealing with remote working employees:
- Equipment and Furniture – Companies should consider providing a one-off stipend for employees who are first setting up their remote working stations at home. However, the costs are only meant to cover one location, which is primarily the home. After all, the employee would be provided with a desktop, desk, chair, and printer if they had to work on-site, and they should have access to the same provisions when they are working remotely to as part of the job. Some companies might cover the cost of helping their workers get set up with a proper desk and chair and other work-related material they might need, but any additional extras would be at the employee’s expense. For example, if an employee chooses to work in a coffee shop or while they’re traveling, the employee would need to cover that cost. The company has already done its responsibility by providing the basic necessities.
- Hardware and Software – Like the basic office equipment, if the company requires an employee to have certain hardware or software to carry out their duties, then the company would need to cover the cost. The same way they would if the employees were working on-site. Remember, they’re still working even though they’re not sitting behind a desk in one location. If they are supplied with this equipment while they are in an office environment, they should be supplied with the same necessities even if they worked remotely. The software that is needed is going to depend on the job function and industry of the business. Designers, for example, require different software specifics compared to what a programmer might need. Those working in sales might require customer relationship management software and other types of marketing tools. All remote employees will likely require capable video and audio conferencing tools to touch base with the company and other members of the team. There is also a need for certain project management tools that would make work a lot more efficient. A company laptop would probably have all of these requirements already, but if the employee is using their own device, the company would have to foot the cost of installing and purchasing the software.
- Internet – This one is a bit of a grey area since most employees would already have established internet connectivity at home. One research found that out of the 1,900 remote working employees who were surveyed from 90 different countries, 78% of those surveyed were paying internet connection themselves. If your employee is already on a fixed internet package plan per month for unlimited usage and they’ve had no problems paying the bill thus far, then it’s safe to say that they’ll be more than happy to continue doing so as part of the perks of working from home. It should still be discussed with them to make sure they are okay with this. However, if the company does require that the employee upgrade their current internet package to meet the broadband speed demands needed for work, then the company should offer to cover the balance of the extra cost incurred.
- Desktop or Laptop – Most companies these days are happy to supply their staff with a company laptop for them to work on the go. Working remotely, this arrangement should still be doable. No extra expense is needed on the employee’s part if they get to use the company laptop. If, however, the company requires a desktop, and the employee does not already have one at home, then this is something that needs to be discussed. Both parties need to establish if there is an actual need for a desktop, or if the job can be done using only the company laptop. Again, this would depend on the company involved, the nature of the job, and the company’s policy when it comes to supporting remote employees. A company laptop might not be possible if the company is a small one with the budget to spare, and if that is the case, a discussion needs to be held with the employee to determine suitable work arrangements using the employee’s current device.
- Superannuation and Retirement Accounts – This is the employer’s responsibility, even for employees that work remotely. As long as the individual is employed with the company (not as a freelancer) and has a valid employment contract, they are still entitled to the same benefits as the on-site employees are.
How much the company is willing to provide financially is going to be entirely dependent on the company and what mutual arrangements they have worked out with the employees. There’s no hard and fast rule, but if a company and the employee can come to an arrangement that everyone is happy with, the positive ripple effect from this is going to be evident in the quality of the work produced. The cost of helping the employee set themselves up with everything they need to work efficiently from home would still be much cheaper overall than having to pay for rent and the overhead costs that come with running an on-site office. Especially when rental prices spike in major cities. PGi reports that full-time work from home employees can result in a company saving as much as $ 10,000 annually per employee in terms of real estate savings. Health insurance giants like Aetna, for example, managed to do away with 2.7 million square feet without the need for an office, which in turn resulted in the company saving $ 78 million annually. You certainly don’t need an office these days to run a full-fledged business, and remote working teams can equal significant savings for the business overall.
There is also the issue of workplace health and safety and insurance. While employees are unlikely to experience any work-related accidents if they don’t’ leave their home to commute to work, there are still some unique health and safety considers that an employer needs to consider. Physically, an employee that is not set up with the proper ergonomics to work behind a desk long-term is likely to experience some posture and physical related issues while on the job. Medical benefits and basic insurance coverage should continue to remain part of the employment package offered, even for remote workers. Remember that they may not be on-site, but they are still working on matters for the benefit of the company, no matter where they may be. Not being on-site does not make an employee less valuable, and if they are employed full time, they should still be provided with basic health and insurance coverage, the same way on-site workers are, even if they end up not using it in the end.
Advantages and Disadvantages for the Employees
Offices are not always the ideal type of work environment for everyone. Of course, since people are different, some are going to prefer the dynamics of working in that kind of setting, while others may prefer a more remote option. In early 2020, many employees found themselves working from home not by choice, but out of necessity since businesses were ordered to close temporarily as part of the enforced social distancing measures to curb the spread of the COVID-19. Some employees were no doubt thrilled by the idea. The daily commute quickly became non-existent, they had a lot more control over the kind of work environment they wanted to set up for themselves, and probably the best part was there was no need to change into your office wear. You could be working in your pajamas all day if you found that more comfortable. Probably the biggest challenge was not having any bosses or colleagues around, which made it difficult to stay on top of the tasks they had to do. Being accountable for all their decisions and actions now that they were working independently was no doubt a bit of an overwhelming experience for some employees. What a lot of employees working remotely for the first time might be underprepared for is the costs involved with setting up your workspace. If you have never worked remotely before until now, it’s unlikely you would already have an in-home office setup or designated area declared as your workstation. There’s no hard and fast rule as to how your home office should be set up, but you definitely want to get yourself organized with a designated work area to help you stay focused. Once in a while, if you want to move to the couch or dining room for a change of scenery, by all means, go ahead and do it. But ideally, a home office is still a necessity, and there are two main factors you need to consider when setting up this area solely for work:
- Separation – Remember how some employees find it hard to separate work and personal life when they work remotely? Well, this is why you need a separate area for one specific purpose. In this case, your home office should be a separate area that is solely for work and nothing else. The rest of your home can be well used for rest and relaxation and any other activities you want to get done, but in your home office area, it’s all about work. The environment that you surround yourself in has a certain level of influence on our psychological state of mind. When you’re stressed out by your environment, it makes it difficult to concentrate on anything, and you know this from your days of working in an office. Being distracted and unable to focus on anything else except your stress is how you slowly start to burn out and feel demotivated over time. Your external physical environment can contribute to the way that you feel, and if you need more proof, just think about all those times when you were stressed out in a chaotic office environment. You want to give your brain it’s best chance to stay on task by not being too distracted by your external environment.
- Isolation – If you don’t live alone, you need to be isolated to minimize your chances of being interrupted when you need to stay on task. Or even when you need to host a virtual meeting with your boss and the rest of your team. It simply won’t do to have pets, kids, partners, or spouses running around in the background or creating a lot of noise when you’re trying to stay focused on your meeting. The rest of your team is bound to be distracted by what’s going on in your environment too, and the meeting is going to end up being nothing more than a waste of everyone’s time. Not being isolated enough is a big problem in many office setups too. Chatty colleagues, colleagues on the phone, and various other noises can interrupt your train of thought all too easily. It becomes an even bigger issue when you’re at home with family and this is something you have to take into consideration once you decide to go down the remote working path. Which is again why you need a designated space or room for your home office.
Now, you already know that you’re going to be saving money commuting, buying a cup of coffee and bagel from Starbucks every morning, eating out for lunch, and on the clothes you have to wear, but what about the costs incurred by working from home?
- Your Utility Bills – Now that you’re working from home, your utility bills are going to be much higher when you’re not spending 8 hours away outside and at the office. Prepare to see a spike in your utility bills when you make the transition to work from home and factor that into account when you’re working out the salary negotiations with your employer.
- Your Taxes – If you’re employed by a company, then you probably don’t have to worry about this aspect since the employer will take care of it for you. If you’re working independently as a freelancer or an entrepreneur in charge of your own business, then a chunk of your earnings still needs to go towards taxes even if you’re self-employed. You’ll want to discuss this with your accountant before making the leap, so you know exactly the kind of costs you will be looking at tax-wise.
- Health Care Costs – If you’re employed by a company, then like your taxes, this is something you don’t have to worry about too much either. But if you’re working independently, then you’re going to have to bear the cost of your own medical expenses. This additional expense is something to take into account since it will have an impact on your take-home salary.
- Health and Insurance Coverage – Yes, working remotely may result in better health without the need to commute and being able to pace yourself when you work, but health and insurance coverage is still something you should not skimp on. Even if the company does not provide basic insurance benefits, this is something that you should establish independently on your own to protect yourself. If the company you work for does not offer insurance, consider the costs of the monthly premium and see if the cost can be worked in when you’re negotiating a salary package.
- Home Office Setup and Equipment – If you haven’t already got a designation work station for yourself, then you’ll need to set yourself up with one if you’re planning to give up traditional office life in favor of working remotely. The cost of setting up your home office is going to differ based on what you’ve already got that you can use and the things you don’t have yet that you need to buy. It’s going to be different for everyone. You’re going to need to invest in a proper desktop or laptop (depending on whether you need one or both), a printer, and a scanner, perhaps even a copier if you need it. You’re also going to have to invest in high-speed internet so you can conduct your meetings with the rest of your team virtually (unless you’re working independently).
- The Cost of Groceries – You’ll be spending less money buying take out food, but your weekly grocery bill is bound to see a spike when you’re spending more time at home. More home time means more meals needed at home now that breakfast and lunch are no longer going to be external affairs.
Do the Benefits Make It Worthwhile?
There is no denying that remote working has some major cost-saving benefits for both the business and the employee. However, at the end of the day, it is up to the employee to determine if the perks and the financial savings are going to be worth the realities that come with working from home. Not everyone operates the same way, and some people crave and thrive on the social interactions they get daily from meeting their colleagues and being physically present to work together in a team. Even the flexibility and better work-life balance might not be enough of a benefit to compensate for the loneliness and isolation that is often felt with remote work, especially if you live alone and don’t have a family just yet.
For the employee, it is important to give some serious thought to before making the transition. It is up to you to decide if remote working is going to be a good fit for your personal and financial goals, especially where the salary package is concerned. Having a tight budget every month can quickly take the fun out of being able to work in your living room in your pajamas all day. Besides the work-life balance, cost-saving in certain aspects, and the flexibility of setting your own hours and style of work, there’s another big reason why one might consider remote work full time. To reduce the daily stress that you feel. Being excessively stressed every day is one of the major reasons why so many people feel overwhelmed. Even when, in reality, their circumstances are manageable, the worry that they experience is affecting their ability to see clearly.
Everything feels like a big deal when you’re overwhelmed. Everyday stress could be triggered by information overload, a routine that is too hectic, pressures at work, and even if you happen to be dealing with several mental health issues like anxiety, depression, or panic attacks. Excessive worry and stress is a debilitating condition to deal with. It is a taxing emotion to go through for a long period, and it will take its toll on both your mind and your body if nothing is done to keep it under control. It starts with stress before it eventually leads to other mental health conditions, depression, and anxiety among them. Stress can cause severe disruption in your ability to focus. When you’re stressed, the simplest thing or task can appear to be something overwhelming. Your behavior might become frantic and erratic, even unpredictable as the stress piles on until you finally reach a point where you can’t think clearly anymore. Being in a state of frequent emotional turmoil can lead to stress, which, as we all know, is never good for the body. The elevated cortisol levels, adrenaline pumping through our veins, they are referred to as “stress hormones,” and when they course through our bodies, they’re pumping us up to react in a way that is quick and strong. Unfortunately, it is also difficult to concentrate when you’re in this state.
For all these reasons and more, remote working is quickly becoming a more appealing option, especially to the younger generation. Better quality of life eventually leads to elevated levels of happiness, and there’s no reason why you have to sacrifice one for the other when we live in a world of options these days. The happier you are, the more it shows, even in the simple day to day tasks that you have to manage on the job.