The Costs and Benefits of Hybrid, Remote & Distributed Work

Distributed work, hybrid work, remote work, or whatever label you want to put on it, offers many benefits for employers, employees, and the environment.

Organizational leaders primarily see it as a way to save money on real estate, improve attraction and retention, reduce work-life conflict, increase productivity, mitigate the risk of unexpected events that would otherwise threaten business continuity.

Workforce planners see it as a way to reduce under-employment, fill talent shortages, slow the brain drain, increase diversity, and improve employee well-being.

Human resource professionals see it as a way to recruit and retain the best people, fill talent and skills gaps, increase diversity, and improve employee well-being and engagement.

Environmentalists applaud it because it significantly reduces greenhouse gases and energy usage.

Urban planners realize it can reduce traffic, reduce the gap between transportation supply and demand, slow the outbound migration of talent, and revitalize cities.

Employees enjoy it because it saves them time and money and improves their quality of life.

Disabled workers, rural residents, and military families appreciate it as way to address their special needs.

Governments see it as a way to reduce transportation infrastructure costs, improve the environment, enhance the ability to contain the spread of disease, and reduce the risk of a widescale business shutdown in the event of an emergency.

Pets love it because it keeps their human home all day and increases the potential for belly rubs, walks, treats, and more.

Summary of the Research on the Costs/Benefits of Hybrid, Remote, and Distributed Workplace Strategies for Employers, Employees & the Environment

In addition to our own research, we have cataloged over 7,000 research papers, case studies, industry reports, and articles about the who, what, when, where, why, and how of work. Below is a summary of what the research shows to be the most common advantages and disadvantages of hybrid and distributed workplace strategies for employers, employees, and society.

Advantages of Hybrid, Remote & Distributed Work for Companies

Improves employee satisfaction

People are sick of the rat-race, eager to take control of their lives, and desperate to find a balance between work and life.
Two-thirds of people want to work from home.
36% would choose it over a pay raise.
A poll of 1,500 technology professionals revealed that 37% would take a pay cut of 10% if they could work from home.
Gen Y’ers are more difficult to recruit (as reported by 56% of hiring managers) and to retain (as reported by 64% of hiring managers), but they are particularly attracted to flexible work arrangements (rating among benefits as an 8 on a 10 scale for impact on overall job satisfaction).
80% of employees consider telework a job perk.

Reduces attrition

Losing a valued employee can cost an employer $10,000 to $30,000.
Recruiting and training a new hire costs thousands.
14% of Americans have changed jobs to shorten the commute.
46% of companies that allow telework say it has reduced attrition.
95% of employers say telework has a high impact on employee retention.
Almost half of employees feel their commute is getting worse; 70% of them feel their employers should take the lead in helping them solve the problem.
92% of employees are concerned with the high cost of fuel and 80% of them specifically cite the cost of commuting to work. 73% feel their employers should take the lead in helping them reduce their commuting costs.
Two-thirds of employees would take another job to ease the commute.

Reduces unscheduled absences

78% of employees who call in sick, really aren’t. They do so because of family issues, personal needs, and stress.
Unscheduled absences cost employers $1,800/employee/year; that adds up to $300 billion/year for U.S. companies.
American Management Association, organizations that implemented a telework program, realized a 63% reduction in unscheduled absences.
Teleworkers typically continue to work when they’re sick (without infecting others).
Teleworkers return to work more quickly following surgery or medical issues.
Flexible hours allow teleworkers to run errands or schedule appointments without losing a full day.

Increases productivity

Best Buy, British Telecom, Dow Chemical, and many others show that teleworkers are 35-40% more productive.
Businesses lose $600 billion a year in workplace distractions.
Over two-thirds of employers report increased productivity among their telecommuters.
Sun Microsystems’ experience suggests that employees spend 60% of the commuting time they save performing work for the company.
AT&T workers work five more hours at home than their office workers.
JD Edwards teleworkers are 20-25% more productive than their office counterparts.
American Express workers produced 43% more than their office based counterparts.
Compaq increased productivity 15-45%.

Saves employers money

Nearly six out of ten employers identify cost savings as a significant benefit to telecommuting.
Alpine Access Remote Agents close 30% more sales than traditional agents the year before. Customer complaints decreased by 90%. And turnover decreased by 88%.
IBM slashed real estate costs by $50 million.
McKesson saves $2 million a year.
Nortel estimates that they save $100,000 per employee they don’t have to relocate.
Average real estate savings with full-time telework is $10,000/employee/year.
Partial telework can offer real estate savings by instituting an office hoteling program.
Dow Chemical and Nortel save over 30% on non-real estate costs.
Sun Microsystems saves $68 million a year in real estate costs.
Offers inexpensive compliance with ADA for disabled workers.
Saves brick and mortar costs in industries where regulations or needs require local workers (e.g. healthcare, e-tail).

Equalizes personalities and reduces potential for discrimination

Hiring sight unseen, as some all-virtual employers do, greatly reduces the potential for discrimination.
It ensures that people are judged by what they do versus what they look like.
Communications via focus groups, instant messaging, and the like equalizes personalities. No longer is the loudest voice the one that’s heard.

Cuts down on wasted meetings

Asynchronous communications allow people to communicate more efficiently.
Web-based meetings are better-planned and more apt to stay on message.

Increases employee empowerment

Remote work forces people to be more independent and self-directed.

Increases collaboration

Once telework technologies are in place, employees and contractors can work together without regard to logistics. This substantially increases collaboration options.

Provides new employment opportunities for the un- and under-employed

Eighteen million Americans with some college education aren’t working.
More than 12% of the working-age population are disabled (16 million). A full three-quarters of unemployed workers with disabilities cite discrimination in the workplace and lack of transportation as major factors that prevent them from working.
24 million Americans work part-time.
Only 75% of women, still the traditional primary caregivers age twenty-five to fifty-four, participate in the labor force (compared to 90% of men). Almost a quarter of women work part-time (16.5 million), compared to 10% of men.

Expands the talent pool

Over 40% of employers are feeling the labor pinch; that will worsen as Boomers retire.
Reduces geographic boundaries.
Provides access to disabled workers.
Offers an alternative that would have otherwise kept parents and senior caregivers out of the workforce.
Offers geographic, socioeconomic, and cultural diversity that would not otherwise be possible.
Over 70%of employees report that the ability telecommute will be somewhat to extremely important in choosing their next job.

Slows the brain-drain due to retiring Boomers

75% of retirees want to continue to work – but they want the flexibility to enjoy their retirement.
36% of retirees say the ability to work part-time rather than full-time, or to work from home would have encouraged them to keep working – even if it didn’t provide health benefits or meant a temporarily reduced pension.
38% of surveyed retirees indicated that being able to work seasonally or on a independent contractor basis would have encouraged them to delay retirement.
71% of retired workers who later decided to go back to work, originally retired because of a desire for more flexibility than their job offered.

Reduces staffing redundancies and offers quick scale-up and scale-down options

Having access to a flexible at-home workforce allows call centers, airlines, and others to add and reduce staff quickly as needed.
The need to overstaff ‘just in case’ is greatly reduced.
24/7 worldwide coverage is easier to staff with home-based help.

Environmentally friendly policies are good for companies

Sun Microsystems reported that its 24,000 U.S. employees participating in the Open Work Program avoided producing 32,000 metric tons of CO2 last year by driving less often to and from work.
Office equipment energy consumption rate is twice that of home office equipment energy consumption.
70% of employees report they would see their companies in a more favorable light if they helped them reduce their carbon emissions.
24% of employees say they’d take a pay cut of up to 10% to help the environment.

Reduces traffic jams

If traffic continues to grow at the current pace, over the next couple of decades drivers in Atlanta, Baltimore, Chicago, Denver, Las Vegas, Miami, Minneapolis/St. Paul, Portland, San Francisco-Oakland, Seattle-Tacoma, and Washington, D.C. will be sitting in daily traffic jams worse than the infamous traffic jams that plague Los Angeles eight hours a day.
As a result, commutes will take almost twice as long and you’ll have to leave even earlier to allow for traffic jams if you have to arrive someplace at a specific time, producing a further reduction to our national productivity.
Traffic jams rob the U.S. economy of $78 billion/year in productivity.
Traffic jams idle away almost three billion gallons of gas and accounts for 26 million extra tons of greenhouse gases.
Every 1% reduction in vehicles yields a three-fold decrease in congestion.

Prevents traffic accidents

Half-time telework, for the portion of the population that holds telework-compatible jobs and wants to work from home, would save more than 1,600 lives, prevent almost 99,000 injuries, and save over $12 billion a year in direct and indirect costs associated with traffic accidents.

Takes the pressure off our crumbling transportation infrastructure

New roads are being built to meet needs of ten to twenty years ago. Less than 6% of our cities’ roads have kept pace with demand over the past decade.
By 2025 we’ll need another 104,000 additional lane miles – that will cost $530 billion.

Ensures continuity of operations in the event of a disaster

Federal workers are required to telework to the maximum extent possible for this reason.
Bird flu, terrorism, roadway problems, and weather-related disasters are all drivers.
Three-quarters of teleworkers say they could continue to work in the event of a disaster compared with just 28% of non-teleworkers.

Improves performance measurement systems

Drucker, Six Sigma, and management experts agree that goal setting and performance measurement is key to successful management.
For telework to work, employees must be measured by what they do, not where or how they do it.

Offers access to grants and financial incentives

A number of states, including Virginia, Georgia, and Oregon offer financial incentives for businesses to adopt telework. Other states including Arizona, Vermont, Washington, and Connecticut offer free training to encourage companies to give it a try.

The Holdbacks To Hybrid, Remote, and Work At Home Programs for Companies

Management mistrust

75% of managers say they trust their employee, but a third say they’d like to be able to see them, just to be sure.
Company culture must embrace the concept at all levels; sweatshop and typing pool mentality has to be abandoned.
From Peter Drucker’s introduction of Management-By-Objectives in the mid-1950’s, to Six Sigma which was popularized by General Electric’s Jack Welch in the 1990’s, setting and measuring goals has long been held as the key to good management.

It’s not for everyone

For some, social needs must be addressed. Telephone, email, instant messaging are a solution for some. Innovative solutions such as virtual outings, online games, and even Second Life have proven successful as well. Occasional telework is also a solution.
Telecommuters must be self-directed.
They should be comfortable with technology or arrangements should be made for remote tech support.
They should have a defined home office space.
Home-based employees need to understand that telecommuting is not a suitable replacement for daycare unless they can schedule work hours around their children’s needs.

Career fears from ‘out of sight, out of mind’ mentality

Some employees cite career fears as a reason not to telecommute. Successful teleworking programs overcome the ‘out of sight, out of mind’ issue with performance-based measurement systems, productivity versus presenteeism attitudes. Teleworkers who maintain regular communications (telephone, email, instant chat, even the occasional face-to-face meeting) with traditional co-workers and managers find career impact is not an issue.

Co-worker jealousy

Employees need to understand why they were or were not chosen for telework.
Employees should see telework as a benefit that is earned, not given.
Standards of selection should be uniform.

Security issues

Almost 93% of managers involved in IRS pilot telework program believe there is no problem with data security.
Security issues are easy to solve, but must be addressed.
90% of those charged with security in large organizations feel that home-based workers are not a security concern. In fact, they are more concerned with the occasional work that is taken out of the office by traditional employees who lack the training, tools, and technologies that teleworkers receive.
Security training should be provided for all employees.

IT infrastructure changes may be necessary

Teleworkers need access to company systems, software, and data.
Infrastructure changes that support telework improve efficiency for office and traveling employees as well.
Companies need to address remote technical support issues. Off-the-shelf solutions exist.

Collaboration concerns

Some managers feel that distance inhibits collaboration. They need the ‘energy in the room’ when a crisis occurs.

Double-taxation

Some cities, notably New York, impose taxes on home-based workers whether they work in the city or not. A Connecticut resident who works at home for a New York company owes taxes to both states.

Employment law and OSHA concerns

A few recent accidents in the homes of teleworkers has raised concerns about employer liability.
The inability to monitor employee overtime is also an issue.

Local zoning issues

Some communities and homeowner associations prohibit home offices.

Advantages of Distributed, Remote & Hybrid Work For Employees

Telecommuting saves employees money

Employees save on gas, clothes, food, parking, and in some cases, daycare (provided they can flex their hours to eliminate the need).
Average savings are $2,000 to $6,500/year/person for half-time telework.
Telework allows employees to live in places where the cost of living is lower rather than being forced to live in high-cost urban locations close to company offices. Employees can save over $7,000/year for every $100,000 reduction in home value.

Telecommuting increases leisure time

Full time telework results in an extra 2-3 workweeks of free time a year – time that would have been spent commuting.
The majority of teleworkers report they have more time with family, friends, and leisure.

Telecommuting reduces stress, illness, and injury

80% of diseases show that stress is a trigger. Because telework reduces stressful commutes and alleviates caregiver separation issues, teleworkers are likely to suffer fewer stress-related illnesses.
A quarter of telework employers report improvements in employee health.
Teleworkers are exposed to fewer occupational and environmental hazards at home.
Teleworkers suffer fewer airborne illnesses because of lack of contact with sick co-workers.
Teleworkers report being able to make more time for exercise.
Anyone who has ever dieted knows it’s harder to stay the course when you dine out. Teleworkers often eat healthier meals and are less inclined to consume fast food lunches.
Those who choose to move to more rural areas can reduce the stress of the hustle and bustle cities and suburbs.

The Holdbacks To Hybrid, Remote & Distributed Work for Employees

Management mistrust

75% of managers say they trust their employee, but a third say they’d like to be able to see them, just to be sure.
Company culture must embrace the concept at all levels; sweatshop and typing pool mentality has to be abandoned.
From Peter Drucker’s introduction of Management-By-Objectives in the mid-1950’s, to Six Sigma which was popularized by General Electric’s Jack Welch in the 1990’s, setting and measuring goals has long been held as the key to good management.

It’s not for everyone

For some, social needs must be addressed. Telephone, email, instant messaging are a solution for some. Innovative solutions such as virtual outings, online games, and even Second Life have proven successful as well. Occasional telework is also a solution.
Telecommuters must be self-directed.
They should be comfortable with technology or arrangements should be made for remote tech support.
They should have a defined home office space.
Home-based employees need to understand that telecommuting is not a suitable replacement for daycare unless they can schedule work hours around their children’s needs.
Some employees cite career fears as a reason not to telecommute. Successful teleworking programs overcome the ‘out of sight, out of mind’ issue with performance-based measurement systems, productivity versus presenteeism attitudes. Teleworkers who maintain regular communications (telephone, email, instant chat, even the occasional face-to-face meeting) with traditional co-workers and managers find career impact is not an issue.

Co-worker jealousy

Employees need to understand why they were or were not chosen for telework.
Employees should see telework as a benefit that is earned, not given.
Standards of selection should be uniform.

Costs

The average overall annual direct spend per virtual office employee was $2,710. Support costs average $1,231. Most organizations reported that virtual employees are provided with or reimbursed for: a laptop or desktop computer, software, cell phone, printer, voice/data communications, office supplies, and a fax machine. Most did not cover office setup, postage or courier services, scanners, PDAs or pagers, phone cards, or any sort of per diem.

The U.S. General Services Administration estimates that a cost of $16 million to provide a basic teleworker at-home solution for 50,000 telecommuters (at an agency with 100,000 staff) can, in appropriate circumstances, be offset with a realization of over $36 million in benefits of the same period.

NCR and Lucent found the savings from their telework programs were double the costs.

In 2006, the U.S. GSA reported that an employer’s average first year cost per teleworker was $1,000 (often as low as $300).

Only about a third of federal agencies pay for home office equipment, relying instead on the employee’s own equipment or providing equipment GSA already owns. Of those that do pay for equipment, most pay only a portion of the costs.

Security issues

Almost 93% of managers involved in IRS pilot telework program believe there is no problem with data security.
Security issues are easy to solve, but must be addressed.
90% of those charged with security in large organizations feel that home-based workers are not a security concern. In fact, they are more concerned with the occasional work that is taken out of the office by traditional employees who lack the training, tools, and technologies that teleworkers receive.
Security training should be provided for all employees.

IT infrastructure changes may be necessary

Teleworkers need access to company systems, software, and data.
Infrastructure changes that support telework improve efficiency for office and traveling employees as well.
Companies need to address remote technical support issues. Off-the-shelf solutions exist.

Collaboration Concerns

Some managers feel that distance inhibits collaboration. They need the “energy in the room” when a crisis occurs.

Double taxation

Some cities, notably New York, impose taxes on home-based workers whether they work in the city or not. A Connecticut resident, who works at home for a New York company, owes taxes to both states.

Employment Law and OSHA Concerns

A few recent accidents in the homes of teleworkers have raised concerns about employer liability.
The inability to monitor employee overtime is also an issue.

Local Zoning Issues

Some communities and homeowner associations prohibit home offices.

Advantages of Hybrid, Remote & Distributed Work for Communities & the Environment

Telecommuting reduces our foreign oil dependence

Half-time telework (roughly the national average among those who already do) by those with compatible jobs and a desire to work from home could reduce Gulf Oil imports by 45%.
Saves 281 million barrels of oil worth $22 billion in oil imports.

Telecommuting slows global warming

Half-time telecommuting could reduce carbon emissions by over 51 million metric tons a year – the equivalent of taking all of New York’s commuters off the road.
Additional carbon footprint savings will come from reduced: office energy, roadway repairs, urban heating, office construction, business travel, paper usage (as electronic documents replace paper).

Telecommuting bolsters pandemic and disaster preparedness

Three-quarters of teleworkers say they could continue to work in the event of a disaster compared with just 28% of non-teleworkers.
A decentralized workforce means there is no World Trade Center or Pentagon-like target to attack. If an attack does occur, fewer people will be effected, economic stability will be maintained, and continuity of operations is assured.

Telecommuting redistributes wealth

Location-independent job opportunities offer better employment options to rural workers.

National productivity would increase $334 billion to $467 billion a year through telecommuting

Studies and empirical evidence shows productivity increases between 15 and 55%. Based on the average teleworker salary, the increase in productivity would add up to over six million man-years of work.
Cost savings from telecommuting will encourage home-shoring and bring back many of the jobs that have been lost to foreign labor.

Telecommuting reduces traffic jams

If traffic continues to grow at the current pace, over the next couple of decades drivers in Atlanta, Baltimore, Chicago, Denver, Las Vegas, Miami, Minneapolis/St. Paul, Portland, San Francisco-Oakland, Seattle-Tacoma, and Washington, D.C. will be sitting in daily traffic jams worse than the infamous traffic jams that plague Los Angeles eight hours a day.
As a result, commutes will take almost twice as long and you’ll have to leave even earlier to allow for traffic jams if you have to arrive someplace at a specific time, producing a further reduction to our national productivity.
Traffic jams rob the U.S. economy of $78 billion/year in productivity.
Traffic jams idle away almost three billion gallons of gas and accounts for 26 million extra tons of greenhouse gases.
Every 1% reduction in vehicles yields a three-fold decrease in congestion.

Telecommuting prevents traffic accidents

Half-time telework for the 50 million Americans with compatible jobs and a desire to work from home at least part of the time would save 1,500 lives, prevent almost 95,000 traffic-related injuries and deaths, and save over $11 billion a year in related costs.

Telecommuting takes the pressure off our crumbling transportation infrastructure

New roads are being built to meet needs of ten to twenty years ago. Less than 6% of our cities’ road construction has kept pace with demand over the past decade.
By 2025 we’ll need another 104,000 additional lane miles – that will cost $530 billion – money the cities just don’t have.
Half-time telework would reduce road wear and tear by 112 billion miles a year.

For a roundup of the latest statistics on who’s telecommuting and how much, visit our Telecommuting Statistics Page. For a look at how we as a nation could benefit from regular telework, visit our Telework Savings Potential Page.

It’s time to make “the road less traveled” the way to work.

* Statistical information on this page comes from a wide range of studies. For additional information, reporters on assignment can email kate-at-GlobalWorkplaceAnalytics-dot-com. Please let us know what publication you represent, the nature of the article, your time frame, and the estimated date of publication. We’ll help if we can, and will always respond as quickly as possible. If you’re on deadline, please call 760-703-0377.