Making the business case for flexibility

(Article originally published by WFC Resources, June 2006, as an UpDate Column)

Our most recent home page survey left no doubt about what's keeping work-life professionals up at night.

Two of the alternatives captured the lion's share of your votes. The first: Getting managers to be more flexible. The second: Demonstrating the return on investment for work-life initiatives. Each was checked by more than 60% of the 50 companies responding. We put the two together and concluded that many of you still need help making the business case for flexibility.

Help employers alleviate their pain

The business case has to show that what you're suggesting can alleviate the particular pain your management is experiencing at that particular time. So it isn't necessarily going to look the same for every organization. But we have identified seven sources of executive pain that are fairly universal, responsible for a lot of lost sleep among CEOs and other executives. Here they are:

1. The need for more productivity
2. The high cost of health care
3. The need to reduce absenteeism
4. Lack of engagement, commitment or loyalty
5. The need to cut costs
6. The need to recruit skills
7. Worries about profit

If it's flexibility you're wanting to incorporate into your culture, you're in luck. There is abundant evidence that it can alleviate these seven sources of executive pain. Here's some of what we know.

1. The need for more productivity

Since the early '90s, a host of studies has been giving us indisputable evidence that giving employees flexibility and control over their schedules increases productivity.

In 1998, Radcliffe Public Policy Institute and the Fleet Financial Group collaborated on a study of work redesign that included measuring the effect of flexibility. Those “flexing” reported more control over their work, and even though fewer people were working long hours, productivity was sustained or increased at both sites.

In 2000, a Boston College study of six companies reported that the use of flexible scheduling arrangements had a positive impact on productivity as well as work quality and retention.

In 2001, the UK Industrial Society reported results of research that found those who used flexible scheduling were out-performing those who worked traditional hours by 30%. And that year, Brigham Young and IBM researchers found employees who felt they had flexibility were able to work anywhere from eight to 13 hours more a week without adding stress or their sense of work-life balance.

In 2003, a UK study by software-maker Corel found companies could boost productivity by finding out when workers felt most creative, and allowing them to structure their own day − in other words, giving them more flexibility and control over their schedules.

In 2005, two studies, both with funding from the Sloan Foundation, put the icing on the cake. "The Bold Initiative" helped eleven companies conduct flexibility pilots and all reported positive bottom-line results. Flexible scheduling at Chubb reduced unscheduled time off by 50% each month and overtime by 40% per employee. Gannett cut backlogged orders by 81% in one month. Macy’s reported improved coverage and a 33% reduction in the use of sick leave. Pitney Bowes reduced overtime costs by as much as 80% in April and May of 2005. Puget Sound cut incidents of late sign-ins by 35%. At Prudential both productivity and quality improved. And Weyerhaeuser announced plans to immediately scale up the project.

The other groundbreaking study that year, conducted for Corporate Voices for Working Families by WFD Consulting, examined the results of flexibility in 29 companies. In every one they found flexibility to be a driver of financial performance and productivity. The case for expanding workplace flexibility, said the report, "is so compelling and substantial that it should be considered a business imperative."

2. The high cost of health care

Before we look at the relationships between flexibility and health care, we must be clear about the link between stress and the cost of that care.

As early as 1991, Northwestern National Life linked job stress with frequent health problems. Peggy Lawless, NWNL research analyst, said at the time, "Research shows the single largest cause of burnout to be lack of personal control on the job." Since then, countless studies have shown that workers who are stressed and depressed are likely to have health care costs 70% higher than those who are not. We now know that there is practically no health condition, including cancer and heart disease, that can’t be linked at least indirectly to stress.

In 2003, a Mercer HR Consulting study found 506 out of 723 employers saying stress or depression was their highest-cost disability condition. And in the UK, stress was having such an impact on health care costs that a new rule was enacted this summer; British employers were told they would have to act to protect their staff from stress or risk fines and legal action.
Given that information, these studies showing flexibility is a stress-reliever become more valuable.

In 1998 the Royal Bank of Montreal surveyed their users of flexible work arrangements, along with their managers and customers, to gauge the impact of that flexibility. The result: workers using part-time, job sharing, work at home or other modified work schedules were less stressed; 70% reported lower stress levels and 65% had more energy.

Also that year, the Radcliffe Public Policy Institute and the Fleet Financial Group study found that in just three months, less "frenzy" was noticed among those using flex options. They had more control over their work, and both stress levels and sleeplessness decreased dramatically.

And a third study that year by researchers E. Kevin Kelloway and Benjamin H. Gottlieb, University of Guelph, Ontario, asked nearly 1,000 women working regular, alternative and reduced schedules about their feelings of stress and control, among other things. The result: flex schedules, part-time work and job sharing did indeed reduce stress and give employees a greater sense of control over the use of their time.

A 2001 study by the London School of Economics and Policy Studies Institute found pressure and stress was not dictated by the long hours, but by how much flexibility and control workers felt they had over them and two years later a University of Arkansas study reached the same conclusion, finding working longer hours was not the cause of stress; rather it was how one worked, and the amount of flexibility, control and autonomy a worker was given.

3. The need to reduce absenteeism

A 2003 study of 9,000 Americans by the AdvancePCS Center for Work & Health found stress and depression to be the leading cause of absenteeism. Because stress is responsible for so much absenteeism, and flexibility relieves stress, it also reduces unscheduled absences.

In 2004, Work Life Balance International examined the practices of 300 companies and found those that invested in flexible work arrangements had fewer stress-related absences, lower turnover and more motivated employees. That same year, a study by LLuminari told us that one of the top five work-related causes of stress and ill health was not having enough influence over the job and how it’s done.

In 2005, research commissioned by Accor Services and conducted by Working Families, a British non-profit, surveyed more than 41,000 employees and found 85% believed flexibility to be the best incentive for managing their absences.

4. Lack of engagement

In 1997, a Watson Wyatt survey found half of all large companies surveyed and nearly a third of mid-sized companies were making “nontraditional” arrangements commonplace. The 614 employers polled ranked flexible schedules as a tool that created a more committed, engaged and dedicated workforce.

In 1998, a study by Patricia Roehling and Phyllis Moen of Cornell and Mark Roehling of Michigan State looked at loyalty in organizations with and without flexibility. The presence of flexibility was related to higher levels of employee loyalty and commitment.

In 2003, Towers Perrin reported that their research found one key to engaged, committed, loyal workers was "sufficient flexibility." WFD research agreed, saying that giving employees a sense of control over when, where and how they do their job was critical in the search for engagement.

The 2005 Corporate Voices/WFD Consulting study found that in every company, flexibility was not only
a driver of financial performance and productivity, but also engagement. Even a small measure produced significantly higher levels.

5. The need to cut costs

Turnover is one of the major sources of lost revenue. So flexibility reduces costs by retaining workers, a fact demonstrated by dozens of studies, including the 2000 Boston College study, and anecdotal reports from company after company.

Telecommuting in particular has been shown by IBM, Sun Microsystems, JetBlue, ARO, Holland America and dozens of other employers to save millions of dollars in real estate and other expenses. A 1999 study by the International Telework Association & Council put that savings at $10,000 per employee after surveying a sample of 247 teleworkers, and comparing them with more than 1,200 workers who were office-bound but wished they could occasionally work at home. The savings came from reduced absenteeism, increased productivity, enhanced recruiting and freed-up office space.

6. The need to recruit skills

As far back as 1999, a report by the Society for Human Resource Management told us their research had found flexibility was the way to recruit needed skills, and each year since then, other polls of job seekers have agreed. Last year, Australian researcher Dr. Paula McDonald examined studies from around the world and concluded that companies must quit treating flexibility as a "perk" "Flexibility," she said, "means work-life balance, and the consequences of treating it as a perk will be serious and significant, both in terms of employees’ health and the recruiting of talent."

A Lee Hecht Harrison poll of 1,680 job-seekers in 2004 year found 76% both want and expect to get flexibility. New York Times Job Market researchers found nearly three-fourths of 350 job-seekers put work-life balance and flexibility at the top of their wish lists. TrueCareers reported 92% of employees said the ability to telework would be a key factor in deciding if they would accept a job.

A 2005 study by the Simmons School of Management and Bright Horizons Family Solutions reports that 84% of both men and women say they’d choose an organization that offers flexibility and respects personal/family time.

7. Worries about profit

Here's another "secondary link." We know that flexibility has a significant impact on employee satisfaction. The Simmons School of Management/Bright Horizons Family Solutions Inc. study asked respondents to compare their current job with their ideal, and identified "gaps" between the two. In their ideal job, said both men and women, they want to be able to work from home, have control over their work schedule and be able to take advantage of flexible work policies and programs. And a 1999 Wharton/Drexel University study asked 861 employees a series of questions to determine whether they thought of their organization's climate as being "family-friendly." Whether or not they had flexibility was key to their satisfaction. In every case where the organization was perceived as supportive (synonymous with "family-friendly"), flexibility and control were present.

Once we accept that flexibility means satisfaction, the following studies become more meaningful as we demonstrate flexibility's ROI:

A 1999 study by Texas University researchers found profits went up when supervisors were given people skills, and taught to worry about employee morale.

A 2000 by Vanderbilt University and Hewitt Associates found that becoming a "best place to work" offers a huge payoff. They compared companies on Fortune’s "100 Best Companies to Work For" list (companies must offer flexibility to qualify for that list) with some that didn’t make it and found the companies on the list outperformed similar companies that weren’t on it, and also did better than the broad market, showing "substantial financial performance advantages."

A 2004 Purdue University study of 5,500 employees from 100 organizations showed a direct link between employee satisfaction and a company’s profits.

In 2005, the Great Place to Work Institute reported that its "Best Companies to Work For" produced four times the gains when compared to two other indexes of the broad market.

Need we say more? We believe it could hardly be clearer that creating a more flexible, supportive workplace is one way employers can alleviate the pain caused by every single one of those factors.

The business case is made.