In-Depth Analysis: The ROI of Work from Anywhere Policies

If you’re reading this, you likely clicked because you're looking for creative ways to ensure business continuity. Remote working is an obvious win here, but how do you ensure your teams stay productive and connected during work hours?

Is there still enough tangible business benefit to a remote work policy when business continuity isn’t the number one reason? Well, in short: yes. Provided you have the right tools, policies and mindset in place, you can calculate the Return on Investment (ROI) of remote working.

Before we dive into the good stuff, let me just set the context for you, and why we’ve been invited to write a guest post for our partner Onix. Happeo is the community-powered employee communications platform that combines an intranet and enterprise social network with real-time collaboration. We enable your business communications to flow seamlessly, making work a happier place for all. And in this case, “work” can be wherever the good stuff happens.

Servicing over 150 clients across the globe has given us a unique perspective on remote working, and we’ve helped a lot of those clients form policies around our product. Now we want to help you with the experience we’ve gained.

Remote working may be “hot” right now, but what happens if you’re in a company that’s just thinking of maybe, potentially, possibly implementing a remote work policy? Well, that’s when you’ll need to talk numbers. We’re here to help.

Quantifying the ROI of intangibles is always a challenge. Solutions like social intranets and digital workplaces are largely cost-saving tools, but these aren’t savings that will appear on your balance sheet. Still, business speaks the language of currency. So now what?

Well, we’ve collected a large amount of reports from sources such as McKinsey, Gallup and Harvard Business Review. They’ve all done intensive research into the effects of employee engagement, increased business alignment and, topical right now, remote working. And you can’t talk about remote working without mentioning alignment and engagement.

We’ll cover a lot of elements. From productivity, to engagement, to your carbon footprint and more. Ready? Here we go.

Productivity Contributes to ROI

There are two sides to the same productivity coin. On one hand, remote working increases productivity. A Work From Anywhere (WFA) policy increases productivity by 4.4% – which in the US represents up to $1.3 billion of annual value. Productivity increases are hard to quantify - which is why I use sources such as HBR - but easy to calculate. Simply put, if you work 4.4% harder, a company gets 4.4% more value for the salary they pay you.

There is a flip side to this. Implementing a remote work policy and just leaving it at that won’t get you anywhere near that 4.4%. Staying at home, or going to your favorite local barista, requires more discipline and focus.

Our belief? Everyone has it in themselves to work from wherever they want, effectively. But organizations would be wise to provide them with tools. Courses on mindfulness to stay focused on work-life balance, a training on Getting Things Done so people can stay on the ball – all are just a few examples of practical tools you can teach your employees to help them succeed. It all comes down to understanding how to effectively manage a remote team.

You’ll also need a healthy tech setup. A fast-enough internet connection and a good laptop is one, but so are your communication tools. They become much more important when you’re implementing a WFA policy – but more on that later.

Increase Employee Engagement through Remote WorkPolicies

Just like productivity, there are two sides to this coin. It requires a little more effort to keep employees engaged when they’re not in the office. You’ll need to find ways to transfer that water-cooler conversation to the digital realm. If you’re in a large, global company, you’re probably already doing this. It doesn’t stop there though.

It’s simple to give employees personal attention when you can walk over to their desk. Hand someone a birthday card. Give them a pat on the back. That type of stuff. It’s easy to do this digitally, but in our experience this requires a mindset switch. If it’s someone’s birthday and they’re in the office, don’t just celebrate it in person. Send a message on your digital communication tools too! You want to avoid remote worker FOMO (fear of missing out.)

What to Look at When Calculating ROI

Now that you have an idea of the extra effort it takes to keep employees engaged when they’re working remotely, you can start looking at the numbers.

Stanford University found that companies see an average increase of 9% in engagement when employees get to work remotely. We’ve previously compiled a list of sources for Happeo on the ROI of employee engagement and found a couple of formulas that you can use to calculate your own ROI, so we’ll use that here.

We’ll talk turnover in a second, so for now we’ll just state that increasing your employee engagement will decrease your onboarding costs – by saving 5% of your training costs. Since Bersin found that the average onboarding cost for one employee is $3.000, we can create a quick calculation:

(Amount of employees hired x turnover%) x (3,000 x 5%) = savings

Example:

(300 x 17.8%) x (3,000 x 5%) = $8,010

Better employee branding with remote work policies

Gallup’s research found that WFA policies result in better employee branding – according to them this is a “highly desirable policy by the most talented employees.” We’ve also found research stating that a strong employer brand saves 10% per hire. If we take that average hiring cost of $3,000 from our last formula, that’s $300 per hire!

Remote work policies decrease turnover

There are two parts to the effect of turnover reduction with remote work policies. One is easy. Companies that support such policies experience a 25% decline in turnover. That’s a massive statistic right there.

The other is a bit more complicated and relates to employee engagement. See, increasing employee engagement also decreases turnover. So we can create a formula! Here’s what that looks like:

  • We previously stated that remote work policies increase employee engagement by 9%.
  • The average cost of an employee leaving is between $15,000 to $25,000. Let’s be fair and use $20,000 for this formula.
  • The average turnover rate for companies is 17.8%. You could then consider anything higher to be a high-turnover company, and lower, you guessed it, to be a low-turnover company.
  • Companies with high turnover experience up to a 24% decline in turnover with strong employee engagement.
  • Companies with low turnover experience up to a 54% decline in turnover with strong employee engagement.

Putting that all together, a concrete ROI formula looks like this:

(Quarterly turnover in employee amount x 24% OR 54%) x $20,000 x 9%

Example:

(60 x 54%) x $20,000 x 9% = $58,320

Dizzy yet?

Carbon-footprint reduction

In 2015, Xerox reported that its teleworkers drove 92 million miles less. The result? A 41,000 metric-ton reduction of CO2-emission, and savings of over $10 million. That’s huge. But, hold on, there is a counter argument. WSP UK found that the emission reduction only counts in the summer if we’re talking strictly about people that work from home.

The reason? It’s more obvious than you would think. During the winter, all those homes are running heaters to keep warm, where they wouldn’t if those homeowners were in the office.

Lower overhead costs

We’ve left this for last, because it’s the most obvious. NBC News collected a bunch of sources and concluded that, if companies let people work from anywhere, including home, just half the time, they save an average of $11,000 per year. Those overhead costs include the office mortgage or lease, utilities, supplies and all that other good stuff.

Communication tools: divide and conquer

Before the dollar signs in your CFO’s eyes nudge you to implement a WFA policy, we need a quick reality check. Remote working changes the way your company communicates. The result? Less desk-interruption and water-cooler talk, and a significant increase in digital communication.

It’s not just your employees’ internet connection that needs to be up to snuff. Hangouts are great and necessary for face-to-face communication, but you will notice that these are less frequent than a quick chat at someone’s desk. To replace that, meetings and more, you need a host of communication tools at your disposal – email alone won’t cut it. We’re going to categorize different types of communication. We recommend that you base your policy around this, as many of our clients have done so successfully:

Static communication

Static communication is information employees need, but doesn’t require an update every week-or-two (your mileage may vary). A list of preferred suppliers. Office information. Onboarding material. An org chart or even your brand guidelines – all simple examples. This information is best left in intranet pages that are easy to discover through search functionality.

Dynamic communication

Dynamic communication’s easiest example is a post on your Enterprise Social Network (ESN), or an email. Email has its place, don’t get us wrong, but there is significant downside to its lack of transparency, boring format and bad searchability. It’s still an important business tool and a preferred method of communication of critical information.

However, with a good social intranet, email becomes a channel to send and link information present on that platform, rather than hold the information itself.

Hyper-dynamic communication

A quick message from Slack or Google Chat is often all you need to get something done, fast. Likewise, group discussions in chat can jump start a project or inform a small selection of key stakeholders.

But, there is a danger to this. Too much communication in chat causes an information overload. Important details get missed, and topics can get derailed quickly. That’s why it’s important to bridge these quick conversations into something easier to find and less “noisy”. That’s why it’s great that you can link to chat conversations and post a quick summary on your Enterprise Social Network, or social intranet.

A Final Checklist for Remote Working Success

Remote working is a way of life for some people, and a big change for others. If you’re thinking about implementing a remote work policy, don’t forget to:

  • Train your employees in mindfulness (or something similar) to help guard their work-life balance.
  • Teach your employees a methodology to stay focused in an environment full of distractions. We’re fans of the Getting Things Done method.
  • Make sure your employees are up-to-date on your company’s security policies. Don’t just remind them to lock their computer when they go to the bathroom, also tell them what to do when they’re dialing in to a guest WiFi network or what they should do when they access a website that has no security certificate (quick trick: websites that start with http:// aren’t secure, sites that start with https:// are!).
  • Create clear internal communications policies. Just remember: the goal here is not to restrict, it’s to empower. These policies should include a brief rundown of “what do I communicate where?”, how to deal with notification settings and, preferably, a rundown of who has the responsibility to communicate on which topics. That last one sounds like a step too far, but misinformation spreads like wildfire across digital channels. It’s easy to prevent through a bit of discipline and, if needed, a source check.

At Happeo, we’ve noticed that a lot of people want a tool that just takes care of everything for you. We want to take that as far as we can, but there is a limit. See, at the end of the day, communications platforms like ours are a sandbox. How that sandbox is filled, is determined by your people. If you help them out with great tooling and great guidelines, little can go wrong.

Post Your Comments


SEARCH Blog

MEET THE AUTHOR

Jonathan Davies, Internal Communication Journalist, Happeo

Jonathan Davies, Internal Communication Journalist, Happeo

Jonathan has a rich background in content and communications management, with a focus on Internal Communications and HR tech. He leads Happeo's editorial content, hosts the Internal Communications Podcast and is the co-author of Mike Klein's research series, "The Present and Future of Internal Communications." His goal? To kickstart a revolution in Internal Communication, fueled by a deep understanding of strategy, the modern market and technology.

MORE POSTS BY JONATHAN DAVIES, INTERNAL COMMUNICATION JOURNALIST, HAPPEO