When Your Company Goes WFH, Your Leverageable Value Drops

When Your Company Goes WFH, Your Leverageable Value Drops

If your company introduces a Work from Home (WFH) policy, do not just blindly rejoice. I just finished reading a paper by a big U.S. bank economist who is advising its customers that (1) WFH will help them expand their talent pool (2) Reduce wage growth for their workers over time (3) Solidify an employer-market, arbitraging best talent and lower cost.

As companies like Twitter, Facebook, Amazon, Microsoft, and Zillow embrace this redesign, do not think it is because they want you to have extra sleep by keeping you at home over jumping into early morning traffic. This is the fact: Covid-19 has forced a huge global experiment, pushing companies around the world to pilot something many would not have done. And the results came out largely just fine.

Both of Jack Dorsey’s companies will now allow employees to work from home permanently.

San Francisco-based Square said Monday it would let people work remotely, even after regional shelter-in-place orders end. The news came a week after Twitter, also run by Dorsey, announced its employees would have the same option.

“We want employees to be able to work where they feel most creative and productive,” a Square spokesperson told CNBC. “Over the past several weeks, we’ve learned a lot about what it takes for people to effectively
Be aware that WFH will offer a new domain of competition where talent sources will be both local and global at the same time.  Simply, talent becomes unbounded and unconstrained, making it possible that plug-and-play can happen at scale. Yes, if you are in San Francisco, earning $8,000 per month, you can be replaced with someone in Nairobi, earning $2,000, and the company will justify it as adopting a new way of work philosophy. But deep behind is a clear value-creation for employers, through reduction of the cost of labour!
“We can get talent anywhere. There’s a lot of folks out there that do not want to move to San Francisco. They feel comfortable working in a much smaller office or just home.” CEO of Twitter, Jack Dorsey
It is arbitraging the best, lowest cost workers globally, pushing workers on the edge downward trend. While some workers will lose, some will benefit. A positive impact on workers is the new Andela policy to adopt WFH for experienced software developers.

ICT created value for companies through improved productivity. The internet has done the same. But there is a key difference: the web does create value but it is also great on destroying and shifting value. If you make a phone call with Whatsapp from Lagos to New York and spend one hour, you may be spending about $1 via equivalent broadband cost. 

But if you have called direct via MTN, a telecom company, you may be off by $40. Yet, the $39 you have saved is not going to Whatsapp which remains free. So, for companies the value has been destroyed, not transferred between. This trajectory cuts across industries making it possible that you can innovate, and yet not earn any income from it; you just end up destroying value for everyone!

The WFH is a new technology app: it would destroy value for some workers (others will benefit) and help employers save while improving overall efficiency through a more talented workforce! It is basic economics, whenever supply increases, other things being equal, price drops. If WFH increases talent for companies, expect wages to drop for workers in some expensive regions of the world! If you live in those regions, you must ensure you can bring more value to avoid displacement. And understand where you stand in this dislocation.

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5 thoughts on “When Your Company Goes WFH, Your Leverageable Value Drops

  1. As always, know what you are wishing for, because the devil is always in the details, never on the surface.

    The same way capitalists outsourced manufacturing to low cost regions, with the promise of cheaper goods in return, and people cheered, because they could buy more with less; but you must first have a job to even make a purchase. So when jobs are gone, even the cheap goods won’t be affordable…

    As for WHF, the winners are employers and tier one employees, because while the former can source great talents from cheaper regions, the latter can also hold three key positions in three different companies. That leaves the usual endangered species: the small guys to continue with life struggles again.

    Things aren’t as great as they appear, depending on where you are standing and how far you can see.

    Reply
    1. I think the idea and goal is to make the little guy believe he can be the big guy.
      Because that is what it is.

      On the whole the so called little guy must adjust just like everyone else in order to be relevant.

      Reply

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