The 9-5 workday was invented in 1926. Around this time the world also saw the first iteration of the television, the aerosol spray can, and liquid rocket fuel, with the hopes that one day, man would fly to the moon.
The office cubicle was invented in 1967. That year also saw the invention of the handheld calculator and the first ATM.
Now how does it sound to say that your company works the same way as companies did before the invention of scotch tape?
When we look back at the technology, the inventions, and the mindset of individuals back in those eras, we must wonder why everything else has been revolutionized, yet we remain decades behind when it comes to evolving the workplace.
It took not only a deadly pandemic, but several years of forced remote work for companies to realize that working from home wasn’t synonymous with sleeping on the job. That, not only could you trust your team to get their work done outside a cubicle, but that the move to remote work opens high-level opportunities to decrease overhead, increase your profit margin, and create an environment that benefits both employee and employer.
Whether your company chooses to go fully hybrid or remote may seem like a matter of opinion, with senior members on one side, looking out for the culture and organizational innovation that can happen when working in person, and employees on the other, hoping to balance work and life a little better. But as we enter a period of economic recession — “Deloitte economists put the odds of a slowdown at 60% and the odds of a recession at 40%” — executives should be viewing remote work as an opportunity for growth rather than as a detriment.
After all, recessions cause a hurricane of difficult decisions that will fall on the shoulders of the C-Suite to keep their company afloat in uncertain times. So, where are you cutting costs?
Recessions are just as much psychologically turbulent events as financial as many understand that cutting costs often means reducing the labour force to those necessary for the main operations of the company. And while remaining flat through a period of recession may feel like a win, data shows that those who push their foot on the gas in times of uncertainty are the ones that continue to accelerate, increase market share, and come out on top.
But that fuel must come from somewhere.
When looking at what to cut back on, the opportunity that remote work offers in cutting down on overhead costs is significant. The rental cost of office space is one of the highest costs to consider when understanding the benefits of a remote or partially-remote workforce.
In downtown Toronto, the average cost of one square foot of office space is $40 and with the current office space per person requiring an average of 100 square feet per workstation, this means that each individual costs $4,000 a year to have a comfortable workspace in the office. These numbers, of course, don’t account for the meeting rooms, facilities, or common areas that companies have in order to keep those employees happy.
And those are just the basic real estate numbers. When we consider that on top of rent alone, there are utilities, cleaning services, food, and even some taxes that could all be decreased or flat-out eliminated, the idea of remote, or hybrid work, seems more appealing from a financial perspective.
Global Workplace Analytics conducted a study that estimated that a typical U.S. employer can save an average of $11,000 per half-time telecommuter per year (therefore, $22,000 on a fully remote employee). This is due partially to the overhead costs and partially to the other benefits of remote work: increased productivity and improved employee retention.
One of the main arguments against remote work is that it fosters an environment to kick back and get distracted by your home environment. Anecdotally, this may be true to an effect. There is a good chance at the start of the pandemic that you heard talk from friends, family, or other coworkers, about the difficulties of focusing during at-home work. The data, however, backs up an increase in productivity among remote employees.
It is possible that individuals don’t even realize how much time they spend on non-work-related tasks while in the office. It may be tempting to believe that employees in office are chatting about how to innovate or come up with new creative ideas for a project but are more likely bouncing ideas off a coworker for a new TV show to watch or restaurant to visit when standing at the water cooler. We see, in fact, that remote workers are getting more work done from home. A study at Stanford found that remote workers are 13% more productive than their in-office counterparts, meaning the company is benefiting financially from having staff work from home. American Express found that its teleworkers took 26% more calls and increased their business output by 43% — nearly an added half of an employee — than their coworkers who worked in a physical office.
When looking at the Global Workplace Analytics study, the savings on productivity are the most impactful as they create more value per employee and increase the ability for growth in the company per year. This number would likely also continue to grow as companies who offer telework are not just increasing the productivity of their current team, but with the ability to hire nationally or internationally, finding the best of the best to do so.
Employee satisfaction is the hot-button topic; how remote work allows individuals to lower their personal costs and create a better work-life balance. And while those are certainly true in some ways, companies should reframe their ideas that refute those points and instead look at how employee retention is another driver of lowering overall business costs.
If you’ve decided to lay off some of your workforce to prepare for a recession, this one will be even more imperative because everyone you keep is an important part of keeping your company running and thriving.
Not only is keeping talent important to growth but “hiring new employees is a “costly business.” The average company in the U.S. spends $4,000 to hire a new employee, and it takes about 52 days to fill the position.” And a flexible work policy was cited to be one of the driving factors that retained employees and kept them happy.
In 2021, 47.8 million workers quit their jobs, an average of nearly 4 million each month. The Great Resignation, as it was dubbed, may be dwindling now as the alarms of recession sound, but with so many individuals still hesitant to compromise on flexibility, the opportunities that remote work options provide are more likely to attract top talent. Therefore, allowing remote work not only saves investment on retention of current employees but helps to attract top talent as they search for new opportunities, further sparking growth and company productivity.
Those companies that have already taken the leap into hybrid or remote work are seeing the benefits. Shopify, who went fully remote at the beginning of the pandemic, has multiplied its stock value by 2750% since its IPO in 2015 and attributes a lot of that to their ability to hire the best talent internationally and create an environment that motivates its workforce no matter their location. Cisco, a company that has been remote-first for nearly a decade, estimates that it saves $277 million a year from the productivity gains brought by remote employees.
With the gains made on moving your workforce to partial or fully remote work, your company sits at another opportunity for growth. As your competitors take other avenues of cost-cutting or keeping their head above water, you now have the advantage of taking another step forward. With the costs saved through remote work, you can invest in marketing campaigns that target uncertain shoppers/clients. Like we mentioned earlier, a recession is not just a financial hardship but a psychological one, and consumers are going through it just as much as companies are. As the conscious consumer looks for solutions, there exists the perfect opportunity to offer up your product or services.
Forbes gathered historical data on marketing in recessions that showed “as the economy began to recover, those that decreased marketing efforts saw their market share drop by 0.8%. Those that maintained their marketing and advertising at pre-crisis levels had an increase of 0.6%, while the companies that increased their advertising saw an increase of 4.3%.” It’s important to remember that building and maintaining strong brands with a strong share of voice will remain one of the best ways to increase market share and mitigate business risk.
One of the key reasons to market during an economic downturn is to keep yourself top of mind for consumers. Advertising during downturns will give your company authority and prime real estate in the minds of consumers looking for guidance.
We are already seeing the impact of consumers’ behavioural changes in the face of recession and companies are reacting accordingly. As consumers seek more budget-friendly options to offset inflation, Unilever has understood that an increase in marketing will increase the share of voice of their brand and begin to develop more share of mind for their target demographics. “Unilever’s CFO Graeme Pitkethly said that the hike in advertising and branded marketing is to prevent shoppers from trading down to private label.” Knowing that despite the brands overall health remaining stable at an average of 80% stability or growing brand power across its portfolio, the best way to further growth amid changing behaviour is to conduct proper customer research and advertise to remain top of mind.
Being a leader in your industry means little if you aren’t continuing to seek new customers. After all, even if you have more market share now, your competition can always catch up. You may have the most people yelling, but you also want to be the loudest one in the crowd.
According to Harvard Business Review, “during downturns, marketers must balance efforts to pare costs and shore up short-term sales against investments in long-term brand health. Streamlining product portfolios, improving affordability, and bolstering trust are three effective ways of meeting these goals.” To meet these goals, marketers need to know and understand the changing consumer and market effectively, increasing marketing will not only increase your level of trust and reliability to consumers and keep you top of mind, but stay ahead of competitors in understanding behaviours and improve your businesses overall functionality long-term.
Another reason to market during a time of unrest is to gather data on the new consumer and be prepared to target them effectively. Not only does knowing your consumer put you in a better place coming out of a recession, but it also allows you to increase your ROAS as you market, understanding deeply who your consumer is at every stage of behavioural change.
As customer confidence recedes, advertisers need to not only remain top of mind, but do so in a way that speaks to the changing consumer. According to Insights Lab by Time + Space, only 2% customers currently see advertisements as an important source of information, and creating dialogue to the right consumer at the right time – especially when they need guidance, will help increase those numbers.
With marketing budgets under more constraints in a downturn, increasing market share also leans on the ability to target the right individuals at the right time. Doing so will keep your company on budget and continue to build trust with consumers in a less-saturated market.
Remote work is not just a debate of opinion on how you work but statistically backed up to fuel growth. Not only does remote work allow you to decrease overhead and increase productivity but it opens more possibilities to challenge your competition during an economic downturn. Cutting down on expenses related to physical office spaces will allow you to reallocate those expenses and invest in increasing market share. Now is not the time to go back to “normal”, it is the time to invest in growth and be a part of evolving and elevating both the workforce and your company’s greater goals.