How Companies Are Saving Money from Working at Home

How Does Working From Home Save Companies Money January 11, 2023

Priyanka Bhadani

Writer

Many companies have been hesitant about transitioning to a remote workforce. It may seem much simpler to manage a team when they are nearby, particularly for a complex organization with many moving parts.

Though it's not possible to have all employees work remotely, many companies have been successful in transitioning to these new work arrangements. Studies have challenged many negative assumptions, demonstrating that even half time remote workers tend to be more productive, happier, and efficient.

This has generated a mutually beneficial partnership between employer and employee while offering several financial benefits to both. Read ahead for the top financial benefits derived by remote work and how it can improve an organization's bottom line.

Why You Should Let Employees Work from Home

As more companies see razor-thin profit margins, it's become essential to look for cost savings opportunities wherever they may be. Because labor and real-estate costs can make or break a business, cutting back on those expenses has become one of the top priorities.

With COVID-19 increasing restrictions on businesses, enterprise leaders are looking for alternative ways to maintain operations and still generate a profit. Thankfully, computer software systems have improved connectivity, allowing thousands of businesses to employ remote workers.

Remote employees also enjoy the better work life balance gained by a more flexible work options. They save money on telecommuting and are more likely to meet KPIs, which increases employee engagement and financially benefits the company. Other long term reasons that remote work benefits an organization financially include -

1. Reduction in Numerous Costs

While a business saves money on real estate and labor costs by employing remote workers, they also see other cost savings opportunities. If the majority of employees are remote, the organization doesn't have to pay for utilities, cleaning services, office supplies, and food/water.

Though some of these costs are minimal, they can certainly chip away at profit margins over time. Finally, because companies have less rent and labor costs, they can also sometimes save money on payroll, sales, and property taxes.

2. Reduction in Payroll Costs

Surveys have shown that employees would rather take a pay cut and work from home than work in an office. Employers can take advantage of this by offering a work from home option instead of bonuses or excessive raises.

Businesses can reward high performing employees by offering more flexibility in their remote work, such as allowing staffers to pick their hours or have an occasional Friday off. This increased flexibility will minimize some need for bonuses and other expensive payroll costs that eat away at profit margins.

3. Increased Productivity

Remote workers appreciate the work-life balance afforded to them and tend to be more dedicated to meeting their KPIs. Studies have shown that remote-based employees are 13% more productive than on-site workers.

This increase in productivity improves the quality of deliverables, customer service, and efficiency of the business. As a result, remote-based employers tend to see an increase in profit.

4. Decreased Absenteeism

Absenteeism costs an organization thousands of dollars a year in expenses. Every time a worker calls out sick or takes an unplanned absence, it decreases the efficiency and productivity of the entire organization.

Other employees have to perform the missing worker's job, which is frustrating and time-consuming. Morale begins to decrease, which causes more employees to take unplanned absences.

Remote work decreases absenteeism because it gives employees the flexibility to manage personal obligations. This helps boost the efficiency and profitability of the company, while also improving employee morale.

5. Lower Turnover Rates

Employees who consistently work from home are more satisfied with the work-life balance afforded to them. This improves their productivity and encourages them to meet key targets. If employers reward those who meet goals, it further improves worker satisfaction.

As a result, remote workers tend to stay at the company rather than look for outside opportunities. Because hiring and recruiting is an expensive process, this helps an organization save money on turnover costs. Companies also build a stronger and more effective workforce as opposed to an ever-evolving door of new hires.

6. Minimal Travel Expenses

Because of new communication software, individuals can collaborate via video conferencing rather than travel from New York to California to finalize a business deal.

Decreased travel expenses save companies a lot of money, particularly for those with clients across the country. In many cases, the organization can hire remote sales teams who can drive to a target sales area, even if the business is located in an entirely different city.

Key Takeaways

In conclusion, here are the main reasons a company will save money by employing remote workers

Providing flexible work options helps to save money on rent, utilities, water, food, and cleaning services. Employers also see a reduction in payroll expenses because workers are less likely to demand a raise.
Remote workers tend to be more productive, which improves the quality of deliverables and efficiency of the organization. It also increases profit margins.
Employees working from home have decreased absenteeism because workers can manage their obligations more efficiently. This saves money while boosting morale and productivity.
Remote workers tend to have higher job satisfaction, making it less likely they will look for outside employment. This decreases new hiring costs and optimizes the workforce. Companies also save money on travel expenses when people work from home because communication software allows users to correspond without flying.