Can Telework Cut Costs and Raise Productivity in Today's Economy?
By Lorrie Lykins and Mark Vickers -
They've already done the obvious. Most organizations have taken cost-cutting steps such as slashing travel budgets and postponing or canceling major capital expenditures. Many have also engaged in a rash of painful layoffs. Now, some are looking for other ways to further reduce costs while avoiding losing more employees.
Among the tactics being tried are decreasing work hours, condensing workweeks, limiting overtime and sending workers on unpaid furloughs. Others include implementing freezes on hiring and raises, suspending 401(k) contributions, offering enhanced retirement buy-out packages, or a combination of these approaches (Challenger, Gray & Christmas, Inc., 2009).
Now, a less-obvious alternative that seems to be gaining momentum is telecommuting. Traditionally viewed as a perk for a select few employees, it's now seen as a viable way to address several challenges facing today's companies.
One such example is the Home Shopping Network (HSN), an i4cp member company, which has created a "work-at-home" telecommuting program that employs 900 telecommuters in three states. HSN made the move last year to bring its previously offshored call center jobs back to the U.S. in response to declining customer satisfaction ratings. The results have been everything HSN had hoped for: improved customer satisfaction, increased productivity and elevated status as an employer of choice; HSN says it has 16 applicants for every one job it fills (Albright, 2009).
Another example is Sun Microsystems, also an i4cp member firm, which implemented an office consolidation initiative by allowing employees to telecommute, a move the company says has cut costs significantly now that 19,000 employees (56% of its workforce) work away from the office at least one day per week. The company reduced its real estate holdings by 15% in fiscal 2007 and says that expenses for employees who work from home at least part time range from 30% to 70% less than for employees who work on campus (All, 2009).
How common is telecommuting these days? An i4cp survey conducted in early 2008 found that 38% of respondents said their organizations offered telecommuting, and 45% expected to see a greater use of flexible work arrangements in the coming year. This seems to be part of a longer-term trend. The number of employees working remotely at least one day per month increased 39% from 2006 to 2008, according to research conducted by WorldatWork and Dieringer Research Group (Elmer, 2009).
The nonprofit Telework Coalition says its research has found that productivity rises among teleworkers in the U.S. and abroad. Here are two of the coalition's findings:
But not everyone is sold on the idea of telecommuting. Some major organizations have actually called their telecommuters back to the office, citing the need for more of the kind of face-to-face interactions that boost innovation and engagement (Shellenbarger, 2008). And, whether they voice it or not, some managers are simply uncomfortable with telecommuting, convinced that people who work at home will be distracted, unsupervised, and simply less productive.
HSN addresses concerns about productivity and supervision by carefully screening applicants and onboarding new hires on campus in a three-week training program. Telecommuters also have the option of going to work on campus whenever they feel the need to, and monthly face-to-face meetings with their supervisors are required. Work-at-home employees also stay connected with one another through blogs and online social networking (Albright, 2009).
In the current down economy rife with layoffs, when some terrifically talented people are hitting the labor market, telecommuting programs may also be a way for companies to attract and hire such skilled employees, even those who can't sell their homes and move to headquarters in the short term. In short, telecommuting can be a way for some companies to get stronger at a time when their competitors are losing their talent.
Even after the current economic crisis begins to ease, working remotely may become more commonplace rather than viewed as a temporary stopgap to cut costs. Governmental agencies, many of which have embraced telecommuting for some time, will likely expand their virtual teams as economic stimulus dollars come through and the federal workforce grows in number, making floor space and empty desks scarce. "One way or another, we're going to see more folks [telecommuting]," said John Palguta, vice president for policy at the Partnership for Public Service (Mitchell, 2009).
i4cp Recommendation: Businesses should view telecommuting from a strategic perspective, determining how it can best be used to simultaneously lower costs and raise quality and productivity. It should not be used for its own sake. Telecommuting has been around for years, and best practices are available. Businesses can gain from one another's experiences, and there is substantial research from which to draw. Therefore, companies should do their due diligence before embarking on any major telecommuting initiatives, keeping in mind that good execution will make the difference between success and failure.
Documents used in the preparation of this TrendWatcher include the following:
They've already done the obvious. Most organizations have taken cost-cutting steps such as slashing travel budgets and postponing or canceling major capital expenditures. Many have also engaged in a rash of painful layoffs. Now, some are looking for other ways to further reduce costs while avoiding losing more employees.
Among the tactics being tried are decreasing work hours, condensing workweeks, limiting overtime and sending workers on unpaid furloughs. Others include implementing freezes on hiring and raises, suspending 401(k) contributions, offering enhanced retirement buy-out packages, or a combination of these approaches (Challenger, Gray & Christmas, Inc., 2009).
Now, a less-obvious alternative that seems to be gaining momentum is telecommuting. Traditionally viewed as a perk for a select few employees, it's now seen as a viable way to address several challenges facing today's companies.
One such example is the Home Shopping Network (HSN), an i4cp member company, which has created a "work-at-home" telecommuting program that employs 900 telecommuters in three states. HSN made the move last year to bring its previously offshored call center jobs back to the U.S. in response to declining customer satisfaction ratings. The results have been everything HSN had hoped for: improved customer satisfaction, increased productivity and elevated status as an employer of choice; HSN says it has 16 applicants for every one job it fills (Albright, 2009).
Another example is Sun Microsystems, also an i4cp member firm, which implemented an office consolidation initiative by allowing employees to telecommute, a move the company says has cut costs significantly now that 19,000 employees (56% of its workforce) work away from the office at least one day per week. The company reduced its real estate holdings by 15% in fiscal 2007 and says that expenses for employees who work from home at least part time range from 30% to 70% less than for employees who work on campus (All, 2009).
How common is telecommuting these days? An i4cp survey conducted in early 2008 found that 38% of respondents said their organizations offered telecommuting, and 45% expected to see a greater use of flexible work arrangements in the coming year. This seems to be part of a longer-term trend. The number of employees working remotely at least one day per month increased 39% from 2006 to 2008, according to research conducted by WorldatWork and Dieringer Research Group (Elmer, 2009).
The nonprofit Telework Coalition says its research has found that productivity rises among teleworkers in the U.S. and abroad. Here are two of the coalition's findings:
- Productivity increased 31% among the 9,000 telecommuters employed by British Telecom.
- At JD Edwards, telecommuters are 20% to 25% more productive than office workers (All, 2008).
But not everyone is sold on the idea of telecommuting. Some major organizations have actually called their telecommuters back to the office, citing the need for more of the kind of face-to-face interactions that boost innovation and engagement (Shellenbarger, 2008). And, whether they voice it or not, some managers are simply uncomfortable with telecommuting, convinced that people who work at home will be distracted, unsupervised, and simply less productive.
HSN addresses concerns about productivity and supervision by carefully screening applicants and onboarding new hires on campus in a three-week training program. Telecommuters also have the option of going to work on campus whenever they feel the need to, and monthly face-to-face meetings with their supervisors are required. Work-at-home employees also stay connected with one another through blogs and online social networking (Albright, 2009).
In the current down economy rife with layoffs, when some terrifically talented people are hitting the labor market, telecommuting programs may also be a way for companies to attract and hire such skilled employees, even those who can't sell their homes and move to headquarters in the short term. In short, telecommuting can be a way for some companies to get stronger at a time when their competitors are losing their talent.
Even after the current economic crisis begins to ease, working remotely may become more commonplace rather than viewed as a temporary stopgap to cut costs. Governmental agencies, many of which have embraced telecommuting for some time, will likely expand their virtual teams as economic stimulus dollars come through and the federal workforce grows in number, making floor space and empty desks scarce. "One way or another, we're going to see more folks [telecommuting]," said John Palguta, vice president for policy at the Partnership for Public Service (Mitchell, 2009).
i4cp Recommendation: Businesses should view telecommuting from a strategic perspective, determining how it can best be used to simultaneously lower costs and raise quality and productivity. It should not be used for its own sake. Telecommuting has been around for years, and best practices are available. Businesses can gain from one another's experiences, and there is substantial research from which to draw. Therefore, companies should do their due diligence before embarking on any major telecommuting initiatives, keeping in mind that good execution will make the difference between success and failure.
Documents used in the preparation of this TrendWatcher include the following:
- Albright, M. (2009, February 27). No place like home for HSN. Retrieved from sptimes.com
- All, A. (2008, December 9). Employers find telecommuting brings savings plus productivity. Retrieved from itbusinessedge.com
- Challenger, Gray & Christmas, Inc. (2009, January 26). Nearly half of employers avoid layoffs; like President Obama. 27% freeze salaries. Retrieved from challengergray.com
- Elmer, V. (2009, February 19). Everywhere an office. Retrieved from washingtonpost.com
- Jones, K. (2008, June 18). Telecommuting could save gas and U.S. $38 billion annually. Retrieved from informationweek.com
- Mitchell, A. (2009, March 2). More teleworkers foreseen. Retrieved from federalnewsradio.com
- Shellenbarger, S. (2008, March 4). Some companies rethink telecommuting. CareerJournal.
Lorrie is i4cp's Vice President of Research. A thought leader, speaker, and researcher on the topic of gender equity, Lorrie has decades of experience in human capital research. Lorrie’s work has been featured in the New York Times, the Wall Street Journal, and other renowned publications.