3×3: What’s Driving Your Organization’s Remote Work Decisions?

The recent decision by Yahoo CEO Marissa Mayer to end the company’s remote work policies provoked a storm of reactions from all sides. Working parents are calling it unfair, especially when Yahoo doesn’t provide on-site childcare. On the flip side, some office workers think it’s a move toward fairness, not away from it. And other companies see it as a sign to reevaluate their own policies.

The primary reason Mayer gave for ending these policies was a perceived lack of collaboration and communication due to remote working. Mayer also argued that quality is often sacrificed when employees work from home. Apparently, something wasn’t working. However, to accurately assess the success or failure of Yahoo’s program, one needs to understand why the company adopted remote work in the first place. What were the objectives of the program and to what extent were those objectives being met?

My research and consulting experience suggests that companies use remote work to help drive two broad categories of objectives: strategic business objectives and human capital objectives.

Business Drivers

These are ways in which remote work can directly contribute to your organization’s performance and bottom line:

Cost Reduction — One of the primary reasons many organizations adopt remote work practices, at least initially, is to reduce cost. For example, remote work could allow you to close sites, shrink your real estate footprint, or save travel costs by using technology for employee collaboration, rather than face-to-face meetings. The desire to cut costs often spurs remote work initiatives, but such savings are elusive. Many companies I’ve worked with have actually found that unless they close sites, remote work can increase costs due to spending more on expanding the scope of technology systems.

Expand Globally — Beyond cost reduction, companies can use remote work to expand globally. Remote workers enable you to move into new geographies and serve new customers, at relatively low cost and risk. And having a global footprint of remote workers allows your business to follow the sun — with individual contributors and teams handing off to each other, around the clock.

Employee Productivity — Finally, remote work can enhance employee productivity. In fact, some organizations explicitly require higher levels of performance from employees who work outside the office. But, many companies I’ve worked with have found that remote work policies provide minimal productivity gains. Generally, companies are satisfied if their remote workers are as productive as their office-based counterparts.

Human Capital Drivers

These are ways that remote work can impact your organization’s human capital outcomes:

Applicant Attraction/Accessibility — Increasingly, companies use remote work as a critical component of differentiating their employer brand. Offering remote work can also attract talent that, in the past, was unavailable to your organization. For example, one company I worked with uses remote work to attract nurse practitioners located in rural areas, a very difficult group to access. By offering remote work, the company is able to recruit employees that, in general, it’s previously been unable to access because they don’t live near any of its locations.

Work/Life Balance — Remote work also can help employees better balance their work-life demands; better balance often helps promote employee health and wellness. One company I’ve worked with surveyed their remote workers and found that these employees had lower stress than their employees overall.

Engagement/Retention — Finally, companies often find their remote workers to be more engaged than office workers. The autonomy and flexibility remote work provides seems to play a significant role in enhancing employee satisfaction and retention.

Insights and a few important caveats

For organizations contemplating remote work, understanding these drivers — and their contingencies — is critical to success. It’s true that advances in technology are enabling remote work to contribute to business and human capital outcomes. Employees can now access the same information and systems regardless of their location. And they can interact with each other, customers, and clients just as they would if they were co-located. It’s this capability that can allow remote workers to sustain, and sometimes even enhance, their performance.

But technology is just a tool. Remember that the business and human capital benefits of remote work aren’t guaranteed. You can’t simply implement remote work practices and expect to see enhanced outcomes. To realize these benefits, employees must believe that your organizational culture supports and values remote work. In particular, they need concrete assurances that they have the same status and career development opportunities as their office-based colleagues.

Finally, by understanding the drivers of remote work in your organization, you’ll be in a better position to evaluate the program holistically — identifying not only where it may be falling short of expectations, but also where it is adding significant value — and be better equipped to make decisions about the future of the program.