Does Having Remote Workers Cost or Save Money? How Do You Know?

Last Updated Jan 5, 2011 8:25 AM EST

Most remote teams come about as a result of cost saving efforts. Reducing travel costs, saving money on remote offices or contracting work on a project basis rather than hiring full timers are all valid financial reasons but can you measure their impact?

The problem may be in your metrics. You have to measure output as well as savings, and that can be harder than it seems. Some of what you're measuring can be held against the bottom line (if they don't have to come to a meeting you saved the airfare, you can measure that), but what are the costs or productivity advantages between a team that's clicking and one that's dysfunctional? That can be harder to quantify.

I recently interviewed Gary Grossman, co-author of "Becoming a Successful Manager" about this challenge.

Can you give us some quantification on the costs of managing (remote) teams?
The cost of managing remote teams is ideally measurable in terms of:
• amount of time
• increased risk
• mistakes and corrections (integrity and trust)
• lost opportunity
• and/or business infidelity.

One key cost is the establishment of the team. Due to the fact that the members will be remote, there needs to an evaluation of them at three levels. First, the members need to be an evaluated in terms of their skills and history against a clear set of requirements. Second, there needs to be a testing of the gravity (commitment/ability/interest/trust/drive) of the member to the team, mission and deliverables. Third, their ability to collaborate with other members of the team for the good of all involved.

The benefit of motivated, well chosen team members reduces the measurable costs while increasing the value of what's delivered or produced beyond the expected value. Chemistry, clarity, and cooperation result in a value that renders the cost almost irrelevant.

What are the metrics that get used badly or conflict with other metrics in terms of remote teams?
Metrics are potentially invaluable but can also be dangerous if they result in false comfort or (inaccurate/incorrect) associations. For example, when managers value quantity vs. quality or activity vs. productivity, they may be giving credit and money before it is due.

What are the skills managers need to develop to flourish in that environment?
The effort to manage a remote team is greater due to the checks and balances that need to be maintained to reduce cost and risk.
• First and foremost, creating a system of checks and balances within your existing framework of technology will reduce risk and increase profitability. Knowledge does not change behavior--"Knowing" what to do does not deliver the same results as creating a system of checks and balances that demonstrates you have benefitted from that knowledge.
• The second key element in creating a productive environment is maintaining open communication. Several factors can undermine such communication. An effective manager understands these factors and takes steps to overcome them.
• The third element is valuing diversity. Every team comes with a variety of perspectives, experiences, and needs. Knowing what they are and how this variety can be used is key to a successful organization.

Flexibility and creativity can be invaluable when it is constrained by clarity of purpose and specification of deliverables. The art of managing those constraints through clear, consistent, respectful communication and measurement is how managing a remote workforce yields successful results,

Have you considered the metrics you're using to measure your team's success? Does it include both cost savings and productivity? If not, this might be the year to take a good hard look.

Read more:

Photo by flickr user ScottieT812 CC 2.0