Working from home: remote control

Many employees will be happy to leave behind noisy open-plan offices and lengthy commutes. Photo / 123RF

Lex COMMENT:

The forced experiment of decentralised work is starting to look more permanent. After two months of lockdown, Shopify, Twitter, Square and Facebook are telling their workers that some need never come into the office again. Where tech leads other industries will follow.

Facebook's plan for "aggressively opening up remote hiring" will enlarge its potential talent pool and cut costs. Employees like working from home. A study by Stanford University in 2017 found the average worker was willing to accept 8 per cent less pay for the option.

If workers move away from expensive cities, staff costs will fall further. According to often-quoted research by Joe Hadzima, senior lecturer at the MIT Sloan School of Management, an employee typically costs 1.25 to 1.4 times their salary once employment taxes and benefits are factored in.

The average will drop if employees move to states with lower workers' compensation and state taxes. Localised pay policies will cut costs still further. Facebook's US$250,000 ($407,773) median employee salary is linked to the high cost of living in the Bay Area, where a one-bedroom flat costs US$4,000 a month to rent — four times the national average. If more jobs go offshore, wages will be pushed down further still.

Large, mature businesses even more driven by cost savings than fast-growing tech companies will find the promise of such cuts alluring. Many employees will also be happy to leave behind noisy open-plan offices, lengthy commutes and expensive property prices.

So why has it not happened already? Most US employers offer some form of remote work yet it remains the exception. According to US Census Bureau data, just 5 per cent of US workers work from home full time.

The hold-up appears to come from middle-ranking executives — the group that has benefited most from the existing structure of the company they work for.

Executives may relish the idea of working in their shorts but they will be loath to give up the opportunity to network in person with their boss.

- Lex is a premium daily commentary service from the Financial Times.

© Financial Times