Flex Work from an Accounting and Finance Perspective
By Eric Johnson
As the pandemic further pushes the work environment into remote and off-site arrangements, we are beginning to see conversations regarding the future of work, and what remote working would encompass over the course of a longer period of time. Many organizations already have telecommuting options to reduce employees’ exposure to long commute times, approaching this type of arrangement as a perk of employment.
However, in many cases these arrangements are limited in both scope in time. It is now beginning to appear that discussions are starting to take root in the fact that working remotely can be an advantage to the bottom line on a long-term basis. And indeed, as companies analyze how this will affect their bottom line, several elements should be considered.
1. The ability of fixed assets to be strategically reduced or redeployed…
If incorporated into strategic planning and financial planning efforts, organizations that are committed to remote work as a strategic advantage can reduce their building and maintenance spend buy as much as they are willing to commit to the remote work approach. For organizations that are service oriented, and do not have specific on-site requirements for job responsibilities that necessitate a presence, physical buildings can possibly be eliminated. If elimination is not an option, then excess physical spaces can be sub-leased or contracted for rent-by-use. All of this points to the revenue potential of existing space and the use of it as another value-added tool rather than as a cost vector.
2. …along with the reduction of business expenses and other attributes of the physical space…
Along with the benefits from reduced fixed expenses can come benefits from variable expenses of on- site maintenance, insurance, utilities, cafeteria services and other in-house services, etc. Additionally, with these expense reductions also comes the reduced complexity and staffing associated with these activities that can be redeployed to other business value-added activities.
3. …with the added benefit of increased attractiveness to talent…
In our current state, remote work is more of a necessity than an option. However once a vaccine is well under distribution to the general public, and the threat of the coronavirus is vastly diminished, leadership will be confronted with a new component of the new normal: Do I continue the current remote work approach, or do we go back to the traditional norm of office work. A benefit to remote work that sometimes goes overlooked is the attractiveness to both current employees and to potential candidates. When weighing the decision to join an organization, candidates often consider both the job activities and the work/life balance aspect. Remote work makes a company significantly more attractive to candidates with long commute times or home obligations. For the business, this can mean the upper hand in attracting high potential candidates that might otherwise choose other organizations based on flexibility.
4. …can be accomplished with a few investments depending on the desire and/or needs of the organization.
Now that we've talked about the benefits, what are some of the investments required to make remote work sustainable and successful? The first is IT infrastructure, and the organization will need to develop a strategic and operational plan to ensure that employees have the appropriate tools to conduct work remotely. IT will be less inclined to make physical visits in the manner that they can possibly conduct in-house, and as such remote assistance tools will need to be a significant part of their toolkit in addition to hardware mail-in support. Additionally, security investments will be necessary to account for the distributed electronic activities across the network. Lastly migration to a cloud provider may be necessary to scale existing and future work in light of the potential reduction in physical presence and servers.
Without a doubt, the benefits from remote work can significantly improve the bottom line if strategically planned and executed. The reduction in costs and the improvement in employee satisfaction may well offset the level of investment required to keep the IT infrastructure secure and employee operations sustainable in achieving customer satisfaction.