Companies often complain about how they must bend over backwards to meet the demands of Millennials, who now represent the majority of the workforce.

Once such demand is flexibility in working location.

And, in some cases, we’re not just talking about working from home once a week. Services have even popped up that enable workers to roam the world while maintaining a job. One company, called Remote Year, organizes travel and accommodations for workers who want to live and work in 12 cities over 12 months.

Is Remote Work Too Extreme?

Have business owners gotten too soft in allowing this? Or is this a really good idea?

One of the best things about going into an office is developing interpersonal relationships. We all have “work friends” who we enjoy chatting with by the coffee maker or heading out to happy hour with on a Thursday evening.

There’s also a great benefit to walking the hallways, where you can get a sense of what’s really going on within your company. On top of this, companies often see success in growing revenues by merely re-locating complementary departments so they can more readily bump into each other and share innovative ideas.

But the siren song of remote work has grown louder over the years, and in doing our research, we’ve discovered that there are some massive benefits (and also a few downsides) to working with a distributed team.

For most companies, it’s a good idea to keep an open mind and discover how remote working can be a plus for their business—then think about how to manage the potential downsides.

Three Pros of a Digital Workforce

Given the advances in digital technology, remote working can be a boon to your business. Everything else is in the cloud, so why can’t employees be there, too? There are several benefits to a virtual team. The three largest ones are:

1. Access to Talent You Otherwise Could Not Afford

Having a solid infrastructure for remote workers allows you to hire people who would be too expensive to hire on a full-time basis. Many talented developers, designers, marketers, and consultants prefer juggling multiple balls and would not settle for a full-time gig at a single employer (unless the money was phenomenal).

Chief Digital Officers run between $250,000 and $750,00 per year these days. You might not be able to afford that, but you may be able to find a “fractional” executive for $75,000 who is available enough for your needs. Developers average a six-figure salary. Don’t have that in the budget or don’t need one full-time? You can find highly skilled computer engineers willing to work remotely for a fraction of that cost.

2. Fewer Distractions Lead to Higher Productivity

Cisco Systems, which has been allowing remote working since the 1990s, stated that it realized $195 million in annual productivity gains from its telecommuting program. No time wasted by the water cooler, no distractions from people walking by and asking, “Hey, do you have a second?,” no unnecessary face time or meetings. Commuters don’t arrive burned out by the traffic. In fact, eliminating the commute frees up more time for your workers to, well, work!

3. Save on Real Estate Costs

The average yearly cost per employee to rent office space in a city ranges from $4,194 to $14,800, depending on where you are located. For companies looking to save on overhead, implementing a productive work from home strategy could really help. What percentage of your sales go directly to your landlord?

The Biggest Risks of a Digital Workforce

Of course, remote work is not perfect. There are some roadblocks you need to watch out for if you expect to have a distributed team.

Opportunity Cost of Lost Chance Encounters

It’s difficult to find hard data to support this claim, but ask any executive, and he or she will tell you that there is power in just being together with your colleagues. That’s where crazy ideas—that turn into great ideas—form. These moments are much harder to create via chat, video call, or email.

Security and Downtime Concerns

If you’re dealing with a lot of sensitive information, such as credit card numbers or patient health data, it may be difficult to stay compliant with data security protocols with a distributed network of computers. Since people don’t have to “swipe in” to their home office, there is a greater chance for hardware to be stolen. Furthermore, you won’t have an on-site IT guru to troubleshoot computer, software, or network issues, which could lead to downtime.

Shirking

When you ask leaders what they’re most concerned about when considering a distributed set-up, many will say they’re worried their employees will sit at home and not actually do their jobs.

First, it’s worth noting: The data shows that slacking off actually decreases when you empower employees to work remotely. However, there are always going to be some bad apples, and you’ll need to make sure you have the right measurement and accountability devices in place to safeguard against this risk. Get your HR team involved in making the decision on when and who should be allowed to work remotely.

Is a Digital Workforce for Us?

Still deciding? Ask yourself these three questions to assess if a remote working experiment is appropriate for you.

1. Is Your Workforce’s Output Measurable?

If it is, you are a prime candidate for a digital workforce. Salespeople are clearly measurable (sales). Developers can be measured on time and accuracy (how often their code breaks). Creatives (writers, designers) can be evaluated based on meeting deadlines and consumer engagement with their work (number of views, number of click-throughs, etc.).

Measurement leads to a trackable sense of accountability on your team.

2. Do You Have a Strong, Widely-Engrained Culture?

Values speak louder than words. If your culture includes a shared set of values, you can feel more comfortable trusting all your employees to make the right decisions in the face of uncertainty.

Take, for example, the consulting firm McKinsey, where there is a very strong culture. There, employees are encouraged to be entrepreneurial in their decision-making, within the bounds of the firm’s values. “It’s better to ask for forgiveness than permission” was a common mantra. This only works if people understand the cultural ground rules.

3. Do You Have Growth Ideas, but Implementation Is Limited by a Constrained Budget?

What about starting a virtual “innovation arm” of your company? This digital department can be an incubator for new growth initiatives. You won’t need to pay for extra real estate, and you may get access to talented people who you couldn’t otherwise afford to hire. And it can be temporary. You can always create an in-person team once the new idea is proven.

In the end, allowing workers some locational flexibility should not be viewed as pandering to millennials. Instead, it should be a conscious business decision, based on your analysis of the above pros and cons.

About the Sterling Woods Group, LLC

The Sterling Woods Group’s mission is to help clients make sense of their data to build deeper relationships with their best customers, launch new products and membership programs, and execute smarter marketing strategies.

We use a hypothesis-driven, data supported methodology to discover your “spin”—a simple insight that no one else is paying attention to. Then, we help you assemble the right technologies, marketing plans, and resources to seize this opportunity.

About the Author, Rob Ristagno

Rob Ristagno, founder and CEO of the Sterling Woods Group, previously served as a senior executive at several digital media and e-commerce businesses, including as COO of America’s Test Kitchen. Throughout his career, his focus has been on embracing technology and analytics to spur strategic development and growth.

At the Sterling Woods Group, he and the team are passionate about helping clients understand their best customers through data, and developing products and membership programs that exceed expectations – and generate impressive revenues.

Committed to spreading this message, Rob is the author of A Member is Worth a Thousand Visitors and is a regular keynote speaker at conferences around the world. He has been featured on ABC, NBC, CBS, Fox, and Digiday.

He holds degrees from the Harvard Business School and Dartmouth College and has taught at both Harvard and Boston College.