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HomeBusinessHiring Remote Employees: The Financial Benefits

Hiring Remote Employees: The Financial Benefits

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Managing a fully remote workforce comes with its own challenges, such as implementing time tracking software to keep track of employees and fewer face-to-face interactions. But does having a remote workforce reduce company costs overall?

Although there are many factors to consider, studies and data make a compelling argument for hiring remote workers and transitioning to a partially or fully remote business model.

Big businesses such as Facebook, Twitter, Square, and Shopify will continue to let at least some of their employees work remotely after the pandemic.

This is because, conversely to what business leaders anticipated, the productivity of their employees actually increased. While a higher level of productivity translates to higher efficiency and saving on costs, there was another factor that made business leaders sit up and take notice.

Businesses that transitioned to remote working saved money in other areas – from office supplies and equipment to higher costs like real estate.

Remote working has a significant impact on company spending – businesses can save anywhere from 21% to over 60%. Here’s how.

Lower Overheads

The most prominent area for savings is overhead costs. Overhead costs include office stationery, electronics, equipment, office cleaning services, utilities, property rental, and property taxes. When businesses transition to remote working, they usually find that they need less space.

When companies move to a fully remote workforce, they eliminate all the costs of running an office, saving up to $11,000 per employee per year.

Lower Healthcare Costs

Employees that are working remotely are spending much more time at home, and working at home has enabled many remote workers to reinvest in their health.

Remote workers are better able to monitor their eating habits, are less stressed because their work-life balance has improved, and may have begun an exercise regime – this shift to a healthier lifestyle could result in lower overall healthcare costs.

Another factor that impacts the cost of healthcare for workers is commuting. Studies have shown that the time workers spend commuting impacts their stress levels directly, which decreases their overall health. Remote workers are healthier and happier, which can affect productivity and employer insurance costs.

Lower Travel Costs

Remote working has created a greater reliance on video conference calls and other digital communication tools, which has made leveraging them to build better relationships a priority. Businesses are re-evaluating the need to attend meetings in person and cutting down on unnecessary travel costs.

Lower Labor Costs

The labor costs for remote employees are significantly lower than for in-office employees due to reduced training costs, fewer absences, and lower employee turnover.

Benefits of hiring remote workers

Reduced Costs of Hiring and Training Staff

The cost of replacing and training a new employee after another leaves is something many businesses overlook when it comes to expenditure. According to research, issues of attrition can cost a company up to $30,000.

Hiring remote professionals will reduce the cost of training because most freelancers are experts in their fields. Remote workers are also less likely to have human resource conflicts, which can be costly to resolve.

Another reason to hire remote workers is the lower cost of labor. The wage discrepancy between nations and even across states means that businesses can employ top talent at a reduced price.

Many companies that hire remote workers implement salary adjustments based on the cost of living for the employee. For example, the average one-bedroom apartment in San Francisco costs around $3,422, while a similar-sized apartment in Raleigh, NC, costs around $1,177.

According to Glassdoor, the average salary for a product manager in San Francisco is $129,387, and in Raleigh, it is $104,976. A business can leverage this discrepancy to save on labor costs while receiving work of the same quality.

Reduced Absenteeism

Unscheduled absences cost employers anything from $1,800 and $3,600 per employee.

Remote employees tend to take less unscheduled time off because their work-life balance has improved. Around 80% of office workers who take sick days aren’t actually ill – they take time off for family obligations, because they are stressed, or for other personal reasons.

Remote employees also tend to return to work more quickly after a medical event.

Reduced Turnover

According to former Proctor and Gamble executive Scott Mautz, turnover decreases by 50% when employees are offered remote options.

According to a 2019 report by OWL Labs, 80% of employees working at home felt less stressed, had better work-life balance, and felt more trusted by their employer. Overall, remote workers are happier than their in-office counterparts.

A significant factor in remote workers’ happiness is their commute to work. On average, a one-way commute in the U.S. takes 26 minutes. Over a year, that adds up to almost nine days spent on commutes to work. When the commute is eliminated, employees are happier with their jobs and less likely to leave.

Increased Productivity

While managers often worry about decreased productivity in employees who work at home, studies have actually revealed that the opposite is true.

Former Proctor and Gamble executive Scott Mautz found that productivity increases by as much as 50% when employees are allowed to work at home. A study by Bloom found that remote workers are 13% more productive than in-office workers.

This is because they work more and have fewer distractions.

Office Environments Have More Distractions

While some employees thrive in an office environment, others do not. It would be nearly impossible and far too costly to cater to every employee’s needs.

Remote workers, however, have an opportunity to create their ideal working space. Because they can work from anywhere, they can avoid distractions by simply leaving.

Remote Employees Do More Work

Remote workers work more than office workers because they have more time. They don’t have to worry about traffic jams, and they tend to take fewer breaks.

Employees working at home have enough flexibility to run personal errands and attend appointments, and they don’t lose a whole day when they attend to personal matters.

Key Takeaways

Companies can reduce costs by hiring remote workers and transitioning to a fully remote business model.

Working remotely helps businesses save on overheads and the costs of labor, travel, and healthcare. Remote business models have additional benefits, such as increased productivity among workers, lower turnover, and less absenteeism.

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