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Why Telework?

For the love (of your employees) and the money (you'll save) - By Jennifer Bresnahan

The initial lure of telecommuting proved irresistible for many companies: employees tied into the office by technological tethers, able to work from homes, airports, cars or hotels with a few tinny bleeps from a modem. Happier employees and lower overhead were bound to follow, or so the logic went. But in the years since laptops became vogue and employees became "empowered," the promise of telecommuting has become a bit tarnished. Many companies have launched telecommuting programs that now can only be called dismal failures. The culprits? Poor technology planning, unrealistic expectations, culture shock and lack of trust.

These failures proved that while there might not be a wrong reason to start a telecommuting program, there are certainly wrong ways to implement one. Merrill Lynch & Co. Inc. and IBM Corp. belong to that hard-to-find group of companies that discovered some right ways. Both made teleworking succeed in two completely different cultures for radically different reasons. Merrill Lynch wanted to earn the loyalty (if not love) of its employees. IBM needed to save a few million in real estate costs. These companies' strategies demonstrate ways to incorporate telecommuting into a productive and efficient definition of how work gets done.

Merrill Lynch
Earning Loyalty

For once, the financial services powerhouse Merrill Lynch, with $1 trillion in client assets, didn't care about the money. Three years ago when the company decided to launch a program that will have 450 employees telecommuting by the end of 1998, money wasn't a factor. What mattered was making employees happy so they would stick around. "We didn't care about cutting costs," said Chief Technology Officer and Senior Vice President Howard Sorgen. "Our goal was to promote loyalty and productivity."

Like every company that depends heavily on its information systems (IS) department, Merrill Lynch suffered from the dreaded and prevailing staffing crisis. There simply weren't (and still aren't) enough skilled technologists to go around. Sorgen and Vice President Camille Manfredonia had the enormous responsibility of recruiting and retaining IS staff to support the Private Client group, which totals one-third of Merrill Lynch's 54,000 employees scattered in 40 countries. In 1995, when the company launched a Work Life Strategies task force to investigate alternative work arrangements, Sorgen and Manfredonia seized the opportunity to form a separate Employer of Choice task force specifically for the 1,700 programmers in their department. "If you try to boil the ocean, you're not going to get anyplace," says Sorgen, explaining the choice to limit the program to IS instead of going companywide. "We wanted this program just for ourselves."

Composed of representatives from every department in the private client side of the business, the task force's goal was to make Merrill Lynch the most appealing IS employer in the market. "In order to become the employer of choice, we had to consider all the things we could be doing above and beyond what we had in place today to give us the edge over the competition," says Sorgen. "One of them was telecommuting."

Manfredonia handpicked people for the task force she considered to be forward-thinkers and who were aware of the staffing crisis. Nevertheless, they disagreed about whether making employees happy justified launching a telecommuting venture that would cost $500,000 upfront and $3,000 per year thereafter for each employee. Without a cost-cutting component or at least any measurement for success, they felt the program didn't offer enough benefit to the company, says Sorgen. "I myself was one of those people at first," he adds.

Over the course of nine months, reluctant committee members came to see that the cost of continually losing IS staff could be higher than the cost of the telecommuting program, Manfredonia says. If the program could stop the IS revolving door, it would be much more than an employee perk. Telecommuting consultant Gil Gordon, president of Gil Gordon Associates in Monmouth Junction, N.J., helped the group understand the productivity payback of telecommuting as well. Benchmarking that the task force had done with companies like AT&T Corp. supported his assertions. Sorgen says that they fought for telecommuting with much the same strategy they used recently to get approval for a casual dress policy for IS staff. "We're a technology organization," Manfredonia says. "What do technologists need to be happy so they'll give us what we want? You can't measure that. You just know that [telecommuting makes] people feel comfortable and productive."

Some members of the task force worried that productivity would drop as telecommuters lounged all day or were distracted by child care demands. Still others were concerned about worker compensation issues. If an employee slips on a banana peel while working at home, they wondered, would the company be liable? The task force took these misgivings very seriously and addressed them one by one. "We approached this as an R&D effort and didn't attach a deadline to it," says Manfredonia. "We wanted to make sure that we explored every avenue. A lot of the time was spent in constructive conflict."

To address the uneasiness over productivity, Sorgen made it clear that managers would have to expand their notions of how to supervise people. "I took the 150 managers in a room and said, 'Look, we have 1,700 people and we operate out of 13 different locations,'" says Sorgen. "'Now you tell me why you have to look at every one of your people in order to lead them properly.' Managers have to trust. We're systems professionals. The work measures itself-you can tell if someone is writing bad code."

The committee also established rules and processes to govern work away from the office. First, employees cannot telecommute until they've been with a new project for 90 days and are then required to go to the workplace at least once a week. These stipulations ensure that employees foster strong ties to project members and managers. Once employees have decided to telecommute, both they and their managers must attend a daylong training program designed to stimulate thinking on such issues as how to plan a safe, ergonomically correct home office and how often to call into the office. Then, employees and managers go through a technical interview to determine technology requirements. Merrill Lynch supplies the computers, but employees are required to purchase their own furniture. (Lynch secured a group discount rate from local suppliers.) Finally, employees spend two weeks in a telecommuting simulation lab at Merrill Lynch. Employees are located away from where they usually work with the same equipment they'll use at home. Desks are placed next to windows overlooking a busy street to prepare workers for constant distractions. Then they're expected to communicate with managers the next two weeks as if they were already telecommuting. The experience helps prepare employees for the sometimes jolting realities of working outside the office.

As for the liability issue, the task force found that the same rules of liability in the workplace apply to the home office. As an extra precaution, however, the company requires employees to check with their insurance agents to make sure telecommuting doesn't violate their homeowner's insurance. Home work-spaces are inspected for safety and conduciveness to productivity. For example, a poorly lit office next to the washing machine would fail inspection. "We thought we were going to have trouble with home inspections, but employees understand and are proud of how they set up their work environment," says Manfredonia. "They're very quick to do the things they need to do to be able to telecommute."

Despite the group's careful planning, it couldn't foresee every obstacle that would arise once people started tele-commuting. But those problems didn't derail the program because Merrill Lynch was willing to spend whatever was necessary to solve them. For instance, the committee initially underestimated the need for technical support. "When I first started tele- commuting, [technical support] was informal so I didn't have the help I needed," says Susan Davelman, a Merrill Lynch systems analyst who telecommutes three days a week. "If I couldn't get my computer to work, I had to come into the office."

The company assembled a five-person IT support group dedicated to solving problems for remote workers. Available from 7 a.m. until 7 p.m. on weekdays, the group also carries beepers for off-hour problems. "I call them a lot, like when I have a problem getting through with my laptop," says Davelman. "This couldn't have been a successful program without their help."

The task force also failed to predict how communication patterns change when workers no longer have face-to-face contact. "The first week I kept on calling my boss and he was never there," says Davelman. "Finally, I just sent e-mail and that's what I do now.... Most everything is covered by e-mail." The trouble came a few months later, however, as everyone else also discovered that e-mail was the most reliable mode of communication. The system bogged down and people were "e-mailed to death," says Manfredonia. To solve that problem, the company built a corporate intranet last fall where people can post announcements and updates, reserving e-mail for more immediate communication needs.

Three years after its inception, the Employer of Choice strategy has made Merrill Lynch precisely that. Employee satisfaction is up 30 percent, according to annual in-house satisfaction surveys. And the company is also getting outside validation: Working Mother voted Merrill Lynch one of the 100 best places to work, and BusinessWeek named it one of the top family firms to work for, due in no small part to its telecommuting venture. The program has also enabled Manfredonia and Sorgen to hold on to several star employees, including a woman who telecommuted from Russia while going through a several-month process of adopting a baby. Another valued employee relocated from New Jersey to Florida and now telecommutes five days a week, visiting the office once a quarter.

"This is an employee perk to create loyalty to the firm and a happy populace that wants to jump on a grenade for Merrill Lynch," says Sorgen. "It's a tremendous retention tool and a phenomenal recruiting tool."

Saving Money

Telecommuting was one of several strategies that helped bail IBM Corp. out of a prolonged funk. From 1991 to 1993, the Armonk, N.Y.-based company lost $16 billion, cut some 117,000 jobs, and took more than $28 billion in restructuring charges. CEO Louis V. Gerstner, who took the helm in April 1993, declared after coming on board that the only way out of the mire was to make the then-sluggish company more responsive to customers, increase employee productivity and cut, cut, cut wherever possible. All of that would not have been possible without telecommuting, says Bob Egan, Salt Lake City-based director of mobility for IBM North America Sales and Distribution.

In 1995, the 10,000 salespeople and consultants in North America who survived Gerstner's initial slashing spree suddenly found themselves without a home (or rather, with only a home) as dedicated office space was now shared at a 4-to-1 employee-to-office-space ratio and telecommuting became mandatory. Because salespeople and consultants were already used to working remotely and were grateful to still be employed, IBM didn't encounter the resistance that such a drastic change might normally engender. And, of course, it didn't hurt that the directive came from the Big Guy [Gerstner] himself. "I welcomed the mandate," says Dan Curtis, worldwide network service line and competency leader for network design and architecture, who works out of Boston. "It's my personal opinion that the office is a difficult place to be productive because we had an open, bullpen-type design. I'm a consultant; I need time to think, which is very challenging when people can walk up and talk to me and the phones are ringing."

Still, even with a willing telecommuting population, problems inevitably ensued. First, there was a technology barrier. IBM is staffed with technologically sophisticated people, but using a laptop is very different from being on a host-based system linked directly to the company network. People had to get used to working a different way, says Egan. For example, employees couldn't stay logged in to the network all day as they would at the office because phone bills would be atrocious. Instead, they logged in to the system every few hours for updates.

Then there were communication challenges. IBM's culture had always focused around meetings. But lengthy status meetings over phone lines were awkward. Managers suddenly found themselves without an obvious way to monitor employee productivity, and employees felt out of the loop. Even worse, customers and clients complained that they could never reach consultants. To stay in the loop, IBM employees learned to rely on e-mail, voice mail and the corporate intranet to communicate with each other. Curtis, for example, visits the intranet at least once a day to communicate with others, access a best practices databases of client cases and check announcements. To allay customer concerns, employees use a call forwarding and messaging system that allows clients to reach them anywhere.

The biggest challenge the company encountered, however, was enabling its scattered workforce to have regular social interaction with peers. While Egan and others anticipated that issue, they had no idea just how significant it would become for their telecommuters. "Over the years we took for granted that things happened among employees as a natural course of events, like chatting over the water cooler," says Egan. "Once our employees were mobile, it all went away and there was a social need that wasn't being met, as well as a business need because many meetings and customer strategy sessions happen informally."

At first, IBM managers tried to continue holding regular meetings, but that became difficult because salespeople and consultants were mobile and usually busy serving customers. In an interesting twist, IBM employees began identifying more with their clients than with fellow IBMers, says Curtis. Now one of Egan's main responsibilities as senior location executive is to draw employees in the Utah area together for activities like potluck dinners and outdoor recreational activities. The consultants in Curtis's North East Area division also have an annual retreat; this year's retreat was at the Girl Scout camp in upstate New Jersey where one of the Friday the 13th films was shot. "Sleeping in cabins is enough to make city folk bond," says Curtis.

A related challenge was determining how to assimilate new employees into a virtual workforce. Soon after people join the company, they attend a seven- to ten-day course covering the basics of working at IBM, where they get a chance to bond with peers. "It's been my experience that people stay in touch with fellow classmates," says Curtis. A short time later, new employees attend a series of four- to ten-day training seminars in their specific discipline. When they're ready to actually start working, they're assigned to projects with others who are already experienced in the field. "We try to avoid casting someone off on their own when they're a new hire or new to a project because that's not productive for the employee or IBM," says Curtis.

New consulting hires are also assigned two mentors: a professional development manager (PDM) and a competency development mentor (CDM). The PDM helps with administrative questions and personal development and the CDM handles business-related questions. This two-tier mentor structure ensures that the new employees always have someone to turn to if they have questions. The mentors, for their part, are motivated to be as helpful as possible because their performance is based in part on their mentoring abilities. "We're in a knowledge-based business," says Curtis. "It's critically important that we share information with others."

IBM's mobility initiative has given the company a leg up in achieving Gerstner's goals. First, telecommuting has saved the company significant dollars in real estate costs. By having 10,000 salespeople and consultants mobile, IBM saves $75 million per year. Employee productivity has increased 20 percent and a survey showed that 75 percent of employees said that teleworking had a positive impact on overall morale. Employees are working longer hours, getting more done in an hour and are happier overall, says Egan. Moreover, the company's customer service has never been better. "Telecommuting has enabled us to be less focused on internal IBM activities and requirements," says Curtis. "Instead, we can focus on the customer and client."

Mobile Roadblocks
Top barriers to telecommuting success

Manager Resistance and Mistrust: If managers aren't totally behind the program, they will eventually find a way to bring it to a halt.

Dumping-Ground Effect: If employees aren't trustworthy, reliable and productive at work, there's no reason why they would be at home.

Inadequate Technical Support: Just giving employees laptops and ISDN lines isn't enough. They need somewhere to go for help if something goes wrong-because it always does.

Culture Shock: Working at home often represents a cultural shift in the way people work. People need to be educated about how to set up home offices and stay in touch with coworkers.

No Face Time: Virtual team members need time to bond and overcome trust issues that are often exacerbated when communicating without visual cues.

Scalability: Telecommuting pilots usually work well on a small scale but can fall apart when rolled out across the enterprise.

False Economy: In the long run, companies save money by buying employees the equipment they need at the start, rather than skimping and doing it after the fact.

Senior Writer Jennifer Bresnahan can be reached at - Jan. 15, 1998.