Telework costs and benefits

One of the first barriers presented by a telecommuting-reluctant organization is that it costs too much. But after a careful analysis of telework costs and benefits most organizations change their minds. Here’s why.


First let’s take a look at the tangible costs. For employers they come in two categories: Startup (one-time) and operational (recurring). The startup costs comprise project planning; participant selection (not everyone can — or should — telework); technology selection and testing; and training. The project planning part is important since it includes development of success criteria (answering the why are we doing this questions?); impact forecasting; and policy and procedures development.

For home-based teleworkers the costs can include any additional office furniture and equipment needed, higher energy (heating and air conditioning) costs and, possibly, slightly higher insurance premiums.

Operational costs include telecommunications charges; impact evaluation (is it working out the way we thought it would?); equipment maintenance and depreciation and, possibly, additional training.

It’s important in this cost-benefit analysis to only include costs that are specific to teleworking. For example, if all employees have laptops then only additional costs for niftier laptops needed for teleworking, if any, should be included. Ditto for telecommunication costs: only those costs attributable to teleworking should be counted.


There is a long list of benefits from teleworking but the most important tangible ones for employers include: performance improvement (on the part of the teleworkers, their supervisors and their colleagues); facilities savings; healthcare cost reduction; turnover reduction and its complement, the ability to attract highly qualified employees. Intangible, or less easily measured, benefits to employers include faster reaction to customer needs, enhanced visibility/prestige, improved ability to satisfy air pollution regulations, greater ability to cope with natural disasters such as blizzards and floods. Typically the tangible benefits, minus the costs, add up to a substantial fraction of the salary of each teleworker — especially after the year in which the startup costs are incurred.

Teleworker’s tangible benefits include decreased (or eliminated) commuting costs, decreased child/eldercare costs, decreased business clothing/cleaning costs and reduced lunch costs. Intangible benefits include greater feelings of being in control of ones’ life, increased creativeness, (counterintuitively) greater feelings of being included in office social activities and increased participation in local events.

For more on this topic try our do-it-yourself cost-benefit analysis.

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