May 20, 2010

Are Telecommuting Stats Too Good to Be True?

Fredric Paul, in a post over at Enterprise Efficiency, suggested our research is biased. Says it’s all too good to be true. He didn’t bother to contact us before he wrote, so we left a comment there with some initial thoughts and referred readers here for the rest of the story.

In his post he writes:

Citrix Online, which makes remote access products, natch, has come out with a report — “Workshifting Benefits: The Bottom Line” — claiming telecommuting could save U.S. businesses $10,000 per employee, or a whopping $400 billion per year!

Conducted by the (unbiased?) Telework Research Network — the study is all good news, but that $400 billion figure raised warning flags for me.

No one paid us to do the research (which is not to say, we wouldn’t welcome some funding for further research–provided it didn’t have any strings attached). Our model evolved from research we did while writing a book on the topic of home-based work, Undress For Success – The Naked Truth About Making Money at Home, Wiley 2009.

We approached Citrix Online to fund additional research, but they suggested we do a whitepaper based on our existing research–specifically because Citrix preferred independent research. In the end, we agreed to write a paper for them that quantified the bottom line benefits for companies with 50, 100, and 500 home-based telecommuters, an audience Citrix Online serves. Yes, we were paid for the paper, but the research didn’t change as a result.

The conclusions we’ve drawn are based on our synthesis of over 250 case studies, scholarly reviews, research papers, books, and other documents on telecommuting and related topics. In addition, we interviewed large and small virtual employers and their employees, corporate executives, telework advocates and naysayers, top researchers, legislators, legal representatives, leaders of successful telework advocacy programs in both the public and private sector, and venture capitalists who have invested in the remote work model.

At every turn we used conservative estimates, vetted by other experts, to make sure the results weren’t, literally, too good to be true.

Using the latest Census data, and assumptions from dozens of government and private sector sources, we developed the Telework Savings Calculator to model the economic, environmental, and societal potential of telecommuting for every, city, county, congressional district, and state in the nation. It’s been used by company and community leaders throughout the U.S. and Canada to quantify the extent to which telecommuting can reduce greenhouse gases and petroleum usage, save money, improve work-life balance, increase employee loyalty and turnover, reduce absenteeism, increase productivity, and reduce highway congestion and traffic accidents.

Our research has been quoted in the Wall Street Journal, Harvard Business Review, Washington Post, and dozens of other publications.

The Telework Savings Calculator is available free here on this site, along with a free version that allows companies and communities to roughly quantify their own potential telework savings. Custom runs are also available for those firms who wish to change any of the more than two-dozen assumptions in our standard model.

The number comes from combining five-year-old data claiming that 40 percent of American workers could work from home at least part-time, and a 2009 survey indicating that 79 percent of them would do it if allowed.

Correct. The journal article (“Telework Adoption and Energy Use in Building and Transport Sectors in the United States and Japan”, Matthews and Williams, Journal of Infrastructure systems © ASCE, March 2005) is ancient in terms of business use of computers and broadband penetration. We’d like more recent data; but there simply haven’t been any other thorough studies done. However the available data makes our results conservative. The percent who could work from home is undoubtedly higher now. For example, 61% of federal employees are eligible – the balance being mostly customer facing or very high security jobs.

The authors of the study, based on Bureau of Labor (BLS) Statistics data, only included the following BLS job categories: professional specialty, technical support, administrative support, and a fraction of sales. Management level jobs, even within those categories, were not considered eligible. And then they went even further, they included only jobs they considered to be telecommuting-compatible:  individual versus group work; clear parameters for evaluation; did not require ongoing personal contact with customers; and did not require physical work to be done on-site. Management roles, for example, didn’t even make the cut.

To top it all off, the study cites a 27 percent increase in productivity on days when employees work from home, due to reduced interruptions, more effective time management, a feeling of trust, flexible scheduling, and longer hours available by reducing commuting.

Correct again. That’s based on the fact that study after study show that people who work from home are more productive than their office counterparts. But as in every other case we’ve used conservative numbers, even when 32.5% (Dow Chemical), 35% (BestBuy) and even 50% (IBM) are documented (see below).

Contributing factors include:

  • Fewer interruptions: Home-based workers are not distracted by the many time drains that take place in a traditional office – morning chatter, coffee breaks, long lunches, rumor mills, birthday parties, football pools, etc.
  • More effective time management: Email and other asynchronous communications can be time-managed more effectively and are less apt to include non-work digressions.
  • Feeling like a trusted employee: A sense of empowerment and commitment is consistently shown to be one of the highest contributors to employee job satisfaction.
  • Flexible hours: For those who are able to flex their hours as well as their location, workshifting allows them to work when they are most productive.
  • Longer hours: Many employees work during the time they would have otherwise spent commuting. In fact, overworking is a significant problem.

It’s also based on industry research on productivity (citations for the following are among those included in the whitepaper):

  • Employees admit to wasting two hours a day (not including lunch and scheduled breaks).
  • Businesses lose $600 billion a year in workplace distractions.
  • Best Buy’s average productivity increased 35% through its flexible work program.
  • A Work+Life Fit / BDO Seidman survey of CFOs showed 75% agree that flexible work increases productivity.
  • British Telecom estimates productivity increased 20% through telecommuting.
  • Dow Chemical estimates a 32.5% increase in productivity among its teleworkers.
  • Surveys and pilots conducted by IBM suggest that telework employees can be up to 50% more productive.
  • Alpine Access, one of the nation’s largest all-virtual employers, attributes a 30% increase in sales and 90% reduction in customer complaints to its home-based agents.
  • American Express teleworkers handled 26% more calls and produced 43% more business than their office-based counterparts.
  • Compaq Computer Corporation documented increased teleworker productivity ranging from 15 to 45%.
  • Over two-thirds of employers report increased productivity among their teleworkers.
  • Sun Microsystems found that teleworkers spend 60% of the commuting time they save performing work for the company.

Frankly, it all sounds a little too good to be true for me. I’m all for telecommuting when practical and appropriate, but I think we’re being oversold.

Undersold, actually. We’ve diligently used conservative numbers whenever a range is available. For example, already over 50% of employees nationwide telecommute some of the time. The “what if” level of 40% telecommuting 2.5 days a week takes into account, as an other example, that about 20% of people simply won’t want to even if they could. We’ve even included mileage estimates for days when people don’t commute because we know they still have to run errands that they would have done on the way to or from work, and we include the extra electricity a home office will cost a telecommuter.

Mobility, remote work, and virtual collaboration are happening. It’s no longer just an employee benefit, it’s a business strategy.

Currently, the report says, only some 2 percent of workers actually do telecommute. Why? If you ask me that’s partly because the right tools haven’t been available, and partly because most companies — and most people — are built on the concept of people working together and getting to know each other in person.

That’s why we asked the experts, and based our model on research results, not opinion. The studies that we’ve read show management resistance is the biggest hold back by far (loss of control over employees cite by 82% of managers, fear of reduced productivity cited by 73%), followed by security issues (cited by 21%) and lack of funding (cited by 6%). “The right tools” isn’t even on the list.

A lot of these projected benefits are still pretty theoretical.

Actually, they’re not. They’re backed up by case studies from real companies like Best Buy, American Express, British Telecom, Dell, and the U.S. Goverment’s own teleworkforce – as we stated in the report.

For example, would telecommuters’ productivity really stay elevated by 27 percent when half the company is spending half their days at home? Sure workplace distractions are a drag, but what about the distractions of working at home?

Actually, productivity goes up as people become more accustomed to the new work environment. Many of the companies cited in the paper have been involved in telecommuting for more than a decade. Alpine Access, a 10 year old  all virtual call center with 2,800 agents in 35 states shows 30% higher productivity than their bricks and mortar counterparts.

Also, the study seems to flip back and forth between part-time and full-time telecommuting options, when the two pose very different challenges and opportunities.

Actually, the report focuses on half-time telecommuting, in part precisely because “the two pose very different challenges and opportunities.” We’re unable to find any place where we assumed full time telecommuting.

For example, the study claims telecommuting cuts facilities costs. But those savings would be marginal for part-time telecommuting unless employees are willing to share office space in hoteling and hot-desking schemes — the modern equivalent of hot-bunking on naval vessels. (Ewwww.)

Sleeping in someone else’s sweat and slobber hardly compares to using a shared office.

Beyond that, half-time telecommuting does not mean everyone works at home 2.5 days a week. Some do so full time, some three days a week, and some just once in while. Our assumption of an 18% reduction in office space due to half time telecommuting is based on some office sharing (which has been proven to work) and some elimination of offices.

More to the point, I have a lot of experience both telecommuting and working with telecommuters, and I can tell you there are pluses and minuses to the practice.

Correct. Completely agree. We weren’t writing about the pros and cons. But we have right here.

Despite dramatic improvements in remote-working technology, it’s a mistake to think that telecommuting can provide the rich interactions of in-person collaboration. That’s less of an issue for part-time telecommuters, but then you lose some of the savings.

Exactly why we assume half time telecommuting, though full time models have been proven to work by many companies. Indeed, there are number of companies that have recently closed their offices and gone all virtual.

Hey, and don’t forget about the poor folks stuck in the office. Past research has shown that telecommuters may be happy with their lot, but the remaining office workers are often resentful, feeling that that they’re left having to pick up slack.

That study was based on one company and only 250 participants. It was heavily criticized by experts and may serve more as a good example of why a properly executed telework program, including training, is a must more than an example of why telecommuting won’t work. Well executed telecommuting programs deal with those kinds of HR issues before they become business issues. By the way, a PhD thesis from Virgina Tech, based on a meta-study of available research, found that “some non-telecommuters experienced envy and jealousy, frustration, resentment, anxiety, unfairness and anger towards telecommuting colleagues,” but “few empirical studies have directly examined the creeping affect and effect of the telecommuting challenges on others in the work unit.” It may be an issue, but good management still is requried.

And then there’s this: Buried in the Citrix Online report is a forecast by TechCast, estimating “the market for related telecommuting products and services at $400 billion a year.” Well, there goes your $400 billion savings!

Buried? We pointed that out on the first page! In any event, replacment spending to support a new business model does not erase the economies that model provides.

Regarding “there goes the $400 billion in savings,” much of this is not new spending, but replacement spending. Rather than mainframes and hardware – it’s technologies to support mobility that will capture IT dollars in the next 5 years. This spending will be necessary for any company that wants to keep pace with technology regardless of whether their employees work at home, on the road, or in a traditional office. The nature of IT has changed.

Okay, class. Any questions on this case study on slanted “journalism”?

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In The News

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It’s Unclearly Defined, but Telecommuting is Fast on the Rise, New York Times, March 7, 2014

Telework Yields $32 Million in Snow Day Savings, Forbes, February 27, 2014

Lone Eagle Cities: Where the Most People Work from Home, NextGov, March 3, 2014

Madison firms not about to ban telecommuting, Capital Times, February 25, 2014

How To Build and Sustain a Remote Workforce, Fast Company, February 21, 2014

Accountability, The Key to Federal Telework, Federal Times OpEd by Kate Lister, February 6, 2014

Florida Among the Top 10 States for Telecommuting Jobs, Jacksonville Business Journal, February 10, 2014

Federal Telework Surge Could Save $14 Billion Annually , Wired Workplace, January 25, 2014

Measuring the Impact of Workplace Flexibility, 1 Million for Flexibility, January 24, 2014

FEDTalk, Federal News Radio interviews Kate Lister on the Office of Personnel Management’s latest Status of Telework—Report to Congress, January 24, 2014

Report Says Telework Could Save Government $14 Billion a Year, Federal Computer Week, January 24, 2014

Federal Telework Surge Could Save $14 Billion Annually, NextGov, January 24, 2014

Telestorming: When weather and disasters forces people to work from home, Deseret News, January 10, 2014

Why Telework When You Can Take a Snow Day?, Nextgov.com, January 4, 2014

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