MIT: A new normal, but at what cost?
The pandemic has turned the world upside down and the way businesses operate has now ultimately changed. Lecturers Stephanie Cox CA and Aimee Weir CA consider this new normal from a wellness perspective as well as exploring themes within Management Information and Technology (MIT).
Will things ever go back to what we once considered ‘normal’? Is that what employees and employers want?
With the advancements in technology, employers are recognising that staff can often perform their role from anywhere in the world. We look at the impact of costs to employers if working from home were to become permanent.
Costs can either be controllable or non-controllable. A company can control staff salaries or production costs on a specific product, they cannot however, control the share of electricity per department (this would be a total building cost). Although expenses such as heat and lighting would have been significantly reduced over the past year, for companies that had to halt production, the daily charge would still exist.
With some companies choosing to close significantly large offices, we also need to consider the overheads allocated to these branches. If an office is closed because it is underutilised and making a loss, other profit-making offices (known as a profit centre in MIT) could turn loss making if the share of overheads were transferred across via apportionment and re-apportionment. There is a knock-on effect which companies may not have fully analysed and they must examine all unavoidable costs when deciding to close an office or branch down.
There are also sunk costs that have been incurred already and therefore are irrecoverable. Sunk costs should never be considered during the decision-making process. If a company has a ten-year lease they are committed to, this will become a sunk cost. Regardless of whether the building is used or not, the expenditure cannot be avoided. It should therefore not be factored into the decision-making process.
Many firms have had to shift their format from working in a structured office, at a specific desk, to working fully or partially from home. This change has prompted many businesses to reconsider their working practices and implement new policies for the future. However, they will have experienced sunk costs as a result such as rent for an office or stock that has been collecting dust in a warehouse.
Despite some costs, these new strategies around how we work will also result in benefits to employers as well as employees. Some firms are looking to introduce a fully flexible approach – allowing staff to work at anytime from anywhere. BP are allowing their office staff to work from home part-time going forward. One of the Big Four accounting firms, PwC, are considering a blended approach between home and their office. Meanwhile Spotify, propose to allow their staff to work from anywhere, such as a coffee shop or even a desert island.
Employers will be able to make significant cost savings because of reduced office spaces, high city rent and will be able to utilise desk space more appropriately going forward. Although as mentioned above, they should only be considering relevant costs when conducting this analysis.
Hot-desking is a relatively new concept however, more and more companies are bringing in collaborative thinking spaces for staff. Google promote ‘casual collision’ with large open spaces that invite staff to work together rather than be separated by the traditional office partitions. This may lead to incremental costs – costs which a company would not incur if they followed a course of action. An example of this being a company incurring costs to set up collaboration areas. Incremental costs occur because of a decision that has been made. If the action (setting up an area for collaboration) does not transpire, neither would the costs.
Tips for working from home
Working from home appears to be the option most employers are going to be giving their employees and with this in mind, here are some points to think about when working from home.
Stick to a regular working pattern, whether that is 9 till 5 or flexible it should be consistent.
Use the time that you would have spent commuting to do something you enjoy.
Work from a comfortable and suitable area. There are online guides available on how to setup your workspace.
- Give yourself a break
Be sure to take regular breaks away from your screen to help you refresh. This can help reduce stress and aid concentration and productivity. Fresh air and exercise will also help to clear your mind and unwind.
- Stay connected
Interacting with colleagues has always been a key part of work life. This should still be the same working from home. Schedule regular video calls or pick up the phone instead of drafting an email. You can also attend or organise virtual coffee catchups or social team calls.
- Think long-term
It is important to consider this long-term and anything that could make you work from home more efficiently. Do you require more office equipment or a more comfortable chair? Do you need better lighting? Think of ways you could improve your workspace and make a point to action these.
This prolonged period of home working has allowed both employees and employers to identify numerous benefits in terms of flexibility and choice – but also when considering those sunk costs for businesses. The question is whether this way of working is going to be the only way going forward? We suspect not. The balance between work and life is finally starting to even out and with Generation Z entering the work force and management levels, we predict that the scales could shift even more towards prioritising life over work in the very near future.