Recently “Emily”, an HR Manager at one of C2’s government contracting clients implemented an anonymous “suggestion box” to obtain employees’ ideas on how to enhance the company’s benefit offerings.  She discovered that a majority of respondents wanted the option to telecommute at least part of the time.  But before going to her management team to present the idea, Emily came to C2 for guidance on some of the benefits and pitfalls of telecommuting.

A.     What Does it Mean to Telecommute?

 Telecommuting, working remotely, work-at-home, or being a “virtual” employee are all terms that companies use somewhat interchangeably across a broad spectrum of industries. As a general matter, all of these terms mean the act of working at a location other than the company’s office or worksite, often at home, rather than commuting everyday to and from an office.  A growing number of companies are allowing employees in certain positions to telecommute on a full-time basis.  However, on average, companies allow employees to telecommute one to three days per week and report to the office the remaining days.  Obviously, the nature of a company’s business plays a tremendous role in the feasibility and amount of telecommuting that makes sense.  For example, non-exempt employees at a manufacturing company will be far less able to telecommute than salaried, exempt office employees of a software company.

B.     What are the Potential Benefits to Telecommuting?

Companies across the board have experienced mixed results with telecommuting practices.  But there are some potential benefits that continue to peak employers’ curiosity about its viability at their organization, including the following:

  1. Employee productivity increases with flexibility in work hours and location;
  2. Flexible work options reduce absenteeism;
  3. Telecommuting is eco-friendly and cost-effective, because less office space is needed; and
  4. Flexible work options increase employee retention and is a positive recruiting tool.

Improved Productivity. Employees have reported that they are more effective at home than when they work out of the office.  The primary reason they cite is that the seemingly endless interruptions at the office create a work pattern that is subject to repeated restarts, which increases the time it takes to complete tasks.   The additional aspect of socializing with other employees is also frequently cited as having a negative effect on productivity.

Reduced Absenteeism.  Telecommuters may be more productive because they have increased flexibility to schedule their actual working time. They have some flexibility to work during their most effective periods or navigate around other demands in their lives that would normally require them to be out of the office.  For example, some individuals are morning people, others are more productive at night.  A telecommuter may be able to better balance their work with personal demands in their lives (e.g., children, school).  And while telecommuting should not be a substitute for child care, it can afford employees greater flexibility in scheduling this type of care.

Telecommuting is also useful in minimizing the impacts of other occurrences, such as extremely inclement weather, highway construction, or special events (e.g., the Olympics).  In the Snow Belt, “snow days” at local schools force many parents to stay at home, rather than go to work, in order to supervise children usually at school.  And even employees without children can find it difficult to even get to the office.  These interruptions play havoc with deadlines and deliverables.  Organizations with telecommuting programs in place often find that employee productivity remains high during these times.

Overhead Savings.  Organizations with well-planned telecommuting programs have found they are able to reduce the size of their office and furnishing requirements for employees.  In addition to utilizing less square feet (and paying less rent), some companies have adopted office sharing arrangements whereby two or more employees share an office because they work outside the office part of the time.  This does require the company to schedule the use of office space, but the cost savings on office space often makes up for this additional administrative task. Some companies have chosen to create revolving work stations.  Employees are not assigned to a work station but may choose their work space upon arrival at the office.  As such employees are not “married” to their desks, office, or cubicle. Instead they “check-in” on days when they commute to work.   Some organizations have reported up to 30% reductions in overhead by allowing some personnel to telecommute.

Improved Retention and Recruiting.  Employees who have tried telecommuting tend to prefer it and tend to seek out similar opportunities at other companies when looking for new employment.  Employers are also realizing that telecommuting is a way to keep talented employees from “jumping ship” or who, for various personal reasons, find that they can no longer commute to the office.  A common example is when the spouse of a valuable employee is forced to relocate.  Companies are learning they can often retain the employee through the use of telecommuting.

Telecommuting is also a mechanism for recruiting persons with disabilities.  These may be individuals who are excluded from the work force solely on the basis of their inability to commute to and from an office.  (Companies who have employees with disabilities as telecommuters should take care to provide for some social interaction among all their employees.)

C.     There are Some Drawbacks to Telecommuting

Not every company sings the praises of telecommuting.  Contrary to employees’ assertions, some companies feel productivity actually decreases among telecommuting employees.  Also, allowing employees to work remotely (particularly on a large scale) can create unintended problems and raise concerns that companies need to adequately resolve before deciding to make telecommuting an option for their employees.  Some of the potential drawbacks include the following:

  1. Employee productivity actually decreases;
  2. Working remotely allows for abuse of vacation and sick leave;
  3. Supplying office equipment, and worker’s compensation insurance; and
  4. Telecommuting is too difficult to implement for non-exempt, hourly employees.

Decreased Productivity.  Some companies disagree that telecommuting creates increased productivity among employees.  One common problem that many companies point to is that employees who work remotely tend to get distracted by outside demands on their time that they would otherwise put off until after work or their day off if they were coming into an office every day.  Everything from kids, to pets, to doctors’ appointments, to appliance repairmen are thought to detract from employees’ productivity by creating distractions that are not present at an office.

Abuse of Paid Leave.  When employees work from home, they are able to incorporate into their day some things that they would have otherwise had to take vacation or sick time to cover.  Doctor’s visits, school meetings, home repair visits, car service appointments, etc. are just some of the tasks that telecommuting employees can do during their day without taking paid leave.  An employee who works from the company’s office would ordinarily have to take vacation or sick leave to accomplish these things during the business day.  While companies can try to make telecommuting employees use their PTO for such things, monitoring their whereabouts when they are not in the office is not always easy.

Creating a Viable Remote Office.   Companies who allow employees to work from home are still obligated to provide them a safe environment from which to perform their duties.  Furthermore, employers should check with their insurance carrier as to whether their workers’ compensation coverage will apply to their employees’ home office.  Companies often utilize a formal agreement to iron out employee safety and insurance issues – sometimes even requiring the employee to attest in the agreement that her home work space contains certain items (i.e., ergonomically sufficient desk and chair, sufficient lighting, a room or space designated solely as an office, etc.).  Another oft cited concern by companies is that supplying office equipment to telecommuting employees can be a hassle and often results in loss of the items when an employee departs the company.  In other words, it is far more likely a company will recoup all the company property from an employee’s office that is located at the company’s worksite as opposed to being located in the employee’s home.

Monitoring Non-Exempt Employees’ Time.  By all accounts, telecommuting seems to work better for exempt employees than non-exempt employees.  Exempt employees do not necessarily need to punch a “time clock” and their pay is not driven by the precise number of hours they work during any given day or week.  By contrast, non-exempt employees only get paid for hours they actually work – and therein lies the rub.  Many companies find it difficult to monitor the hours “actually worked” by non-exempt employees who telecommute.  Certainly, many companies today have electronic time keeping systems where employees can “clock in” and “clock out” using a computer or even a cellphone.  But some companies believe that allowing non-exempt employees the option to telecommute invites “time card fraud,” because there is no consistent means to monitor whether a non-exempt employee is working when they are not in the office.

D.     The End Result for Employers

There are undoubtedly pros and cons to allowing employees to telecommute.  Whether it makes sense for any particular organization to implement a telecommuting program for some or all of its employees requires an individualized assessment of many factors, including the type of work the company performs, the makeup of its workforce, the practices of its competitors in the market, and whether the company thinks it can reap any overhead savings or other tangible benefit (as opposed to simply providing the employees an additional benefit program). Those companies that decide to utilize some form of telecommuting arrangement for its employees are well advised to create appropriate handbook policies, agreements, and other written parameters so that both the company and the employees are all on the same page.

C2 provides strategic HR outsourcing to clients who want to develop optimal workforce strategies and solutions to allow them to be more competitive and profitable. C2 blog posts are intended for educational and informational purposes only.