Telecommuting
Copyright © 1991 by Michael Kisor
Copyright © 1995-2002 by Magic Publications
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Telecommuting. It has been prophesied as the great work at home revolution of the 1990's. A revolution which will mean the demise of the "office" as we know it. Its proponents tell us that it will increase employee productivity and morale while reducing corporate operating expenses. Its opponents warn us that telecommuters are workers whose homes are in jeopardy of becoming the "electronic sweat shops" of the twenty first century. The truth, more likely, lies between these two extremes.
The term "telecommuting," coined by Dr. Jack Nilles of UCLA in 1973, refers to doing all or part of one's job at home; a job which would traditionally be done in a central office location. Outside salespeople, field technicians and the like, who normally perform their jobs away from the office, are not telecommuters.
While telecommuting is still in its infancy, it is well beyond a theoretical idea. Nilles, now president of JALA Associates, a Los Angeles based management consulting firm, estimates that over 1 million people telecommute at least part time and that that number will swell to 4 or 5 million by the mid 1990's. Others have placed the figure much higher. LINK Resources Corp., a New York consulting firm in emerging technologies, places it at 15.4 million people telecommuting in 1988, 4.9 million of them with formal arrangements. Companies and governmental agencies all over the United States and Europe are implementing pilot programs. Virtually all go on to institute permanent programs after their pilots. In researching this paper, only two failures were noted, contrasted with seventy successes. The National Association for the Cottage Industry in 1989 estimated that over 500 US companies had successful telecommuting programs in place.
So successful are some of these programs that companies sometimes consider the program and its specifics to be confidential. Nilles has noted the secrecy: "They don't want to tell their competitors how to do better." Lynne McGee, in her article Setting up Work at Home, writes: "Perhaps the most telling indication of the value of home work programs is that many companies interviewed for this article declined to discuss their programs. Said one employment supervisor in the Midwest, 'In this tight job market, we don't want to reveal what we view as trade secrets.'"
What are the benefits of telecommuting? The answer to that depends upon whom you ask. For the employee, it is usually something like eliminating the stress of commuting each day to the office, a more flexible work schedule, fewer work interruptions, a more relaxing and comfortable work environment, the ability to work when one is most productive, greater job satisfaction, and the ability to continue working for an employer when circumstances change. For the employer, it is such things as increased employee retention, expanded recruiting opportunities, increased employee productivity, less absenteeism, better management practices and organizational efficiency, reduced office space and expenses.
Often, telecommuting programs begin as a response to unusual circumstances or an attempt to retain a valued employee. Donna Cunningham, Media-Relations Manager of AT&T's Bell Labs in Short Hills, NJ, became a telecommuter after she married and informed her supervisor that she planned to quit and move to Vermont with her husband [ref: 1]. Pacific Bell, which employs more than 1,500 telecommuters today, began its program during the 1984 Los Angeles Olympic Games in response to the increased traffic congestion caused by increased tourism [ref: 2]. Megatek began its telecommuting program when it learned that five of their programmers expected babies near the completion date of one of their software products [ref: 3].
Regardless of their motivation for implementing pilot telecommuting programs, few companies would continue them if there were no sound business reasons for doing so. "If you select and train your people properly," advises Nilles, "productivity will go up, morale will increase, and your turnover rate will go down, sometimes drastically." All companies with successful programs report increased productivity from their telecommuters. The most common figure cited is between 20 and 30 percent. Carol D'Agostino, senior research associate for LINK, says that "a 5 percent increase is low - and probably means the program is not well run. The typical increase in productivity would be 50 percent. People who volunteer are usually self-motivated achievers who find the distractions of the office block their ability to work." Nilles observes that "even the most hard-nosed, skeptical managers say, 'At least productivity hasn't gone down.'"
The Travelers Insurance Company says that their telecommuters are 20 percent more productive, when comparing lines of code generated by their programming staff [ref: 4]. Buck Benham, Special Assignments Manager of US West Inc., says: "We have found that the quantifiable benefits during the two years that we kept very careful records ranged from absolutely no increase in productivity to as much as a 30 to 40 percent increase. Our [home-based workers] said fewer interruptions, a quieter environment and reduced stress enabled them to complete assignments more quickly and with better quality." The Travelers' Michael Crampton, a director within the long range planning and public policy unit and a telecommuter, agrees: "I go up to my study, close the door, and really focus and concentrate on thinking activities. If I have reading or research that I have to do, I can really focus on it, and I find I am significantly more productive in that environment." Lack of the distractions normally found in the office is the most frequently cited reason for the productivity boost. "Somebody pops in to talk to you or the phone rings. Your mind shifts. The question is," asks Nilles, "How long does it take to get back to where you were? Typically, the answer I get varies from '15 minutes' to 'I never get back.'"
Increased productivity isn't the only benefit. Benham says that "some of our supervisors report that the telecommuters they work with see an increase in their creative ability. And we attribute that in no small measure to their ability to concentrate or focus on the job to be done." Alex Malcolm, Director of Strategic Systems at John Hancock, also believes that creativity can be enhanced by telecommuting: "The people with whom I work are a creative type. They don't start thinking at 8:30 in the morning, nor do they stop thinking at 4:30 in the afternoon. Some of their best work probably is done in the wee hours of the morning or late at night." Drew Robichau, Senior Systems Analyst, agrees: "Telecommuting has given me the ability to really delve into the software much deeper than I could have at the office. It's given me a lot more time to 'play' around, experiment and master some programs. The day-to-day production pace of the office is to get the job done. At home, I have the opportunity to pursue esoteric details. It's been quite an advantage."
Increased productivity, however, usually isn't the reason that most companies implement a telecommuting program. "Ten or twelve years ago," Nilles says, "I thought that productivity increases would be the major incentive for work-at-home programs. But as it turns out, more often than not, it isn't number one." The two most common reasons are that "companies are running out of office space or they want to attract and retain some specially talented people."
Offering telecommuting as a work option can greatly enhance a company's ability to recruit and retain skilled people. Alan Hunter, Assistant Executive Officer of the California Franchise Tax Board, observes that with the last of the baby boomers now leaving college, "everyone knows the labor market in the '90s for certain skills is going to be treacherous." Recruitment costs will continue to skyrocket as it becomes more difficult to find qualified candidates. Travelers' Director of Human Resources, Diane Bengston, says: "Recruitment was a prime reason for offering work-at-home [arrangements] to employees." Telecommuting is not only attractive to prospective employees, but it also expands the geographic area from which companies are able to recruit. US West considers their telecommuting program to be an effective weapon against the attrition of people with valuable skill sets as well as an valuable recruitment tool. "The fact that we have telecommuting does make us highly attractive to prospective employees," say Benham. "We also have cases of people who were going to leave the organization but were able to stay [through] telecommuting."
To realize the potential that telecommuting offers, the program must be properly implemented. That includes good planning and good management. Good planning is largely logistical in nature: assessing equipment needs, installation and maintenance, office supplies and the like. Good management of telecommuters, on the other hand, often requires a change in style. Many managers believe that you can't manage it if you can't see it. That's simply not true. "The trick is to shift from observing activity to managing results," says Jonathan Goodrich, a professor of marketing in the College of Business Administration, Florida International University, Miami. Gil Gordon of Gil Gordon and Associates, a New Jersey consulting firm specializing in telecommuting, agrees. When his firm prepares managers for telecommuting, they focus on the difference "between observing activity and managing for results. There are some managers who, for whatever reason, are used to, or like, or believe in that over-the-shoulder supervision. I happen to think, though, that that kind of management is rapidly becoming passe." Joseph McKenna agrees: "The manager needs to learn - or possibly relearn - the essence of good management is not synonymous with standing over an employee's shoulder."
Nilles says that the initial reaction most managers have to telecommuting is "how do we know if people are working if we can't see them? The obvious retort to that is 'How do you know they're working if you can see them?'" He adds "Managers have to learn how to manage, to find out what their people are doing, set goals and objectives, and evaluate them on the basis of what they produce, not if they look busy, or pretty, or ugly." David Fleming of the California Department of General Services found that many of his managers "had no performance criteria to begin with. Not just for telecommuters, but for all employees." Gordon adds that telecommuting is "a way of enforcing good management practices. It requires managers to focus on the results, the deliverables, instead of the activity."
"You develop some bad habits when your staff is clustered about you." says Control Data Corporation's Ralph McCraw. "You don't have to be as concise or consistent in the way you inform workers [because you know those] who don't understand a task can yell across the hall: 'Hey, what's this all about?'" Nilles adds that those who succeed at managing telecommuters increase their level of overall managerial expertise [ref: 5]. He further observes that "the major obstacle to telecommuting in the last 15 years has been conservative management with industrial revolution mind-sets." [ref: 6]
Franklin Reece, III, president of USTeleCenters in Boston says that "I do a lot of management by wandering around. I just do it by wandering through remote telecommunications. I think that I am still a pat-on-the-back coach." USTeleCenters has about 100 employees, most of whom telecommute a minimum of two days a week.
On the flip side, James Barry, Vice President and Publisher of International Custom Publishing, is a manager who is himself a telecommuter. He finds that an unexpected benefit of his telecommuting is that he is able to judge his own staff more objectively. He says that "the arrangement puts a premium on clarity of purpose and direction. You're judging people on whether they got the job done and the quality of their work."
Barry is not the only manager who telecommutes. Tom Peters (author of In Search of Excellence and Thriving on Chaos) manages a Palo Alto headquartered business from Vermont eight months a year. He thinks that telecommuting is "the ultimate bureaucracy-bashing tool."
Though failures are rare, some programs do not realize their fullest potential either. Two failed programs were found in the research of this paper: The Hartford and California-Western States Life.
The Hartford's pilot program, not viewed as a success, was discontinued. There were, however, a number of factors which contributed to their failure. Raymond Howell was Assistant Vice-President of Information Management at the time. He said that senior management was not supportive of program and the political climate was not favorable. In addition, there were technical problems.
The company chose not to install state of the art workstations or telecommunications equipment. They also had difficulties connecting the telecommuters with their mainframe (during a time when the local telephone company was on strike). To make matters worse, the telecommuters had little technical support from their MIS department. Two months before their pilot was terminated, upgraded workstations were installed and the 600 BAUD modems were replaced by 1200 BAUD modems. The results were encouraging [ref: 7].
The telecommuters in The Hartford's program were enthusiastic, says Howell. They thought that they were "in an almost ideal situation where they could work during their peak hours, and plan home responsibilities around their jobs. They thought it was a very positive experience, and their managers would support that statement."
Cal-West's experience was much less positive, ultimately resulting in a $250,000 lawsuit for economic losses and "not less than $1 million" in punitive damages. The suit was eventually settled out of court for an undisclosed amount. Cal-West's 1982 telecommuting program, a textbook case of what not to do, attempted to save the company money by converting full time employees into independent contractors. The company offered "telecommuting" only to those who agreed to give up their benefits and work on a pay-by-the-piece basis. They could set their own hours, but they had to meet certain weekly quotas. The quotas allegedly became excessive and the lawsuit followed.
Cal-West's program violated a policy advocated by most telecommuting experts: leave compensation and benefits untouched [ref: 8, 9, 10, 11, 12, 13, 14]. The Travelers' Crampton said: "We wanted to ensure that the telecommuter was treated just like any other employee of the Travelers. There could be no distinction in terms of benefits, salary or career paths. The telecommuter has to be on an equal footing."
Programs such as Cal-West's have caused some to assert that telecommuting could lead to in--home electronic sweat shops. The AFL-CIO, for example, asked the United States Department of Labor in 1983 to ban telecommuting [ref: 15, 16]. It seems unlikely that that will happen in the next few years, however, as President Bush praised the telecommuting concept when he addressed the California Chamber of Commerce in March of 1990 [ref: 17, 18].
What's involved in a successful telecommuting program? Good management and good planning, and a little pioneering spirit. Don't be afraid to try telecommuting, says Pacific Bell's Al Repato. "The bottom line has always been a positive gain as far as the company is concerned."
Good management will focus on objectives. The Travelers' uses the same objective-oriented management and appraisal system for telecommuters as they do for other employees. Telecommuters, says Travelers' Crampton, "negotiate their objectives and establish their performance standards with their respective managers, and they are measured based upon that."
Good planning consists of anticipating the needs of the home office, installation of equipment, and connectivity. Usually, one or two dedicated business telephone lines, paid for by the employer [ref: 19], should be set up. Good planning also involves selecting the right people, determining the methods and kinds of communication, and the frequency. Gordon recommends candidates with at least six months experience: "We want somebody who's been on the job long enough to answer many of their own questions and solve many of their own problems." He also cautions: "It is not for everyone, and the manager has to retain that same discretion as he or she would for any other assignment." Another important consideration to plan for is that there is a predictable period of adjustment (and decreased productivity) when an individual begins to telecommute. This often takes from one to three months and is usually directly proportional to the amount time required to procure and train on all the needed equipment.
"Despite its appeal from a technology standpoint, telecommuting is really a business solution to business problems," says Gordon. "Both the employer and the employee can come out ahead in such a situation, something we don't have an opportunity to see happen very often."
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Table of Contents for the Appendices
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Footnotes (References)
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Bibliography
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Appendix A
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Appendix B
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Appendix C
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Appendix D
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Appendix E