What started out as a necessity has turned into a way of life for many: remote work. Over two years after the start of the Covid-19 pandemic and the subsequent shift to remote work, experts are starting to see some of the financial implications of moving work out of the traditional office setting.
While results are largely promising and several experts point to various ways remote work has helped businesses financially, the members of Forbes Finance Council have been observing both positive and negative financial trends among businesses newly engaged in remote work. Below, 14 of them share some key financial results they’ve observed for companies that have switched to remote work and why these insights should matter to every business leader.
1. Companies Are Paying Compliance Fines
While financial implications are usually positive, we’re actually seeing challenges caused by remote work—specifically, around monitoring communications for compliance purposes. With the move to remote work, compliance staff were basically left blind as to what is going on in their organizations. Those organizations that didn’t adapt fast enough are now receiving regulatory fines of $200 million and up. – Shiran Weitzman, Shield
2. Companies Are Spending Money To Improve Communication Applications
When an organization is considering remote work options, thought must be given to maximizing communication efforts. Before making the switch, measure the tradeoff. Yes, you are likely able to recognize cost savings in certain areas, but where do you need to spend to improve your communication applications to maintain efficiencies? – Kacey Butcher, Adaptation Financial
3. Industries That Require In-Person Training Are Struggling To Maintain Productivity
Remote work is not helpful or workable in a growing number of industries that require training younger employees to be experts in their fields. It’s hard to train new lawyers and accountants on how to do their jobs if they can’t work alongside someone and learn how it works. This lowers productivity and impedes the ability to replenish the workforce, which ultimately impacts profitability. – John Ward, Bridge Investment Group
4. Struggles With Customer Service Are Causing Some Companies To Lose Business
While some companies have made the transition seamlessly, others have failed miserably. We have moved our bank accounts and our P&C brokers. Both are big names in their respective industries. It feels like there is a lack of supervision. I have waited days for a return call for basic services. Companies that can operate remotely and still provide excellent service thrive during this new period. – Michael Seltzer, Vérité Group, LLC
5. Remote Work Culture Can Get Watered Down
Culture is defined as the values, ideas, attitudes and goals that characterize a firm. Firms work extremely hard at developing a great culture. If there is a large contingency of employees always working remotely, a firm’s culture can get watered down. This can have a ripple effect throughout the organization. – DeLynn Zell, Bridgeworth Wealth Management
6. There Are Hidden Costs In Maintaining A Strong Culture
A fully remote business requires a strong company culture to ensure a sense of purpose and shared passion for your employees. While the overhead costs might be lower with a remote team, it is vital to consider the hidden costs of maintaining a strong culture while working remotely and investing in technological changes and employees’ future prosperity, retraining and role in the community. – Peter Goldstein, Exchange Listing LLC
7. Managing A Multi-State Workforce Is Challenging
Remote work is not for every company or role, and oversight is important. The biggest impact is the inability, especially in small businesses, to cope with a multi-state workforce. They are not equipped to manage multi-state systems for payroll and benefits and are struggling with remote people management. Seek help on regulatory and personnel management and development matters. – David Kelley, Mailprotector
8. Expenditures On Rent Can Be Significantly Reduced
If work is consistently completed in a timely manner, remote work could provide a potential windfall in expense savings for a business owner. Moving to smaller offices brings down rent costs, as does allowing employees to work from remote locations. In addition, employees saving commute time will be happy to have the flexibility and will feel motivated to be sure their work is done on time, efficiently and accurately. – Christopher Drake, Drake Consulting Group, LLC
9. Companies With Large Office Spaces Are Considering Leasing Or Selling
We might have switched to a “hybrid office,” but in reality, we’re only using about 20% of our office space. That’s a huge financial responsibility for a space we aren’t using to its full capacity anymore. Now, we’re starting to ask ourselves if we should lease or sell our property. That’s a tough decision, but at the end of the day, we need to do what makes sense for the business. – Christopher Hurn, Fountainhead Commercial Capital
10. Remote Work Can Add Complex Tax Implications
A company can get a nasty surprise when its remote workers move to states the company wasn’t registered in. This creates new payroll and income tax exposures. Additionally, some states and cities are still trying to hold onto potential tax revenue, even if the employees no longer work or live there. The short-term result is more tax exposure, fines, paperwork and compliance. – Aaron Spool, Eventus Advisory Group, LLC
11. There’s A Higher Risk Of Costly Data Breaches
A data breach is one of the most significant financial risks that come with remote work. Remote offices still need to maintain data integrity and security, especially during periods of high employee turnover. Files are shared remotely and in different time zones. Confidentiality within a household can’t be verified or secured. Companies that want to shift to remote work must set up data integrity systems first. – Jared Weitz, United Capital Source Inc.
12. Businesses Are Investing More In Cybersecurity
Although business leaders generally expect to cut operating costs by implementing a remote work environment, doing so does require additional investment to enhance cybersecurity measures. Before switching to a remote or hybrid work environment, business leaders and advisors alike must ensure that they have the right tools in place to secure their network while keeping costs in line. – Mara Garcia, Phonexa Holdings, LLC
13. Companies Are Incurring New And Increased Tech Costs
There has been an increased investment in technology and process creation for operational efficiencies. Examples include internal and external communications SaaS products that were previously not present in our business, VOVO -1.5%IP phone systems, messaging systems, video conferencing software, shared digital document storage, and tech equipment, including laptops, headsets and high-speed internet. – Cynthia Hemingway, Fourlane, Inc.
14. Models For The Cost Value Of Production Are Changing
Managing production and the cost value of production in a remote workforce is more difficult than it is within a controlled office environment. Efficiencies in a remote workforce are lower than those in a physical workforce, and this difference is greater within industries that require a high level of collaboration between co-workers. Financial models for the cost value of production have changed. – Joseph Orseno, Tiltify