Working from home (too much) can cost organisations 1.5 billion in the long term

Less cooperation, less involvement, isolation and stress have a negative effect

If all employees who are able to work from home, even after the corona crisis, start working an extra day from home, this could lead to costs for their employers in the long term. These costs are related to the effects of less collaboration, less engagement of people with the organisation and isolation and stress. These costs can run from 375 million to 1.5 billion per year. Employers can take various measures to mitigate the risks of working from home, and therefore also the costs.

29/10/20

Working from home can negatively influence 'soft' organisational aspects

In organisations where it is possible, a significant number of employees are working partly or completely from home in connection with the corona crisis. Because this is going well, partly owing to good digital infrastructure, many companies are seriously considering permanent changes to where and how work is done in their organisations. Our study The Costs and benefits of working from home, part II shows that there are risks involved, which mainly relate to the soft side of the organisation: the aspects that are not immediately visible, less tangible and more difficult to quantify. These effects of working from home, such as on innovation, productivity and the well-being of employees are only visible in the longer term, but can be long-lasting.

Do not simply compare costs and benefits against each other

Previously, PwC published research showing that the benefits of working from home are also large. If everyone who is able to work from home does so for an extra day compared to the pre-crisis situation, society could save nearly four billion euros. These savings mainly come from lower spending on the rent of office space and greatly reduced commuting, which also results in fewer traffic jams, traffic accidents and less investment in infrastructure. CO2 emissions could also fall by 606 kilotons.

However, the revenues as presented in the first study and the costs from The costs and benefits from working from home, part II, cannot simply be compared with each other. While the benefits (or cost savings) are immediately visible, the costs only arise in the long term. Furthermore, employers, employees and society benefit from the savings, while the costs associated with more working from home arise largely due to the "soft" organisational aspects like lower collaboration and innovation, and almost exclusively end up with the employers.

Mitigate the risks of working from home

PwC assumes that even when social distancing is behind us, many organisations where remote working is possible, will choose to continue doing so, at least partly. This requires adjustments in the organisation and among managers. For example, to mitigate the risks of working from home, it is very important that supervisors know how their employees are doing. This can be done by regularly sending out surveys, on the basis of which other measures can be taken.

Working from home for too long leads to stress and loneliness

People often find working from home very pleasant. It gives flexibility and freedom. At the same time you see that there is also a kind of tipping point. This research also shows that when working from home continues for too long, a large number of people feel stressed and lonely. For many companies the office will become a meeting place and the home office will be the place where you work out documents or complete your to-do lists. But that also demands a lot from the organisation and the people.

According to PwC, it is a question of finding a balance. Everyone wants to keep the positive aspects of working from home as much as possible. Rightly so, but then you also have to address the negative sides from day one. It's not going to go well by itself.

Main conclusions from the research

The costs of working from home for too long fall to employers

If all employees who can do this work an extra day from home per week, this could lead to an increase in costs in the long term from 375 million to 1.5 billion euros.
These costs are caused by the effects of less collaboration, less involvement of employees with the organisation and isolation and stress.
The costs occur in the long term and fall largely to the employers.
Collaboration with colleagues also happens from home, but research shows that the most effective collaboration occurs in (physical) places that stimulate the exchange of ideas. Moreover, working from home lacks the ‘serendipitous interactions’ that often lead to new ideas. In the long term, this will be at the expense of innovation and productivity. The total costs of this can amount to 200 to 800 million euros.

Higher employee turnover, higher absenteeism and lower productivity

Reduced employee involvement weakens the organisational culture. The long-term effects of this are higher employee turnover, higher absenteeism and lower productivity. The costs of this can be as high as 125 to 500 million euros.
More working from home leads to more isolation, more stress and a greater risk of burnouts. The costs are between 50 and 200 million euros.
There is a tipping point in employee engagement. Research shows that when employees work from home for more than three days, the involvement decreases.