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Economic devastation is as real a fear to us today as the plague was to mediaeval Europe, and one specter of economic ruin we got used to in the last few decades was global outsourcing. Jobs going overseas. Customer services, back office functions, manufacturing: all jobs which form the backbone of middle and working class neighborhoods across the country. All gone. Shipped off to developing regions where you can hire five workers for every individual here in the West. This still happens, of course, but not to the extent where it is feared like the plague.
What we are seeing now is something of a revival of the idea that geography doesn’t matter, so long as skills can be supplied at the right price. Except not in manufacturing or customer service jobs. Well paying, flexible, highly skilled, knowledge economy based jobs, both in the form of telecommuting, or a freelancer working many hundred or thousands of miles from their employer or client, are becoming more commonplace.
We are witnessing the rise of the Globalized Workforce, or rather a workforce which isn’t anchored to any one location. The “office” in the traditional sense is gradually getting displaced. According to the American Community Survey, telecommuting has ‘risen 79 percent between 2005 and 2012 and now makes up 2.6 percent of the American work force, or 3.2 million workers.’ A trend which is only likely to continue as millennials (those born between between 1978 and 1994, also known as Gen-Y) exert more of an influence on workplace culture and policies.
The Rise of Remote Workers
With the average length of time people stay with the same employer being as low as 4.4 years, a more accepted level of employee flexibility is likely to come into practice.
Basecamp founders, Jason Fried & David Heinemeier Hansson have recently published Remote: Office Not Required, following on from the NYT bestseller, Rework, which has contributed to a more popular appreciation of remote workers as an important component of the workforce.
Remote work is shedding the pajama wearing, sitting on the sofa watching Netflix image. Basecamp is also one of the many tools, like Skype, PayPal and Google Hangouts, which help facilitate this revolution in working practices. Cloud computing, which according to Forrester will be a sector worth $241 billion by 2020 (currently at $41 billion) and smartphone adoption rates (Gartner estimates that there are 1 billion smartphones and more than 420 million iPhone’s in existence as of the end of 2013) are making it easier to work from anywhere.
The other stereotype still prevalent when it comes to remote workers is it is either done by twenty-somethings who don’t want to suit up and work in a real office with the grown ups, or mothers, who are working from home and raising children. Both images are far from the reality of telecommuting. The New York Times points out that the average remote worker is in fact ‘a 49-year-old college graduate — man or woman — who earns about $58,000 a year and belongs to a company with more than 100 employees’, According to the Census Bureau’s annual American Community Survey.
For the employee there are numerous advantages: flexibility, fits in with lifestyle choices, can be beneficial if raising a family, and the ability to pick how and where you work. Some people prefer Starbucks. Others stay at home, wherever that is, usually working from a dedicated office space within the home. For some the feeling of an office is helpful, like being based at a business incubator, co-working space, or a serviced office facility (Regus dominates this market).
Do Employers Benefit?
Nicholas Bloom, an economics professor at Stanford wanted to test whether remote working was as beneficial to the employer as it seems to be for the employee. Working with Ctrip, China’s largest travel agency he tested the benefits on 250 team members over a nine month period. Half worked from home, half stayed in the office.
Some of the benefits of working remotely were that Ctrip saved $2000 per-employee annually due to a reduction in the strain on office space. At the same time there was a 13 percent rise in productivity from the remote workers, with them working 9.5 percent longer during the test period. It also reduced employee turnover, since 50% less people left the company. Increased productivity could be a natural result of wanting to remain relevant and show work is getting done regardless of location, or it could be due to being away from all the noise and distractions of a busy office.
The downside, for the employees is that those working from home were passed over for promotion, despite the increase in productivity. It took twice as long for them to be promoted as their office based colleagues.
“It may be a case, ‘out of sight, out of mind,’ ” Professor Bloom said. “Or it might be that you’re not drinking in the bar with your boss. Or it could be you’re not managing your employees as well if you’re not around them.”
An Unlimited Pipeline of Global Talent & Skills
Overall however, both employers and employees gain when allowing people to work remotely or when using freelancers who are geographically independent. Finding the right skills, especially when sourcing skills which are scarce or in demand. Limiting your company’s talent pool to a specific metropolitan area, or hoping workers with key skills will always be willing to relocate isn’t always viable. Not for long term growth and the sustainability of the business. Being adaptable to the needs of employees, which means looking further afield for talent, or allowing workers to telecommute, will make your business stronger and pull a higher calibre of candidates your way.