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Flexible Work Arrangements: A Strategic Business Imperative in Any Economy

February 2009

Judi C. CaseyAlfred P. Sloan Work and Family Research Network

at Boston College

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Agenda

Why a strategic business imperative?

Definition

CommonFlexible Work Arrangements

Business Benefits

Current EconomicClimate

Resources

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Why a strategic business imperative?

• Constant change is the norm• Resilience is a differentiator• Must be nimble and responsive in any economy • How individuals, leaders and organizations contribute• FWA are a strategic business imperative in any economy

Down Economy • Alternative to Layoffs

and Rehiring• No/Low-Cost Strategy• Support Employees• Reduce Stress

Up Economy • Recruitment• Retention• Employer of

Choice

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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

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What are flexible work arrangements?

“The Sloan National Initiative also includes in their definition of workplace flexibility:

• The ability to have career flexibility with multiple points for entry, exit and reentry into the workforce; and

• The ability to address unexpected and ongoing personal and family needs.”

Workplace Flexibility 2010

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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

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FWA Metrics and Statistics

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

1985 1997 20040%

10%

20%

30%

% of Workforce doing FWA

Beers, Thomas. (2000). Flexible schedules and shift work: replacing the ‘9 to 5’ workday? Monthly Labor Review 123(6), p. 33.

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Business benefits of FWA

•Offers a no-cost or low-cost initiative with high ROI

•Impacts ability to recruit and retain

•Reduces unplanned absenteeism

•Enhances reputation as an employer of choice

•Lowers overhead and real estate costs

•Provides greater coverage in a 24/7 global economy

EmployerBenefits

•Increases job satisfaction, loyalty and engagement

•Improves productivity and performance

•Lowers stress and health care costs

•Minimizes the impact of environmental issues

Employer &

EmployeeBenefits

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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

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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.

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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.

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General obstacles to implementation

• Nature of work

• Managers perceptions and abilities

• Culture of workplace and how work is done

• Employee concerns

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Economic obstacles to implementation

In today’s economic climate, FWA present new challenges:• Stock market rewards job cuts

─ Creates a culture that reinforces layoffs• 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

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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

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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 to

late to embrace FWA

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Best practices and examples

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.

Goal: Reduce workforce costs without severing ties to employees

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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.

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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.

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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 Assembly established 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.

• 16 states allow workers with reduced schedules to collect unemployment

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One last thing

Carefully consider the impact of your recession driven strategies on employee morale, productivity and loyalty in the long run.

“So, as recession-inspired actions cross your desk, be sure to evaluate them not only for their bottom line impact today, but also know their impact on your employees and their level of engagement for tomorrow.” Allbusiness.com

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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

Online: www.bc.edu/wfnetwork E-mail: wfnetwork@bc.edu Phone: 617-552-1708 Fax: 617-552-9202

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

Online: www.bc.edu/wfnetwork E-mail: wfnetwork@bc.edu Phone: 617-552-1708 Fax: 617-552-9202

Resources

http://wfnetwork.bc.edu/template.php?name=shrm

Online: www.bc.edu/wfnetwork E-mail: wfnetwork@bc.edu Phone: 617-552-1708 Fax: 617-552-9202

Resources

1. Articles• As Layoffs Spread, Innovative Alternatives May Soften the Blow

http://knowledge.wharton.upenn.edu/article.cfm?articleid=2106

• Alternatives to Layoffshttp://management.about.com/cs/people/a/LayoffAlternate.htm

2. Free monthly newsletter on work-family issues from the Sloan Networkhttp://wfnetwork.bc.edu/join_form.php

3. The Sloan Network Work and Family bloghttp://wfnetwork.bc.edu/blog/

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Need more information?Questions?

Contact: Judi C. Casey, Director617-552-2866

caseyjt@bc.eduhttp://wfnetwork.bc.edu