The Work from Home Elephant in the Room

Few topics in business are as polarizing today as the remote work debate. Thrust upon us and shoved down our throats by COVID, a funny thing happened.

A lot of employees seem to like it. I know I do (though I am technically “management”). I haven’t regularly come to an office in over a decade. Between having my work setup catered to my exact specifications (I’ll admit, I’m a tech diva) and saving time in the commute, it makes me both happier and more productive than if you tried to force me to come into the office.

It’s Not for Everyone

However, I’m the first to admit that working from home/anywhere (WFHA) is not for everyone or every company. Some industries, of course, demand high human interaction to operate, such as hospitality, medicine, and freight. Until we have robo-waiters, doctors, and trucks, if you’re in that industry, chances are good you are working where the employer needs you.

However, industries such as software and professional services can be much more location agnostic, and there is a true tug-of-war going on between labor and management, with Tesla and Apple being the most known among them.

McKinsey has published the most compelling study that I have seen on how important remote work is to workers, and the answer is, “very.” The opportunity to work from home is the third most frequent reason people look for a new job.

WFHA and the Value of My Company

Yet, somewhat off to the side of this debate lies an important question that requires a reckoning, which is, “Does WFHA impact the value of my company?” We aren’t aware of any study of consequence that’s been published on the topic, and it will likely be years before a statistically significant data sample is even available. However, the world isn’t going to wait to buy or sell companies until rigorous studies are available. We can, though, offer a framework for how to think about WFHA and value.

1. Culture Fit: Some decision-makers are dead set against WFHA while others are strongly for it. Like so many things in our society, those positions are further entrenched and polarized thanks to social media. But the degree to which WFHA is allowed or encouraged is now a fundamental cultural facet of a company. Companies that want their employees mostly in the office would be wise to be very careful about buying companies with a heavy WFHA emphasis as they may see significant turnover in the workforce, post-merger. Companies that are heavy into WFHA may want to stay away from companies that rely heavily on office-located work because their managers and procedures may be ill-equipped to work in WFHA, leading to significant disruption.
2. Employee Engagement and Stability vs. Oversight: As discussed previously, companies that have WFHA seem to be more engaged and less likely to quit. That would seem to indicate that WFHA might be less risky. However, it would be naïve to presume that there is no cost. Managing remote employees is more difficult than managing everyone on site. There’s no opportunity to “manage by walking around.” You must be more intentional about employee communication, and you must put employees in a position to make more decisions for themselves. It’s hard to find managers like that. And you must have a strong culture of trust in place for WFHA to have a chance of success. Finally, the importance of process documentation is amplified.

These things are hard to quantify, and I don’t envy the task of whatever researcher chooses to take it on. In the meantime, these questions provide a reasonable framework with which to make a qualitative assessment with respect to how WFHA (or lack thereof) impacts the value of a company, and whether that impact is positive or negative.

Contact Us

If you’re wondering about how to address WFHA in an acquisition or how the question of WFHA impacts your company’s value, contact us for a consultation. We can offer clarity to an endemically murky scenario.