The real cost of returning to the office

What would you say to the opportunity to quickly and easily save up to $11,000 (£8,200+) per employee every year? That would have a pretty significant impact on your bottom line, right? Well, the good news is you are probably already doing this: US-based research shows that a typical employer saves this amount for every person in their organisation that works remotely for half of the time. On the flip side, employees stand to spend an additional €100 (£83) per week on travel, clothing and food if they return to the office full-time.


For various valid reasons, the return-to-office (RTO) decision is something that, for many companies, keeps getting kicked down the road. Most recently any plans to start the new year back at the office were scuppered by the Omicron variant of Covid-19, with March as the next planned deadline. Health and safety aside, it is a complex decision to make and needs to balance professional and personal considerations that differ from employee to employee and business to business.


For instance, there is overwhelming support for remote working from people who enjoy the time they gain from skipping their commute, and their increased standard of living thanks to an improved work-life balance and time to spend with friends and family and on leisure activities. On the other hand, remote working doesn’t suit everyone. Some roles require a physical presence, or the individual might not thrive in isolation and need the social aspect of an office space to perform well. Practically, not everyone has access to or can afford an effective remote working environment, with a comfortable, private and secure place to work and stable broadband access. When it comes to the latter, full remote working tends to disproportionately negatively impact junior staff members and lower earners.


There certainly is no one-size-fits-all answer, and it stands to reason that unless there has been an overwhelming reason to return to the office, many companies are still weighing their options after almost three years in limbo. Right now, that means there is an opportunity to consider what the outcome of this decision means from a forecasting, planning and budgeting point of view, and to weigh in on the decision with hard facts to cut through some of the received wisdom and cognitive entrenchment that might be clouding the debate.


Considering that your people and your rent are your largest fixed expenses every year, let’s start there.


Your people

If your organisation is doubling down on a strict RTO policy, you are going to need to plan for additional recruitment fees and training, as well as allowing for dips in productivity as you replace the people who inevitably resign. What’s more, these leavers are likely to be your top-performers who now have the choice to work with remote-work orientated companies anywhere in the world.


This also means that when you start hiring their replacements, you’ll be up against a global marketplace, not just local businesses. Top talent has a choice of who to work for and the potential for generous salaries at companies that will allow them to continue working remotely. You will need to pay a premium to convince the top performers that live locally to join you in your office.


On the other hand, if your organisation has included a remote work option, you could save on salaries while still hiring top talent. If you’re based in a location that typically pays a premium, you could hire people from anywhere in the world, pay them more than what they would earn locally, but less than what you'd have to pay at home.


Your space

Obviously, your RTO decision will have a significant impact on your office space requirements. Whether you choose to be remote-first, or select a flavour of hybrid working, your office space and other property and facility costs will be impacted. It’s unlikely you will need the same amount of office space and its configuration will need to change. Managers’ offices and individual desks might give way to hot desks, break-out rooms, and well-equipped video conferencing spaces.


And not to be under-estimated is how you encourage people to return, either full-time or on a hybrid basis. At the minimum, you'll need decent connectivity, an attractive and comfortable space with decent facilities, good coffee and whatever else it is that is important to your people. For instance, during the South African summer, an air-conditioned office is a huge drawcard. And finally, as it seems likely that we will be living with Covid-19 for some time yet, sanitation and personal protection are going to remain important.


Do bear in mind though, that it will be well-worth reinvesting some of these savings in bringing people together in real life if you choose a hybrid or fully remote route. Research shows that virtual happy hours and all-hands meetings are some of the most challenging to do remotely, so this could be well worth the investment.


How your company tackles RTO is going to be one of the most existential decisions you collectively make and implement. While each company is different, it does seem that a properly implemented hybrid model might be the most appropriate for our next normal. Yes, this takes careful planning and a significant mindset shift – especially in traditional businesses – but the advantages are there. The good news is that with some forethought and work, this could be extremely beneficial to your bottom line. And to your people.


As published in AccountingWeb - March 2022