How to Measure Remote Work ROI

A common refrain among managers considering or implementing remote work arrangements is how to determine whether the setup makes financial sense for the company.

ROI can be difficult to measure when employees aren’t in a central location. So, Remote.co asked five remote work experts for their insights on the best way to measure remote work ROI.

Widen the Concept of Employee Effectiveness

Inna Shevchenko, Chief Marketing Officer at iGMS, has over 14 years of experience in marketing, including managing remote teams. In her opinion, ROI shouldn’t be the primary measurement for all workers’ effectiveness.

“At iGMS Marketing, we have different team members responsible for various marketing channels,” Shevchenko explained. “And for some channels and activities, it’s hard to calculate the exact impact on the revenue; hence, it’s hard to measure the ROI.”

Still, the CMO maintains that it’s vital for everyone in the marketing department to work toward higher sales and conversion rates. “With this in mind, we analyze what is the impact of each channel on our lead generation and compare it to the industry standards and our goals,” Shevchenko said.

Consider the Basics

Tony D’Aurizio, people development manager at Amica Senior Lifestyles, has over 30 years of experience in HR and recruitment. D’Aurizio explains that ROI should be measured on an individual basis, using a team baseline for comparison and goal setting.

“You may use a mixture of analytics, audits, and employee feedback to establish the metrics that can be used for such a comparison,” D’Aurizio said. “And you should account for a range of quantitative and qualitative metrics.”

The HR expert added that while some of the beneficial impacts of remote working may only become apparent in the long run in terms of ROI, remote working may be deemed effective if:

Overhead costs are reduced
Employee retention rates are improved
Greater levels of staff satisfaction are recorded
Productivity levels are increased

Hone in on Key Measurement Metrics

Ben Lamarche, general manager at Lock Search Group, oversees a team of 45 associates, most of whom work remotely. Lamarche’s team uses three main metrics—productivity, output quality, and engagement—to measure remote workers’ ROI.

Productivity: Lamarche explained that each employee’s productivity is measured by his or her total output in a given period. “More tasks completed, say within a month, indicates a higher ROI,” Lamarche said. “In a hybrid setting, the productivity of remote workers can be compared to that of in-office workers for a more objective measure of remote work ROI.”

Output quality: It is not enough for employees to complete tasks, according to Lamarche. “The ability to meet the agreed-upon quality standards while working away from their supervisor’s direct gaze can help determine the payoff of remote work,” he said.

Engagement: “The more engaged employees are, the higher the returns,” Lamarche said. “Engaged employees are more productive, deliver high-quality work, and stay longer with the company.” The general manager noted that tools, such as regular virtual pulse surveys and one-on-ones with employees, can aid in gauging overall engagement.

Compute It With an Output-to-Salary Ratio

Roy Morejon, president and cofounder of Enventys Partners, has been very hands-on with hiring remote workers. Morejon suggested that a quick way to measure remote worker ROI is to get the ratio of the total value of outputs produced in a business divided by their wage in a year.

“For example, one of our social media managers generated $30,000 worth of revenue in a month’s campaign,” Morejon said. “Divide that by the salary for that month—plus other expenses like issued equipment, allowances, and benefits—and you immediately get the returns of investing in that employee. In some roles, it might not be as easy to find.”

Use Digital Performance Management Tools

Nick Gallimore, director of talent transformation and insight at Advanced, explained that when people are working remotely, digital performance management tools are essential to monitor and assess ROI.

“Managers may worry that staff aren’t being productive, while employees may also be concerned that what they are doing isn’t enough, or that they are spending too much time on the wrong priorities,” Gallimore said. “These tools allow joint agreement on a clear set of deliverables that are aligned with strategic goals.”

Gallimore also pointed out that such tools can allow employees to see their own progress and feel more motivated as they work through and complete tasks. Plus, better teamwork can be achieved via the tools, since they enable easier collaboration on deliverables. “They provide employers with clear measures of engagement, a key factor that impacts productivity, and they offer actionable insights into performance for individuals, teams, divisions or departments,” Gallimore concluded.

To learn more about successfully leading a remote team, check out our articles on remote management.