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How Telecommuting Increases Business Profits

Working from home is one of the most popular trends changing the modern workplace. Since 2005, telecommuting in the U.S. has grown 80 percent, and now, 3.7 million employees, or 2.8 percent of the population, work from home.

It’s easy to see why telecommuting has become a workplace trend. Today’s employees appreciate the flexibility that comes with telecommuting and are more productive and less stressed when working from home. Like employees, employers also experience benefits when they implement telecommuting policies, namely cost savings.

Are you curious about how you could save? Here are three significant ways telecommuting helps companies save money.

Lower Overhead

The most obvious cost saving that results from telecommuting is reduced overhead. Companies that don’t have to pay for employees’ office space and supplies can save quite a bit in a year. One study showed that if a company allowed an employee to work from home just half of the time, it would save on average $11,000 per employee, and each employee would save between $2,000 and $7,000.

When added up across the country, that’s more than $700 billion in total national savings in a single year, and a greenhouse gas reduction of the entire state of New York — a big factor for some employers like Dell, Xerox and Aetna.

Case Study: Sun Microsystems

Sun Microsystems implemented a telecommuting policy in 2007. The policy has eliminated 7,700 “seats” in physical offices, saved the company more than $255 million over four years and continues to save the company $68 million annually. The company also has 115 flex offices around the world that employees can go to if they need to work in a physical office.

Increased Productivity

Employees’ productivity has been shown to increase drastically when they work from home. Home offices aren’t nearly as distracting, and telecommuters are less likely to be interrupted midflow by a colleague stopping by to chat, an intercom announcement or other workplace distraction. Working from home can also help minimize tardiness since employees don’t have to deal with uncontrollable traffic and commuting.

Employees who work from home are also less likely to use sick time. Since employers lose $1,800 per employee per year on unscheduled absences, that cost saving adds up quickly.

Case Study: American Express

American Express is a great example of a company seeing increased productivity from telecommuting. After implementing a telecommuting policy, the company performed research and found that its teleworkers took 26 percent more calls and increased their business output by 43 percent — nearly an additional half of an employee — than their coworkers who worked in a physical office.

Reduced Attrition

Telecommuting has shown to lead to improved employee satisfaction, which ultimately lowers attrition and saves the costs associated with recruiting, hiring and training new employees.

One study found that 46 percent of companies that allow telework say it has reduced attrition, and 95 percent say telework has a high impact on employee retention. Losing long-term employees can cost a company between $10,000 and $30,000 each, so keeping them on board longer can result in massive cost savings in the long term.

Case Study: CiscoSystems

CiscoSystems has had a work-from-home policy for the past decade. The company’s Internet Business Solutions Group director, Gordon Feller, said the real driver for the policy was to retain talent, increase happiness and improve productivity. The company has since cited telecommuting as a way to keep attrition costs low and estimates it saves $277 million each year in productivity gains.

Other Cost Savings

In addition to these three main cost reductions, telecommuting policies can save companies money in other ways, including:

  • Lower healthcare costs: Telecommuting is shown to help employees lead healthier lives. One study found that home workers reported 25 percent lower stress levels, made healthier eating decisions and experienced a better work-life balance. All of these factors help employees lead healthier lives, which can ultimately reduce their healthcare costs.
  • Lower travel costs: Companies that operate virtually can save on costly business travel trips. Because they’re already leveraging video chat and remote communications platforms for day-to-day operations, they can also leverage them to decrease employee travel and travel costs.
  • Improved customer service: Alpine Access saw its remote agents’ performance improve drastically after implementing a work-from-home policy. Agents closed 30 percent more sales than the year before, and customer complaints decreased by 90 percent. Keeping customers happy will encourage them to return, improving profits and reducing the cost of finding new customers.

The thought of saving significant costs may be enough for you to consider implementing a telecommunication policy. You might also be attracted to the thought of your employees being more satisfied, more productive and happier. These are all great benefits that can result from a work-from-home policy.

However, you should be sure to think holistically when considering a telecommuting policy. Telecommuting has its benefits and can lead to business growth but may not be right for all cultures, teams and workplaces. Be sure to sit down with your leadership team to consider the pros and cons of implementing one at your office before making a decision.

ps. Here is another article on the same topic you might be interested in reading: 10 Ways Telecommuting Saves Employers Money


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