TELECOMMUTING INCREASES PRODUCTIVITY



Corporations that have experienced an increase in productivity due to telecommuting

Organization                  Percentage of Productivity Increase

Amex Life Assurance 20%

State of California 10% to 30%

Blue Cross/Blue Shield 20%

Travellers Insurance 20%

Smart Valley Inc. 18% to 23% 3COM Cisco Systems Deloitte & Touche Gray Cary Ware Freidenrich Hewlett Packard Pacific Bell Regis McKenna Silicon Graphics IBM 15%

Information Access 20 to 25%

Mountain Bell 30%

* Percentages are rough estimates of productivity increases.


Examples of Telecommuting Successes

Amex Life Assurance: A Success Story

Amex Life Assurance in San Rafael, CA has had a telecommuting program in place for approximately 5 years. The program currently has 20 telecommuters most of whom are underwriters, who work at home one to two days per week. The company has not supplied computers or other equipment and was able to implement the program at no cost.

Naudia Wise Ibanez, Sr. Employment Relations Professional reports that there has been an overall increase in productivity of 20% for employees telecommuting one day per week. Productivity increases for employees telecommuting more than one day per week are even greater as supervisors report that telecommuters typically get twice as much work done at home than at the office.

In terms of employee retention, Naudia reports that they have had no turnover among the telecommuters in three years, which is highly unusual in the life assurance field.

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American Express Travel Related Services Transitions to the Virtual Office

American Express Travel Related Services (TRS) noticed that the productivity of its field sales force was declining, as measured by the number of sales calls made each day and the number of new establishments signed up to accept cards. With the help of an outside consultant, a TRS task force began to study the entire field sales process and organization. Says Richard Tiani, Director of Service Establishment Best Practices for American Express, "We spent day after day in the field with the sales reps because we wanted to understand their jobs and we wanted their input into the change process." This resulted in a comprehensive difficult overhaul of almost everything they did, with most of the emphasis on the processes at all stages in the sales and establishment service process.

As part of the process, the TRS team looked at the facilities issue. Although TRS maintained a network of fifty satellite offices around the country, these satellites were rapidly becoming obsolete.

After a careful analysis of what the sales rep did when they came to the satellite, the Team realized that much of what was being done could be done at home more efficiently. In the spring of 1994, TRS began the transition from satellite offices to the virtual office. They decided that in order for it to be successful, it would have to be at least as productive as satellite office work, measured by the number of sales calls made each day, results of customer and sales rep satisfaction surveys, and the cost savings (measured by comparing virtual office start-up costs with ongoing satellite office rent and administrative expense).

TRS provided a comprehensive support package for the reps, including a PowerBook and software, printer, fax machine, copier, two phone lines, car phone, reimbursement for all normal business expenses, a one-time home-office set-up allowance of $1,000 and more. TRS made clear to reps that 75-80% of the work week was to be spent with customers and prospects, and that less than 15% of the time was to be spent at home.

The goal of the program was to increase sales productivity. Productivity measures

show the project to be a success. The number of calls made per day increased by more than 40%, there were 20,000 new establishments signed up, sales managers now spend four days a week in the field. Customer satisfaction ratings were up 28%, while rep satisfaction increased by 25%. (These gains are a cumulative result of all the changes that were to be made-not just the move to the virtual offices.)

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IBM Overcomes Management Resistance

Often, middle managers become barriers to successful telecommuting. Fears and emotion result in "passive resistance" to program buy-in. To counter this frustrating problem, IBM's Mobility Strategy program involved its managers as strategic partners in the company's highly successful and rapid conversion of most of its U.S. marketing and services workforce to "mobile" status. IBM US reported a 40-60% reduction in real estate costs per site, or $35 million not spent on office space last year. Productivity has risen per site as much as 15%. For the first time ever, productivity, customer satisfaction and employee satisfaction all increased.

More than 20,000 or 95% of IBM US marketing and services personnel have become mobile teleworkers since 1993. They work from home, customer locations, airports, and at remote sites. Besides learning the basic tools, techniques and time/job management skills of mobile teleworking, telemanagers are trained "How to Manage the Mobile Worker" as part of the larger IBM Leadership Development curriculum. IBM has discovered the importance of peer support among telemanagers. By sharing their experiences, managers learn from each other, which allows IBM to monitor the unique aspects, needs and triumphs of various sites.

Part of the rewards of a successful telemanager and team at IBM is better pay. The manager's compensation package is based on customer satisfaction, and IBM's quarterly evaluation surveys show that telemanagers and their mobile teams command higher customer respect and satisfaction.

The bottom line is that we basically legitimize and give people the flexibility to balance when they need to work, when they need to be with their customer, and when they need to be with their family. It all gets done now versus having the stress of trying to get it done within a specific time period," says Andrea Cheatham, IBM's Mobility Strategy representative.

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Tidbits from Telecommuting Review: The Gordon Report

Annotated Abstracts

(A5 - 1984) Gallup's Home Interviewer Program: Gallup employs 35 home telephone interviewers, who work up to 20 hours a week and come into the office three times a week. They report less turnover and no problem with supervision.

(A8 - 1984) Data Entry Firm Branches Out from Telecommuters to Software: Unibase has had in-home data-entry workers from its start in 1968, to supplement office workers. It now has 110 offices with 5,000 workers. Telecommuters are treated as employees and paid slightly more than those in the office. There has been a great reduction in labor costs, very little turnover, and strict document control. Though providing equipment increases costs, this is offset by increased stability and productivity of the work force.

(A124 - 1991) Utah Data Entry Firm Thrives with Telecommuters while Serving Large Companies' Needs: Unibase Data Entry, profiled in TR 1/85, now employs 386 telecommuters. Clients include many large corporations and state prison systems. The telecommuting supervisor has 8 assistants, each responsible for a group. He or she knows each group member and can refer to a computer record of her background and performance, thereby preventing feelings of isolation. Quality is checked by keying every entry twice. Workers are trained in the office and work at home when they have 99.9% accuracy. They are paid by item keyed, good workers averaging $6-8 an hour. They meet through carpools, office calls and socials. There is a large backlog of applicants. Unibase saves by centralizing operations in Salt Lake City.

(A14 - 1985) Phoenix Hi-Tech Firm Starts, Stays with Telecommuters: International Anasazi, specializing in systems for hotels and banking, has used telecommuters from its start. It has 8-10 people working at home, regular employees with full pay and benefits, who are selected according to the nature of the project and equipment needed. They are mostly senior people, self-motivated. Communication and accessibility are important, and conference calling is used a lot. Phone lines and equipment are provided by the company. A Unix-based system is used. Benefits are increased productivity, less cost for facilities, retention of key staff. Drawbacks are more subtle: some resentment among those not privileged to work at home, some loss of informal communication, some strained relations.

(A16 - 1985) Bank Sees Success in Small Pilot, Plans Expansion: Manufacturers Hanover Trust has a pilot with four carefully selected people, who average two days a week in the office. The bank pays telecommunication costs, and pay and benefits are unchanged. Workers are highly motivated and take more responsibility. The program seems not to be suited to junior level employees, and those actively working toward management positions, or to jobs all through a project life cycle.

(A23 - 1985) A Look Back at a Retiree-only Remote Work Firm: Lessons from Wave III: Wave III aimed to have a flexible pool of programmers and was very successful for its two years of operation. Retirees were trained for three months and treated as independent contractors. As telecommuters, retirees want challenging part-time work and provide a growing and concentrated work force.

(A29 - 1986) Database Supplier Reorganizes, Keeps One Work-At-Home Program But Ends Another: Information Access Co. of Belmont, CA, has ended its telecommuting program in Northbrook, IL, because of the distance. The remote abstractors were too hard to manage and did not always meet deadlines, and now abstracting is being done in-house. A group of 6-8 telecommuting indexers has been set up. They work on company-provided equipment and come to the office 1-2 times a week; they have been 20-25% more productive. They are employees with full benefits; selection criteria and morale are high.

(A30 - 1986) AVCO-Lycoming Conducts Telecommuting Pilot Study: Professor Adolph Katz, University of Connecticut, evaluates a pilot involving only one person, and three software projects. The telecommuter kept a daily log of all activities: actual and planned hours spent, voice communications, problems and also a morale log. There was a reduction in lost time, a high rate of task completion, and improved quality. Morale was not a serious issue.

(A33 - 1986) Insurance Firm Starts Program for Claims Approvers, Sees Future Expansion Potential: The Mutual Service Life Insurance Co. in St. Paul has a group of women who review and approve claims working at home. They purchase their own equipment and pay telephone charges, and are paid on a per-claim basis. The company believes that the independent contractor arrangement gives them the greatest earning potential and breaks the supervisor-employee relationship. Advantages to the company are cost savings, shared with the telecommuters, and access to top-quality people.

(A38 - 1986) Wisconsin Hospital Uses Telecommuters with Union Support: This report follows up the article of 3/1/86, p. 11, on the University of Wisconsin's Hospital and Clinics' telecommuting program. Three at-home workers transcribe physician's notes, receiving dictation by phone. Allen Highman, representing the union, attributes success to careful planning, shared with the union.

(A45 - 1986) Mountain Bell's Program Moves Along Well; Broader Employee Participation Sought: Buck Benham, program coordinator, reports on the progress of this pilot which has 20 telecommuters, and expects to raise this number to 100. They show a 30% increase in the amount of work, better morale, less distraction and absenteeism. They plan to expand the program to people with special needs and to a satellite sight.

(A48 - 1986) Market Research Firm Cites Success with Program for 60 Data Entry Workers at Home: The NPD Group adopted telecommuting because of the tight labor market on Long Island and high cost of office space. James Call, Senior VP, compares costs to illustrate potential savings from telecommuting, and describes his program. For NPD, accuracy and data control are most critical; they write special software and information is transferred by diskettes, not telecommunications. The company provides PCs and supplies. Supervision is done through a structure of clusters or "pods," of 20 people, with a supervisor, also at home, in each. The pods also meet socialization needs. The workers are carried as part-time employees, and all important issues are covered in a "Homeworker Guidelines Agreement." The telecommuters work 10-15% faster than the office workers.

(A58 - 1987) Amtrak's Telecommuting Program Works Well with Rotating Schedule: Members of a customer relations group, directed by Calvin Kraft, of 9 letter-writers work at home one day in every 2 to 3 weeks, on a rotating schedule. Morale and productivity have improved. Supervision and work planning are explained.

(A62 - 1987) The Travelers Begins to Reap Rewards from Well-Planned Program: This program is described by Michael Crampton and Diane Bengston of the DP Dept. It now has 6 remote sites, including one in Ireland in search of labor pools and to provide management opportunities. This prior experience gave them expertise to support employees working at home. Training and selection programs were designed, and a support-group approach formulated. Current telecommuters are all voluntary, on a professional level, and have the same pay and benefits as other employees. Equipment and furniture, and software are provided. Voice mail and e-mail are available. The program was introduced gradually, with staff meetings and orientation sessions.

(A65 - 1987) Midwest Data Entry Service Bureau Uses Telecommuting as Solution to High Operating Costs: Spar Marketing Services has 12 home workers who record marketing information sent in by data collectors from mass merchandisers, using a GEMIDEX package. The keyers work an average of 20 hours a week, and are carried as independent contractors. Costs have dropped dramatically.

(A66 - 1987) JC Penney Expands its Program Again, Doubling the Number of Telecommuters: The customer service telecommuters are expanding to 126, at 6 centers. A survey by graduate student Ellen Anderson produced interesting responses as to their job satisfactions.

(A68 - 1987) Maryland Blue Cross Sees Positive Results with Year-Old "Cottage Keyers" Program: BC/BS of Maryland's 3 telecommuters (soon to be 5) produce quality work at a cost that's 53% lower per claim than the cost paid to a service bureau. They were hired as independent contractors, but are being converted to part-time employees. BC/BS provides terminals and pays phone charges. Workers are expected to process 150 claims per hour, as compared with 100 for office workers, because they are considered to have less distraction and pressure at home. Telecommuters are paid a low hourly rate, with all benefits. Editor expresses mixed feelings about the financial aspects.

(A85 - 1989) Church Gains Access to 5500 Telecommuters After Designing Own Telephone Network: When the Worldwide Church of God found that calls to its 800 number had grown to 30,000 each weekend, engineer Phillip Sandilands designed SWIFT, a system to route calls to volunteers in their homes all over the country. Two Pasadena supervisors oversee the lines, with monitors that show the status of each line. Annual savings are estimated at $500,000, and the need for a new office building avoided.

(M40 - 1989) New Data on Eldercare Shows Effects on Work Performance, Suggests a New Role for Telecommuting: A recent study by AARP and the Travelers Companies Foundation measures the amount and financial costs of caregiving and its effects on the work life of caregivers, suggesting that telecommuting may we

provide the flexibility needed by caregivers to the elderly.

(A102 - 1990) AT&T Issues Mid-Term Survey Results on Los Angeles Pilot: This conservative project for 160 managers is producing good results: better time management, greater efficiency, better morale, improved customer relations. Telecommuting averaged 2 to 4 days per month per participant. Some found a need for more technical support.

(A110 - 1990) Final Report out on Transportation Effects of State of California Pilot: A report from the Transportation Research Group at U.C. Davis gives results of a survey carried out through travel diaries. It states that telecommuting reduces trips to work without increasing non-work trips by the telecommuters or family members.

(A126 - 1991) American Express Completes Small Pilot, Announces Plans to Expand: "Project Hearth" is a pilot that employs two travel agents at home in Houston, Texas, providing service to corporate clients. Each has a terminal, phone and modem and receives calls via ACD. They maintain a full-time schedule, working on split shifts that match peak calling periods. The system allows supervisors to monitor calls and data on their terminals. The program will be expanded shortly with twenty more agents, in Houston and New Jersey. The company benefits from lower turnover and office space savings.

(M54 - 1991) Work-at-Home Survey Data Shows Continued Growth: LINK Resources' 6th annual survey shows a fast gain in the telecommuting segment. The total telecommuter population is estimated at 5.5 million, increasing 38% over last year. About 4.5 million work at home an average of 2.5 days a week; 876,000 work 35 or more hours; 43% are executive or professional. The editor notes that a fairly broad definition is used, but screening questions have become more precise. LINK has also released "Telecommuting Case Studies Report," with a review of the market and 20 case histories.

(A139 - 1992) California Research Shows Significant Productivity Gains for Public Center Telecommuters: The Institute for the Study of Distributed Work at the University of San Francisco reports on a local government agency pilot that shows an average productivity gain of 16.8%. This is based on estimates of the telecommuters, and backed up by the estimates of managers.

(D47 - 1992) Productivity Measures: Are We Trying to Count the Wrong Thing? Most reported productivity gains are better called "effectiveness" gains-doing better or faster work, or doing more tasks at once. In an interview, Carl Thor, of the American Productivity and Quality Center in Houston, said that improved technology has resulted in better and more timely data, so that we have shifted people from processing data to acting on it, but have not reduced the number of people involved. Measures of productivity should include quality, customer satisfaction, on-time delivery, cycle time, equipment utilization. For telecommuters, this means better and faster reports, since they can concentrate on better away from the office. Bill Schmidt, of JFK University in California, spoke about Top Quality Management, an ongoing process of determining customer goals and what it takes to satisfy them. Managers should give lots of support, interaction, and a sense of team effort to telecommuters, and honor and reward people who create customer satisfaction. Schmidt is working on a book about managing telecommuters with TQM.