5 Ways to Sell Remote Working to Your CFO and COO.
20 Ideas in 20 Days — Day 13
Interested in ditching your commute, working from home or keeping your job but moving to a city where you can actually afford to buy a house? As the CFO/COO of my last startup, I realized that having remote workers (work-from-home and work from where ever) can actually create a pretty compelling competitive advantage. Here’s how:
1. Less expensive labor.
Companies built to operate with a workforce in multiple locations can take advantage of hiring people in locations where it’s cheaper to live and therefore lower average salaries. That means you can either get more runway with the current headcount or you add headcount for the same money.
2. Less competition for labor.
This is related to less expensive labor, but may result in even bigger advantages. Less competition for labor means that you don’t have every other company in town trying to poach your employees as soon as you’ve trained them. The cost of retraining and replacing an employee can cost from 16% of annual salary for an hourly employee to 213% of annual salary for a highly trained position. The cost of replacing employees is almost never factored into financial projections, and yet is a very real drain on resources (both human and financial).
3. Increased productivity.
The SF Bay Area apparently has the highest number of mega-commuters — people who commute more than 90 minutes and 50 miles one-way. LA and New York are not far behind. Imagine recapturing all that time and having ti refocused it on work. Clearly, not everyone will return all that time to work. Some might go to personal pursuits. But that generally leads to more satisfied employees who are in turn….more productive.
4. Lower Rents and Fixed Asset Expenses
If you don’t have everyone in the office everyday, you don’t need as big an office. Maybe you don’t need an office at all. Even if you offer to pay for co-working space for people who don’t want to work at home, it’s still not going to cost you the same as office-space in a desirable location. And if you don’t have an office? Well then, no desks or chairs, refrigerators and ping pong tables. Really, the only thing you have sitting depreciating on your balance sheet is the hardware. You have to do the math as to whether this is actually less expensive since you’re likely going to end up giving stipends for home work stations or to offset co-working spaces. You don’t HAVE to, but if you want to be one of the cool kids, you probably should.
5. Attract to a more diverse group of employees.
There are plenty of studies that show companies with diverse workforces outperform other companies. However, one of the main reasons women leave the workforce is lack of flexibility. And it can’t be fixed by working at home one day a week. It has to be true flexibility. Doctors appointments, sick days, teacher conferences, school holidays and complicated pick-up and drop-offs rarely fit neatly into a set schedule. And the post-tax cost for child-care and/or paying someone else to do all of these things often makes the work/stay home decision a wash. Remote working allows for a more fluid work/home life and will make your company more attractive to parents. But, this kind of flexibility for companies can be disruptive or seen as preferential treatment in companies with conventional structures. But when flexibility and not being co-located are built into the company culture, it can be a beautiful solution.
Are there negatives to fully-distributing the workforce? Yes. Are there tools and processes that make it easier? Yes.
I’ll cover both of those in another post. But given today’s technology, this is totally possible and building this structure and culture could actually be a key factor in your company’s success.