WHAT EVERY SENIOR EXECUTIVE NEEDS TO KNOW ABOUT DISTRIBUTED WORK

www.TelCoa.org

WHAT EVERY SENIOR EXECUTIVE NEEDS TO KNOW ABOUT DISTRIBUTED WORK

How often have you used the term Im going to work? That phrase suggests that work is a place. But increasingly work is an activity that occurs in many places. This booklet describes what you need to know to make sure your company benefits from this change. As you read this, some of your employees are working in an assigned office. But more, possibly many more, are working at home, in an airport lounge, on a plane, train, or bus, at a customers facility, in a company facility other than their assigned office, or in a hotel room. In other words, work is already distributed. Distributed work takes place whenever employees work in physical workplaces other than a conventional assigned office or workstation. These other workplaces may include: Unassigned or temporary workstations within a traditional office (Internally mobile workplaces) Home Remote offices anywhere Satellite offices in the same region Third places (coffee or internet caf, hotel rooms, customers offices).

The question is not whether your employees work in distributed places. They do. Companies that have studied how work is actually done in their organizations have found that distributed work is already a reality, despite what it may say on paper. Studies of actual office usage in several companies showed that at any one time as few as 30% of the seats are occupied. A leading and very successful tech company recently reported that one-fifth of its employees had never met their bosses face-to-face. Distributed work is a fact. That horse has left the barn. The question is whether it is done well. In many cases employees are working effectively in a distributed manner in spite of, not because of, company practices and policies. Imagine how much more effective they could be if the company recognized reality and provided support for productive distributed work. So the real question becomes, how well is your organization supporting your employees so they can work productively wherever they are? A growing number of companies are finding that by developing programs to support and enable distributed work they can increase productivity, reduce facility costs, improve sustainability, and improve the lives of their employees. Companies with a successful distributed work

program are increasingly receiving favorable attention from industry and stock analysts. The Watson Wyatt 2002 Human Capital study found that companies that provide more flexible work arrangements could see as much as a 3.5 percent rise in shareholder value. When distributed work happens, but is not part of a conscious company policy, there is a high risk of contradictory expectations, policies and practices that inhibit distributed work, and reduce employee satisfaction and engagement. The recipe for successful distributed work is a comprehensive program that includes policies, processes and procedures complemented by enabling technologies and linked to an internal communications plan that keeps employees informed, engaged, and enthusiastic. What works for one individual or organization will not necessarily work for another. This is what you need to know when you design a distributed work program for your organization.

1. Powerful business realities and lifestyle changes are pushing your workforce towards distributed work.
The business realities pushing work outside of the traditional office include: outsourcing, off-shoring to adapt products to local markets, reaching out for talent wherever it is, participation in multiple project teams, maintaining diverse locations that support business continuity, the mounting pressures for sustainable business practices, and the high cost of travel. Lifestyle changes are also pushing toward distributed work. These changes include dramatically higher costs for gas and commuting, preference of many workers to work remotely rather than in a traditional office, desire for better work/life balance or to care for young children or older adults, growing concern over the environmental sustainability of long commutes, opening up opportunities for people with disabilities who could work productively at home, and the possibility of increasing the number of people who can do part-time work or spit shifts without a commute.

2. There are both advantages and disadvantages to distributed work.

The Telework Coalition has compiled the results of a number of studies published over the last decade regarding the potential advantages of distributed work. In summary, these studies show that distributed work can result in: 22% boost in productivity 12% boost in customer satisfaction 26% increase in retention

63% decrease in costs related to absenteeism 20% reduction in training costs

Historically, the most obvious reasons for locating employees together were to provide access to central records and to physically observe employees in order to supervise them. The computer and broadband Internet access has wiped out the need to locate people near central records. Increasingly the need to perform knowledge work by drawing on expertise scattered around the world has removed any realistic possibility of supervising knowledge workers by observing them directly. But, if some of the traditional reasons for bringing people together physically are no longer valid, there are other advantages to bringing people together in the same location. Our review of research studies shows that collocation more easily supports the density of communication that allows people to absorb norms, expectations and information without conscious effort. Being in the same place is still the fastest way to build and maintain social relationships. According to the Telework Coalitions Telework Benchmarking study released in 2006, the primary concern of full time home-based employees is an occasional feeling of isolation. Workers who work together but are distant from each other must explicitly communicate the information that previously they learned with little conscious effort. Theres a need to visibly define expectations, agreements and norms that previously were absorbed just by being together in the work environment. Although distance creates a challenge for dense communications and relationshipbuilding, distributed teams are not necessarily less productive. The New Ways of Working Network reviewed more than 28 studies of remote virtual teams, teams that relied primarily on technology to communicate. There were clear examples of extraordinarily productive and innovative work done entirely in remote virtual teams. There are even a few researchers who found evidence that remote virtual teams can be more innovative, because of the diversity of opinions and knowledge. But some researchers believe that remote work does pose unique challenges that require care and attention. Some researchers believe remote work makes it harder to engage in breakthrough thinking. Fortunately, in many situations, a distributed work program can leverage the advantages of both collocation and distribution, as discussed below.

3. There are financial incentives for distributed work.

Whats a distributed work program going to cost? And what is the ROI? That will depend on your unique circumstances. Based on its experience analyzing and establish telework programs, the Telework Coalition (TelCoa) estimates that savings available to any business adopting such a program will produce an average savings of $10,000,000 over a five year period per 100 full-time

teleworkers, or about $20,000 per worker per year (see below). These figures are based on relatively low-wage employees. Cost savings could be dramatically higher for higher-paid employees. Cost savings for distributed work will differ depending on the location and size of the distributed offices and the retention and productivity rates. Our experience is that distributed work holds the potential for considerable savings. Weve also found that if that is the only goal, a distributed work program may succeed at nothing but real estate cost savings, and may result in loss of productivity, alienation and lack of engagement. We recommend that you approach distributed work with the primary goal of increasing productivity. This will require you to invest some of the anticipated cost savings in the information technology needed to support distributed work, revising company policies and procedures, ensuring needed training and skills, and constructing new work places supportive of a variety of work requirements. Youll get significant real estate savings. But youll also get improved productivity.

Costs per 100 employees over 5 years One-Time start-up costs

$ 446,000 ($1,766,000)

Recurring annual costs ($264,000) x 5 years 1,320,000 Total Cost (5 years) Savings Per 100 Employees over 5 years Savings from unneeded office build out $ 1,500,000 Annual real estate cost avoidance 2,500,000 Productivity ($50k salary x .15 x 100) Retention ($50K salary x.20 x 100) Total Savings (5 years)
Net Five Year Savings

3,750,000 5,000,000 $12,750,000 ==========

$10,984,000

4. Distributed work is an important element in planning for business continuity in the event of business disruptions ranging from weather incidents to terrorist attacks.
Distributed work can play a crucial role in any plan to provide continuity of operations during natural disasters or terrorism. Employers have gone to great lengths to back up their data and infrastructure. But concern about continuity of operations has increased dramatically in response to 9/11; the fear of SARS and the possibility of a bird flu pandemic with mandatory quarantines; the devastation of hurricanes Rita, Katrina, and Ike; the bridge collapse between Minneapolis and St. Paul; and other catastrophic happenings. After the attacks in New York in 2001, organizations that had telework programs and never thought of them as anything else, found they had a significant element of a Business Continuity plan already in place. Several firms, whose primary offices were destroyed in the attacks, were back at work within 48 hours enabled by their work-athome employees, as well as those working from remote offices, hotels, client offices, etc. If workers cant get to their offices or other assigned alternate work stations, an organizations ability to survive is in danger. The American Red Cross estimates that as many as 40% of small businesses that experience a disaster never reopen. Yet a recent study found that less than 50% of the organizations polled had incorporated telework into their business continuity programs. Distributed work can serve as an insurance policy to ensure that businesses can continue to operate, even if their employees are unable to get to their primary place of employment.

5. You need an integrated design team and an integrated solution.

Building an effective distributed program requires a strategy that integrates information technology, workspaces (facilities, workplace planning) that support a variety of work, and corporate policies and procedures (often located in human resources). Building your program on just one of these is likely to fail.

Information Technology
Distributed work must be supported by effective information technology. Information technology provides the backbone for the communication that must substitute for faceto-face interaction. You want distributed people communicating frequently and easily to make up for the loss of the density of informal communication that takes place when people are collocated.

In addition to basics, such as laptops, wireless, and access to broadband, there are some tools you need to get right to collaborate remotely. You need (1) good audio, with multipoint connections (including to/from meeting rooms) and ease of use; (2) the ability to share documents in real time, and (3) the ability of teams to create team web sites (virtual team spaces). Several companies are now offering telepresence products that bring video closer and closer to the real life experience of meeting together. But these products are still expensive, particularly because there must be a telepresence room at each end of the conversation. Yet a number of companies have found that by the time they considered travel costs, travel time, wear and tear, and impact on families, telepresence made economic sense, especially for higher paid managers and executives. When evaluating technology, a major consideration is ease of use. We recommend that: Applications be web-based so you can access them from anywhere (and our IT people say that they should be flash so there are no issues about getting through firewalls) Teams need to be able to provide access to stakeholders/team members outside the corporate firewalls There should be uniformity of applications, so that once an employee has learned how to use an application in one part of the company, he/she knows how to use it in other parts of the company, even in other parts of the world Teams should be able to select the desired components and tools (from a laundry list of standardized applications) and customize their solutions and toolset.

Workplace
Will the workplace become obsolete in a world of distributed work? No. But the workplace will change significantly. A virtual environment can provide some, but not all, of the things that a physical place provides. If the only reason to go into a physical workplace is access to corporate information, this need can be met as well by providing access to a corporate intranet from anywhere in the world. If the only reason to go to the office is to perform individual work that can be performed elsewhere, there is little doubt that the current trend to shrink the size and number of individual offices (or even cubicles) will continue. We foresee workspace dedicated to precisely those uses that virtual space does not serve as well: communication, collaboration, team/project work, socialization, and recognition.

We see the workplace of the future as a place to meet and interact. There will be a variety of work settings. They will be easily reconfigurable to respond to individual, group and team needs. Meeting rooms will be central and essential. Technologies such as wireless will free up office space from being tied to the telephone and electric outlet. We also anticipate that there will be different kinds of work places. Some companies have experimented successfully -- with satellite offices located at the fringes of urban areas, near where their employees live. Home offices will be recognized as legitimate workplaces. Companies will actively support work at home as one of many places employees work. Some companies provide a modest subsidy to ensure that home offices are adequately equipped. Corporate policies need to support use of home offices on at least an occasional basis. Other companies, such as IBM, are creating social hubs to encourage their remote employees to come back to the office regularly to touch base and keep engaged.

Human Resources
The third element in establishing an effective distributed work program is the development of policies, processes and procedures, along with skills assessment and training. Within many organizations Human Resources would take the lead in providing this kind of support. Ironically, our experience shows that Human Resources is rarely the leader in advocating distributed work. Management may need to set a clear priority before Human Resources will step into this role. The New Ways of Working Network recently completed a study of effective work practices in distributed groups. While critical work practices werent hard to identify, we quickly discovered they were the same management practices that have been identified as important in management of knowledge workers for at least the past decade or more. What we did discover was that the effects of failing to use these work practices was more dramatic in distributed groups. Collocation appears to mask some of the effects of weak management practices. Working in a distributed group magnifies all those weaknesses. In distributed groups, good management and work practices matter more. Human resources can play a critical role in ensuring that these work practices are infused throughout the company. Human resources can also contribute to planning the change management aspect of creating a distributed work program. Here are some of the lessons learned from people who have successfully implemented distributed work programs:

Choice matters
Most people today work in positions that require special knowledge and routines unique to their work. The people doing the work, as individuals and as teams, are in the best position to know where and with whom they need to work to be effective. If people can make day-to-day decisions about work location, then they have the ability to be efficient with their time and to engage with colleagues and customers in the ways they know to be most effective. Building this kind of choice into a distributed work program is critical. If you offer employees the opportunity to work in a distributed manner, they see it as a benefit. If you require distributed work, they see it as something being taken away from them. How you rollout a distributed work program is often as important as the nature of the program itself. Some companies have found it helpful to present distributed work as something that is earned with performance, or by acquiring the training and skills needed to work effectively in this manner. You might want to define a minimum curriculum of training before employees are certified or credentialed to work remotely. We recommend development of a Quick Start Toolkit that outlines company expectations and the reciprocal obligations of the company and the employee.

Consider all kinds of distributed work

Some of the problems with distributed work occur when people attempt to apply a single type of distributed work to all situations. Sometimes people think in terms of only two possibilities: everybody works in an assigned space, or everybody works from home. But an effective distributed work program considers how to support productive work in a variety of conditions, ranging from the traditional office, hoteling1 offices, other company offices, at home, satellite offices, and hotels, airport lounges, or other travel related spaces. Theres also a tendency to think that distributed work makes sense for people scattered globally, but not for people who reside in the same geographic area. Companies that have implemented successful distributed work programs have found some of their greatest gains come from providing options even for teams that could (and did) assemble physically several days a week. With planning you can leverage the advantages of both collocation and distributed work. There are also different kinds of teams, ranging from operations teams that are often referred to as a department within a larger organization, and are defined by reporting relationships and teams working on projects, usually ending when the project is

Temporary use of a desk, with full support services, on a reservation basis.

complete. Increasingly, work is done in project teams, whether members are located in the same metropolitan area or scattered nationally or globally. Those within a metropolitan area have the advantage of easily meeting together in a central location whenever they feel its important to do so. It is more challenging to manage a globally distributed team. You dont have the advantages of personal contact on a regular basis, and theres a need to get agreement on work practices in a hurry and without a shared work environment. Our experience and review of the research literature say that if the team is globally distributed: It requires more rigor in establishing and adhering to explicit structure of processes and protocols Theres a greater need to create this structure intentionally and early More intentional effort is required to communicate frequently and informally More effort is required to understand contextual differences Theres greater reliance on compatible, reliable technologies.

Just as there are different kinds of work teams, there are also different kinds of work. Some jobs lend themselves to distributed work, others may not. Some kinds of jobs require a different kind of support for distributed work than others. Some jobs require intense social interaction with co- workers, others do not. Some involve relatively routine tasks, others involve breakthrough thinking and extensive expertise. Some require privacy, some do not. These differences require both different kinds of work spaces when people are in a workplace, and can require different policies and tools for effective distributed work.

Distributed work is not for everybody

There are some employees who may not be able to adapt to distributed work, either due to their personal styles or their cultural context. Some personalities just dont adapt well to distributed work. For some employees, their work is their social life (even though they may be hard workers). For some, for example in India, going to work in an office is an important part of ones identity or status. You need a program that gives employees options, and you may need to preselect people for distributed work based on the type of work and personality and their ability and willingness to work without the structure of going to the office. Finally, if you need people who can work in a distributed manner, your future recruiting efforts may need to be targeted at people who can work effectively in a distributed world.

You need data

No company works exactly the same way. The mix of jobs and requirements in your company may mean that a program that works effectively in one company may not work well in yours. The starting point is always the same. Understand how people actually work before you start changing things. The reality of how people work in your organization may be (and probably is) very different from what you think. Start with a research program that tells you how work is actually being performed now. If you are going to design a program that makes sense for your company, you need data, and lots of it. You need data on: -- Different kinds of work in your company -- Different personal circumstances -- Different group/team needs -- Different work patterns Dont assume you know this information. Most companies that have answered these questions have been surprised by their own findings. Most didnt even have the most basic data about how their workspace is currently used. Companies that have been through this process have already developed or located the tools needed to collect this data. What it takes is a basic commitment to base the program on solid information, not assumptions or hunches.

Focus on results
The recent New Ways of Working Benchmarking Study of Alternative Work Strategies found that the biggest barrier to new ways of working is, not surprisingly, cultural resistance. Most of this resistance is coming from middle managers and their fear of losing control of their staff. They fear giving up the sense of control that comes from being able to watch their staff work (even if, in reality, they rarely are able to watch their staff work). The Telework Coalition, in interviews with executives, most frequently hears the concern how do I know theyre working if they cant be seen. A crucial precondition for distributed work is a job performance evaluation and measurement system that measures actual performance and is not dependent on supervisors and managers being able to personally observe staff at all times. Without this in place, managers will feel unable to evaluate and control their employees, and

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employees will fear that if they work in a distributed manner they will be passed over when it comes to recognition and rewards (i.e.out of sight, out of mind.). As an example, Best Buys Results Only Work Environment (ROWE) is built upon the premise that employees can work anywhere as long as they produce results. Such a program requires that both managers and employees acquire management by results skills from a combination of training, mentoring, and experience. Some managers may have difficulty adjusting their management style to distributed work. If you believe distributed work is important, you may want to recruit managers who know how to supervise without constant visual oversight. In some cases, managers who cannot cope with distributed work may need to be moved to positions where they supervise collocated employees, or they may not fit in the new management style.

Training for distributed work

Much distributed work is still done in teams, mediated by technology. Our research shows that for teams to work effectively via technology they must acquire additional skills and make many more explicit agreements about how they will work together. The core competencies weve identified are social skills such as conflict management, information sharing, performance management and measurement, building trust, and setting expectations and building agreements. These are so called soft skills. But as one of our most experienced IT colleagues puts it: The soft stuff is the hard stuff.

In conclusion
Developing an effective distributed work program is a significant effort. Its not just something done casually to reduce real estate costs. It will require investments in information technology, in supportive workplaces, and in developing policies, procedures, and training to ensure that your people have the skills they need to work effectively in a distributed manner. After all, the real goal of distributed work is not just to work as effectively as we do now, but to be even more effective and productive as we adapt to an increasingly competitive world.
Credits:

This report was written by James L. Creighton and Joe Akinori Ouye, New Ways of Working Network; Chuck Wilkser and Jack Heacock, Telework Coalition. Portions of this report were based on materials taken from reports available to members of the New Ways of Working Network. These reports included: June Langhoff, An Overview of Remote Virtual Teams & Productivity; June Langhoff, Does Place Still Matter? The Role of the Workplace in a Distributed World; Eric Richert, Distributed Group W ork Practices, and the New Ways of Working Network Alternative Workplace Benchmarking Study (2008). Portions of this report were taken from the Telework Coalition Benchmarking Study (2006).

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THE NEW WAYS OF WORKING NETWORK (www.NewWOW.Net)

The New Ways of Working Network is a membership organization of thought leaders from companies and academia exploring new ways of working such as distributed work, environmental sustainability and work, cross- cultural work, innovation and productivity. The Network brings together people from facilities management, architecture, administration, change management/ organizational development, information technology, anthropology, psychology, and project management to explore work as a unified system. Many of the Networks members are early adopters of distributed work. Others are now in the process of creating distributed work programs. Based on their experience, this at a high level is what they believe every CEO needs. Members receive a weekly newsletter of trends, participate in symposia and roundtables, and jointly sponsor the preparation of research summaries on topics related to new ways of working. They also work together on projects such as an annual benchmarking study and an environmental sustainability calculator.

TELEWORK COALITION (TelCoa) (www.TelCoa.Org)

The Telework Coalitions (TelCoa) mission is to Enable and Support the Advancement of Virtual, Mobile, and Distributed Work through Research, Education, Technology, and Legislation. TelCoa, the largest nonprofit organization supporting telework in all of its forms in the United States, brings together private and public organizations and individuals for the purpose of promoting and adopting distributed work, telework, and telecommuting programs that exemplify triple bottom line advantages: benefits to employers, employees, and society in general. TelCoa has special interest in Work@Home agents for call centers, inclusive technologies that provide the foundation for employment of persons with disabilities, opportunities for older workers, to enhance rural economic development, and to emphasize the key role that telework plays as a critical component of Business Continuity and Continuity of Operations planning.

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