How Remote Work Provides Companies a Competitive Advantage
This is a chapter from the upcoming book “Remote Work – The Complete Guide” which we will be publishing first on Simple Programmer, every two weeks. If you would like to be the first to know when the new book is released, sign up here.
While working remotely is an excellent deal for developers and other IT professionals, you should never, ever try to sell the idea of it by touting how beneficial it is to you. That’s a recipe for disaster, and it almost never works.
I worked with a guy once who tried to convince management to let him work from home because it would reduce his child care costs and commute time. Not only did he fail to sell management on the idea, but he also irritated them to the point that they never allowed him to work from home.
When I suggested that the same company should allow me to work from home so that I could be more productive without distractions, I was allowed to do so the next day.
It is very difficult to sell an idea to others based on how it will help you, but it is much easier to do so when you talk about how it will help them.
If you want to convince management that working remotely is a good idea, you need to understand what it can do for a company on a day-to-day practical level as well as at a strategic level. Allowing employees to work remotely offers tremendous value and flexibility for companies.
In other words, if you can demonstrate that it helps the other party, they are more likely to work with you. The characteristics of a remote-first (or even remote-only) workspace can really correct a lot of issues in a workplace.
These issues are roughly subdivided into three categories of problems. In this second part of our series, we’ll discuss these problems and how they can be mitigated using remote work. Try to consider whether your own company could benefit from remote work based on the impact of these issues.
Of course, some things might not apply to your current work environment. You must determine which are relevant and which are not so you can address those concerns with management when trying to convince them to let you work remotely.
The Three Issues Remote Work Can Help With
The first category of problems that remote work can help solve is the issue of obtaining and keeping more skilled employees.
If you ask a hiring manager at most companies these days, it’s becoming harder to recruit new employees and to keep existing ones. Furthermore, because of the relative scarcity of certain types of IT professionals (software developers and security professionals especially), companies are simply forced to pay more for the same talent.
When your only leverage on the market is price, the only way to beat the competition is a bidding war. That’s expensive, and it’s a race toward drastically overpaying for help.
The second category of problems that remote work helps with is the category of organizational flexibility and resilience. While having a single location helps with the type of “collaboration” we lovingly outlined previously, it does introduce some downsides.
For one, requiring everybody to be in the office means that work doesn’t happen when people can’t get there. Traffic, inclement weather, and personal issues can mean that a company can’t effectively respond to problems when people aren’t in the office. Depending on where the company is located, this represents a profound risk to business continuity.
Finally, remote work can also significantly help with costs. Office space is not cheap. Not only do companies have to rent the space they use, but their employees also have to live close enough for a daily commute.
The latter means that the employees also have to be paid enough to live near expensive office space. This is a hidden cost that is often ignored.
Let’s now take a closer look at each of these issues.
As we saw previously, some of them might be relevant to your own situation, while others aren’t. Identifying them and focusing your efforts on what is relevant will greatly enhance your chances to come to an agreement with management, and to do so in a way that benefits the company.
In effect, you need to figure out which issues give you the most leverage in the discussion and go from there.
Recruitment and Retention
It’s very expensive to lose employees. While exact figures are hard to come by, replacing a software developer or other IT professional can easily cost well into the five figure range—just counting the money and time required to find, interview, and onboard a new developer.
When you consider the opportunity cost of turnover, it’s even worse. It’s also quite common for IT professionals to change jobs on a fairly frequent basis, so anything that reduces the frequency of such changes constitutes a significant business advantage.
According to the 2017 State of Remote Work report, companies that allow remote work experience 25% less turnover.
Remote work is more than simply another way to get things done—it’s also an effective recruitment and retention tool that allows employers to compete on more than salary and benefits.
The same report indicates that fully remote companies (companies with no corporate headquarters) were able to fill positions 33% faster than other companies.
Additionally, the 2017 report showed that managers see equal performance between their remote and on-site employees. While “merely” equal performance doesn’t sound particularly compelling, bear in mind that the on-site employees are often sitting in expensive real estate that costs the company money on an ongoing basis.
It’s costing more money for the same work.
In many cases, remote employees represent a significant cost savings for the same amount of work. This savings often means you can hire more people.
While discussions of employee retention often center around employees voluntarily leaving a job for a better one, that’s not always the case. Sometimes employees have to leave due to their own medical issues or those of their close family. In these cases, the opportunity to work remotely may mean that they can keep their current job rather than having to quit by circumstances.
Larger Hiring Pool
In addition to the greater ease of recruiting and retaining employees, remote work also greatly increases the size of the labor pool available at a given price to the companies that allow it.
For instance, consider the typical software company in many major cities. They’ll usually have an office headquarters in a reasonably expensive area (so that the employees don’t get mugged at night while leaving the office).
Any employees they manage to hire have to live close enough to be able to commute to the office, and their pay has to be high enough to afford doing so. While there are clearly a lot of people who will meet these criteria in almost any major city, the number of people who could afford to take a similar salary to work remotely is considerably higher.
Because employee recruitment and retention is such an expensive and time-consuming part of running a business, anything that either lowers the costs of hiring or increases the number of potential employees constitutes a significant business advantage. This is especially helpful in areas where salaries are high, the local population is not particularly tech-savvy, or where terrible commutes and gridlock make travel difficult.
Most inhabited parts of this planet have at least some extreme weather, geological, or social events that can disrupt work. While one can anticipate many of these issues (hurricanes, for instance), many other issues tend to give little or no warning of their impending interference in your business.
Tornadoes, earthquakes, forest fires, heavy rain and snow, and even social unrest can often seem to come out of nowhere. If they happen during a workday, these events can often mean that people are unable to reach the office, have to leave early, or even get stuck in transit.
For example, I currently live in Nashville, Tennessee. While we haven’t had any significant earthquakes in living memory and are insulated from coastal hurricanes, we are extremely unprepared for the sort of winter weather that happens farther north.
It’s routine for schools to be closed here when less than half an inch of snow has fallen, while 2 inches of snow can render many of the roads impassable due to people having no practice driving in snow.
When you combine this with our hilly terrain and the tendency of “snow” to really be “ice,” a small winter storm can paralyze parts of the city. However, such events usually are not bad enough to mean that the electricity isn’t working. Employees who are able to work from home are generally able to do so with very little disruption.
Additionally, we periodically have problems with flooding. In some cases, the flooding is fairly extensive (2010 was an especially bad year, with much of downtown being flooded and the power being out for days in many areas). In this case, many remote employees were not able to work from home but were able to work from the homes of relatives or from coffee shops.
In some cases, like that of one of my clients, the remote employees were able to keep critical systems running until the floodwaters receded. Remote work can help build a degree of redundancy into an organization, simply because it changes the way people interact with critical systems.
In my client’s case, remote workers were the reason they had moved many things (including source control) into the cloud. That move to the cloud meant that when the floodwaters entered the server room, most of the critical infrastructure wasn’t there.
If your team is distributed, it will change the way your organizational resources are managed. One unexpected effect of these changes tends to be that organizations are more resilient to disasters and other problems with local conditions.
Additionally, if your team is distributed over a wider geographic area, some local disruptions may not bother some remote team members at all.
Lower Office Space Costs
Popular cubicle sizes are 9 feet by 12 feet for managers, 8 feet by 10 feet for senior staff, 8 feet by 8 feet for general staff, and 6 feet by 6 feet for support personnel.
Respectively, that’s 108 square feet for managers, 80 square feet for senior staff, 64 square feet for general staff, and 36 square feet for support personnel. While this highlights the disparity in space given to people in general, it also makes it pretty easy to calculate how much it costs to house employees on-site.
For instance, in one of the heavy tech-centric areas near where I live (Brentwood, near Nashville), commercial office space costs around $27 a square foot. Given this, we can calculate how much each type of worker costs just in terms of the space required for their seating and work area. We can consider the following figures, just for cubicle space:
● Manager cubicle: 9′ x 12′ or 108 square feet. At local prices, that’s $2,916 a month, just for the cubicle.
● Senior staff: 8′ x 10′ or 80 square feet. That’s $2,160 monthly at local prices.
● General staff: At 8′ x 8′, that’s 64 square feet, or $1,728 monthly.
● Support personnel: For the 36 square feet they get, that’s $972 monthly.
In addition to the rather alarming prices for the square footage taken up by cubicles, workers will also require a number of other things to go about their jobs. These include things like bathrooms, meeting rooms, hallways, common area spaces such as kitchens and dining areas, and parking.
Depending on where your offices are located, it only takes reducing your office footprint by a few cubicles to easily cover the salary for another support or development person. If you manage to reduce your footprint by half, it can make a truly huge impact on your company’s bottom line.
The cost of office space is something that is seldom taken into account to the degree that it should be. Not only is it expensive to keep employees on-site to work, but office space is seldom rented on a month-to-month basis.
Rather, office space tends to be leased over a longer period of time on a contractual basis. If your company’s market situation changes drastically, these long term leasing contracts can create a lot of headaches.
Picture, if you will, a company whose product suddenly starts selling like hotcakes. Rather than just needing to incrementally add personnel, the company needs to double in size over a period of less than a year.
If you are lucky, you have additional office space nearby you can rent. If you are unlucky, you may be forced into a more expensive office space, forced to break your lease, or stuck with having a company split between two locations. Often, it’s some combination of the three.
The reverse is also true. I worked for one company that had huge, posh offices that was suddenly faced with drastic market changes. They had to let go of nearly half the staff but were stuck with their lease for another few years. The office space rental was one of the major factors in the company continuing to lose market share.
The end result was the liquidation of assets at pennies on the dollar and the termination of the remainder of the staff. The inflexibility of office space leases can be an existential threat to a company, and it usually isn’t recognized as such until it is too late.
In addition to the costs of office space and benefits to the hiring process, remote work makes it easier to hire developers at a lower cost. Developers near your office may well be willing to work for a lower price, simply to be able to avoid the commute.
This is especially true if you are in a major city with significant traffic issues or are located far from inexpensive housing. The reduced cost to employees may well offset the lower salaries.
Depending on your location, you may also find that salaries for many employees are far cheaper in other cities or even outside of your own country.
To give an example, the average senior C#/ASP.NET developer in Nashville can expect to make around $104K a year, while a similar senior developer just down the road in Memphis might only make $96K a year (numbers retrieved from Indeed.com).
While an eight thousand dollar difference in price may not seem like much, when combined with the cost savings in office rent and the larger hiring pool, the difference can be substantial. Additionally, these numbers are numbers for major cities—once you get into smaller towns, the pay rates are often significantly lower.
I’ve seen senior developers at my own level earn 25% less than I do while doing very similar work in a much smaller town. Even at the lower salary, they still have a better quality of life than I do in a large city.
However, when a company needs to accommodate remote workers, the very same accommodations that allow employees to work from home can also enable employees to work from nearly anywhere. This can significantly lower salary costs, especially when your processes are flexible enough to allow for work in distant countries with much lower living expenses.
While it is harder to coordinate teams over large distances and multiple time zones, the cost savings can often be worth it, especially if the remote workers bring skills or knowledge to the team that you wouldn’t otherwise have. Managed properly, a remote work environment can allow you to build a team that would be impossible to create in your current location.
Allowing remote work also allows people with difficult life situations to still be gainfully employed by your company. Whether a person is facing a serious disability that limits their ability to drive, has a sick child, or is otherwise in a life situation that keeps them from working in most jobs, remote work can be a true blessing for many.
While you probably shouldn’t underpay someone simply because of their life situation, you may find that you get better results for your money even if you pay them a competitive rate. When you give someone an opportunity that others do not, it often creates the kind of loyalty that you have to experience to believe.
I’ve seen absolutely phenomenal work done by people who had a life situation that precluded most jobs. If you want a good way to hire extremely loyal employees, look no further than the people who are in difficult situations. There is a huge difference between hiring someone for whom you are “just another employer” instead of the person that gave them a chance when no one else would.
At a societal level, remote work offers the opportunity to lift many people out of poverty and misery. This can include people on the other side of the planet, and it can include people down the street. While many companies brag about their ability to make the world a better place, allowing your employees to work from home is a way to actually accomplish that.
What Remote Work Really Is
At the end of the day, none of us really care all that much about how much we are paid. We care about what that pay can do for us and what kind of life we can create for ourselves with that money. If a million dollars could only buy a candy bar, almost nobody would buy a lottery ticket. The number in our salary isn’t what matters—it’s the options that number allows us to create.
Everyone’s vision of the perfect version of their own life is different, but almost every vision takes time, attention, and money to accomplish. When a company creates an opportunity for someone to build a better version of their own life, employees notice.
Rather than just being “technology company #2348 who has yet another web development job,” as a remote company you are offering a better, more flexible life for your employees. In the eyes of a potential employee, this changes your company from just another job option to an incredible opportunity that gives them back hours a day.
Furthermore, once they become employees, this benefit will—unless you really screw up—make them happier, healthier, and prouder of where they work. While you can’t really quantify goodwill from your employees (and their families), it can have an incredible effect on team morale.
Remote work changes the way employees and potential employees evaluate companies. While it’s great to work in a “cool” industry and have top of the line pay scales, most companies are in “boring” industries and have pay scales that are closer to average.
If you don’t want to be constantly competing on price for your development team, remote work is one excellent way to outshine the competition. As the practice becomes more accepted and common, your competition will be doing it, too. You are far better off making your competition react to you than you are being forced to react to them.
Remote Work … Works for Companies, Too
There are a number of valid business reasons to allow your employees to work remotely. In addition to the tremendous benefits to recruitment and retention, remote work allows organizations to be more resilient.
Remote work can also lower office space costs, reduce the amount a company spends on wages, and make it easier to compete with other companies without simply throwing money at the problem. Remote work changes employment from “just a job” to a way of creating a better life for your employees.
While allowing employees to work remotely is not the best choice for all companies, it can be a huge game-changer when it works for yours. The benefits of allowing it can be worth more than is initially obvious.