Feature

How to Create an Effective Telecommuting Program

While some big-name companies have ended their telecommuting programs, that doesn't mean it can't work in your business.

June 1, 2015 | Dana Wilkie

Two years ago, when Erin Ramsey was interviewing for a job at New York City-based Families and Work Institute (FWI), she made one thing clear: She had no intention of moving to the East Coast. She had a home in the Midwest, two kids in high school, a grandbaby nearby and a husband with a solid job in the area.

Ellen Galinsky, FWI’s president, was wary. She wanted someone who could be in the office and interact face to face with the small team working on the organization’s “Mind in the Making” initiative that focuses on childhood learning.

But, in the end, Ramsey was the best qualified and most talented applicant, so Galinsky hired her. Today, Ramsey is the initiative’s director and works full time from her home in Evansville, Ind., holding weekly teleconferences with her team and traveling to the FWI offices once every month or so to see her colleagues.

Although Galinsky leads an organization known for its pioneering approach to work/life balance, she can be excused for initially balking at Ramsey’s desire to be a full-time telecommuter. Collaborating, brainstorming, building collegial relationships, managing subordinates—custom has taught most of us that these work activities are ideally done in person.

Indeed, better collaboration and communication were the chief reasons high-profile companies Yahoo, Best Buy and Hewlett-Packard gave for scaling back or ending their telecommuting options. In all cases, executives argued that the companies could be more innovative and successful if employees worked side by side.

Representatives for these three businesses either declined to comment or didn’t reply to requests for comment on how their new telework limits have helped or hurt their companies.

But executives who have created successful telecommuting programs—sometimes after fits and starts—tend to offer this advice:

A robust telecommuting program requires strong managers. It means doing the hard work of setting clear, precise, measurable work goals. It takes the right technology—as well as tech training—to ensure that remote workers stay connected. And it requires recognizing what type of person makes a reliable telecommuter, and what type doesn’t.

On the Rise

About 3.3 million people in the U.S., not including the self-employed or unpaid volunteers, considered home to be their primary place of work in 2013, according to the latest statistics from the Telework Research Network, part of the consulting firm Global Workplace Analytics. That’s up nearly 80 percent from the number of full-time telecommuters in 2005. Based on an analysis of the U.S. labor force composition, the network estimates that 64 million employees hold jobs that are compatible with teleworking at least part time.

The share of managers in the U.S., the U.K. and Germany allowed to telecommute during normal work hours is almost 50 percent. The proportion in many developing countries is between 10 percent and 20 percent.

Research and experts indicate that telecommuting has become increasingly common for several reasons:

Laptops, cellphones, videoconferencing, e-mail and remote desktops have made it easier.
Increased traffic has robbed personal time from employees who must be at the workplace every day.
The share of U.S. households with children in which both parents worked increased from 40 percent in 1970 to 62 percent in 2012, according to a 2014 report by the Council of Economic Advisors—making telecommuting one way to help employees balance their work and personal lives.
Telecommuting often makes economic sense, as it can cut costs for both businesses and employees. Sun Microsystems found that its telecommuting program saved the company $64 million a year on real estate and $2.5 million on electricity bills, while employees saved an average of $2,335 a year in commuting costs. And, with a reduced number of in-office employees, FWI was able to rent a smaller space, saving $800,000 over the 10-year life of the new lease.

Today, home-based workers range from sales assistants to real estate agents to software engineers. A 2014 survey by the Society for Human Resource Management showed that 59 percent of U.S. employers offered telecommuting to employees. Companies that champion telecommuting include Xerox, Dell, American Express and Apple.

Telecommuting practices can vary widely even within industries. For example, JetBlue Airlines’ call center employees all work from home, but American Airlines doesn’t allow any such arrangements and United Airlines has a mix of practices.

Lingering Doubts

“Speed and quality are often sacrificed when we work from home,” read the February 2013 memo that Yahoo HR chief Jackie Reses sent employees when announcing that CEO Marissa Mayer was ending the company’s telecommuting program. “We need to be one Yahoo!, and that starts with physically being together.”

In a statement, the company noted that Mayer’s policy wasn’t “a broad industry view on working from home. This is about what is right for Yahoo right now.”

Other big-name companies followed suit. A week after Yahoo’s move, Best Buy reined in its Results Only Work Environment (ROWE) program, which allowed employees to work where and when they wanted. Where telecommuting was once an employee right, workers had to get supervisors’ approval—even though a University of Minnesota study found that employee turnover was 45 percent lower for those who participated in the ROWE program. Eight months later, Hewlett-Packard announced that it was discouraging remote work as well.

Bringing everyone into the workplace is often a reaction to a decline in profits or the company’s failure to meet organizational goals, says Tim Eisenhauer, CEO of San Diego-based Axero Solutions, which builds social networking platforms for companies.

It’s worth noting that Mayer is Yahoo’s sixth CEO in as many years, and she was brought in to revive the company. Best Buy CEO Hubert Joly was also charged with turning around the retail chain, which has struggled to compete in an industry that’s shifting to online purchasing.

Bringing “all hands” back into the workplace, where managers can see them, creates an illusion of control, Eisenhauer says, even if having everyone there doesn’t translate into more productivity, higher profits or a bigger market share.

Sometimes, a company’s or a manager’s reluctance to allow telecommuting is a matter of trust.

Cord Himelstein, vice president of marketing and communications for Michael C. Fina, a jewelry and tableware retailer, worked from home when he was a regional representative for a recording company. “My bosses would call just to make sure I was working,” he recalls. “It was definitely a reminder that you were being watched.”

To assess whether employees actually do “shirk from home,” researchers at the National Bureau of Economic Research conducted an experiment at CTrip, a 16,000-employee, Nasdaq-listed Chinese travel agency.

Call center employees were randomly assigned to work from home or in the office for nine months. Working from home led to a 13 percent performance increase, 9 percent of which was attributed to working more minutes per shift, thanks to fewer breaks and sick days, and 4 percent to making more calls per

minute, thanks to a quieter environment in which things like getting lunch or using the bathroom were more convenient than at the workplace. Attrition also fell sharply among the home-based workers, dropping by 50 percent compared with the control group.

“The overall impact of working from home was striking,” the researchers wrote. “The firm improved total factor productivity by 20 percent to 30 percent and saved about $2,000 per year per employee working at home. About two-thirds of this … came from the reduction in office space and the rest from improved employee performance and reduced turnover.”

Creating a Program that Works

One key to successful telecommuting arrangements is providing proper training and tools. “There are particular things [remote workers] have to get used to doing—how they access the computer network, what systems will be open for them, what security standards are in place to gain that access,” says Matt Brosseau, chief technology officer and head recruiter at Instant Alliance, a Chicago-based HR staffing and consulting firm.

“If you send a bunch of employees out into the wild blue yonder without training, you run the risk of having a lot of tech issues crop up," Brousseau says. "But if you do that upfront training, you’ll find the [problems] are relatively minimal.”

Results from the January 2014 National Workplace Flexibility Study show that 98 percent of managers who received this type of training concluded that telecommuting did not have a negative impact on business.

“The biggest asset to telecommuting success is giving people access to information,” says Eisenhauer of Axero Solutions, whose 24 employees reside in various states and all work remotely. “You need collaboration software, ways for people to communicate outside of e-mail, ways to give workers access to people in the company who have the information that can help them do their jobs.” Key to Axero’s success is the company’s intranet, which connects colleagues in real time so that everyone can see and discuss how projects are coming along.

It takes effort on a manager’s part to create reliable metrics to measure the performance of employees working from home and to keep teleworkers connected to the organization and their colleagues.

“You have to have regular times for discussion and brainstorming, and you have to make sure people are in the loop,” Galinsky says, adding that FWI gives teleworkers an allowance so they can travel to headquarters as needed. “You have to arrange time for being together, because sometimes there is no substitute for face-to-face interaction.”

It can be particularly difficult to set metrics for jobs that require abstract thinking or creativity. “You don’t come up with a drug to cure cancer right away, so, with jobs like that, you have to expect a certain amount of failure,” Galinsky says. “There are other ways to quantify that kind of work. Is the person producing peer-reviewed articles? What are colleagues saying about them? Are they seen as a team player? Are their ideas worth testing?”

After iHire LLC, a Frederick, Md.-based company that matches employers with workers, gave its employees the technology needed to work from home along with unlimited paid time off (PTO), sales dropped. Lisa Shuster, who was hired to build the company’s telecommuting program, discovered that several workers were taking far more PTO than expected and that managers hadn’t put solid sales quotas in place. Once quotas were created, PTO requests dropped and sales increased dramatically.

“This year, we had our highest increase in sales revenues in the history of our organization,” she says. “The lesson was that there need to be strong managers in place. Taking unlimited PTO does not supersede an employee meeting their objectives.”

Managers also need to think through when they expect telecommuters to be available and how they will cultivate relationships with remote workers.

“If you’re used to managing people in an office and then introduce telecommuting but have never managed telecommuters before, there’s a learning curve,” Himelstein says. “Are you expecting them to be available from 9 to 5, or do you expect to give them tasks and they take care of it whenever they want?”

Max Yoder, CEO and founder of Lesson.ly, which helps companies maintain records of employee training and education, says it helps to “try to mimic human personal interactions with your remote workers to the extent possible.

“This may mean sending a simple e-mail to an employee asking how his family is doing or remembering to send a card on a remote worker’s birthday,” he explains. “These little gestures make a big difference when it comes to a remote employee’s perceived relationship with a company.”

Even with the best program in place, telecommuting is not for everyone. “We’ve all had an employee we had to watch, to make sure they’re on task,” Brosseau says. “That type of person is probably not the best for a work-from-home policy. But it works for someone who you never have to check on, someone you can give a task … and before the day is over, it’s done.”

After iHire rolled out its telecommuting program, seven workers were fired because they couldn’t keep flexible hours and also meet expectations, Shuster says.

“Some employees couldn’t hack it in terms of being measured by results,” she says. “We took that as an opportunity to say, ‘We’re increasing our expectations here; we need to make sure we’re all working at a high level.’ We put stretch goals in place for people.”

At FWI, Ramsey’s workday includes creating a checklist for every task and every goal, so she can keep track of her production levels and her accomplishments, hour by hour, day by day.

“If someone were to say to me, ‘This [telecommuting arrangement] isn’t working, and we’re not getting enough done,’ it would be very easy for me to argue otherwise,” she says. “Everything is documented, and there’s just no doubt that my production is super-high, and possibly higher” than if she worked in the office.

Attracting Talent

Telecommuting can be the carrot a company needs to land the best candidate. Often, it can make up for what a company can’t pay in salary.

“What we get is the best employees we could possibly have,” Galinsky says. “I wouldn’t have lost them for anything in the world.”

Brosseau works with a colleague in Guatemala to make clients’ websites more user-friendly. “All our interactions are remote,” Brosseau says. “He has a rare skill set, and I had to find someone good. Let’s say you’re looking for a ‘big data’ professional—someone who’s been doing this since the onset of big data. You’re talking about an incredibly small group of professionals. If your company is in Hudson, Ohio, one of them probably doesn’t live near you.”

Dana Wilkie, an online editor/manager for Alexandria, Va.-based SHRM, telecommutes from Pennsylvania.

Sidebar: Out of Sight, Out of Mind?

Research suggests that full-time telecommuters tend to lose out on promotions more often than their onsite colleagues. A study of Ctrip’s 16,000 employees found that the promotion rate for telecommuters at the travel agency was reduced by about 50 percent.

Matt Brosseau, chief technology officer and head recruiter at HR staffing and consulting firm Instant Alliance, says promotions depend a lot on the type of work a telecommuter performs.

“If I was grooming someone to work as a senior manager under me and to oversee a team, I would want a lot of face time with that person,” Brosseau says. “But let’s say you’re looking at a senior developer role where a lot of computer code is produced. That won’t hinder a telecommuter’s ability to get ahead.”

Sidebar: Working It Out

Ensuring that working from home is successful for both an employer and its employees takes planning and constant attention. Tips from experts include the following:
Provide suitable training and technology, including collaboration methods.
Create appropriate performance metrics.
Establish regular times for discussion and brainstorming.
Communicate regularly; keep telecommuters in the loop.
Schedule regular visits to the worksite.
Simulate informal, face-to-face interactions, such as wishing someone happy birthday.
Set expectations on workers’ schedules and availability.
Select for telecommuting arrangements workers who are disciplined self-starters.