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Telework in corporate America

Feb 17, 20036 mins

Wonder what the other guys are doing? Take a peek inside 10 firms’ remote work programs.

How does telework play in your company? Is working away from the office widely embraced, tolerated or frowned upon? The bigger question: Is telework saving your firm any money – in facilities costs, increased productivity, or in employee recruitment, retention and training? To find out, we interviewed executives at more than a dozen companies about their programs. The results were surprising.

Today’s telework takes many forms. There are formal programs dictated by corporate management to cut costs; grass-roots programs created to meet employee needs or demands; and occasional or informal telework – employees work at home after-hours, on a snow day, or when a manager says it’s OK. Most firms with teleworkers also have full-time remote (or virtual) employees, often living in another state.

Schering-Plough, with 30,000 worldwide employees, has a program in its clinical research division. Forty percent of its 500 staffers telework formally two or three days per week or work remotely. The company doesn’t account for occasional teleworkers. “I have no idea how many there are, but I’d imagine the numbers are quite high,” says project manager Gail Smith.

Similarly, HP, which has offered telework and other flexible work arrangements since 1990, says it doesn’t “centrally track the use of work/life options.” However, it estimates that between 10% and 50% of its workforce teleworks one day per week or on an ad hoc basis.

While there’s nothing wrong with not tracking informal telework, it might prevent companies from optimizing cost savings.

Telework newcomer NASCO, an Atlanta national account services company, launched a small program in October 2002 with 60 project managers working one day per week from home. While NASCO lauds the increased productivity and employee morale, it doesn’t expect to save money.

“We did a cost-benefits analysis, looking at everything from the cost of computer equipment to coffee, lighting, cubicles, you name it,” says Mira Moss, NASCO’s vice president of human resources. “Once employees are working three days a week at home, we could recoup some office space. But it’s one thing to say you can get rid of these cubes, another to look at the business that’s contracted for. We have a 10-year lease. So even if we got rid of them, we’re still going to pay. With telework, the only thing we’re saving on is the occasional cup of coffee.”

Schering-Plough saves on office space but receives no direct cost savings, because the company owns its facility. But telework will keep the firm from having to lease additional space as it grows, Smith says.

Across the gulf, AT&T, IBM, Morgan Stanley, Sun and others are realizing huge facilities cost savings from telework. While most won’t share specifics, Sun says it saves $150 million per year. Industry sources say KPMG saves $66 million, and Ernst and Young well over $100 million.

AT&T’s program is one of the oldest, largest and most successful. Last year, it began a big push to “virtual officing,” sending 400 middle managers home for good, as a way to reduce costs, increase output, and improve job and career satisfaction, says Joe Roitz, AT&T’s telework director. To ease the process, the firm added a virtual office piece to its intranet, so workers and managers could handle the process themselves. Rather than set up a free-standing virtual office portal, AT&T links workers to the relevant departments such as IT, facilities and purchasing, to get set up.

“We’re creating a business benefit and structuring the enterprise for the knowledge economy, which means arranging it around networks, not buildings,” Roitz says.

Cigna, which employs 38,000 people, saves $3,000 per year, per employee in office space, and reports a 30% decrease in turnover and 15% increase in productivity among teleworkers. Such numbers are driving the health insurance company to increase its teleworkers by 15% annually.

Nortel and Merrill Lynch continue to promote telework, despite grim downsizing. Nortel says it’s laid off only 7% of its 13,000 teleworkers between 2000 and 2001, compared with the tens of thousands of employees fired in the same period.

Baxter BioScience and Lockheed Martin Information Technology (LMIT) – and NASCO – each reported management resistance to telework. Baxter, which has no formal program, increased its number of teleworkers by 25% in December 2002, when the company relocated several hundred employees to a new facility 30 miles away, increasing the commute for many.

“At the time, our [HR] department was supportive. But now I hear they’re trying to restrict the number of people teleworking,” says Dominique Endicott, senior manager of clinical data management. “For now, managers are implementing telework into our groups until we’re told to stop,” she says.

In contrast, LMIT met management resistance by creating a structured program. The firm, which provides IT consulting for the military, was urged by employees to institute a telework program in 1997.

“We faced traditional thoughts about how employees wouldn’t be as effective [out of the office]” says Joe Wagovich, director of communications. In response, LMIT implemented stringent policies on eligibility, as well as guidelines for how often teleworkers would check e-mail and call the main office for messages. Although most LMIT consultants’ jobs aren’t suited to telework, the company supports those that are with equipment such as notebook PCs and cable modems.

“We know there needs to be a balance between home and work life. “It took us a while to understand the culture, to learn telework can be managed and increase productivity – in the right setting,” he says. “People have come over and said, yeah, telecommuting isn’t so bad.”

Telework snapshot A down economy isn’t keeping firms from promoting telework. The savvy ones are using it to cut costs and gain a competitive edge.
CompanyEmployeesWhat’s new
AT&T25,000 teleworkers; 5,000 remote workers Firm is moving hundreds of teleworkers into virtual offices as a way of reducing costs and increasing output.
Baxter BioScience clinical research department35 teleworkers, 12 remote workersNumber has increased 25% in December 2002, when firm moved corporate office.
Cigna3,100 teleworkersAdded 1,100 new teleworkers in 2001. Plans to increase the number to 5,000 by year-end; goal is 15% annually.
Eli Lilly and Company90 formal teleworkers, 14,000 informalNumber has increased 30% from last year.
HP10% to 50% teleworkNo changes; mature program.
LexisNexis2,600 teleworkersProgram continues to grow, but more slowly than its inception eight years ago.
Lockheed Martin ITAbout 350 teleworkersFirm’s attitude. LMIT found telework can be managed and increase productivity — in the right setting.
NASCOAbout 60 teleworkers, 40 remote workersThe program, which was launched in October 2002.
Nortel13,000 teleworkersNumber has decreased only 7% between 2000 and 2001, despite massive employee layoffs.
Schering-Plough clinical research division130 teleworkers, 70 remote workersAdded 25 teleworkers in 2002. Instituted a waiting list.