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ANALYSIS
March 2, 2009
Sagging Index no longer reflects what’s going on in the market, some say, Replacements? Google it, to start.
March 2, 2009
Downward price spiral will actually boost the cost of capital for most companies. CFOS, take note.
March 2, 2009
The latest bailout at AIG could be a preview of how the president will deal with Wall Street.
March 2, 2009
No corporate defaults. Big debt offerings. Percolating CP issuance. Things may be looking up in the capital markets.
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Martin Simon
YOUR DESK AWAITS Rebekah Kleinman of RSM McGladrey said that just the two flex offices in the D.C. area are saving the company $400,000 a year.
October 15, 2007 12:01 AM ET
In 2003, McKesson Medical Health Solutions decided to see what benefits it could realize by having some of its call center employees work from home. The results were encouraging. Four years later, 85% of those employees work from home all the time, saving the company $4 million a year. “We’re hiring directly into the home now,” said Linda Casey, senior operations manager at MMHS, a unit of McKesson Corp., the giant pharmaceuticals distributor. “It has been tremendously successful for us.” The company has almost 800 employees, most of whom are registered nurses, who provide triage and disease management services to health insurers. Arguments for telecommuting often stress the advantages for employees of being able to work from home some or all of the time, ranging from the time they save by not having to commute to the ability it gives them to take care of errands or care for a sick child. But big companies with experience using telework say that the practice offers substantial benefits for employers as well, benefits that reach all the way to the bottom line. About half of McKesson’s savings reflect the cutbacks the changes allowed it to make in office space. Since starting its work-at-home project in 2003, the company has gone from six brick-and-mortar call centers down to two, for a savings of $2 million a year. Mrs. Casey noted that cutting down on office space has eliminated not only rent and utility costs but other expenses as well, from security to coffee to copier rentals. Reducing the attrition rate among call center employees was one of McKesson’s goals in adopting the work-at-home program. And in fact, attrition has been cut in half, to 19% from 39% before the initiative started. That’s a change Mrs. Casey credits with saving McKesson another $1 million a year. “It’s very costly to keep having to recruit, screen, hire and train staff,” she said. And McKesson is saving another $1 million a year as a result of the greater scheduling flexibility that’s possible when employees work from home, flexibility that’s key in a call center environment, which has to be staffed for three shifts a day. “We are using the same number of staff, but they’re moving their hours to better meet both their personal needs and the needs of the business,” Mrs. Casey said, noting that 20% voluntarily work split shifts. Mrs. Casey said the work-at-home arrangements have proven to be a business advantage as well. When McKesson bids on jobs with state Medicaid programs, there’s often a requirement that the work be done locally. In the past, that would have meant setting up a new call center; now, the company just hires workers who live in that state. When companies talk about the savings they’ve realized from telework or flexible work arrangements, real estate is typically a major factor. Caroline Jones, a senior analyst in technology and service provider research at Gartner, noted that on any given day, offices tend to have a number of empty seats. “You’re paying quite a lot of money to keep spaces that aren’t being used,” she said. “You can cut yourself down to a more realistic number of desks that aren’t necessarily all assigned to one person.” RSM McGladrey, the professional services firm, opened its first two flex offices this year in the Washington, D.C., area. Employees who come to the office every day have their own workspace, and those who are in the office less frequently reserve a workspace for the days they’ll be in. “Between those two offices, we’ve been able to reduce the space we plan for per full-time employee by 50 square feet,” said Rebekah Kleinman, director of operations for RSM McGladrey’s mid-Atlantic region. Ms. Kleinman said that ability to reduce the amount of space was the main factor in saving the company about $400,000 in annual rent. And the new flex offices are just two of RSM McGladrey’s 120 office locations, noted Teresa Hopke, the company’s director of work-life strategies. “You can multiply those savings out.” At IBM, 40% of the company’s 355,000 employees are classified as mobile and do not have an office space of their own, because they either work from home, work at a customer’s office or are on the move most of the time. IBM provides eMobility centers—suites of temporary offices that mobile workers can use. The company estimates that its mobile workforce reduces its real estate requirements by at least 2 million square feet, saving IBM about $100 million a year. Dan Pelino, general manager for health care and life sciences at IBM, said that flexible work arrangements are also part of IBM’s efforts to compete for “top-notch talent.” Work-life balance is one of the main considerations workers will use in the future when deciding which job to take, he said. Proponents of telework also say that it bolsters productivity: Employees freed from the wear and tear of commuting have more energy to devote to their work, they say, and those working at home aren’t likely to linger at the coffee machine or take long lunches. According to a 2003 study by AT&T, which had been allowing telework for 10 years at that point, employees said they added about an hour of productive time a day when working from home. “The productivity metric is one that we’ve seen grow significantly,” Mr. Pelino said, adding that IBM tracks productivity by comparing its revenue to the number of employees. Ms. Hopke of RSM McGladrey said she sees some signs that allowing employees to telecommute has bolstered retention, noting that before the company began a flexible work program three years ago, work-life balance was the leading reason that employees cited for leaving in exit interviews. “This year, it has moved from number one to number three,” she said. Lower costs, more productive employees—what’s not to like about telework? Well, companies caution that allowing employees to do their work away from the office requires a new approach to managing them, one that focuses more on employees’ productivity than on their whereabouts. “That’s the next phase, getting the supervisors or managers trained on how to deal with someone they don’t see every day,” said Rose Stanley, a practice leader at WorldatWork, an association for HR professionals. “We have such a tradition in this country of face time. We have to turn that around and say it’s not face time, it’s productive time.” Companies also have to take steps to prevent teleworkers from feeling disconnected in the absence of the informal contact that occurs when workers and managers spend their days in the same location. “You have to reach out and touch these people on a regular basis,” said Mr. Pelino, noting that IBM provides mobile workers with mentoring opportunities, regional town hall meetings with executives and even IBM clubs that allow mobile employees to meet with co-workers socially at sporting events or trips to the zoo or museum. “It’s very important to continue to have that esprit de corps,” he said. FW
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