Why Companies Need a Remote Strategy to Survive

I’ve always been an advocate for remote work. Before I started Firstbase, my assumption was that the remote revolution would be driven by talent—by great people demanding the option to work where they choose as a condition of employment.

These last few months have changed my perspective.

Ten Years Into the Future... in Just Three Months

Prior to the pandemic, many enterprise leaders didn’t believe remote work was on the immediate horizon. Leaders at companies across the US, including Apple, Google, Facebook, and Microsoft intended to continue and expand their in-office practices, as evidenced by their heavy investments in corporate campuses. Whatever benefits of remote work they saw, traditional offices were clearly part of the future.

Enter the COVID-19 pandemic. Nearly every company across the world faced the need to send employees home quickly. The going-remote timeline for implementing remote programs jumped 10 years into the future.

While the transition was forced, companies realized that remote work works—and not just for employees. The very same companies that planned to spend billions on commercial real estate suddenly saw the virtue of remote work. Mark Zuckerberg, CEO of Facebook, predicts that within the next decade, “Facebook—a company that until recently paid new hires a bonus of up to $15,000 to live near its Menlo Park headquarters—could be a largely remote workforce.”

The benefits of working in an office—access to coworkers and company data, for example—can be replicated remotely, at least to some degree. Productivity, too, can be at least as high in a remote office. A Stanford study demonstrated that “working from home boosts employee happiness and productivity.”

"We've tracked all of our key performance indicators, and there has been no change,” said Kirt Walker, CEO of Nationwide.

I believe company executives are realizing that the benefits of a remote workforce—access to more talent, significantly reduced capital expenditures, and the competitive advantages these provide—can never be replicated in the office.

Companies need to recognize the benefits of remote work and transform their companies accordingly. Yes, talent will increasingly make remote work a condition of their employment, but unless organizations adopt remote work programs, they will be replaced by remote-first companies.

Here’s why.

The Best Talent Isn’t Always Local

High-quality talent is not always located within commuting distance of companies that need it. Yet, for years, companies insisted on finding local talent or requiring talent to become local, rather than embrace the idea that talent is distributed globally. Why should hiring practices limit access to 99.9 percent of the world’s talent? They shouldn’t. Instead, they should focus on finding the best talent for the needs at hand wherever that talent happens to be.

“Location as an element of diversity is not yet part of the conversation. It really needs to be,” writes Paul Estes, editor-in-chief of Staffing.com.

Remote work allows for greater diversity by neutralizing gender, race, location, and disability biases. Remote work offers opportunities to talent who, before now, were left out of the equation due to physical limitations, having to care for family members, or an inability to get the visa needed to enter the country. Study after study has shown that diverse teams offer enormous benefits to companies including stronger financial returns, increased innovation, higher productivity, and better problem-solving.

Remote Work Reduces Capital and Operating Expenditures

Commercial real estate costs are a significant expense. According to MarketWatch, the average cost of office space ranges from $4,194 (Atlanta) to $14,800 (New York City) per employee per year. By the time the costs of utilities, liability insurance, and incidental products like toilet paper and coffee are included, the average office-first company spends $22,000 for each employee each year, according to Global Workplace Analytics.

If companies were to outfit their remote workers with the best home office money could buy, including the coffee, they would spend about $2,000 per year per employee, according to Firstbase’s data. For enterprise companies with 1,000 employees, this means having in-office employees adds an additional $20 million of expense each year. (Leaders can calculate their own potential savings with remote work using Global Workplace Analytics’ free tool.)

To justify such an expense, companies would need to see enormous productivity increases from employees who clock into the office every day. However, the opposite is true. One recent study shows that, on average, remote workers work an extra 16.8 days each year.

It’s More Competitive

The only companies that can afford to go back to an office full-time are monopolies. All other companies should expect to have remote-first competitors in the near future. The combination of better access to talent and reduced costs gives remote-first companies the ability to offer products and services at lower costs, making them more competitive.

Although I firmly believe in a remote-first philosophy, I do not think companies will, or should, completely abandon in-person space. How that space is used will certainly change. I see remote talent coming to office space for meetings or to collaborate while using their home space to do the deep work. Companies that try to hang on to an office full-time will be outpaced by remote-first competitors who are more talented and more cost-efficient.

I see many companies struggling to replicate an in-office setting. What they don’t realize is they’re trying to replicate the negative aspects of the office: constant and instantaneous availability, disruptive meetings, and specific office hours. Working remotely provides the time and space for deep-focused work, which is nearly impossible to do in an office.

There are currently 225 million desk jobs globally. Two years from now, I imagine every large enterprise will be 30-50 percent remote. Within 10 years, a majority of knowledge workers will work remotely a majority of the time. My belief is that whether it takes two years or 10, ultimately, remote-first companies are going to replace non-remote companies.

Talent will continue to demand remote working options. Companies that are not driving a remote work strategy for the benefits it offers the organization, however, will be left behind—quickly.