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THE ECONOMIC PERSPECTIVE OF REMOTE WORKING PLACES

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THE ECONOMIC PERSPECTIVE OF REMOTE WORKING

Associate Professor VUZF

Abstract

The labor market dramatically changed during the past years. More and more companies became
global, the teams are working worldwide and due to the technical abilities of the environment there is no
problem to work all around the globe. 6.1 million individuals in the USA can be categorized as remote
workers, self-employed, freelancers or employed for organizations on a full-time or part-time basis
(Feldman, 2014). The report of U.S Bureau of Labor Statistics shows that more than 26 million Americans
work remotely which is about 16 % of labor power at the market (Greenbaum, 2019). The total increase of
employees who are operating remotely between 2006-215 increases with 115 %.

Key words: remote, working places, innovations, satisfaction, benefits,

Introduction

Nowadays it’s not important at all where you are physically located once you are connected to your
network. The economic downturn during the last years contributes to more people becoming self-employed
or preferring flexible working hours and work-life balance regime. Flexible workplace arrangements can
be in terms of when one works, or how much one works (including time off after childbirth or other life
events). They include a variety of arrangements such as job sharing, phased retirement of older workers,
and telecommuting, that allow workers to continue making productive contributions to the workforce while
also attending to family and other responsibilities (Cornell University, 2010). Telecommuting arrangements
can vary greatly for different workers. They can be fully or partially remote, they could work from home,
using co-working space or other location and be geographically distant from the organization or clients they
serve.

Due to the report of work-life balance and the economics of workplace flexibility (Cornell
University, 2010) there are several trends the society could observe in the US market. For example, almost
one fifth of the employed people are caregivers who provided cares to a person over 50. In the same time,
half of the employers’ report that periodically they need to change the company starting and quitting hours.

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In the same time, many employees complain that they do not have the choice to have flexible working hours
based on their life routine.

In the same time, less skilled employees have less flexibility to choose their working hours or the
ability to work from home. For technology companies facing a talent crunch, hiring remotely seems a
particularly good idea. However, there are some companies that prefer to keep their staff on site to enhance
collaboration and creativity via direct interactions and face-to-face conversations.

There are variety of researches about the advantages and disadvantages of the remote working
places. Some of the studies even claim that remote work will be the future of all working places together
with automatization of operations, process and artificial intelligence. Owl Labs of State remote work (2017)
claims that employees prefer to work remotely to avoid daily commutes, reduces distraction and satisfy
family care responsibilities. In a study, based on the feedback of 273 teleworkers from sales, marketing,
accounting, engineering and other departments at one organization, Gajendran and Golden found that
employees whose jobs were highly complex but did not require significant collaboration or social support
performed better and have excellent results when telecommuting than when working in the company’s
office (Journal of Business and Psychology, 2019). Golden (2019) highlights that employees whose jobs
require problem-solving or significant concentration prefer focused time in a separate and private place.
Most of the cases, in the shared office they face a lot of interruptions and distractions.

Before defining some of the major economic advantages of the remote working, we would like to
highlight the difference between working hours policies. There are several different ways to define work
flexibility:

Flexibility in the scheduling of hours

One of the most important sources of flexibility is the ability of workers to have some control over
when to use their working hours. This could include flexibility in when an employee arrives at or leaves
work, the scheduling of breaks and overtime, and compressed workweeks. The data from the National Study
of Employers suggest that 81 percent of employers allowed at least some workers to periodically change
their starting and quitting times, within some range of hours in 2013, a slight increase from 2008 and a
larger increase from 2005. Data from the American Time Use Survey show that in 2011, only 49 percent
of all workers, and 47 percent of full-time workers reported they had flexible work hours that allowed them
to vary or make changes in the time they began and ended work. Usually, this type of scheduling is popular
when the company provides regulated 8-9 hours working day but allows employees to change the period
of using the necessary hours.

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Flexibility in the working place

During the years, most of the jobs required physical presence at work. Some jobs as teachers,
lecturers, clerks and administrative jobs cannot do their work obligations if their work remote. Managers,
salespeople and executive positions need to be present and have face-to-face contact. Nowadays, we should
say that due to rapid technological growth more and more companies allow to their employees to work from
home. More companies adopted policies and practices that allow the employees to choose their preferable
place of work. Furthermore, the global companies are operating even in global teams which enhance only
online communication between them.

Flexibility of number of hours of work

Another way to provide flexibility at work is in the number of working hours. In most of the
European countries and US several options are offered to the employees. Flexibility of this sort can be
further divided into practices that reduce the number of hours worked in each week and those that allow
employees to take leaves of absence (paid or unpaid). This is also very important type of scheduling for
employees like mothers or people that are not able to work full time.

We will try to define some of the most discussed advantages both for the organization and the
employees:

- Cheaper resources – the organizations receive the same talent pool and productivity without
the necessity to pay for extra benefits like fancy office, additional benefits and facilities. Ware
and Grantham believes that enabling employees to work remotely from home can reduce the
company expenses with about 40-50 %. Working with contractors help to avoid the stress of
fighting between the companies to retain their talents. In the same time, having people in-house
is usually difficult for the companies among with developing programs to retain them.

- Ensure diversity - Distributed work requires more discipline on behalf of the company and
the employee in order to ensure they are getting all the benefits, but it is worth it when the
company consider the diversity they reap. Differing opinions, viewpoints and work styles
combine to make a better work environment and a group of employees who are more creative
at solving problems and better at understanding their customers ‘needs (Abraham, 2019).

- Maintaining work-life balance – employees nowadays looking for remote work in order to
coordinate all the social roles they should cover. The flexibility to work from home saves a lot
of hours in driving and offering better work-life balance. In the same time, avoiding a commute
can lead to big savings of both time and money. According to a study, people who work from

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home in Los Angeles, save around $510 annually compared to their counterparts who drive to
work. Even those who work remotely half the time save around $255 per year. The average
savings nationally rounds out to $222 to $444 for those working from home between 50% and
100% of the time (Salmon, 2018). These statistics highlight the not only the financial impact
of remote work, but also the ecological impact of such measures.

- Reduces company headcount – currently there are plenty of companies offering only remote
work to their employees. We should say that this is easier in high-tech and software companies
where it’s very convenient and common practice to work remotely. The increased use of remote
work not only creates directly measurable environmental benefits, but its benefits are in many
cases extremely far reaching and often only noticed after large scale remote work programs
have been implemented. Fewer people in the workplace means less office space, which reduce
the cost of the lease along with heating and cooling rates, lighting, and other expenditures.
Thanks to remote work capabilities, some companies have now replaced their office rental with
a virtual office agreement; this enables them to keep a commercial mailing address with access
to meeting rooms and day office rental, without the long-term commitment or cost of a full-
time office.

- The employees are more productive and more focused– one of the main reasons why many
companies switched to remote work is the belief that the employees will be more productive.
There are plenty of researchers which show the advantages of working remotely and even some
of them belief that work from home makes people even more focused and productive. Some
studies define the direct benefits of working remotely such as improving productivity of
employees. With productivity loss costing employers an estimated million annually and two
thirds of employers reporting higher productivity of remote employees, remote work provides
a huge win for the economy (and environment) at large. From environmental point of view if
the work is done faster than the people will spend less time on front of computer. The next step
will be automatization of the work;

- Remote work improves morale and happiness - Productivity is rooted in personal wellbeing.
A happier, fulfilled person is more likely to put in additional effort for your company — but
fulfillment isn’t always related to pay or promotion (Dimitropoulou, 2019). Giving employees
the opportunity to work flexibly is equal to better work-life balance, more time with their
families, and less commuting, which saves the employees time and money;

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- It helps talent acquisition and retention - Millennials, Generation Z value flexibility in the
workplace. In the same time, more of the previous generations struggle to handle all the social
roles they need to face. Companies that embrace remote working are in touch with their
employees’ needs and requirements and are more likely to attract skilled workers from further
field, given the reduction in leaving. Currently, more and more companies try to find the
working and useful model for their employees in order to avoid dissatisfaction and losing of
work motivation;

- Flexible working hours reduces attrition. In addition to employee retention, flexible work is
known to help reduce attrition in the workforce. As we already mentioned different life
changes, social roles and life events as marriage, having kids require different life routine. The
ability to have flexible working hours allow employees to reduce their level of stress trying to
fit and find time for all the tasks they have during the day.

- More autonomous employees - Giving the employees the ability to work from home allows
them to operate in a way that suits them (Hunkeler, 2018). People can be very particular about
how and when they like to work. In an office environment, all employees must adapt to the
same working hours and daily routine. In the same time at home, they have much more control.
Some employees will subscribe to the tidy office, or need to create a serene, spotless
environment to be able to perform at their best. Other employees, probably those with a more
creative mind, might do their best work on the sofa or even late at night. In such cases, the
company needs to put certain rules in place, but within those guidelines, the team will have the
freedom to create an environment and a schedule that allows them to perform at their best;

- Use all the advantages of technology - working from home would be impossible without the
technologies we can use today. Technology is the key to enhance mobility based on Wi-Fi
connections, smartphones, and cloud computing, instant messaging and project management
software. The temptation might be to think that a remote workforce is a disparate workforce,
but given these invaluable tools, these days that’s simply not the case (Hunkeler, 2018);

- Keeping older generations at the labor market – the overall life expectancy increased
worldwide which lead to increased cost of living. Based on that, many people over 65-67 years
decide to delay retirement and prefer to work and have a fresh mind with long life learning.
Based on some researches more than 70 % of the Americans want work flexibility (Loubier,
2017);

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- Better health and less polluted environment – the average employee in U.K spends about
60-80 minutes getting and coming back from work. The telecommunication tools are great way
for a company to become greener and to improve the employees’ wellbeing. In a 2014 study
by PGi, a leading provider of software services, it found that 80% of remote workers reported
higher morale, 82% said it helped lower their stress levels, and 69% reported lower absenteeism
(Loubier, 2017). Some studies define the effect of remote capable employees working from
home, and their results were particularly notable when it came to fossil fuel utilization.
Working remotely reduced the consumption of gas by more than $20 million per year globally,
but it also decreased the greenhouse emissions by 54 million tons annually and helped to save
640 million barrels a year of oil (Ripton, 2016). The increased use of remote work not only
creates directly measurable environmental benefits, but its benefits are in many cases extremely
far reaching and often only noticed after large scale remote work programs have been
implemented.

Despite the largely positive findings on the effects of telecommuting, just 7% of American
companies offer the option to most or all of their employees, according to recent BLS data. Some early
adopters—companies like Best Buy, IBM and Yahoo—are even reversing policies that once allowed
employees to work remotely, citing leadership changes and a growing need for creative collaboration. In
the same time, a handful of organizations are effectively using research insights to build evidence-based
remote work programs. Health-care company Aetna, for instance, has a decade-old remote work program
that screens, trains and supports teleworkers—a group that now makes up around half of the company’s
workforce. The company has worked closely with psychologists at Cornell University to proactively
address issues such as employee isolation and has seen rewards including reduced real estate costs and
better talent retention.

In the same time, we should mention that there are still some prejudices or disadvantages about
remote work. Some researchers mentioned that the lack of community and differences in the culture is
one of the main topics. Remote work leads to lost face-to-face interaction and usually it is very difficult to
substitute this by some activities. Video calls are just a way to improve it but it cannot replace the overall
communication during the work day. Cross-cultural differences are another topic which is hard to cover if
the company has remote working employees. Not only the lack of cross-cultural experience but in the same
time the cultural barriers can be faced when you have remote workers all over the globe.

Some tips how to avoid this is related to some certain steps. Having company gathering at least or
even twice per year is useful way to getting know people better. Providing a basic knowledge and company
fundamentals is also essential in order to avoid any misunderstanding and miscommunication.

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The lack of communication is another trap in remote work. Every question and document should
be approved online which is much easier when you are surrounded by your colleagues and can ask simple
questions. Remote workers should balance variety of different and even overwhelming communication
streams. There are plenty of communication channels that should be checked. Good practices how to avoid
all that lead to having regular virtual meetings even with co-located workers. Implementing different project
management tools and avoiding the e-mail spam as much as possible is another useful way.

The lack of management in remote working teams can turn into low reliability and retention of
the employees. Clear documentation processes and using content checking software could help in avoiding
these trends. Keeping the company standards about performance management policy is also very difficult.
Providing a time-tracking and performance tool for remote workers can help management to observe and
measure their data. Companies should build a culture of transparency by having clear career paths and
working career development models.

Losing the interaction is another effect of the remote work. When the employees work from home,
they don't have the benefits of employee interactions. People that work from home enjoy working in remote
way. Don't work from home and don’t bring the home at work is just one of the rules that everybody should
follow (Forbes, 2017).

Seriously endanger efficiency, synergy and collaboration is another side effect of remote
working. When the idea of remoted team is considered, the biggest question arise is how employees will
be able to get the work done. After certain period of usage of remote offices management ensure that people
can complete the work. In the same time, it's hard to overstate the importance of collaboration and synergy
within a team. These elements are the foundation of an employee's enthusiasm, passion, loyalty and sense
of value to the company, and distributed staffs struggle with achieving these (WMtek, 2019).

Open Potential Security Issues. Security is often overlooked when a business decides to allow
employees to work remotely, leaving the company vulnerable to cybercriminals. Although there are cloud
options to make remote work easier, with today’s internet of threats, companies cannot afford to overlook
protecting their confidential and proprietary information (Cohen, 2019). Loss of productivity and or even
more loss of any kind of data could be a serious damage for the company. It could be case of data leaks or
even employees stealing data. This could seriously affect the company not only money wise but could be
crucial for maintain positive company reputation (Go, 2018).

Along with social isolation, keeping of work-family boundaries is a significant challenge for remote
employees. Employees operating from a home office lack the physical and psychological separation
between these two domains that exists in a traditional office setting, highlight Golden. For example, family

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and social obligations can easily affect working hours. But more often, studies show, teleworkers’
professional obligations tend to extend beyond the traditional workday, interrupting family time and
preventing employees from being truly disconnected.

An analysis showed that the blurring of such boundaries causes remote workers to associate their
homes with their work roles as work obligations repeatedly intrude upon family time (Eddleston, K.A., &
Mulki, J., Group & Organization Management, Vol. 42, No. 3, 2017). Remote workers also appear to work
more. A Gallup survey, run in 2013, found that employees log an extra four hours per week on average
compared with their colleagues in the office. Employers may see these outcomes as positive, translating
into higher productivity and better workplace citizenship. Gajendran and his colleagues emphasize that
teleworkers often go above and beyond—for example, by responding to emails outside of work hours—to
demonstrate their organizational commitment (Personnel Psychology, Vol. 62, No. 2, 2015). But
psychologists say that without setting boundaries, employees can experience exhaustion and burnout and
that such overwork should be discouraged by managers and organizations.

Tipping (2018) describes the main disadvantages in remote work:

- Lack of routine;

- No work social life or lack of team building;

- Distractions;

- Less team interaction and a loss of a feeling of community and shared values;

- Communication challenges;

- New management style will need to be implemented;

- Impact on company culture;

- Larger costs around technology and IT support;

- Trust level needed.

Christian (2019) defines several disadvantages of remote working:

- The challenge of having everybody informed and in the loop - Even with all modern
advancements in technology regarding communications and collaboration (conferencing apps,
emails, SMS, cloud-sharing services, etc.) nothing can compare to being physically present

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when thrashing out ideas. Sure, fully remote teams can meet daily and do their best to keep
each other in the loop, but what about when the teams have traditional office workers, as well
as remote workers. The people in the office are having daily chats at the water cooler, and
thrashing out ideas on whiteboards, how are the remote workers kept in the loop? It’s possible,
but it is a hurdle that must be overcome.

- Remote workers can find it harder to feel part of the team - A lack of team cohesion and
group culture can come as a result of having teams full of remote workers. Remote meetings
aren’t the same as in-person discussions. The usual difficulties faced are that it may take longer
to establish trust and develop smooth working relationships within a remote team than with an
in-person team. There is also the risk that remote employees will be focused only on their part
of the work, with the knock-on effect that there is less focus on the bigger picture. This could
also affect the impact of the overall project, lead to misunderstanding of the importance of the
overall team. It takes a lot of work to make sure everyone is up to date with each other’s
progress, and this is something that can be a drain on productivity.

- Keeping motivated and focused can be tough – Motivation and especially self-motivation is
a main topic when it comes to remote working. Some people simply aren’t applicable to remote
work. These types don’t have the discipline or temperament to thrive and be self-motivated in
a solitary environment. Even if they can stay motivated to get their tasks done, there is the
tricky business of keeping themselves focused to contend with. Parents might find themselves
overwhelmed looking after children, while non-parents can easily find themselves lost in their
record collection picking some tracks out to put on to “help them stay in the zone”. If the
employees are not careful, these distractions can multiply when working remotely, it takes a
lot of willpower to keep their defenses up against them. In the same time, they can try to
increase their productivity and motivation through a variety of productivity apps or even
productivity blogs.

- The risk of burnout - While remote workers can often be more productive than their in-office
counterparts, one of the biggest problems remote employees face is burnout – it is a very serious
risk to their health. Sure, working from home has been shown to bring an increase in
productivity, but it also means that they can find it difficult to disconnect from their work.
Remote workers often find themselves just doing an extra mile before they go to bed, just
because they can. As a result, quality downtime away from their workstation becomes rarer
and rarer, and mental health certainly suffers as a result. Office employees might stay late, but
once they go home, they’re home, and a switch off.

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Like any business process, certain rules and regulations must be put in place in order to help the
companies remote work policy run smoothly. Setting clear expectations is e one of them. When the teams
are not working in proximity the manager must tell them what the expectations and outcomes of their work
are. For example, do the company expects remote employees to have 9-hours day shift? Can they start or
finish earlier? What’s the protocol for lunch breaks? How they should stay in contact during the day?
Whatever the company expect of them, they should be fully aware, and those regulations should be even
part of their employment contracts.

Regular meetings and discussions are another crucial part of remote work policy. It can be
isolating and even frustrating to work at home. Keeping up regular communication but don’t rely too much
on email is important part of team-members ’communication process. When inboxes become swamped this
usually led to stress and missed messages. Scheduling video calls and talking over the phone support
discussion of projects or tasks in more details. For quick day-to-day queries, there are plenty of instant
messaging apps which enhance communication. Virtual and personal meetings are a way to retain team
working and ensure consistent company values and goals are met. As we already mentioned, one of the
critical discussions of remote working are based on the lack of communication and building strong
relationships.

Documentation of regular processes. Documentation becomes a whole lot more necessary when
there’s distance between the teams. Remote workers can’t simply turn up at someone’s desk to ask a
question, so it’s worth documenting certain tasks or procedures to provide guidance along the way. In the
same time, rather than constantly pinging the remote teams to ask for project updates, they can use an online
centralized project management tools to check in on certain tasks. It assigns tasks, sets deadlines, and sends
timely reminders too, which means less person-to-person chasing. Rather than sending amended documents
back-and-forth, shared online documents can be stored securely in the cloud and are a boon for instant
feedback.

Find and hire the right people. Organized, focused, reliable motivated people with a strong work
ethic are needed for remote working. Remote work option is not an option for each company and each
process of work. The management needs to ensure that they have the right people with the right attitude
and mentality. Applicable people allow the company to be more effective and productive. The companies
need to make the investment in Technology and IT infrastructure an integral part of the company culture.

Management style is the key. Remote working can be more challenging to manage, and make
sure everyone is working towards the same goal, and that managers have the reassurance that their team are
putting in the hours and delivering what they need. This is where a more forward-thinking management

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style will come into play. This set up just won’t work for someone who micromanages their employees so
there must be trust first and foremost. KPI’s and regular performance reviews can play an important part in
monitoring performance. Leading by example is a must, all managers are easily contactable and transparent
in the work they are doing from home.

Remote way of working will take time for each company. Everyone must understand that there will
be a certain time frame where everyone adjusts to the new ways of working and addresses any issues. Strict
guidelines on when meeting must take place and when employees must be online will give remote workers
a framework and structure to ensure productivity. In the same time, physical presence is still the key – the
management needs to make sure the teams are brought together regularly. Lack of any kind of company
gathering can lead to less communication and lack of personal relations at work.

There are plenty of positives and negatives of working from home. It is up to the company to decide
which ones are more important to the economic growth and company culture and have a bigger impact on
employees’ wellbeing and happiness. If the company wants to implement remote work, they should have
become basics characteristics. The company needs to hire people with a lot of self-discipline and self-
motivation attitude which is usually hard to evaluate in the recruitment process. Kozlowski (2019) claims
that researchers know how to influence and motivate people at work. In the same time, he truly believes
that the next step should be building more effective virtual teams.

The management and leadership team should be well prepared to lead remote working teams. They
should be very well organized and structured. The constant supervision is a must. The good thing with
remote work is that the companies can easily start it part-time. There is nothing to lose, only experience to
gain. We truly believe that the ordinary working schedule needs to be changed in order to try new solutions
that can boost and optimize the company’s growth and development.

References:

Cornell University (2010). Work-Life Balance and the Economics of Workplace Flexibility, 25 May 2019,
Available here: <
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Christian (2019). The pros and cons of remote work, 20 June 2019, Available here: <
https://krisp.ai/blog/remote-work-pros-cons/>

Dimitropoulou, A (2019). Top 5 Benefits Of Remote Working, CEOWorld.biz, 15 May 2019, Available
here: https://ceoworld.biz/2019/01/29/top-5-benefits-of-remote-working/

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Feldamn, M (2014). Why Remote Work Is Booming?, 13 June 2019, Source: www.techco.com Available
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Forbes Technology Council (2017). 13 Pros and Cons of Having a Distributed Workforce, 20 May 2019,
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Hunkeler, I (2018). 8 Benefits of Allowing Employees to Work Remotely, 25 June 2019, Available here:
<https://recruitloop.com/blog/8-benefits-allowing-employees-work-remotely/>

Loubier, A (2017). Benefits of Telecommuting for the Future of Work, Source: www.forbes.com, 30 June
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Mak, S., & Kozlowski, S.W.J., In Landers, R.N. (Ed.) (2019). Virtual Teams: Conceptualization,
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Employee Behavior,” Cambridge University Press

Ripton, JT (2016). The Positive Environmental Impacts of Remote Work, 15 May 2019, Source:
www.techco.com, Available here: https://tech.co/news/environmental-impact-remote-work-2016-11,

Salmon, M (2018). Working from home could save you even more money than you think, 10 June 2019
Source: https://www.weforum.org/agenda/2018/04/working-from-home-can-save-you-thousands-of-
dollars-every-year,

Tipping, N (2018). The pros and cons of remote working, 15 June 2019, Available here:
https://www.successappointments.co.uk/the-pros-and-cons-of-remote-working/

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