Confusion around flexible working will persist until HR works out a clear ROI for it
Peter Crush, July 23, 2012
Why are so many of the companies that offer flexible working in some form or another so desperate to call this policy anything but that?
"We prefer the phrase 'agile working'. It symbolises us giving our staff virtual collaboration skills," asserts Jacobina Plummer, who is global change and communications manager, Unilever.
"Staff are 'location-independents', says Rob Keenan, head of UK portfolio management at electronics multi-national, Siemens.
"We decided our anytime, anywhere offering is better described as 'smarter working' rather than 'flexible working'," adds Norma Pearce, HR director, Plantronics.
At O2, it is different again: "Staff are one of two types: either they're 'desk huggers' or 'desk hoppers'," says its HR delivery consultant, Stuart Eynon.
Perhaps the reason for such whimsical semantics is because lack of precision affords some HRDs [not necessarily these above], the ability to get away with far less scrutiny of the ROI on flexible working in the first place. "Our 'agile working' is not policy, but more of a framework of principles," says Plummer cryptically, and so, among Unilever execs at least, she says, measurement is not a priority.
"So many things go into measurements, such as productivity, so we don't have any particular science or figures to back up what impact flexible working is having," she admits. "This year, we will ask people if they 'feel' they have got more productive, but that is as far as we'll take it."
For advocates of flexible working, lack of a watertight business case (beyond making staff feel happier), will be disappointing, especially as the organisers of the Olympic Games threw down the gauntlet to firms to make working flexibly the real Olympic legacy.
In fact, for once, it seems as if the usually glacially-slow Government is ahead of the curve. Between 6 and 9 February, it launched a three-day experiment under the code-name Operation StepChange, challenging staff from all 16 Whitehall departments to work from home, ready for six weeks' home working during the Games (the Department for Transport has reported that 35% of all staff journeys were saved).
Surely, the business community ought to be doing (and reporting on) the same sorts of statistics?
"Unfortunately, flexible-working ROI is still a Holy Grail," argues Lynda Gratton, professor of management practice, London Business School. "The problem is, multinationals just see it as a done deal. They feel they don't need to go down strict justification, except beyond elements such as real-estate savings and reduced CO2 emissions, which are the real drivers. This is less helpful to mid-sized firms, which need more sophisticated performance-improvement ROI."
Savings on trips and CO2 are also easier to measure, so Unilever, for example, has numerous stats on this: that it delivers 950 virtual telepresence meetings per month, saving 44,460 short-haul flights a year and 113,506 tones of CO2.
By comparison though, Unilever's people metrics are more piecemeal. "No-one has ever been taken off agile working," says Plummer (inference, people must be hitting targets). It is similar for other businesses.
At Informa Business Information, HRD Alison Chisnell reports 10% of staff are home workers. She says: "If an employee works less than three days a week in an office, they are not given a permanent desk." But for all this workforce planning (saving £100,000), she admits "other than higher retention rates of home workers, it is more we instinctively know flexible working works for staff than anything else."
Experts say this needs to change. "HRDs need to stop thinking about flexible working as a flimsy feel-good benefit, and more as proper a business strategy," explains Peter Thomson, author of 2011 book, Future Work: How businesses can adapt and thrive in the new world of work (Palgrave Macmillan). "They need to say, 'right, so let's improve our productivity by 10%, and flexible working will form X% of it. HRDs need to treat staff as their job titles suggest - as a resource." He adds: "Yes, it is hard to measure productivity, but when firms start formalising flexible working, it should soon force managers to work out the outputs, not inputs, of work."
It is classic 'work is what you do, not where you are' theory, but with the suggestion old-fashioned management needs to up its game. Changing how firms think about flexible working can be helped by real-life examples, though.
When O2 ran its now well-publicised home working experiment earlier this year, it said it 'gained' more than 2,000 extra hours, staff self-reported getting 36% more done than had they been at the office. Data such as this should start to be more compelling. Staff also reported getting more sleep and 14% more family time.
Eynon says this experiment is a continuation of a policy launched in 2010, when O2 merged three offices into one, deliberately having 500 fewer desks. Back then, floor space was the measure, but now new measurements are evolving.
"We are now also talking about monetising saved meeting time and non-meeting time, as well as 'minimisation of distraction' as other measures," Eynon says.
Plantronics launched 'smarter working' in 2010 (and has seen participation among its 300 European staff rise from 20% in 2009 to 70% now). Its HRD Pearce says the wider HRDs start casting their metrics net, the bigger the potential ROI catch: "Among those working smarter, absenteeism fell from 12.5% to 2.7% last year," she says. People who might have not come into work because of a slight cold have also started working voluntarily from home, and a surprising statistic has been an improvement in employee relations.
"We have only had two cases in an entire year - a big improvement," Pearce says. Pearce is so keen to develop an ROI model, she has challenged the University of West England to see what it can come up with. There's a serious point behind this too: "Often the assumption is people 'want' to work at home. But our pilot found some missed the buzz of the office, while freedom during the week for others lost them the identity of their weekends."
Justin Spray, business psychologist at consultancy Mendas, believes there is a serious 'cost' firms could be ignoring in their ROI: "Much of work is seeing people's behaviours and copying them to perpetuate positive outcomes. My worry is that too much home working over time erodes what makes people effective as teams."
Return against cost of implementation is often overlooked. While flexi-working might be benefiting from the trend for 'Bring your own device' (analyst TechMarketView predicts 9.5 million will use their own computing devices for work by 2016), it is not as free as it sounds. O2 reported pressure on the IT infrastructure: VPN traffic was up 162%; instant messaging was up by 40.8%, compared to a normal day. It required 400 IT staff, needing extra training, and deployment of a newer Microsoft Lync system for more stable video conferencing. The Civil Service saw a 93% increase in remote access during its three-day experiment and reports are that its IT system buckled on more than one occasion.
The UK is not alone in poor implementation and measurement of flexible working. Proposals for a universal right to request flexible working were absent from the Queen's speech. There is still hope it may go through, and if so, better ROI will have to follow. At the moment, many staff do not even know they have a right to request it - a factor that no doubt hinders its uptake and effort in reporting.
"Employers forced to encourage flexible working by Government are crap employers," asserts Thomson. "Employers need to react to how staff want to live their lives." Pockets of research will help move the ROI debate along - call centres that allow staff to work from home suffer half the attrition of those who do not - but maybe what will force it more is rising demand from Gen Y workers. HRDs will have no excuse not to measure it then.
Case study: Vodafone
Britain was under two foot of snow in 2010, but Vodafone enterprise commercial marketing director, Peter Boucher, still had the small matter of launching the iPhone. "That was what I call our 'compelling event'," he says, "the thing that really forced us to look at flexible working seriously." He argues that until businesses have a compelling event of their own ("It might be the Olympics," he says), they will continue to side-step flexible working because of old-style management - and issues, such as "there continuing to be too much valuable information located in the office, not accessible at home".
Now that Vodafone is a convert, though, Boucher says the business case is compelling: "A fifth of our workforce now work mainly outside the office, and absenteeism drops - we know it. It has fallen from 6% to 4.5% in two years. At the same time, people are exceeding their performance targets." Vodafone's campus has 3,300 spaces, for a theoretical 5,500 people, an immediate cost saving, and one that Vodafone has been keen to drill down into further. "A full cost analysis of an office worker revealed it cost us £12,000 per year to employ that person. For an identical mobile worker, it only costs us £6,000. We believe staff prefer working in a way that suits them, and we also know they work faster."
He adds: "Some 40% of all work communication within Vodafone now comes from the home, and in future, we definitely see working being mobile working - rather than home or flexible working - as being the dominant form. Our own research reveals an iPad is four times more 'mobile' than a laptop. It literally moves around more and is used more."
Another metric Boucher says Vodafone can no longer ignore is what Gen Y workers want. "Young applicants now rate working flexibly as important as the brand or their salary. As a talent-attraction tool, flexible working has its own ROI scores."
Flexible working: the figures
In May, the CIPD revealed its latest statistics for the provision and uptake of flexible working (home working, compressed hours, remote working, annualised hours, career breaks, job shares and part-time work). It found:
96% of companies offer it overall (100% large firms; 95% medium-sized firms and 91% SMEs)
Three-quarters make 'some use' of flexible working
The most popular form of flexible working offered is part-time working - by 88% of all employees
Some 25% use some form of flexitime, while 20% say they work from home on a regular basis. A further 14% say they take advantage of remote working
More women work flexibly than men (77% vs 70%)
Case study: Silkroad
Our company ethos is to treat employees with respect: they are adults and deserve to be treated as such. They repay our trust with good sense and maturity, and, most importantly, a realistic approach to flexible working that allows everyone to achieve their goals. In the US, employees can have unlimited holiday, with no caps or disallowed dates; the only condition is that their work gets done.
This model means staff can fit work around other commitments in their personal lives. Because we're not clock-watching, our staff take ownership of workload management. If they can work productively from 6am to 10pm and take a four-day weekend, I'm happy for them to do so. We like people to be together in the office, to maintain a great social working culture, but there are options. Businesses must be adaptable in their HR structures to attract and retain the best. UK law does not allow for a high level of flexible working, but when the time comes, this will be the way people work all over the world.
There's no choice: with the global nature of today's workforce and communications, employers must adopt a flexible approach. Otherwise, the high-calibre employees will go elsewhere. We work this way because we can; the world will follow because it has to.
Flip Filipowski, CEO of SilkRoad Technology