WFH or RTO: How Workplace Flexibility Can Affect Your Bottom Line
A workplace dynamic has been in flux for more than a decade now. “Work-from-home” (WFH), while seemingly a child of the COVID-19 pandemic, had slowly been emerging for years when the global health crisis hit.
COVID merely tossed gasoline on the trend, as companies that once thrived on in-office collaboration suddenly found themselves navigating the challenges of remote work.
But as the worst of COVID has receded, and the world has adapted to new norms, some businesses are pushing a return to the old ways. And the rise of “return-to-office” (RTO) policies have sparked debate over the effectiveness of both approaches.
Today, we’re going to examine the pros and cons of WFH and RTO models, and explore how these work options can affect your business’s bottom line. We will also look at some key statistics concerning whether employees are more productive at home or in the office.
The Case for Work-From-Home (WFH)
Remote work offers many advantages, particularly for small and midsize businesses looking to streamline operations and reduce costs.
1. Reduced Overhead Costs
With fewer employees in the office, companies can save on office space, utilities and other expenses. Global Workplace Analytics estimates that businesses can save up to $11,000 per year for each remote worker. “Primary savings are the result of increased productivity, lower real estate costs, reduced absenteeism and turnover, and better disaster preparedness,” GWA says. For companies with significant overhead, these savings can make a noticeable impact on the bottom line.
2. Increased Employee Satisfaction and Retention
Employees often appreciate the flexibility that comes with WFH, with surveys showing increased job satisfaction and reduced stress. Buffer’s 2023 State of Remote Work revealed that 98% of remote workers would recommend remote work to others; the same percentage would like to work remotely for the rest of their careers. This increase in employee satisfaction is crucial for retention, as happier employees are less likely to seek employment elsewhere.
3. Improved Work-Life Balance and Productivity
One of the most cited benefits of remote work is the improved work-life balance. Without long commutes, employees have more time for personal activities and family, which can translate to increased focus and productivity when they are working. In a 2023 study, Owl Labs found that 79% of managers feel their team is more productive when working remotely or in a hybrid role. This indicates that, when managed properly, WFH arrangements can lead to more efficient work and a boost to overall productivity.
The Drawbacks of Work-From-Home (WFH)
While remote work has clear benefits, it’s not without its challenges.
1. Communication and Collaboration Issues
While remote-work technology, such as Slack, Zoom and Microsoft Teams, has made communication easier, some companies still struggle with maintaining the same level of collaboration as they had in the office. For businesses where teamwork and creativity are vital, this can be a significant downside.
2. Management Challenges
While managers largely believe that their teams are more productive, managing remote employees can nonetheless be a challenge. This is doubly so for companies that lack strong communication and leadership structures. Supervisors might find it harder to track employee progress, ensure accountability and maintain company culture. Some executives have used these concerns to push for RTO policies.
The Case for Return-to-Office (RTO)
Despite the rise of remote work, many companies still see significant value in bringing employees back to the office.
1. Enhanced Collaboration and Innovation
One of the most significant arguments in favor of RTO is the idea that in-person interactions foster better collaboration and creativity. Steve Jobs, for example, famously designed the Apple headquarters to encourage chance encounters and collaboration among employees. A 2021 study published in Nature showed “firm-wide remote work caused the collaboration network of workers to become more static and siloed, with fewer bridges between disparate parts.”
2. Easier Team Management
Managers often find it easier to oversee teams and ensure projects are on track when employees are in the same physical space. Face-to-face meetings can be more effective for problem-solving and quick decision-making. That’s one of the most important factors educating executives’ push for a move from full WFH to at least hybrid if not total RTO policies.
3. Cultural Reinforcement
Company culture can be difficult to maintain when employees are dispersed across different locations. Being in the office helps reinforce a sense of belonging and shared purpose. Pew Research Center data published in 2023 showed that “53% of those who work from home at least some of the time say working from home hurts their ability to feel connected with co-workers, while 37% say it neither helps nor hurts. Only 10% say it helps them feel connected.” For businesses focused on building strong, cohesive teams, this is a critical factor.
The Drawbacks of Return-to-Office (RTO)
However, there are some significant downsides to a full RTO approach.
1. Higher Overhead Costs
A return to the office means a return to higher rent, utilities, maintenance and other expenses involved with running out of a physical space. This can eat into profit margins, especially for small and midsize businesses. And these costs might be hard to justify — especially if employees have demonstrated that they can be equally productive working from home.
2. Employee Pushback
Many employees have grown accustomed to the flexibility of remote work and are reluctant to return to the office full-time. A survey by Future Forum found that 95% of employees would like to have a flexible working schedule, while 78% said they wanted location flexibility. Forcing a full RTO could result in employee dissatisfaction, reduced retention and higher turnover rates. In fact, some companies have seen a rise in resignations after implementing strict RTO policies.
3. Potential Productivity Declines
Though some studies show that in-person collaboration enhances creativity, other research suggests that employees might actually be less productive when they return to the office. In the aforementioned Owl Labs study, 91% of remote workers who responded said they were as productive or more productive working from home than in the office. Employees returning to the office may face distractions, longer commutes and reduced flexibility, all of which can lead to a decline in productivity.
WFH or RTO: What’s Right for Your Business?
Deciding among WFH, RTO or a hybrid model ultimately depends on your company’s specific needs, culture and personnel. What’s most important is to remain flexible and responsive to the changing needs of your workforce. In the long term, the businesses that succeed will be those that figure out how to best achieve both worker productivity and happiness, ensuring that both employees and the bottom line thrive.
Are you considering a change to your workplace policy and want to know how it might affect your organization? McManamon & Co. offers a number of business services to small and midsize firms, including consulting services that fortify our clients’ businesses and keep them operating on the highest level.
Want to learn more? Give us a call at 440.892.8900 or contact us online.
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