Flexible Work Arrangements: A Strategic Business Imperative in Any Economy February 26, 2009 Judi C. Casey Alfred P. Sloan Work and Family Research Network at Boston College
What are flexible work arrangements? “Flexible Work Arrangements alter the time and/or place that work is conducted. FWA provide flexibility in the: • Scheduling of hours worked and arrangements regarding overtime, predictable scheduling, and shift and break schedules; • Amount of hours worked; and • Place of work.” Workplace Flexibility 2010
Common flexible work arrangements • “Compressed Work Week: A work schedule that condenses one or more standard workweeks into fewer, longer days. (9/80) • Flextime: A work schedule with variable starting and ending times, within limits set by one’s manager. Employees still work the same number of scheduled hours as they would under a traditional arrangement. (7 am-3pm or 10 am-6pm) • Job-Sharing: An arrangement in which two or more part-time (or occasional) employees share the responsibilities of one full-time job at a pro-rated salary. • Part-time Work: A work schedule that is less than full-time but is at least half of the regularly scheduled full-time workweek. • Personal or Family Leaves: A block of time off while retaining one’s job. These leaves may be paid or unpaid. • Telecommuting: …regularly work at home or at an alternative worksite during part or all of a work schedule (in office M/W/F, remote work T/Th).” MIT
FWA Metrics and Statistics % of Workforce using FWA Everyone wants FWA • Nearly 80% of workers say they would like to have more flexible work options and would use them if there were no negative consequences at work. Families and Work Institute, 2004 • 79% of companies allow some employees to use FWA • 37% of companies allow all or most employees to use FWA (Galinsky, Bond, & Sakai, 2008) Not for every job or employee • Must meet business needs • More common among professional staff • Must achieve performance expectations Beers, T. (2000). Flexible schedules and shift work: Replacing the ‘9 to 5’ workday? Monthly Labor Review, 123(6), p. 33.
Business benefits of FWA: Data 96% report that flexibility influences their decision to stay at the company; 73% say that flexibility is “very important” in that decision, and 23% say that it’s “somewhat important.” Employees who use flexible work arrangements scored, on average, 30% lower on stress and burnout. Bank branches with flexible work arrangements had retention rates 50% higher than other branches. Corporate Voices for Working Families with WFD Consulting
Business benefits of FWA: Data • 73% of employees with high availability of flexible work arrangements reported that there was a high likelihood that they would stay with their current employer for the next year. Bond, J.T., Thompson, C., Galinsky, E. & Prottas,D. (2003). Highlights of the 2002 national study of the changing workforce. New York: Families and Work Institute. • Studies indicate that the availability and use of flexibility and other work-family policies is associated with higher commitment, job satisfaction, loyalty, and lower intention to turnover. Kossek, E., Lautsch, B., & Eaton, S. (2006). Telecommuting, control, and boundary management: Correlates of policy use and practice, job control, and work-family effectiveness. Journal of Vocational Behavior.68(2), 347-367.
Business benefits of FWA: Data • Organizations with higher employee satisfaction report larger than average annual returns to investors. “…with respect to flexibility programs that enable workers to work from home, if the proportion of employees working from home increases by one percentage point, the firm’s profit rate increases by an additional six-tenths of one percent. For the average firm included in this sample, this equates to a profit increase of approximately $84 million.” Meyer, C.S., Mukerjee, S., & Sestero, A. (2001). Work-family benefits: Which ones maximize profits? Journal of Managerial Issues, 13(1), p. 40.
General obstacles to implementation • Nature of work • Managers perceptions and abilities • Culture of workplace and how work is done • Employee concerns
Economic obstacles to implementation In today’s economic climate, FWA present new challenges: • Inflexible systems make it difficult to integrate FWA • Groundwork not created to integrate FWA within the organization • Not comfortable with FWA as a way to do business
Overcoming the obstacles Effective steps to reduce obstacles at your organization: • Make managers accountable (raise-dependent) for creating a work environment where employees can thrive at work/home • Help managers to measure important business outcomes • Try a “pilot” program • Train managers and co-workers about how flexibility can help them to achieve their business goals • Train managers and co-workers about how to implement and sustain FWA • Encourage communication about how work will get done and the “rules of the game” • Use metrics and evaluation to demonstrate impacts, make improvements and re-measure
Overcoming the economic obstacles Effective steps to reduce obstacles in current economic climate: • Examine how FWA could help the organization to achieve business goals • Reward performance versus face time • Ask employees and work teams how they could integrate FWA into their jobs/teams • Offer FWA as a way to support employees and provide relief from heavy workloads and stress • Remember: even if there have already been layoffs, it’s never too late to embrace FWA
Best practices and examples Goal: Reduce workforce costs without severing ties to employees KPMG UK, German and Swiss firms: Flexible Futures. Asked staff to volunteer to work either a four-day week with a proportionate pay cut or take a sabbatical for up to three months. “We learnt some painful lessons from the last downturn when we made redundancies and lost some real talent. When the upturn came, we were not positioned as well as we could be. So this time the challenge was clear. Could we create sufficient flexibility in our cost base that would allow us to react quickly to future events while retaining our people for the moment the market picks up?” People Management Dell asked employees to take up to 5 days off without pay during the next 3 months. Although the leave is not mandatory, the company has indicated that layoffs may be necessary if not enough workers participate in this reduction of hours/pay.
Best practices and examples FedEx cut salaries of senior executives and salaried-exempt employees by 5 to 20%, a $600 million savings. Brandeis University requested that faculty members give up 1% of their salary, and 30% have volunteered. Cisco ordered a four-day year-end shutdown. Instead of a severance package, Cisco Systems offered the 8,500 employees it laid off in April, a third of their salaries, all benefits, and stock-option awards while working for one year at a not-for-profit group already associated with the company.
Best practices and examples In Atlanta, an expected budget shortfall of $60 million meant that 4,600 city employees had their weekly hours and pay cut by 10%. During their layoffs, founder Charles Schwab and his wife created a $10 million educational fund for these workers. The fund covers as much as $20,000 worth of tuition over two years at accredited academic institutions for re-training and new skill development.
Best practices and examples • Megavolt (Springfield, MO) moved to a "shared work program" of three 10-hour days a week. While workers keep their jobs, the lost 10 hours each week is enough for them to be eligible for state unemployment benefits in Missouri. • In 1984, the Maryland General Assemblyestablished the Work Sharing Unemployment Insurance Program. This voluntary program provides employers with an alternative to layoffs. The principle behind Work Sharing is simple; instead of laying off a percentage of the work force to cut costs, an employer can reduce workers' hours by the same percentage and keep the entire work force on the job. • Numerous states allow workers with reduced schedules to collect unemployment: AZ, AR, CA, CT, FL, IA, KS, LA, MD, MA, MN, MO, NY, OR, RI, TX, VT and WA.
Conclusion • FWA can help you to achieve your business goals • FWA offer a wide range of business benefits • FWA provide an alternative to layoffs • Research data documents the significant ROI of FWA • Obstacles exist but can be overcome
Network Resources on Flexible Work • Fact Sheet on Flexible Work Schedules • Effective Workplace Series on Flexible Work Schedules • Workplace Flexibility Case Studies • Topic Page