High Gas Prices Challenge U.S. Businesses

Workers are changing commutes and behaviors as a result of $4 gas

By Catherine Skrzypinski May 10, 2011
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The spike in gas prices in 2011 is forcing U.S. companies to re-evaluate how to conduct business and prompting workers to explore alternatives to their daily commutes.

In early May 2011, the average price of gasoline had risen above $4 per gallon in several states, including Alaska, California, Connecticut, Hawaii, Illinois, Indiana, Michigan, Massachusetts, New York, Ohio, Rhode Island, Washington, Wisconsin and the District of Columbia.

“Even though gas prices are getting higher across the country, that’s not necessarily a bad thing,” said Jay Hargis, director of learning and leadership development at Tufts Medical Center, adjunct professor of human resources at Suffolk University in Boston and Society for Human Resource Management (SHRM) member. “Higher gas prices are going to trigger behavior change—whether it is for health reasons or for increasing flexibility in the workplace.”

The $4 mark is a significant psychological threshold for American commuters. The last time gas prices were this high was in the summer of 2008, right before the economy went into a tailspin, according to the U.S. Energy Information Administration.

Retail surveys show that American motorists are starting to buy less fuel, yet government and energy analysts expect prices at the pump to keep climbing in the summer of 2011.

Tough Times

During a surge in gas prices in 2008, 57 percent of human resource executives surveyed by global outplacement consultancy Challenger, Gray & Christmas, Inc. said their companies offered programs designed to alleviate increased commuting costs. The most popular option was to condense the workweek into four 10-hour days.

However, John A. Challenger, CEO of Challenger, Gray & Christmas, said that in the 2011 economic climate, employers will be reluctant to cut a day off from their work schedule.

“Circumstances have changed significantly from early 2008,” Challenger said in a statement. “Companies are focused primarily on rebuilding efforts as they struggle out of the worst recession in decades, and right now in this job market, they have the upper hand and do not have to offer extra incentives to attract or retain workers.”

“Even if the hours are the same by condensing 40 hours over four days, the loss of a day when customers and prospective customers might need service is too much to risk at this point in the recovery,” Challenger said. “Telecommuting is also less likely to be increased in this environment.”

“Instead, [companies] will have to find their own ways to cut commuting costs,” Challenger added. “That may lead to more people biking to work or taking public transportation.”

Boston Blazers

In an urban metropolis such as Boston, many workers are already utilizing its vast public transportation network, including the “T” subway and commuter rail.

In July 2011, Boston is scheduled to unveil a bike-sharing program throughout the city, similar to the ones in Chicago, Denver, Minneapolis, Miami and Washington, D.C. More than 600 bicycles will be available at 61 solar-powered kiosks throughout Greater Boston and its environs, and the program will operate between March and November. According to Hargis, the first 30 minutes on the bikes are free.

“I’m sure there will be more interest in this program as gas gets more expensive,” Hargis said.

SHRM member Jeff Gelinas, HR and staffing manager at Kenexa, a computer software company in Boston, said his company has an area for bike storage and shower facilities for those who commute on two wheels. He added that most buildings in downtown Boston have bike racks.

Carpooling in Boston never really took off, Hargis said, because it goes against the grain of America’s freedom culture. Gelinas agreed, citing his unpredictable work schedule as not being conducive to an inter-office carpool.

Hot in Cleveland

Meanwhile, in the Cleveland metropolitan area, public transportation has always played a role in getting its workers to and from their place of employment. KeyCorp, the parent company of Key Bank, makes bicycle racks and shower facilities with lockers available at branches in downtown Cleveland.

A manager in KeyCorp's HR group in Cleveland has been instrumental in starting up the Mobile@Key program, which outlines policies and procedures about working off site or from home. According to the manager, Key has experienced an overall increase in telecommuting requests during the past four years.

Key has offered “flextime” as an alternate work schedule in which employees are able to change the starting and ending times of their normally scheduled workday.

“We did launch an awareness campaign in 2008 to remind employees of ‘flextime’ and other available benefits that could help them with difficult economic conditions, including the rising cost of fuel,” KeyCorp’s HR manager added.

‘Flexible’ Companies

Other companies are adopting flexibility programs for its employees, although most people still work traditional hours, Hargis noted.

“More companies are offering staggered shifts to beat rush hour,” Hargis said. “Employees are negotiating with their managers to have a schedule that suits their needs and lifestyle.”

Best Buy Inc. is focused on a results-only work environment, Hargis explained. Managers at the electronics retail store rate employees by their work ethic and behavior, not by watching the clock to see when they arrive and depart. Traditionally, most companies are not flexible with hourly employees, but Best Buy is revolutionizing the mind-set, Hargis added.

IBMandBank of America Corp. are implementing remote offices. “Organizations are taking a look at costs and have decided this is how work will be in the 21st century,” Hargis said. “Companies like Bank of America and IBM have tools in place to help remote workers.”

A distributed workforce does make sense for a company’s bottom line, Hargis said, as home offices are much cheaper to maintain. One downside to home offices, Hargis added, is that many workers are putting in longer days and are fighting feelings of isolation from their colleagues.

Another challenge is how relationships between managers and subordinates will be conducted.

“HR must equip managers for the age of the virtual office,” Hargis said. “How should they monitor output? How do they handle communication—either by e-mail, IM, phone or even Skype? How do they manage effectively in a virtual workforce? Good managers must work well with people, as well as with technology.”

Alternative Nation

Even if telecommuting is not an option, companies are being urged to explore other alternatives for employees during periods of high gas prices. Gelinas of Kenexa suggested that companies can give an incentive to employees if they purchase fuel-efficient cars.

KeyCorp’s HR manager has several recommendations:

  • Offer compressed workweeks, mobile work programs, job sharing and part-time positions.
  • Provide Computer Benefit Programs to enable employees to use pretax dollars to cover parking expenses or public transit expenses related to travel to and from work.
  • Reward employee performance with gas cards.

Hargis said companies can increase mass transit subsidies to encourage the use of public transportation in areas where it is underutilized.

Catherine Skrzypinski is an online writer/editor for SHRM.

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