While weighing the costs and benefits of hiring traditional employees versus remote workers, organisations are increasingly exploring the idea of recruiting individuals from outside the United States. To provide insights into this, we have devised the Remote Job Parity, a benchmark similar to the Big Mac Index. Our in-depth analysis aims to help businesses understand the potential advantages and drawbacks of hiring remote workers, thereby aiding them in making an informed decision.
Our analysis will take into account the universal factors of productivity and cost in businesses. Following this, we will evaluate the advantages and disadvantages of having employees work from their homes compared to working from the office.
Kindly inform us if there is anything that we might have missed.
Comparison Between Traditional US Employees and Remote Workers
Working Hours
Traditional Office Workers:
The Bureau of Labor Statistics has stated that the average American workday lasts for 8.8 hours, though they spend only 2 hours and 53 minutes actually working.Remote Workers:
A collaborative study by CoSo Cloud Solutions and US News & World Report found that remote employees are dedicating an extra six to seven hours per week to work, and displaying higher levels of diligence.
Measurement of Profitability
Traditional Office Setup:
According to a recent survey by Harvard University, 16% of office workers experience disturbances from their surroundings, such as noisy colleagues and phone calls. This results in a staggering estimated annual loss of productivity of $1.8 trillion for the US.Remote Work:
As per a survey by Sure Payroll, 66% of businesses that employ remote working have seen an uptick in productivity. Remote employees are found to take fewer sick days, as well as shorter breaks and vacations.
Engagement:
Traditional Office Setup:
Managers are physically available on site for staff, but they are typically not very interactive with their employees.Remote Work:
According to a report by Gallup titled “The State of the American Workplace,” remote workers are likely to experience the highest level of engagement, leading to a high return on investment. This is due to the fact that they can participate in daily meetings with their supervisors and colleagues, despite not being in the office.
Building Stronger Connections Through Collaborative Efforts
Traditional Office Setup:
According to research by Harvard, although the number of collaborative projects has grown extensively over the past twenty years in office environments, only a small percentage of employees (3-5%) are actively participating in such initiatives. This emphasizes the fact that too much of a good thing can have negative consequences.Remote Work:
Harvard school students and faculty members have embraced digital collaboration methods. One of the reasons for this is that digital collaboration can cater to different working styles, encourage involvement from all team members, and consequently enhance engagement and produce better results.
Gaining Essential Technical Expertise
Traditional Office Setup:
When employees resign, whether temporarily or permanently, their managers are often left with limited options other than hiring less qualified individuals to fill the position.Remote Work:
Remote working helps companies to tap into a larger talent pool, which includes experienced and skilled professionals, including retired workers and parents who have taken career breaks. This can reduce the burden on businesses since these individuals can continue to work while balancing their other responsibilities.
Technological Advancements and their Capabilities
Traditional Office Setup:
With the digitisation of workplaces, some employees may struggle to adjust to new procedures and systems.Remote Work:
It is unsurprising that Millennials and Gen Z, who have grown up with computers, have an advantage in using the technology needed for remote working. Remote employees are well-versed in using various remote technologies, such as communication apps, video conferencing services, and file sharing platforms.
Communication
Traditional Office Setup:
Human traits that should enable us to form deep connections with each other can at times become hindrances to establishing meaningful relationships within workplaces. Poor self-esteem, preconceived notions, non-verbal cues and lack of focus can negatively impact communication and effectiveness within the professional setting.Remote Work:
The smooth implementation of remote work significantly depends on the use of remote communication technologies. Most remote teams use one or more of these platforms to streamline communication, expedite task management and simplify the process, requiring minimal effort from their team members.
Salary
Traditional Office Setup:
It’s crucial to consider candidates from outside the local area when recruiting for a position. This can help bring in diverse talent to your business, although it may result in additional expenses such as relocation costs. These expenses should be factored in with the regular salary when hiring candidates from foreign countries.Remote Work:
It is unjustifiable to pay remote workers less on the basis of their location. However, by expanding your search for talent globally, businesses could potentially save significant amounts on salary expenses. For example, the wages of Java programmers demonstrate this well. In the United States, a senior programmer earns an average salary of $137,000, while the figure in Sweden is $78,000, $70,000 in Australia, and $58,000 in Spain.
The Cost to Businesses
Traditional Office Setup:
The expenses linked to maintaining a workforce, which include minor benefits like transportation reimbursements and major costs like health insurance premiums, tend to increase as the number of employees rises.Remote Work:
Based on evidence presented here and here, it is clear that enabling employees to work remotely can significantly benefit businesses in terms of cost savings. Not only does it lead to direct cost reductions, but it also results in various indirect cost savings. A survey conducted by FlexJobs reveals that 77% of remote workers reported better physical and mental health compared to their office-working counterparts.
Work-Life Balance
Traditional Office Setup:
Nowadays, office workers are more likely to experience stress and poor health due to various underlying issues. These factors can include limited time for hobbies and personal interests outside of work, daily commuting, and long hours of sitting in one place. Such factors can lead to feelings of overworking and undervaluation, ultimately resulting in physical and mental health problems.Remote Work:
For those who work from home, balancing professional commitments and personal life can be challenging. Nevertheless, remote workers have the flexibility to do so, which their office-based colleagues may not. This is supported through research such as the State of Remote Work research conducted by TINYpulse and Owl Labs, which discovered that 51% of remote workers felt that their work-life balance improved due to their remote work arrangement.
Employee Turnover
Traditional Office Setup:
As per the Work Institute’s Retention Report, businesses could lose up to a quarter of their employees by 2023, which could cost the US economy an enormous $680 billion. This alarming scenario can have significant repercussions for businesses of all types and sizes, as well as the overall economy.Remote Work:
A study conducted by Stanford University found that businesses with remote workers had a 50% lower turnover rate in comparison to those with on-site staff. Additionally, a survey by TINYpulse/Owl Labs indicated that such businesses have a 25% higher retention rate.
It is challenging to determine the exact number of remote workers who could replace one office employee; however, by merely considering salaries, it can be approximated that almost double the number of people can be employed in a remote working arrangement when compared to the traditional office setup. However, it should be noted that this estimation oversimplifies the situation and overlooks the unique skills and expertise that an individual can bring to a team by providing a variety of views and experiences.
The results of this study have established that remote work is undoubtedly more beneficial than a traditional office setup. This may be the reason why an increasing number of businesses are enabling employees to work from home. Should you have any further questions, we are happy to assist you.
