The purpose of this worksheet
is to help State agencies consider the relative costs and benefits of
implementing more aggressive forms of telework as a potential business
strategyfor the future.
Many
State agencies are challenged with
issues that could be addressed by one or more
forms of
telework.Some of these issues
include: How can we serve our customers better, faster and cheaper?How can we plan to assure business continuity
during emergencies? How can we reduce
office space requirements? How can we reduce the costs of employee turnover
and absenteeism?How can we comply with current trip reduction laws and mandates?
As you read through this
justification worksheet, you will have a chance to answer some of these
questions for yourself.This
worksheet will address the following issues facing most State agencies:
calming office space requirements, increasing organizational effectiveness,
decreasing the costs of turnover and absenteeism, addressing
disaster recovery, meeting the County Trip Reduction Ordinance,
and maintaining control of a decentralizing organization.As you read the facts about how an enhanced telework program can be a
part of the solution to some of these problems, take the time to complete the
questions highlighted by text boxes.It
is our hope that State agencies will realize the ample justification for
enhancing their telework program and make telework a business strategy in the
near future.
Use these bookmarks to jump to the
following issues:
Office space requirements rise and fall depending upon the agency's
mission, but consider the calming effects that telework can have on
space demands. Many agencies provide their employees with some
form of remote access to agency resources; such as agency e-mail, LAN
files or databases. At the same time, employees are purchasing
home computers and Internet access to help them meet both family and
work goals. Agency employees who are able to work several days a
week from home can share office space and calm a temporary space crisis.
A
major study conducted by ASU in 1996 found that almost
every State employee surveyed felt their job had some tasks that were suitable
for telework.“Employee support
for telework was evident by their willingness to make sacrifices for the
opportunity to telework: 67% have access to (or would buy) the equipment they
need, 87% are willing to keep daily logs in order to telework and 69% are willing
to share offices in order to telework.”
If your agency
is concerned about reducing office space requirements, you
might consider a more aggressive telework program as part of
the solution. "The reduction in office space requirements depends on the space occupied by the employee, the rental cost for the floor area required, and the slight increase in space required for shared office space for teleworkers when they are in the office.The average reduction will be roughly 130 to 140 square feet (per remote user per year).”GartnerGroup, How to Save Money in Networking in the United States, Part 2, 2/23/96.
The AHCCCS Virtual Office Pilot
- In July 2005, Arizona Health Care Cost Containment System (AHCCCS)
began implementing the virtual office concept within the agency. AHCCCS
defines virtual office as: "Creating a fully functional worksite that is
not bound to a specific location but is portable and scalable,
connecting employees to the work process in the most advantageous
setting, rather than employees having to come to a central office to
connect to the work process.” AHCCCS established a Virtual Office
Steering Committee consisting of Human Resources, Information
Technology, and training experts.
AHCCCS's policy provides detailed
steps and requirements a work unit must follow to initiate the virtual
office process, and requires several employees to "pilot" working from
home one to four days per week to determine any process issues with the
virtual office program. Specific
technology requirements were also
established and a software assessment/GAP analysis of the participating
pilot unit is conducted by AHCCCS Information Technology to ensure
virtual office capability. AHCCCS reports that as of August 2006, 45
employees were working from their homes without any dedicated space at
AHCCCS offices, and anticipates at least 160 employees will be virtual
office workers by December 2007.
Employee productivity is oftentimes the key to the
success of an organization.Employers
are asking more of their employees, and employers
are beginning to see their Human Capital as their
most important resource.For these reasons, employers are adopting flexible
work options(like telework,
flextime and compressed work weeks)because
they have been shown to reduce employee stress, turnover
and burnout, while increasing employee morale, productivity and retention.
For example, a recent economic study on the profitability of programs
(like telework, flextime and
compressed work weeks)
in 95 top ranking companies over a four year period, by the Pittsburgh State University, Department of Economics, shows workplace flexibility programs can have a positive effect on the bottom line.
For example, firms enjoyed a significant positive benefit
when more employees telework.
Work-family benefits: Which ones maximize profits? Journal of Managerial
Issues; Pittsburg; Spring 2001; Christine Seigwarth Meyer, Swati
Mukerjee; Ann Sestero
Arizona
Telework Program surveys have evaluated many agency pilots.These surveys measure change in the working relationships between
teleworkers, supervisors and non-teleworking
coworkers.Each group is also asked if there was a change in productivity; either in
the quality or quantity of work being accomplished by the teleworker.Survey results show that both teleworkers
and their supervisors believe
that telework has increased the teleworker's productivity.Productivity increases because employees have fewer distractions and
interruptions, work at their personal peak times, and are less stressed due to
the absence of the commute.
A thorough evaluation of the
State Telework Program was conducted after six years of program development
(1996) by ADOA in conjunction with Arizona State University and three other
western states.The study revealed
“telework is perceived as a positive, viable and desirable work option
for qualified State employees, with many benefits for the State, its employees
and the community.”The
evaluation considered the program from a variety of angles: management,
teleworkers, coworkers, legislators, and the public.Some of the many benefits of telework revealed in the study were:
increased productivity, improved employee morale, increased job satisfaction,
reduced employee turnover, reduced employee expenses in time and energy, and
reduced traffic congestion and air pollution.
Flexible work options
(like telework, flextime and
compressed work weeks) are reported to be the most popular and most
effective corporate strategies to reduce employee turnover and
absenteeism while attracting new employees. Human Resources Management Ideas & Trends, A CCH Incorporated Publication, Issue No. 569, page 153, October 22, 2003.
According to a huge compensation survey of 1,400 CFOs conducted by Robert Half International in Januaryof 2003,
46% said telework and/or flexible work schedules are second only to salary as the best way to attract top talent.
http://www.roberthalffinance.com
Families And Work Institute reports finding that “companies that offer staff resources to help them manage their work-life priorities, and flexible work schedules, have a lower rate of job turnover.”
Fortune Magazine, 10/2003
Ac
Assuming that the tasks associated with processing employee turnover are essentially the same for most organizations
(about 25% of an annual salary and ERE), you can
estimate the annual cost of turnover in your organization by
modifying table A below.
For example:
Assume an agency has 925employees with a 13% annual voluntary turnover rate;
turnover in this agency is estimated to cost $1,062,769 annually.
If a more aggressive use of telework, flextime and compressed work
weeks could keep 10% of these employees from leaving this agency, it
could result in a savings of $106,277 in annual staff time and
expense.
Table A - Projected Annual Turnover
Savings With Workplace Flexibility Programs (like
Telework)
Number of Employees in
Your Agency
Percent of
Voluntary Turnover
Estimated
Cost of Processing
Each Turnover
Estimated Total
Annual Cost
n
times
times
=
A recent
State study found that it costs 25%
of an annual salary and ERE just to complete the activities required
to process each turnover in
State service, including:
Separation
Activities:
Exit
interviews (salary and benefits of interviewer and
employees)
Salary
paid after separation
Administrative and record keeping
Recruiting and
Selection Activities:
Pre-employment administration functions
Selection
interviews
Pre-employment testing
Meetings
to discuss and evaluate candidate
*The average
State salary is $35,352 therefore 25% of an average salary is
$8,838. The Arizona Department of Administration's Human
Resources Division compiles a quarterly Employee Turnover Report
by agency and class code. The report tracks avoidable
turnover in 13 classes.
According to the 15th annual survey of human resource professionals conducted by CCH
Incorporated in 2005, unscheduled absenteeism now costs employers an average of $660 dollars per employee, per year.
(CCH.com)
In light of this research, estimate your annual cost of unscheduled
absenteeism by modifying table B below.
For example:
an agency with 925employee can estimate an annual cost of
$610,500 due to unscheduled absenteeism. If a more aggressive
use of telework, flextime and compressed work weeks could avoid 10%
of these unscheduled absences in a year, the agency could save
$61,050 in time and expense.
Table B - Projected Annual Savings If Absenteeism Is Reduced by Workplace Flexibility
Number of Employees
in
your Agency
Estimated Annual Cost
of
Absenteeism
per Employee
Projected Annual Cost
of Unscheduled Absenteeism
*
n
times
=
*This
estimate is based upon current national averages from the 2005 CCH Unscheduled Absence Survey.
(CCH.com)
Percent Annual
Reduction Goal
Annual Savings
1%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
The potential savings to the State taxpayer arising
from offering telework options could be significant. State
employee salaries lag behind the labor market and inflation. State
pay has fallen due to a lack of salary increases over the past decade.
The average State employee earns 15* percent less than other similar
jobs in the region. Our ability to keep and attract qualified
employees in the future may depend upon our willingness as State
managers to be more flexible. Allowing qualified employees to have
more autonomy over where and when work may be done, without compromising
product quality, is one small way we can give the employee the
flexibility they are looking for in a job today.
*2006 Annual Advisory Recommendation, Arizona Department of
Administration.
Although
we normally say that the advantages of telework are economic (increasing
productivity and attracting and retaining employees), or family friendly
(spending more time with family instead of commuting), we can now say that
telework is also a viable disaster recovery strategy. During the 1993
bombing of the World Trade Center, the California earthquake of 1994, the
Federal Building bombing in 1995, and during the mid-west floods of 1997,
organizations that were familiar with telework were able to remain
operational while most other organizations closed down.
Gartner,
Inc., the world's leading information technology research and advisory firm,
released a Research Note entitled
Disaster
Management Plan for Remote Access in September of 2001. Gartner's Research
Note concurs, "The moment that disaster strikes, whether a
terrorist or military attack, earthquake or other dangerous event, marks only
the beginning of disruptions that can last for weeks to years. Enterprises
that rely on location-specific business operations can be severely disabled.
Those that have implemented any kind of work-at-home or mobile work schemes
stand the best chance to get their employees back to work as safely and
quickly as possible. Those enterprises that have moved to virtual teaming as a
primary work format will be ideally positioned, via remote access, to move
quickly in the event of a disastrous interruption to operations. This
research note lists steps for managing remote employees to help cope with the aftermath of a disaster."
Critical Function Telework Pilot
- ADOA lead an effort to more fully utilize telework as one of
ADOA's pandemic planning strategies in October of 2006. All
divisions were asked to identify their critical function employees
and then lead them to an internal website designed to help them:
negotiate telework agreements with their supervisor, receive
instruction on all available remote connectivity services, request
the appropriate remote connectivity accounts and, practice using
their connectivity services by doing their critical business
functions from home on a regular basis to remain prepared to work in
the event of an emergency.
Click here for more details of
the ADOA Critical Function Telework Pilot.
All employers
of more than 50 employees at one site in Maricopa County are required by law
(A.R.S. 49-588) to reduce employee
trips each year to help solve our air and traffic congestion problems.State agencies submit
an annual Trip Reduction Plan detailing how they will meet their
trip reduction goals. Telework is one strategy that agencies use to reduce employee
trips.
Reducing employee trips through telework offers some
surprising rewards for employees and the community, including: miles
not driven, pollution saved, commute time saved, and fuel saved by agency
teleworkers. State agencies can use
the following three tables to estimate these savings.
Enter the average number
of days per week your teleworkers telework.
Multiply the above two
numbers and enter here. This equals
the number of
teleworking days per week in your agency.
Multiply by 69.5%
This is the Single Occupancy
Vehicle (SOV) rate for State employees in
Maricopa County, or the percentage of State
employees in Maricopa County who typically
drive alone to work.
The 2007 State Travel Reduction Survey revealed that
69.5
percent of State employees drive alone to
work, and the average commute distance is
33 miles round trip.
This equals the number of
vehicle trips per week saved by agency
teleworkers.
Multiply by 33.0
(the average round trip
commute distance for State employees
in Maricopa County)
This equals the number of
vehicle miles per week saved by agency
teleworkers.
Multiply by 52
(the number of work weeks per
year)
This equals the number of
miles not driven by agency teleworkers in
one
year.
Divide by 30
(For
every thirty miles driven in Maricopa
County, one pound of pollution is emitted)
This equals the number of
pounds of pollution saved by agency
teleworkers in one year.
Insert the number of vehicle trips per week
saved by agency teleworkers.
(Calculated in blue box above)
Multiply by 72
(The average time State employees
in Maricopa County
spend commuting, round trip)
This equals the number of minutes
agency employees saved not commuting to work in one
week.
Most people don't realize what a large
chunk of the day is spent commuting to and from work.
For example, if your one-way commute is thirty minutes,
you spend the equivalent of six 40-hour work weeks in
stressful traffic, commuting to and from work every
year. Telework eliminates the commute on telework days.
Multiply by 52
(The number of work weeks
per year)
This equals the number of minutes not
spent in traffic by agency teleworkers in one year
Divide by 60
(The number of minutes in one hour)
This equals the number of hours agency teleworkers saved by teleworking in
one year.
Insert the number of miles not driven by
agency teleworkers in one year.
(Calculated in red box above)
Divide by 21
(The average number of miles per gallon
for vehicles in Maricopa County)
This equals the fuel savings
(in gallons of gasoline) by
agency teleworkers in one year.
The average cost of gasoline for FY 2007
is calculated by averaging the monthly average cost
reported by AAA for Arizona.
Multiply by $2.62
(The average cost per gallon of gasoline
during FY 2007 in Arizona)
This equals the fuel savings
(in dollars) of gasoline saved by agency
teleworkers in one year.
Agencies should be aware that morning and
afternoon commutes contribute to other problems as well. It's a
proven fact that daily stress reduces employee productivity, and
the drive to work is one of the most stressful parts of our day.
Driving on congested roadways has physical and psychological
costs as well. Recent studies show that the stressful commute to
and from work has diverse effects on blood pressure, mood,
tolerance, frequency of illness, work absences, and job
stability. Perhaps this is one reason why employees are
often more productive on telework days.
Technology allows employees and managers to track business products and
services. The Arizona Department of Administration (ADOA) has
an enterprise network service to provide direct access services to State
agencies connected to its fiber optic ring in Phoenix known as the
MAGNET.This service utilizes Virtual Private Networking (VPN) to allow
State employees secure access through the Internet to State resources from
virtually anywhere.For more information on VPN go to the ADOA Information Security
Services Website or call AZNET at (602) 364-4444, then press
option #1, #1, and #3.
Many State agencies have found that telework makes
good business sense. After reading these three examples, consider how
a more aggressive telework
program could fit into your agency’s business plan.
The
Department of Health Services found the Mobile/Virtual office
form of telework to be an innovative business strategy.Six Environmental Laboratory Consultants, now connected to
the office by phone and e-mail, were able to increase their time in
the field by 18-25% per day just by eliminating the traditional daily commute.Moreover, since the six are now connected by phone and modem, the
department was able to save $11,102
in
office rent alone the first year.“The
telework opportunity has truly been a win-win situation for our customers,
program team and the department,” said Steve Baker, Laboratory Licensing
Program Supervisor.ADHS has become
another virtual success story for the State of Arizona Telework
Program.
The
Department of Weights and Measures conducted a 12-month study to measure the costs and benefits of implementing a
telework program in conjunction with a vehicle take home policy for their
inspectors. As a result, they found
that:
Inspection
time increased 6.9% (or
880 hours)which saved
$10,551
Travel time
reduced 14.4%(or 5,623 hours)which saved
$55,387
Total savings of
$65,938
The
Structural Pest Control Commission coordinated with Project
ADOPT (Arizona Donates Office Products for Telework) for 12 home computers
for their inspectors. The
computers were given free of charge to inspectors, provided the inspectors
telework at least one day each week for a whole year to help reduce travel
and clean our air.While it
is true that inspectors drive during the day, they still save the State gobs of
time, energy and air pollution by completing reports on their home computers and
not driving all the way to the main office every day.The commission’s innovative telework
program will be an example to
many other field workers across America.
Who else is using workplace flexible
work options (like telework, compressed work weeks and flextime)
as a business strategy?
Workplace flexibility is an international movement. Each member of the
United Nations has adopted their Work/life Agenda “to promote a supportive work environment which will promote productivity and enable staff members to respond to the conflicting pressures of work and family life.” The
U.S. Senate recently passed Resolution 210 declaring that "reducing the conflict between work and family life should be a national priority" and designating the month of October as National Work and Family Month.
The first business case for workplace flexibility was found in the 1930s with the W. K. Kellog Company, but research indicates workplace flexibility emerged as a corporate trend in the 1980s. According to a recent Hewitt Associates survey of 975 major U.S. employers (comprised of 87% of the Fortune 100 companies and 61% of the Fortune 500 companies), 74% said they offer alternative work arrangements to at least some employees (Work And Family Update, 11-1-03, workfamily.com).
The Society for Human Resource Management (SHRM) reviewed more than 30 surveys on work-life issues between 1997 and 2003. Its findings: The number of employers offering benefits has dramatically increased and continues to do so. (Fortune Magazine 10/2003)
Here are just a few
examples of Fortune 500 companies that utilize workplace flexibility as a business strategy to attract and retain quality employees taken from a Fortune Magazine article in honor of National Work and Family Month (October 2003).
KPMG - In the spring of 2002, Eugene O’Kelly took over as chairman of KPMG. O’Kelly saw that recent accounting firm scandals were taking their toll on the morale of his staff and their productivity. O’Kelly expanded KPMG work-life programs, making universally accessible information on flexible work arrangements and an array of discount programs. “By helping our employees manage their dependent care issues, work more flexibly and take time off when they need it, we wound up with a very meaningful return on investment, based on work days saved and a projected reduction in turnover.”
GalaxoSmithKline, has a major focus on employee well being. In a recent merger a business initiative was developed that mirrors the mission of the company: “to help employees do more, feel better and live longer.” Managers assess their workplaces for organizational factors that might contribute to employee stress and work-life conflicts. Managers then work with HR to implement appropriate actions.
Deloitte & Touche discovered in a 2003 survey that 86% of their client service professionals cited workplace flexibility as a strong reason to stay with the firm. “Having flexibility enabled Deloitte and Touche to avoid an estimated $27 million in turnover related costs during fiscal 2003.”
Ernst & Young – “Our people first strategy supports a flexible work environment and enables both our people and our firm to succeed,” said CEO Jim Turley.
General Electric – More than 50,000 GE employees telework. In 2001, in response to a survey, GE “launched an all-out effort to increase work-life flexibility for their employees.” “This effort included formalization of some informal programs, the creation of a centralized website, plus manager and employee training. This effort speaks to GE’s commitment of being an employer of choice.” GE’s work-life strategy is tied to business goals.
At Astra Zeneca, CEO David Brennan reinforces the company’s work-life commitment, “Our corporate culture is based on trust, and it empowers our people to produce superior results. We believe there is a strong link between a supportive, flexible work environment and increased productivity, innovation, quality and retention.”
IBM implemented a global work-life strategy in 2001, with specific objectives, actions and measures. Each quarter a scorecard provides the work-life leadership team with results on implementation of the strategy. Based upon the 2001 survey, the percentage of US employees reporting difficulty managing work and personal lives declined 15% from 1996.
PricewaterhouseCoopers believes that work-life flexibility is a critical business issue that affects the firm’s ability to retain top talent and provide excellent client service. Internal surveys showed that work-life issues were important to everyone. Exit interviews found the inability to balance work and personal life is a major reason people leave the firm. To promote informal flexibility, the firm is working to embed these issues in engagement planning and focus on performance rather than face time. The messages to partners and staff are clear: Partners "lead by example and encourage their staff to manage their hours maturely and sensibly.” The changes are getting results. As Dennis Nally, US Chairman and senior partner, sees it, “Trust and open communication – coupled with our flexible work options – are making a difference in attracting and keeping our top talent.”
Here are a few examples of other
(non fortune 500)
public and private organizations that have used workplace flexibility as a business strategy. Twenty-five additional case studies, of how various companies benefited by workplace flexibility programs, are available for review upon request.
Washington State Department of Transportation (WSDOT) conservatively estimates a $200,000 savings for the Olympic region alone as a result of their expanded workplace flexibility program. Close to 100% of their Olympic Region’s road maintenance crews are on 4/10s (4-10 hour days, a compressed work week), especially during the summer, to capitalize on the daylight hours. Ten hour days cut down on the time they spend setting up and tearing down roadwork traffic controls by an average of two hours each week. WSDOT has the lowest employee turnover of any state agency. Their Human Resources Operations Manager believes the major factor in this retention rate is work options (compressed work weeks, flextime and telework). WSU Cooperative Extension Energy Program, 2000
Matsushita Kotobuki Electronics reports a 10% savings in absenteeism after going to compressed work weeks. The Japanese owned and managed manufacturer notes that compressed work weeks are not common in Japan, but the results of moving to compressed work weeks not only save on absenteeism but also increased their productivity an estimated 10%.
WSU Cooperative Extension Energy Program, 2000
Unigard Insurance Group used workplace flexibility options to reduce turnover from 19% to 14% in two years. Unigard calculates that the cost of replacing entry level employees is half of an annual salary; but after two years of employment, that cost is equal to their entire salary.
WSU Cooperative Extension Energy Program, 2000
