Employee expenses have shifted during COVID-19. Here's what you should know about planning for employee expenses today and how to prepare for the new normal.
The coronavirus pandemic has ushered in the age of working from home, with businesses across the globe responding to the threat by either temporarily or permanently closing down offices and physical workplaces to prevent the spread of COVID-19. As a result, there is a new landscape for employees––not just in terms of their physical workspace, but in the way they conduct work, and the kind of expenses they incur.
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As technology companies struggle to understand how to plan for this new normal, many are looking for a way to handle employee expense reports and reimbursements. Should they set hard limits? What is and isn't acceptable? How can they prevent abuse? And how should they plan for a return to the office when things reopen? And how to prepare for an environment that is likely to remain transformed, to some extent, according to Brian Kropp, chief of research for the Gartner HR practice. Looking toward the future, "it is reasonable to think that upwards of 30% of employees will work remote full time."
Kropp said that whereas in the early days of COVID-19, CFOs were more resistant to work-from-home policies, the situation has "totally flipped."
"What CEOs and CFOs have realized is that there's actually an enormous amount of cost savings that can be generated while employees are working remote, and they're also just as productive as they were before," he said. "So CEOs and CFOs now look at and say, 'Gosh, this is great. We should do more of it.'" This is also bolstered by the fact that companies can save. Roughly 20% of the total cost of an employee are the costs of the physical location, Kropp said, in expenses for electricity, rent, etc. Executives now see "an opportunity to arbitrage that 20% cost savings that we get by limiting our real estate footprint and giving some benefits to employees to create a better employee experience for them," Kropp added. Kropp has observed that now companies are "offering more and more benefits to employees to help create a better employee experience for them" –– while still saving money. That means they may be more motivated to pay for additional expenses like childcare, that make this possible.
Anant Kale is the CEO of AppZen, an AI company that caters to businesses that need help managing employee spending by examining expense reports and looking for patterns that might suggest abuse. AppZen has released a monthly report during COVID-19 related to how employee expenses are shifting. According to a recent report, for instance, finance and software industries are charging half of their total expenses on remote work.
Kale said work-from-home expenses have, obviously, increased during COVID-19. But there's a large range of what kinds of things employees are expensing––everything from masks to computer cables to new office furniture. So, having some guidelines about what is acceptable during this time is important.
Still, Kale stressed that during this uncertain time, it's vital for companies to be flexible in their expense policies. "They have to account for the differences in every employee," Kale explained. "The work-from-home conditions, their family, their own personal situation––from the health point of view that they are in." Kale said there are "far more variables" in today's work-from-home environment. Therefore, employee situations should be considered in context. The old rules don't apply, and making sure employees remain safe and healthy should be a top priority.
Kropp said it's also about making sure employees get what they need. "You've got people with kids and people who don't have kids, who have roommates and people that don't have roommates. You've got people that might have elderly parents living with them and people who don't. So the variability in the workforce has moved along a totally different dimension," he said. This means that when an employer offers someone money for childcare but not help for someone with roommates, it might be perceived as unfair.
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"You want to make sure you're providing the right set of benefits and support for your employees to help them do their jobs and be productive, but you have to ensure fairness," Kropp reiterated. "That is the key thing, because different people's perception of fairness will be different."
"It's a new kind of frontier, a new kind of ask that we are seeing from companies," Kale echoed.
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