Companies today face tremendous pressure from current and prospective employees to provide more flexible working arrangements, and there are more options than ever. While the abrupt shift to remote work caused by the COVID-19 pandemic was initially chaotic, working from home (WFH) has proved far more viable than most expected. As a result, companies—and entire industries—that hadn’t previously considered adopting such policies are now looking at making them permanent to attract and retain employees.
Now that we’ve primarily overcome the cultural and technological barriers to working from home, the next logical frontier is working from anywhere (WFA). But then, this level of freedom and flexibility was a fantasy. In the backdrop of the Great Resignation and the reopening of global borders, providing employees with the option to work from anywhere will be top of mind for many employers and employees in 2022.
The main barriers to working from anywhere are legal and taxation issues. Key risks include tax compliance (for employees and employers), immigration concerns, local employment laws, and data security problems. While these risks may seem daunting, we can initially manage them. WFH policies don’t necessarily grant employees absolute freedom. Instead, they provide workers with flexibility while imposing strategic limitations to minimise risks.
WFA is a new and evolving policy area involving regulations from many countries. Nevertheless, employers manage to move forward and make decisions despite ambiguity. The simplest way to evaluate the risks and rewards of offering a WFA policy is through a comprehensive ROI framework. This analysis can help you decide whether adopting a WFA policy is the right choice for your organisation and help optimise your risk tolerance.
“The tectonic shift caused by COVID-19 changed ‘work’ from a noun to a verb. From a place we went to a thing we do, irrespective of place.” —Joe Brady, CEO - Americas, The Instant Group
From “Work From Home” to “Work From Anywhere”
The mounting pressure employers are facing from employees to let them work not just remotely but increasingly from anywhere. So what exactly is the difference?
WFH refers to full-time employees whose companies allow them to work remotely, usually from the comfort of their homes. WFH policies typically apply to workers who stay within one country and can choose to work from “home” either some or all of the time.
WFA policies are different. They permit employees to work remotely abroad temporarily, typically for more than seven days but fewer than 365. Durations fall into a legal gray area in many countries. These are longer than standard business travel but fall short of requiring a permanent change in residency.
While WFA isn’t a new concept for some, it’s something that has often slipped through regulatory cracks. However, as many people join the WFA ranks, the temporary residency will likely come under increased regulatory scrutiny and stricter enforcement. This shifting landscape is another reason to develop a well-designed WFA policy that protects your company from legal and tax compliance risks.
Employers Stand to Gain from WFA Policies
Complex data and solid anecdotal evidence indicate that allowing employees to work remotely can provide tangible benefits to employers, helping them attract and retain top talent, increasing employee satisfaction and productivity, and reducing the need for and the cost of office space. Moreover, employers that permanently provide the option of WFA reap the additional benefit of access to the global talent pool.
A growing body of evidence suggests that many workers would even be willing to take a pay cut for the option to work remotely permanently. While the amount varies by source, in general, most surveyed say they’d accept salary reductions of 5% to 10% to make remote working arrangements permanent.
An ROI Framework for WFA Policies
In much the same way that investors calculate the return on investment, companies often seek to estimate the return on a strategic business decision relative to its cost. An ROI framework can be a helpful tool when developing a WFA policy or comparing policy options. The inputs will undoubtedly be imprecise, as it would be impossible to assign concrete numerical values to the costs or benefits involved. Regardless, this theoretical framework can help you see how to maximise your ROI by increasing benefits or decreasing costs.
For our purposes, the “cost” side of the equation should consider the additional administrative expenditures of implementing a WFA policy and the “cost” of each of the primary risks listed in the following graphic.
You can estimate the cost of any given risk by multiplying the probability of the negative outcome occurring by the cost of the penalty. For example, offering a WFA policy for 30 days per year poses an extremely low possibility that any employee will trigger PE in a foreign country. Although the penalty cost of PE is high, the likelihood of incurring that cost is negligible in this scenario, so offering that policy leaves your company in a reasonably safe position.
Conversely, an unacceptable risk might be permitting someone in a high-risk role like sales to spend more than half the year in a country with a significant risk of creating a permanent establishment that could cost the company millions. In that case, it would be hard to build a business case to allow them to work from anywhere.
Follow us on : LinkedIn
Kamal Rastogi is a serial IT entrepreneur with 25 yrs plus experience. Currently his focus area is Data Science business, ERP Consulting, IT Staffing and Experttal.com (Fastest growing US based platform to hire verified / Risk Compliant Expert IT resources from talent rich countries like India, Romania, Philippines etc...directly). His firms service clients like KPMG, Deloitte, EnY, Samsung, Wipro, NCR Corporation etc in India and USA.