remote work

In the past, the word “teleworking” had a negative connotation; employers feared that, left to their own devices, the productivity of their employees would crater. If an employee hoped to convince their manager to let them work from home, they typically had to have a good reason – and to have built up trust over a period of several years.

But the coronavirus pandemic forced companies to adopt work-from-home policies, and it turns out that the bottom-line benefits of telecommuting can be greater than the drawbacks.

Remote Work Leads to Massive Savings

According to Global Workplace Analytics, if employees who hold telework-compatible jobs (50% of the workforce) and wanted to work at home (79% of the workforce) did so 50% of the time, businesses would save over $500 billion a year in real estate, electricity, absenteeism, turnover, and productivity. That works out to $11,000 per employee per year!

Those numbers may sound too good to be true, but when we look at the components in more depth, it’s clear that companies would indeed save a lot of money moving to a remote working model.

Real Estate and Electricity

According to Statista, the average asking rent for Class A office space in Midtown Manhattan was $85.86 per square foot per year in Q4 2020. If your office has an average density, you need around 150 to 250 square feet of office space per employee. That means that the average company based in Midtown Manhattan is spending $12,879 to $21,465 on office space per employee.

You may be tempted to dismiss those statistics because New York City has some of the most expensive commercial real estate in the world. The thing is, expensive cities are typically home to a higher proportion of talented workers; you might need a presence in a city like New York, San Francisco, or Chicago.

Even if your office is in a city with much cheaper commercial real estate and you’ve managed to put together an excellent team, you’re probably still spending at least a few thousand dollars per year per employee on office space.

The cost of electricity, on the other hand, isn’t correlated with the cost of living in a city. In fact, you may end up spending more on electricity if your company is based in a cheaper southern state because you’ll be forced to run the air conditioner to combat 100+ degree temperatures for much of the year.


Global Work Place Analytics found that unscheduled absences cost employers a total of $300 billion or $1,800 per employee per year. Seventy-eight percent of people who call in sick aren’t really sick.

There are times when employees call in sick because they’re feeling lazy or had a bit too much to drink the night before. But oftentimes, employees call in sick because of family issues, personal needs, and stress.

Allowing employees to work remotely won’t completely eliminate sick days – people are sometimes too sick to work, after all – but it would likely make a big difference. By cutting the number of sick days by a third, employers would save a total of $100 billion or $600 per employee per year.

Moreover, the pandemic has changed people’s attitudes on toughing it out when sick. Before the pandemic, employees were encouraged to fight through a mild cold and come to the office. In a post-pandemic world? Forget about it. From here on out, if an employee appears to be sick, they are going to be told to stay away from the office. So, by not allowing employees to work from home in a post-COVID world, the cost to employers for unscheduled absences could be even higher than $300 billion a year.


There are a number of reasons why an employee may choose to leave a company including a:

  • Better paying opportunity at another company.
  • Desire for a new challenge.
  • Move to another city for non-work-related reasons.
  • Child that the parent wants to stay home with

If an employee is leaving for one of the first two reasons, then offering the ability to work at home is unlikely to change their mind. But if it is for one of the latter two reasons, a remote working perk could motivate them to reconsider.

It costs between one-half to two times an employee’s annual salary to replace them. The lower end of that estimate is a pretty penny, while the higher end is astronomical. As a business owner, the retention of your employees should be a top priority.


As mentioned earlier, employers have long been hesitant to create remote work arrangements because of productivity-related concerns. But in reality, the office itself is one of the biggest enemies of productivity for many workers. In a Udemy survey, respondents said that chatty co-workers (80%) and office noise (70%) were their top distractors at the office.

The collaborative benefits of sharing a workspace have long been cited as justification for employees to share a work environment. Those benefits are real, not imagined. But many tasks are best performed alone – without any potential distractions. Later on, we’ll talk about the possibility of a hybrid arrangement that offers the best of both worlds.

But first, let’s look at some of the additional costs that come with a remote workforce.

Working from Home Increases Expenses in Certain Areas

While remote work brings plenty of cost savings, it can also get expensive if you aren’t careful. It’s not easy to keep all of your employees connected without sacrificing security when they are scattered all over the country (or the world).

Subscriptions Can Add Up

You may have noticed that subscriptions are all the rage these days; people have gotten used to the benefits of “temporary ownership” and like paying a small amount each month instead of a large up-front fee for a perpetual license. Subscription companies, for their part, like the steady stream of revenue that comes with a subscription offering. It seems harmless enough. $9.99 here, $29,99 there… But an individual can quickly rack up a couple hundred dollars a month in recurring costs.

For a company, those costs can add up a lot faster. With collaboration tools like video conferencing software and text-based communication platforms a necessity with a remote workforce, companies are forced to pony up thousands of dollars per month to keep their employees on the same page.

Security Can’t be Overlooked

Your company likely has sensitive data that you wouldn’t want a competitor – or anyone else, for that matter – to get their hands on. With your employees signing in to their accounts from home, the onus is on you to ensure that company data remains private.

You may want to turn to professionals to handle the installation of home office equipment. That could come with a hefty price tag, but it’s just a one-time expense. So, it won’t make much of a dent, right?

While the installation won’t be that costly in the grand scheme of things, you also have to factor in ongoing maintenance. If there is an issue, you may not want your employee – particularly if they aren’t tech savvy – to tinker with your systems.

Remote Workspaces Aren’t Free

While you will save money on commercial real estate if you shift to a work-from-home model, a remote workspace isn’t free. You, the business owner, will be expected to pick up the tab in many instances.

There are the obvious things like computers, desks, and chairs that you will need to purchase for your employees. But employees may also expect a stipend for other expenses such as meals, high-speed Wi-Fi, and co-working spaces. Yes, co-working spaces. Remote work doesn’t always mean work from home – some employees will prefer to work at a location outside the home of their choosing.

Hard to Estimate Costs, But They are Likely Much Lower than the Savings

The previous section on cost savings was littered with statistics for a couple of reasons:

  1. There are more data points for office expenses than work-at-home expenses.
  2. The additional costs are more variable than the cost savings.

That said, most companies are likely to see a boost on the bottom line if they adopt work-at-home policies. The key is to keep remote expenses in check.

Let’s say your employees are allowed to expense posh co-working spaces and luxury furniture. In that case, your remote team could end up costing you a fortune. If, on the other hand, you give reasonable stipends, your company should come out ahead.

Business Owners Should Plan for a Future with Remote Work

At some point, the world will return to normal and companies will have the option to mandate a return to a traditional work arrangement (full-time at the office). But the longer the pandemic goes on, the more likely it becomes that flexible work arrangements are here to stay.

The financial benefits for companies are undeniable, but remote work is also preferable for many employees. The ability to work from home is good for employees’ well-being; they can cut commuting time, spend more time with their families, and customize their workspace, among other things.

So, does that mean the future will be 100% remote? Probably not.

Many business owners will probably adopt a hybrid work model where employees work from home on some days and come into the office on others. The breakdown will vary from company to company, but a 50-50 split may be most the common policy.

In order to most efficiently use work-from-home days and in-office days, employers should direct their employees towards activities depending on where they are. For example, a business owner could have their staff complete tasks that require individual focus at home. Project kick-offs and team-building, on the other hand, can be done at the office.

In a post-pandemic world, different companies will go about remote work in different ways. There is no one-size-fits-all solution, but some amount of time spent working from home is likely to be a net positive for the vast majority of companies. By looking at the pros and cons for your business – factoring in potential cost savings and extra costs – you can find an optimal balance.

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