Insights / Finance / Article

How Remote and Hybrid Work Models Affect Costs: 5 Data Insights for CFOs

July 28, 2021

Contributor: Jackie Wiles

Most organizations spent much of 2020 with many of their employees suddenly working from home. As organizations adjust to postpandemic conditions, remote and hybrid working models are gaining traction. Gartner data suggests that CFOs have a complex task ahead in identifying where staffing costs could rise and fall. 

Download now: 9 Insights for CFOs on the cost implications of remote work

“There is potential for cost savings through salary adjustments, but that also depends on how your employees feel about trading pay for location,” says Nicole Kyle, Sr. Director, Advisory, Gartner. “At the same time, there could be new costs associated with new work models — from added remote work infrastructure to new employee well-being programs — but cost savings from reduced real estate.”

CFOs will need to benchmark all these budget lines to gauge the impact, including potential talent risks and opportunities, and integrate those findings into policy-setting.

5 data insights for CFOs on remote-work costs

CFOs will need to work with HR to evaluate the work preferences of the different employee groups within their own organization, and with IT and HR peers to evaluate the costs and benefits of subsidizing remote-work costs like hardware or adding employee benefit programs.

Directional insight into trends can be seen, though, from Q320-Q420 Gartner data on employees already working fully or partially remotely.

No. 1: Many newly remote and hybrid employees say they would consider relocating and would consider an associated pay cut

“Relocation” in this Gartner data assumes that employees are offered the option to remain remote permanently, and as of September 2020, 48% of newly remote and hybrid employees said they would consider moving away from where they currently live. Of that group, 62% would also consider taking a pay cut tied to local cost of living.

Data on cost of remote work and relocation

No. 2: Younger and more senior employees as groups are more willing than most to accept a relocation salary adjustment

Younger employees are roughly 1.5 times more likely than employees ages 50 to 65 to consider taking a pay cut tied to relocation. Employees in senior-level positions are 1.2 times more likely than entry-level employees and 1.3 times more likely than midlevel employees to say they would consider taking a pay cut to relocate.

No. 3: Employees in the financial, IT and industrial sectors are more willing to accept a relocation salary adjustment

The sectors where employees are most likely to consider taking a pay cut tend to be those in which pay is higher in general — specifically financials, IT and industrials. Conversely, the sectors where employees are least likely to consider taking a pay cut (assuming they could relocate) are healthcare, consumer staples, government and communications services.

No. 4: There are slightly more organizations providing financial support to fully remote employees than offer to subsidize hybrid employees

Most organizations (71%) provide financial support for the remote work infrastructure costs employees incur to purchase hardware, such as monitors and headsets. Fewer (60%) offer the same support for partially remote employees. Organizations are less likely to subsidize recurring costs such as phone or internet usage. Stipends, where they do exist, tend to be recurring for fully remote employees (but usually less than $100 a month) and one-off for hybrid employees. 

No. 5: Costs tied to well-being programs have increased, and will continue   

Sixty-four percent of organizations are offering new well-being benefits in response to the COVID-19 pandemic, with 85% providing benefits related to mental and emotional well-being. 

CFOs should expect HR to request ongoing funding for initiatives such as virtual mental health support (currently offered by 91% of organizations), access to wellness apps (77%) and mental health self-care tools (74%).

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