Businesses have been experimenting with remote and hybrid work models since 2010. Perhaps the most famous experiment was in 2012 when then-CEO Marissa Meyer introduced a telecommuting arrangement at Yahoo.
With Meyer’s telecommuting plan, a small group – initially 5% of the workforce – was assigned work-from-home duties. Allowing employees to attend to their tasks and responsibilities at home would help them find life and work balance.
In theory, happier employees mean higher productivity and reduced turnover, right?
After one year, Meyer discontinued the telecommuting program. Her explanation was that the targets were not achieved. Her decision sparked a backlash of criticism from employees who preferred working from home.
Meyer’s decision to terminate the telecommuting program didn’t deter other companies from experimenting with their version of a work-from-home arrangement.
Unlike Meyer, many of these companies were able to succeed with their telecommuting program and hit their targets. These companies were Dell, American Express, Xerox, Deloitte, United Health Group, JP Morgan, Morgan Stanley, Google, and Microsoft.
In fact, there were surveys done in 2018 that predicted 50% of the global workforce would transition to work-from-home arrangements in a few years.
How The 2020 Pandemic Created A Paradigm Shift Toward Work From Home Business Model
Then, the pandemic hit in 2020.
With economies closed because of government-mandated lockdowns, several businesses suffered financial losses that they never recovered from. However, the businesses that integrated work-from-home policies continued operating as usual.
Companies that once sat on the fence about telecommuting worked feverishly to get a work-from-home system set up primarily as a stop-loss measure until the economy opened and employees returned to work.
What employers around the world didn’t anticipate was how the pandemic changed the perspective of employees about their careers.
The enforced lockdowns gave employees time to think about job security as millions were laid off due to business losses. Employees realized their best interests weren’t covered by their employers.
There were no career pathing and succession planning programs in place. Perhaps in their loneliest moments, employees recounted how often they were disrespected at the workplace.
Employees also thought about spending more time with their families given the uncertainties of the world.
Work-From-Home As The Middle Ground Solution
As economies started to open, it wasn’t business as usual. Employers had a hard time getting their employees back to their workstations. This was a watershed moment in world history that would be known as “The Great Resignation of 2021”.
It didn’t matter that companies scrambled to correct the deficiencies of the workplace. Mental and emotional health was thrust into the spotlight as primary factors of attrition. Employees cared more about happiness and respect than a pay raise or a gym membership.
The middle-ground solution was for businesses to adopt a work-from-home program. And out of the chaos arose 2 business models to choose from: Remote or Hybrid work models.
What Is Remote Work?
Remote work is an arrangement whereby the employer designates and authorizes employees to work exclusively from home. They aren’t required to report to a physical office. Meetings are conducted online by using tools such as Zoom or WebEx.
Usually, a remote employee is responsible for his work schedule. For the employer, what’s important is that deadlines are met and that the quality of work isn’t compromised. However, an employer can also set the work schedule of the remote employee.
Other terms that are associated with remote work include:
- Work-from-home employees
- Virtual assistant
To be clear, a Virtual Assistant (VA) and a Freelancer are professionals who are self-employed and manage an enterprise that provides specific services to businesses.
As self-employed professionals, a VA and a freelancer can take on projects from multiple clients. Thus, the status of their tenure with the company is more of contracted professionals than hired employees.
What Are The Pros And Cons Of Remote Work?
Here are the pros of remote work:
1. Higher Productivity – Remote workers don’t have to rush out of their homes to beat traffic. They can start working shortly after breakfast and can get more tasks done for the day.
2. Lower Attrition Levels – Remote workers are reportedly happier workers because they have an opportunity to balance life with work. An employee who is happy with the working environment will tend to stay longer with the employer.
3. Reduced Cost of Business – By designating employees to work remotely, you can reduce the size of the office space, cut down on paper costs, and streamline other expenses such as Internet bandwidth, office supplies, and payroll, especially if you choose to outsource work to virtual assistants or freelancers.
4. Protect Your Business From Uncertainty – If you have a remote employment setup, you can keep your business running assuming there are events that disrupt the economy.
For example, if there are harsh weather conditions or social/political unrest that leads to the temporary suspension of work, your remote employees can continue to manage their tasks from their homes.
5. Extend Business Hours – Without Spending Extra – If your business is located in the US East Coast, you can hire remote workers from another region where there exists a 12-hour time differential. In this arrangement, you can keep your business running while you sleep.
What tasks can you outsource to cover the extra hours? You can outsource customer service, marketing, and social media moderation services.
Here are the cons of remote work:
1. Higher Security Risk – You have no guarantee that the computer will be used solely by the remote employer or for work purposes only. People in the household might use the computer and have access to confidential information.
Likewise, if the remote worker uses the computer to surf the Internet, he might go to a website that has malware. Your network can get hacked or infected.
2. Lower Productivity – If the household has an environment that’s detrimental to productivity, not much work will get done.
For example, if there are frequent visitors to the home, the employer has relationship issues, and the Internet bandwidth isn’t stable.
3. Higher Attrition – If the remote worker isn’t happy with the work-from-home situation, he might leave the company.
Examples of situations that could cause the employee emotional distress would be:
- Employee misses the feel of a traditional office environment where he shares space with co-workers.
- In the case of remote workers from other countries, incidents of cultural misappropriation could lead to frequent misunderstandings.
4. Higher Risk of Miscommunication – Shared space collaboration has a lower incidence of miscommunication because feedback is almost always automatic.
Working remotely creates filters that could cause the remote worker to be more complacent and not seek clarification on questions he might have about the instructions, tasks, and responsibilities.
What Is Hybrid Work?
The Hybrid work model combines the key features of remote and traditional employment. An employee follows a schedule whereby he works at home on some days and works at the company office on other days.
In many cases, the employer allows the employee to make his work schedule and choose the days when he wants to report to the physical office. Similar to the remote work model, the objective of the employer is to increase productivity.
For the employee, the Hybrid model gives him the option to work in another location should the situation at home prove to be disruptive and not conducive for productivity.
Also, if there’s a power outage or Internet downtime, the employee can use the physical office to complete his tasks for the day.
Thus, with the Hybrid model, the employees are local and reside within reasonable proximity of the physical office. A popular term for employees who are under a company’s Hybrid work program is telecommuter.
What Are The Pros And Cons Of Hybrid Work?
Since it carries the key features of remote work, the Hybrid work model has the same advantages. However, going Hybrid offers a few unique advantages over the remote model.
1. Flexibility – If the current team of telecommuters and onsite employees aren’t delivering the desired results, make the necessary changes.
If your number for cost savings isn’t attained, reorganize your team and designate more telecommuters or delegate additional tasks to the telecommuting group.
2. Easier to Manage – Having the telecommuters report to the office gives you a better vantage point for overseeing quality control.
3. Lower Risk of Miscommunication – With the availability of shared space collaboration, you have a lower risk of miscommunication with your telecommuting group.
4. Comparatively Lower Attrition Levels – Remote workers can feel isolated at home. They can feel disengaged because they aren’t around co-workers. That situation can lead to mental and emotional distress.
The Hybrid setup allows the telecommuter to go to the physical office for a change of scenery and improved mental/emotional health and well-being.
With the exception of higher attrition levels and risk of miscommunication, the Hybrid model might also present a threat to security and be exposed to the same factors that could affect productivity.
The Hybrid model will also be more expensive to maintain.
With a remote worker setup, you can reduce costs by outsourcing work to virtual assistants or freelancers. Because they’re contracted and not employed, you’re not required to assign them a 48-hour workweek.
Telecommuters are full-time employees (FTEs). You’re mandated to schedule them a 48-hour workweek and pay them complete benefits.
Should You Choose Remote Or Hybrid Work For Your Business?
Now that you know the pros and cons of each model, which one should you choose for your business?
On paper, it might seem that the Hybrid model has more advantages than the remote work model. However, having more advantages isn’t necessarily the best reason to choose one model over the other.
Before you make the decision to choose remote or the Hybrid work model, consider the following factors:
1. Current Manpower Complement – How confident are you with your current manpower complement? Do you believe you have employees who are cut out for remote work?
Working from home sounds like a dream job – but it’s not for everyone. Some employees prefer to work in a traditional office because there are distractions at home. You might have employees who perform better with close supervision.
Lastly, finding the right telecommuters and remote workers isn’t just about talent and possessing the required technical or hard skills. You need to consider soft skills or behavioral attributes.
For example, trust is an important attribute for remote workers to have because they’re handling confidential information.
2. Operating Budget – As mentioned, running a Hybrid setup will be more expensive than managing remote teams because essentially, you’re paying for FTEs.
Also, since they’re employed, you have to make sure the computer is working properly and they have enough bandwidth. You can assign a company computer to them and ask the telecommuters to submit invoices covering the costs of working from home.
If you have a tight budget, a remote work setup might be easier on your finances.
3. Business Goals and Objectives – Both remote and Hybrid working models can help you increase productivity, reduce costs, and lower attrition levels.
But your choice of which model to apply to your business will also depend on your goals and objectives.
In our previous example, a remote work setup would be ideal if you want to add after-hours customer service. Likewise, since you’re hiring local talent for a Hybrid model, it might be the best solution if you’re scaling up your business to handle higher production output.
4. Type of Business – Businesses that are managed using simpler processes and workflows will do just fine with a remote work setup. If you have a web design business or run a digital marketing agency, you’ll find success with the remote work model.
For businesses with more complex workflows and processes such as those engaged in financial services, manufacturing, and export/import, you’ll be better off with a Hybrid work setup.
Businesses that require more clear-cut communication might find the Hybrid model more beneficial because the availability of close collaboration will help establish stronger relationships among co-workers.
5. Degree of Flexibility – A common benefit of both remote and hybrid models is that they allow you a degree of flexibility in managing your business. But how far out will you push your boundaries?
How much are you willing to adjust your business processes? Are you okay working with a diversified workforce? Are you willing to invest in digital technology and upgrade your current tech infrastructure?
Transitioning your business model to either setup isn’t a decision you can make overnight or alone.
Consult and discuss the proposal with people who can help you make the best decision. This group of people includes:
- Your team; managers, supervisors, and staff
- Your accountant or CFO
- Outsourcing professionals
- HR professionals
- IT experts
- Entrepreneurs who have utilized both models
Take your time. Review the budget carefully, discuss the pros and cons, and consider all the possibilities. Keep your mind open to adapting either one. What’s important is to feel comfortable – and confident – that the decision you make is the best for your business.
One thing’s for sure, whether you choose remote or the Hybrid work model for your business, you won’t have a hard time attracting talent. Offering potential employees the opportunity to work from home can be more enticing than higher pay.
Regardless of your choice, make sure that your employees can see career growth with your business. Present to them a realistic and doable career pathing and succession planning program. Sell them your vision for the company’s future as well as theirs.
At Mountaintop, we’ve outsourced projects to remote workers and managed telecommuters with great success. If you want to learn more about how we did it, give us a call and we’ll give you a free 30-minute consultation.
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