8 Ways Telework Can Save You $20,000 a Year

By Tom Harnish on 15 July 2010 0 comments
Photo: bonniej

Two nights ago, some friends came over for dinner. The conversation turned to telework, and became, as one put it in an apologetic email later, "spirited." What was his beef?

Fundamentally, he wanted to know what's in it for business owners. Everyone touts the work life benefits and savings of telework for employees, he said, but why should business owners want their people working at home?

After three years' work reviewing 250 studies and talking to employers, employees, experts, and naysayers we knew the answer. As fast as he fired the questions, we answered. You, fortunately, can chew all this slower and digest the answer before you take another mouthful.


Smart employers understand that a happy employee is a loyal one. Over 80 percent of employees consider working from home a perk, and a third say they'd prefer the option to work from home over a pay raise. About the same percent say they would take a pay cut if they could telework. If you can keep good employees, you can save the $20,000 to $35,000 it costs if you lose one that's valued.

You also have access to a much larger pool of qualified people. Telework allows companies to reach beyond their local area for talent, and gives fast-growing employers a way to expand beyond the local population.

Telework also means you can get more work done with fewer employees. The numbers vary from company to company, but productivity increases are typically 30 to 40 percent. Yes, really. There are numerous studies that prove it, conducted by big companies with a lot to lose if telework didn't work.

One obvious benefit for employers with employees at home is that they don't have to provide an office. Nationally, real estate costs employers an average of $10,000 per employee per year. Sure there are some offsetting costs for training, telecommunication, even tech support (see below), but IBM was able to slash its real estate costs by $50 million a year by allowing people to work remotely. Sun Microsystems estimates they save $70 million a year in real estate costs.

But the savings go well beyond the cost of real estate. Telework save companies money in office furniture, equipment and supplies, utilities, janitorial service, security, maintenance, paper goods, coffee and water service, and leased parking spaces. Dow Chemical was able save a third of non-real estate administrative costs, by sending some workers home.

Another savings that telework provides comes from lower absenteeism. Two-thirds of the people who call in sick, aren't. They have to let in the cable guy, take a kid to the doctor, or here in Southern California it may just mean the surf's up. If someone goes surfing this afternoon and works 'till midnight what do you care if they get their work done? In any case, working from home keeps people away from sick co-workers and allows them to start work sooner after illness or surgery. Nortel found that the entire cost to outfit and equip a teleworker could be made up in the first year if only 3.5 days can be saved in absenteeism.

Telework also makes grants and incentives available to employers. Some states such as Virginia, Georgia, and Oregon offer as much as $3,500 per employee to send people home. Arizona, Vermont, and Connecticut offer free assistance for employers considering telework.

And, finally, there's one big savings: If there's a disaster or pandemic, a dispersed workforce can save your company from going out of business. Not having all your eggheads in one basket means your people will be able to keep working when snowmageddon, a flu outbreak, or terrorism hits. When something happens, fewer people will be affected, your economic stability will be more easily maintained, and continuity of operations will be assured. (COO is the impetus behind the Federal Government mandate that eligible employees must telecommute to the maximum extent possible.)


But what about the downsides, our friend demanded. There have to be obstacles and costs. Of course, that's true. Implementing any business strategy requires preparation, training, and will involve some costs and risk. Some people will meet any change with resistance, and that has to be managed, too.

Management mistrust is the biggest problem and the primary reason telework hasn't become the preferred work arrangement for people whose job would allow it. 75% of managers say they trust their employees, but 30% say they want to be able to see them. Of course if the boss is on the third floor and the troops are spread around the building they're out of sight anyway, but . . . .

Some people just aren't cut out for telework. Social needs, self-discipline issues, communications problems mean that certain people need to work in an office. Telephones, email, and instant messaging are a solution for some. Innovative solutions such as virtual outings, online games, and even Second Life have proven successful for others. For that matter, occasional instead of full-time telework is also a solution, and the most common arrangement. Telecommuters today work at home an average of 2.5 days a week. Still, some companies have closed their office and everyone works from all the time, while other organizations have been slow to see and seize the advantages.

Some employees are afraid of an "out of sight, out of mind" problem, but good managers use performance-based measurement systems and base advancement on productivity not perfect attendance.

And there are real costs involved. Our research showed that the average was $2,710, with a range from about $300 to $4000. While few employers provide employees a car so they can get to work, many do feel obligated to provide a computer, software, cell phone, printer, and broadband. Most, however, did not cover office setup, postage or courier services, scanners, PDAs or pagers, phone cards, or any sort of per diem.

Only about a third of federal agencies pay for home office equipment, relying instead on the employees' 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 used to be a common obstacle, but today that's really not the issue. For example, 93% of managers involved in IRS pilot telework program believed there was no problem with data security. In fact, 90% of those charged with security in large organizations feel that home-based workers are not a security concern — they're 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.

Overall, then, our research shows that an employer can save about $20,000 per employee per year if they telecommute full time. For a roundup of the latest statistics on who's telecommuting and how much, visit our Telecommuting Statistics page on Undress For Success. For a look at how you, your company, and your community could benefit from telework, visit our Telework Savings Calculator.

Telework: Make the road less traveled your way to work. It makes cents.

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