Recession looming? The financial benefits of shifting to a remote work model

Numerous experts are predicting a recession in 2023 due to factors such as escalating inflation and slow economic development. Businesses that are particularly dependent on the advertising and technology sectors, as well as those that are at risk of a future recession, should take some preventative measures to lessen the potential impact.

Remote work can have a significant impact on cost savings. The shift into remote work caused by the pandemic has given companies insight into the possibilities and benefits of this model. We have seen that organizations that make this change have large cost saving potential, with research showing that companies that move to remote work save $10,600 per employee per year. A smaller organization of 20 employees can save up to $200,000 by making this shift. This change in environment will likely continue to grow more common, especially if a recession occurs this year. For those that can incorporate it into their culture, remote work may be the ideal solution to the challenges of a recession.

Without a physical office, the costs connected to things such as commuting, rent, and other office space-related expenditures can decrease significantly. Commercial real estate in bigger cities and tech hubs tend to be more expensive, and moving from an office space to remote work can help to save on these elevated leasing costs. The costs associated with office space, of which there are many, also disappear. In-office amenities, furniture, supplies, and office necessities such as the internet are no longer necessary. These expenses are not as impactful as leasing costs can be, but over time they add up, especially with company growth requiring more amenities.

With a remote model, companies can hire in other markets with potentially lower rates, especially in areas with a lower cost of living, which also expands the talent pool and growth of the company. Another advantage of the remote work model is the ability to recruit additional talent at a reduced cost. The potential recession not only weighs on employers but can weigh on employees as well.

Remote work is a win-win for all parties involved. When working remotely, and most often from home, employees can reduce the amount spent on commuting, gas, professional attire, food costs, and cell phone data costs while on the go. The benefits of this flexible working arrangement go beyond just financial savings. Workers have more time to rest without a commute, increased access to talented team members all over the world, and more flexibility in their schedules. Employees are looking for remote work; flexible work arrangements, including hybrid work, rank as one of the top three reasons for searching for a new role. Employees are even opting to quit their jobs over returning to the physical office.

With remote work resulting in fewer employees resigning from their roles, the rate of employee turnover is reduced. This in turn is another way companies can save money: the cost of hiring a new employee is higher than the cost of retaining an existing staff member. Resources spent on recruiting and training new talent can combine to be three to four times the amount of an employee’s annual salary, but with a remote model, attracting and retaining talent is possible while saving money.

Related: How hybrid works best: Developing 4 key workplace personas

For organizations that are unable to go remote, there are other ways to save. One way to do so is by speaking to employees and leadership about tools that are going unused or are not proving to be beneficial. Providing a list of services that are in use and asking employees which tools are necessary for all day-to-day operations and which are unnecessary can be an impactful way to gather insights from all team members, rather than making an executive decision. In addition, more productivity from employees means more output, resulting in a more efficient workflow and higher profits, so investigating how to best empower employee productivity and workflow can result in cost savings.

Making the transition to working remotely could be challenging, but it’ll be worthwhile in the long run, especially when considering the cost savings. Those who can migrate to a remote setting can save significantly, yet remote work may be impractical for some organizations. It’s important for organizations to carefully assess their ability to transition to remote work and determine whether it’s a viable option. However, for those who can successfully make the transition, the cost savings and potential benefits for employee productivity make it a worthwhile investment.

Robert Graham is the Chief Executive Officer for Poll Everywhere.