It’s no secret that the Covid-19 pandemic drastically changed how individuals and businesses operate. The once-temporary work from home policies have gradually become the standard expectation for working environments, and more companies have adopted this model as a permanent solution. Despite some companies attempting to bring workers back to the office, nearly 20% of US office space sits vacant. While working from home has proven to be the preferred option for most employees, businesses typically want to see benefits from an economic standpoint as well. The end of the pandemic begs the question, do work-from-home policies save companies money in the long run? On the surface, it would seem likely with reduced office and lease costs. However, considering other factors, the answer may be more complex. Understanding how working from home could affect your business’ finances can help point you in the direction of the best policy for your company.
The Rise of Work from Home Policies
Prior to the pandemic, work-from-home was more scarce. The option was often only reserved for those who required special accommodation, or for circumstantial occasions. When the pandemic broke out and companies were forced to adopt these policies, opinions changed. Remote work proved to increase productivity and employee satisfaction. Surveys showed that 87% of employees consider the option to remotely a major priority in their career decision. With video conferencing and the workforce itself now being increasingly online, there weren’t many downfalls to maintaining a primarily remote business. Today, while some businesses have returned to the office full-time, a large majority of companies and employees are maintaining their stance on the benefits of remote work.
Financial Benefits of Remote Work
Most companies want to maintain a high employee satisfaction level, but not at the expense of their financial well-being. With that said, remote work forced companies to understand if these policies would benefit them financially in the long run. For many, the answer was yes. There are many ways remote policies can cut costs for businesses of all kinds, including:
- Rent: Working from home means businesses no longer need to rent office space, which is typically a large expense. In the US, the average office lease is $2,500 - $5,700 per month. Fully remote organizations can remove this cost entirely, and hybrid companies are able to downsize.
- Security: Remote work removes the need for security including personnel and equipment.
- Office Equipment: Remote work drastically cuts down the costs of equipment as they no longer need to purchase large quantities of items like furniture, printers, desks, chairs, conference room setup, etc.
- Additional Costs: Office spaces often require additional costs like food, beverages, cleaning services, pens, papers, etc. These can add up in the long run.
It’s clear that there are many financial benefits to cutting out office space. In fact, experts say working from home can save your business up to $11,000 per employee.
Financial Costs of Remote Work
There may be a lot of financial upsides to remote work, but there are areas where it could cost your business additional funds as well. For starters, it's not a fit for everyone and every industry. Some people thrive working from home, but if your employees need more structure and guidance, it could lead to a decrease in productivity and thus revenue. Some other ways it could cost your business additional funds include:
- Home Office Set-Up: Depending on your business’ needs, a work-from-home setup could be quite costly. If your employees require extensive equipment or high-tech gear, you’ll need to pay for each employee's individual setup. Additionally, you may want to cover the costs of desks, chairs, and cell phones.
- Office Space: If your business is partially remote and you still own or rent an office, you could be overpaying for your space compared to the amount of time spent there.
- Cyber Security: Working from home means more room for cyber weaknesses and breaches. Most businesses who opt for work from home also invest in VPNs, higher cyber security insurance, regular professional cyber training, and secure Wi-Fi for employees.
Many companies also opt for regular professional and team social events to make up for the lack of socialization that working from home leads to. Depending on the size of your organization, this could be costly. The overall cost of remote work depends widely on your individual business needs, size, and preferences.
Will Remote Work Improve Your Business' Financial Well-being?
While there are downsides to remote work, both financially and other, in most cases working from home will save your business money and increase employee retention. To ensure you maintain financial stability, put together policies and procedures for your work-from-home budgets. This could be having a set flat dollar amount each employee can allocate to their home office setup, properly budgeted social events, downsized offices, and so on.
Remote work also opens up the opportunity to grow your business's financial wealth through larger talent networks, global clientele, and multiple time zone operations. All in all, looking at the potential savings on material costs in combination with the growth potential, businesses can thrive financially with remote work.
Insurance Solutions for Remote Companies
Just as operations will change with the shift from in-office to remote, so will your insurance needs. Everything from your cyber, workers' compensation, business owners policy, and general liability will require some changes and additions to properly cover remote circumstances. ECBM has a team of agents and consultants who can help you understand your insurance needs, and quickly implement the proper coverages. For more information on how we can help, contact us today.