In my last post (which was based on a thread on Twitter) I expressed my opinion that offering remote work for any role where it’s not explicitly contra-indicated is now “table stakes” for all organizations of all sizes in all verticals.
My energy for ranting was by no means exhausted, however, and I found myself pulling in data, references, and expert insight in a second thread, which you can find here: https://twitter.com/leonadato/status/1410261547184758786. I’m posting it here, in expanded form, where the 240 character limit doesn’t get in the way.
In this post I’ll connecting the dots with Work-From-Home (#WFH) / Return-to-office (#RTO) impacts. Rather than sprinkle them throughout the essay, I’ll list references up front:
I won’t bury the lede: Forced RTO is going to cost companies more in actual dollars than any alleged “impact” of not going back to the old way. In truth, there may not be much orgs can do to keep some folks from leaving even with a sane remote work policy. But forcing them back into the office is a sure-fire way to get them to leave faster. Meanwhile, allowing flexibility at least has a chance of keeping them longer, and maybe “for good” (which, in any case, is about 2-4 years average for IT folks).
You may be wondering how I came to this conclusion. For starters, replacing employees costs an estimated 6-9 months salary. Figuring that anyone who wants to catch eyeballs is exaggerating, let’s set that to 3-9 months. In addition, the LOWEST estimates are that 25% of the workforce will quit in the next 12 months. The HIGHEST estimate, it should be noted, is north of 90% but that was from Monster.com and so it’s about as trustworthy as the WeWork CEO claiming you can tell which employees are truly committed because they’re the ones insisting on coming back to the office. A more reasonable range is 25%-40%.
And, while many executives (and thus their orgs) are eager to have people back in the office, the reasons they cite are astonishingly flimsy and can easily be read as a weak attempt to mask their own personal discomfort (a point I made in the previous post).
Unsurprisingly, the vast majority of employees who legitimately CAN work remote, WANT to work remote.
Connecting The Dots
(In case you wonder where all this is coming from, I remind you that I’ve linked to all the source information at the top of this post. Here I’m just synthesizing it down.)
Staff wants WFH and is already considering leaving. Leadership is pushing for RTO, which makes the staff’s decision to stay or go easy. As a result, the company burns both time and money replacing/retraining staff. Ironically, I predict they’ll probably end up implementing a sane WFH policy in the end when they realize they can’t attract new talent otherwise.
Let’s play with some numbers. Let’s say your company has staff paid at three rates: $30k, $50k, $75k, $100k, and $150k. Let’s also say the current business climate, accelerated by an insistence in RTO, push 5 of the $30 folks to seek greener pastures. In addition, 4 of the $50k folx leave, along with 3 of the $75k staffers, 2 of the $100k workers, and 1 “high value” $150k employee. That’s 15 people out the door, at a total cost of $925k in salary.
If the retrain cost is the lowest projection – just 3 months of salary to put another butt in their seat and be productive- your company just let $231,000 walk out the door. If my low ball estimate is wrong and it’s really 6 months? That was $462k your organization burned. And if the high end estimate of 9 months is right, we’re talking $693k.
BUT… you have to remember that the departure rate is (according to reasonable estimates) somewhere between 25%-40%. That implies those 15 folks who walked out are somewhere between 25% and 40% of your org, which means your entire organization was only 38 – 60 people total. Most companies are who are struggling with remote work are much bigger.
So let’s pump up the volume.
For the sake of simplicity, let’s stick with the same $30-150k pay groupings, and use the same 5-4-3-2-1 breakdown of departures per pay band.
We’ll start slow. You have 100 employees. Using all the assumptions above, you’ll lose 25-40 people, worth $1.54-$2.46million in salary. Your lowest total lost (25% staff with a 3 month retrain cost) is $385,330. At 6 months, you’re talking $770k. 9 months? $1.5million. But that’s just if you lose 25% of the staff. If the losses are closer to the 40% end of the scale, the actual money your company loses to get asses back in chairs is $616k, $1.2mil, or – at the absolute high end of the estimates, $1.85 million dollars.
Let me restart that: If you have 100 people in your company, you could be facing anywhere from $385,000 to $1.85 million in losses just from staff attrition.
How much did you say your building cost?
But, of course, many organizations are way more than 100 people. So let’s look at some other scenarios.
If you have 500 employees, your losses will run from 125-200 employees, and will cost you an immediate retraining expense of $1.9million to $9.2million dollars.
If your company is closer to 1,000 people, you’ll lose 250-400 at a cost of $3.8-$18.5million
And just for a real knee-slapping laugh riot, let’s consider the 5,000 person company. If you don’t do anything to stem the flow, 1,250-2,000 people will walk out the door in the next 12 months. That’s going to hurt a lot – to the tune of $19.2million at the lowest end, all the way up to $92,479,350 if the direst predictions come true.
Just about any way you cut it, businesses (literally) cannot afford NOT to consider permitting remote work – along with every other option, perk, and spiff they can think of to retain existing employees & attract new ones.
If, at the end of this post, none of my math, none of those links, and none of my arguments still seem compelling, I’d like you to consider this last point:
All those perks, spiffs, and options – including (and probably anchored by) a solid remote work policy – are probably what your competitors are doing. And your employees are going to notice.
What do you think will happen then?