I read an article this morning which lead me to writing this post scratching the surface of the distributed office/workforce, costs and the redistribution of some of those costs.
Over the last eight plus weeks we have seen many of our clients successfully move jobs/tasks to a work from home environment. However, we have also seen some of our clients unable to pivot certain jobs/tasks to a a work from home model. After all, the prep-chefs in our restaurant group clients can’t operate from home, no matter how bleeding edge their technology.
No is no one size fits it all for work from home.
What does all of this mean? We created a working group with representatives from some of our clients and “sat down” (i.e Microsoft Teams meetings) with them to establish a framework for analysis.
First, this framework lead to calculating the cost of each employee and each office location down to the penny. There was to be no margin for error. We opted for using direct costs as much as possible as weighted average cost is best guess at best. Luckily IT services from Kontinuum is a fixed direct cost per employee, per server and per location. The end result was a reorganization of their GL’s and allocations to understand the true costs of an employee and each corporate location.
Second on our list was to determine with each company, how many of their employees were able to carry out their responsibilities from home effectively and how many of those employees needed to be in an office/location setting.
Third, using an excel worksheet we created, we began forecasting the differential between employees working from home and employees working in the office. This calculation includes the cost of purchasing and setting up equipment and supplies required for an effective home office. These new work from home costs were amortized over a nine month period so as to not give and unfair advantage over in-office work.
By transitioning to a partially distributed workforce we’ve identified the the potential for some clients to reduce or maintain the amount of square footage leased, or increasing their square footage to accommodate the six foot mandate for social distancing should they want to maintain the pre-epidemic headcount in the office. Of course there are various cost centers that will be affected either way, such as utility bills, printing costs, kitchenette supplies, insurance costs and other such bills.
A benefit of a distributed workforce is removing the geographical limitations to hire personnel. A company in New Jersey/New York can hire and efficiently utilize the services of an engineer in Omaha.
There will be studies to argue either side of this. Real Estate company backed studies will extol the virtues of more office space, accounting departments will likely opt for more of work from home. Like everything in life, the key is in striking a balance.
I believe there will always be a need for a company to have office space, I just don’t think they will need as much square footage and the ancillary costs that go along with it.
The distributed workforce renaissance is upon us. Will you be an architect of its design or a reluctant adopter?