Brief Thought #1: Home-Working a Win-Win Whether an Employee or a Contractor

April is the peak month for our business, so I may not have time to write any lengthy articles.  Instead, I will try to post a brief daily thought until the season slows a bit.

Many small business owners have realized that operating a business from home cuts overhead compared to operating a business on Main Street.  You only have one rent and one heating bill, which can make a significant difference.  But what if you are an employee?  The same economics are at work for the employee.  Companies are sending employees home to do their work because it costs the company extra money to rent and heat space for the employees to work.  This gives the employee the freedom to arrange his own space at home in a way that makes him productive and happy.  The company can spend less money on the facilities and pay the employee more for taking on this extra responsibility.  It eliminates a deadweight loss and puts more money both in the companies profits, and in the employee’s pocket.  This is the no-brainer analysis of why many companies are doing this, and why many more companies ought to.  The next step would be to turn the employee into a contractor, but there are many dynamics in the relationship which would make that a good choice in some circumstances, and not so good in others.  If the company wants to “own” the employee (to prevent him working for competitors on his days off), or if the employee wanted to “own” the company (to receive the company’s benefits), then maintaining the employee relationship would make sense.  Either way, the company that takes every opportunity to cut facility costs by sending an employee home to work, can maintain a competitive edge in the marketplace.