Why a Remote Workforce is a Good Idea for Business

The remote workforce revolution is redefining the relationship between businesses and their employees. According to Gallup’s State of the American Workplace report, the number of people working remotely more than four days a week rose from 24 percent to 31 percent between 2012 and 2016. It is now estimated that within the next 3 years, over 40% of the US workforce will be freelancing. Only 10 years ago, few had even heard of a ‘freelancer’.

Scalable Path’s own team is entirely remote, and we are far from alone. Some of today’s biggest digital brands are also 100% remote. This long list includes Automattic (the company behind WordPress), Mozilla, Basecamp and Github. Other big companies like Dell, Deliotte and United Health Group, although not 100% remote, have successfully integrated remote work into their organizations.

Yet, despite a long list of proven benefits, the leap from in-house toward a remote workforce can be unnerving for many managers and business owners.

Before we get going, let’s define some terms used in this article:

  • A freelancer or contractor is a self-employed individual.
  • A remote worker is an employee, freelancer or contractor that works away from the office of his employer.
  • A distributed, or remote, workforce is a one spread out geographically.

If it ain’t broke…

Fear of the unknown is what holds back change in many businesses. Why pivot away from an in-house team when everything appears to work?

We can look back to another revolution, the industrial one, for some context here. Pre-industrialization methods worked, they had for thousands of years, but they were not as efficient as their steam powered counterparts. Companies that did not embrace these changes were swiftly overtaken.

We believe a remote workforce is a more efficient workforce than its in-house counterpart.

Below are some business challenges you may be familiar with:

  • You need new hires but the local talent is too expensive for your budget
  • You need new hires but the local talent pool is small or unsuitable
  • You are looking to increase staff retention (decrease turnover)
  • You need to cut business expenses without affecting productivity

Remote working has become popular precisely because it is a proven solution to these problems.

Lower Overhead

The prospect of lower overhead is often what drives businesses to consider a remote workforce. The two drivers most often mentioned are:

Reduced Payroll Costs

Freelancers can be brought in for specific projects that match their exact skill set, and then released when that skill set is no longer needed. This means that multiple, talented consultants can be brought in for the price of one full-time employee: reducing payroll expenses.

Reduced Office Costs

If a typical business allowed employees to work from home just half the time, they would save, on average, $11,000 per year. This includes lease, utilities, janitorial services, office supplies, coffee and water expenses, office equipment, furniture and transit subsidies.

Increase Productivity

How often do you find that your day is spent in meetings, chats and phone calls? By the time you have a chance to sit down in front of your laptop to do some work, the day is almost over.

The office is a very distracting place.

Now consider your high performance workers. These are the people responsible for solving some of the hardest problems in your business. They build, design, create and innovate. They are self-driven and crave an environment that allows them to be productive. Because of this, high performers often avoid the distractions of excess meetings and chats. Asking this group to work in a sub-optimal office environment ultimately leads to a drop in their productivity.

Technical talent, in particular, needs to be able to reach a state of flow in order to reach peak performance. Flow is when a person is fully immersed and completely absorbed on what they are doing. To reach this state, an individual needs substantial blocks of time without interruption. It can take an average of 25 mins to regain focus and re-enter a state of flow after being interrupted. 4 meetings a day can result in 2 hours of wasted time per day – just getting back to peak performance!

Businesses that embrace remote working understand that working from home helps remove everyday office distractions. They often practice Agile methodologies where the manager’s role is to help remove obstacles and distractions.

There is also a psychological element here. When you tell a staff member they can work remotely, they hear “I trust you”. Humans are hardwired to reciprocate and will want to repay this trust by working hard.

“I like to give people the freedom to work where they want, safe in the knowledge that they have the drive and expertise to perform excellently.”

Richard Branson, Virgin Group Founder

In the recent Global Workplace Analytics study Best Buy, British Telecom and Dow Chemical reported that their workers were 35-40% more productive when they worked from home. I’m not just cherry picking numbers here either, data that favors remote worker productivity is overwhelming. In a case study by CTrip, where office productivity was measured, remote workers were 14% more productive than their office counterparts. Without having to commute, remote staff start work earlier and take shorter breaks, not to mention the fact that not commuting reduces environmental pollution!

The takeaway here is  ‘trust your workers they will repay that trust’. Managers that like looking over the shoulder of their employees need to start focusing on performance rather than attendance.

Reduce Absences

Another common fear is that hiring remote workers will result in a less reliable team. In fact, research has shown the opposite is true. 78% of employees who call in sick are not actually sick. They just need time off to resolve personal issues: family, personal needs or stress. These unscheduled absences can add up to over $1,800 per employee/per year!

On the other hand, remote staff have been shown to continue working while they are sick because they can stay home without infecting others. They are also able to return to work sooner following medical problems and can schedule errands without losing a full day.

Lower Staff Turnover

Highly trained and self-disciplined staff are difficult to find and expensive to lose. A study by the Society for Human Resource Management predicted that the cost to replace and train a new employee is the equivalent of six to nine months of the employee’s salary. For staff member’s earning $100K, that’s a cost of up to $75k. If that is not shocking enough, this study was actually on the conservative side. Other similar research claims that losing a staff member can cost up to twice their annual salary.

The CTrip experiment, mentioned earlier, did more than just increase productivity. Remote staff were more engaged and happier in their jobs and, crucially, 50% less likely to quit.

Why might remote staff be feeling more engaged with their work and colleagues than in-office workers? Scott Edinger, founder of Edinger Consulting Group, suggests that while the physical proximity of an office gives the illusion that co-workers are collaborating efficiently, the opposite is often true. “Remote workers are actually more engaged and committed to their team because they deliberately communicate rather than assume it is a passive process based on proximity.”

This deliberate communication is greatly aided by the thriving project management industry. These tools, such as Slack, Asana and Basecamp, have been designed by remote workers for remote workers.

Expand Your Talent Pool

One of the biggest obstacles facing technology businesses today is a talent shortage, and the problem appears to be worsening. The U.S. Bureau of Labor Statistics expects that demand for software developers will grow 17% by 2024.

Opening up your interview process to include remote workers can solve this issue by expanding the candidate pool. This is because up to 70% of programmers say they want to work remotely.

“All I hear from my friends is how hard it is to hire. Should I not tell them about remote working? I’ll keep shouting from the rooftop because everyone should do it.”

Automattic CEO Matt Mullenweg

Scale Better

Traditional onsite employee workforces are rigid and cannot easily get in sync with the ebb and flow of business cycles. A remote freelance workforce, on the other hand, is designed to be agile. Using it, businesses can react quickly to changes (within days as opposed to months). Scalable Path can typically get a development team up and running within a week. This makes it far easier to staff up when things are busy and ramp down when there is less work.

Final Thoughts

Working remotely is on the rise not just because it is cheaper, but because of its clear benefits to productivity and increased access to talent.

Embracing a few key ideas can smooth the transition to a remote workforce. To start with, authoritarian management styles are less effective with remote teams. Instead, embracing an approach where conversations, training and documentation are public is key. This ensures that everyone is on the same page and buys into the vision.

“The worst possible thing when you’re working from home is to feel you’re not in the loop.”

Toni Schneider, WordPress CEO, 2006 to 2014

Secondly, there are a lot of excellent collaboration tools and software available that are important to embrace when running a remote team. We’ve written an article specifically on that subject.

Lastly, remote workers should be measured based on their performance rather than their presence. Just showing up is no longer enough!

If you’re a business leader, I hope this article has given you the confidence to take the leap and go remote (if you haven’t already)!