Telework and the New Workplace of the 21st Century - Executive Summary

America may be witnessing another historic transformation of the workplace. In the pre-industrial world, workers lived in isolation, usually on farms, and had little contact with one another. The Industrial Revolution brought people into central locations -- factories for most workers -- to work in a strict top-down hierarchy. The Information Age may return workers to their homes, and yet connect them via modern technology to "the virtual office." 

Such a shift holds huge implications for how we work and how we live. 

One thing we know for certain about telework -- as working from home by means of modern technology is now most often called -- is that we don't know enough about it. To increase national understanding of this important phenomenon, Secretary of Labor Alexis M. Herman convened a national symposium at Xavier University in New Orleans on October 16, 2000. This unprecedented gathering brought together for a day of challenging, in-depth discussion more than 150 leading experts on telework, including academics, social scientists, practitioners, public officials, corporate executives, and representatives of organized labor.

A dozen studies presented at the symposium have been published as "Telework: The New Workplace of the 21st Century" and are available on the Department of Labor's web site, www.dol.gov. These studies provide the most comprehensive review of the literature on telework now available. This Executive Summary reviews some of the most important themes and conclusions in those papers.

The studies suggest that telework holds vast potential to benefit workers, employers, and the American economy as a whole: to help employees balance the demands of work and family, to promote diversity and new opportunities for Americans who are outside the economic mainstream, and to increase worker productivity and help companies compete in the global marketplace.

Some have asked, "Where will the new world of telework lead us?" That is the wrong question. The right questions are, how do we manage the new world of work and the changing workplace, and, as a society, what must we do to ensure that telework's benefits outweigh its costs. But before we can make the choices that will lead to the best results, we must understand telework better. 

**Telework -- Who Does it Now?**

The typical teleworker appears to be a college-educated white man, between the ages of 34 and 55, who owns a home computer and earns more than $40,000 a year. Telework is best suited to jobs that are information-based, portable and predictable, or that demand a high degree of privacy and concentration. Typically, teleworkers have been information workers in mid-level or senior positions, but the trend is toward teleworking at all levels of employment.

By some estimates, there are between 13 and 19 million teleworkers in America today. Some people telework full-time, but a larger number telework one or two days a week.

**The Federal Initiative**

The federal government, with the support of Congress, has actively supported telework since 1990, but could do much more. The federal initiative has included both individuals working from home and regional telecenters where federal agencies can lease workstations for their employees. The telecenters program, begun in 1993, now includes 17 such centers in the Washington, D.C., area and others across America. 

One of the reports presented at the New Orleans symposium examined this federal telework initiative and found it generally effective. The report cited the General Services Administration New England regional office in Boston, which set -- and surpassed -- a goal of having 10% of its people work from home after a huge highway construction project made commuting extremely difficult. 

The report also cited the Consumer Product Safety Commission which now has 95 of its 130 field employees working from home, with an estimated savings of $3 million in rental costs since the program began in 1993. The federal initiative has also stressed telework as a means of expanding opportunities for workers with disabilities. 

The Department of Labor now has about 350 employees who are formally teleworking and 2000 more who telework on an informal basis. One example is Laura Patton-Watson, a cost negotiator in Washington, DC. Soon after Laura married, her husband, an army officer, was assigned to a base in Germany. Not wanting to lose a valuable employee, Laura's supervisor arranged for her to telework from Germany for two years. When Laura returned to Washington, she received a promotion. Then her husband was transferred again, and now she is teleworking from Yorktown, Virginia.

Labor's teleworkers also include more than 30 staff attorneys who work at home one to three days a week, using e-mail and on-line legal research just as they do at the office. This has enabled their agencies to minimize office space because the teleworkers share offices and most often are not there at the same time. 

Although the number of federal teleworkers increased from about 4,000 to an estimated 25,000 during the Clinton Administration, that still amounts to only about 2% of the federal workforce*,* compared with an estimated 10% teleworking in the private sector. A management culture that often resists change is largely responsible for the relatively low number of federal teleworkers. Since the federal program was motivated by the need to hire and retain outstanding employees, as well as to help workers balance work and family, the federal government clearly should do better.

As telework expands in both the public and private sectors, it should not be simply a fringe benefit for the most skilled and educated workers, but a powerful tool for bringing into the economic mainstream millions of people who have too often been denied opportunity, such as Americans with disabilities. Researchers and policy makers must focus on questions of access to technology and technology literacy as a basic element of our future investigation of telework.

**Workers: Benefits, Costs, and Open Questions**

Balancing Work and Family

Telework can provide much-needed flexibility to working parents, thus reducing "role overload" and enhancing family life. Still, the assumption that teleworkers spend more "quality time" with their children was challenged by a new national survey. Older children (grades 7 to 12) of teleworking fathers were 11% more likely to agree that "my father does not have the energy to do things with me because of his job" and "my father has not been in a good mood with me because of his job" than the children of fathers who work in an office. Telework may well be beneficial for parents in some cases, but much depends on how each parent interacts with his or her children. 

Blurred Boundaries Between "Work" and "Home"

Thanks to e-mail, mobile phones and pagers, people who work at home may find themselves on call around the clock. Some teleworkers may thrive on round-the-clock pressure, but others will want to maintain clear boundaries between work time and personal time. They may find it useful to have a clearly-defined home office. And they may raise questions about overtime pay when work spills over into personal time. 

One participant at the New Orleans symposium noted that, when parents work at home with children in the house, men may see the kids as a "temptation" while women see them as a "responsibility." Thus, the participant said, a physically separate home office and a fixed schedule are particularly important when women work at home with children in the house. 

Social Isolation or the Virtual Community

On Labor Day 1999, Secretary Herman issued a study entitled "*futurework*: Trends and Challenges for Work in the 21st Century." The report posed important questions about the impact of technology on human interactions in the workplace.

As technology continues to spread, questions emerge: What are we losing as a society? What is the effect on social relations? Work, after all, is more than just a job or paycheck. It is where we meet friends, share ideas, and build a common sense of purpose and a social network. With voice mail, e-mail, and computer networks, how do we preserve the human network and the social interaction that work has helped to facilitate? What takes its place?

As this suggests, isolation is a danger for those who live and work at home. Still, the evidence suggests that teleworkers are generally included in office networks and find themselves able to maintain personal relationships with co-workers. In fact, the "virtual office" can support genuine social interaction. This may be the result of an important cultural shift in American life: close personal relationships that develop and continue across sizable distances. 

In fact, it appears that virtual groups are able to go beyond a business environment to build personal relationships: one of the participants told about a "virtual roast" she had organized for another member of her virtual workteam.

Despite its benefits, telework must not be allowed to further isolate individuals, certain occupations, or geographical areas -- for many people may need human contact as much as they need income. Managers must seek ways to keep teleworkers involved with the central office as well as with the other teleworkers on their "virtual team." 

The workforce of the future is going to include a great many people who have often been excluded because of age, gender, race, geography or disability. One of the challenges facing America is to leverage our diversity -- to make full use of all the talents of all the people in our uniquely diverse, multi-racial, multi-cultural society. Only by doing so can we live up to our highest ideals and compete with all our strength in the world economy. For Americans with disabilities, and other groups as well, telework can help meet that challenge. 

Avoiding the Commute

For many teleworkers, the number-one motivation for seeking an alternative work arrangement is to reduce or eliminate the increasingly long and brutal commute that so many American workers now endure. Some have speculated that the growth of telework could eventually have a dramatic impact on our society, both in terms of where workers would choose to live -- if liberated from the commute -- and in terms of environmental gains if fewer commuters are on the highways and fewer cars are polluting the air. In theory, full-time teleworkers could move to isolated areas, but there is no evidence that substantial numbers have done so thus far or would in the future.

Telework offers benefits -- relief from commuting among them -- but it is far from clear that the elimination, or even the serious reduction, of pollution or gridlock is on the horizon. If workers stop commuting, they and their families may drive just as far to shop or attend school. We need continued efforts to bring labor economists together with urban planning, environmental science, and transportation scholars, among others, to assess the relationship between telework and the commute. 

**Employers: Benefits, Costs, and Open Questions**

Increasing Productivity

Proponents of telework say it will increase productivity for several reasons. Teleworkers may have a clearer sense of expectations because of more specific instructions from their supervisors. Teleworkers may use their time better at home and suffer fewer interruptions. They can arrange their workplaces in whatever way suits them best. Given more autonomy, teleworkers may assume more responsibility for meeting or exceeding goals. At best, telework may enable motivated workers to unleash their talents with the help of managers who are willing to try new ideas that may benefit both workers and employers.

Nowhere is research more needed than on the question of whether telework increases productivity. Some objective evaluations do exist, but most often claims of increased productivity are based on subjective evaluations by the teleworkers themselves or by their supervisors. Most of these subjective evaluations report productivity gains of 20 to 35% or more, but experts view self-assessments with polite skepticism. 

Studies typically do not compare the productivity of teleworkers to workers in traditional arrangements. If they do, the evaluations do not make clear how much of the increased productivity is due solely to telework and how much of it is because managers have selected their most productive and motivated workers for telework assignments.

Telework clearly appeals to many managers, but those who resist it may cite a lack of "hard" evidence that cost savings and increased productivity will compensate for start-up costs such as training and new equipment. They may also cite a lack of evidence that productivity gains will be permanent. We need more and better objective evaluations of the relationship between telework and productivity. 

Retaining the Best People 

Many companies now regard telework and other flexible work arrangements as vital to attracting and keeping the employees they want. 

*Business Week* noted recently that "the best that corporations can do is to create an environment that makes the best people want to stay." Today's young, educated, in-demand skilled workers can often write their own tickets, and they may see flexible work arrangements as a "must" along with the pay and benefits they can command.

Moreover, losing valuable employees is expensive. By one estimate, it costs an employer one-third of a worker's annual salary to replace that individual. If telework can reduce turnover, it can be a high-return investment for employers. The existing evidence suggests that telework can lower turnover, but it is scant and we need to learn more. 

**Telework in Practice**

Telework represents a dramatic restructuring of relationships between workers and managers and presents both opportunities and challenges to organizations. It can be a mirror that forces organizations to take a hard look at themselves, at how they make decisions, and at their most basic assumptions about work, workers and work locations.

The first challenge for managers is to identify the jobs best suited to distance work. Jobs in sales, customer service, and auditing, for example, can be converted to full-time telework, but jobs requiring face-to-face contact with co-workers or customers are difficult if not impossible to perform from home. There is still much room for creativity in shaping the world of telework. 

A second challenge is closely related: managers must select teleworkers who are suited to the new work environment. Teleworkers must share the work ethic and values of the organization and, therefore, may best be selected from within the employer's workforce. Teleworkers need time-management skills and they must be self-motivated, trustworthy, and able to work independently. Even the most skilled teleworkers may need training in how to work effectively in a new environment.

The third challenge is how to evaluate teleworkers. The traditional system based on direct observation won't work. Instead, telemanagers must rely on such evidence as the time it takes the worker to respond to phone calls or e-mails, or simply on overall productivity. With fewer opportunities for informal discussions, in the hallway or at the water cooler, on how a project is progressing, the manager must be more clear about expectations before a teleworker begins a task. Telemanagers may have to learn new skills and management techniques, with emphasis on results-based evaluation. Some managers say that, in learning to manage teleworkers, they have also improved their ability to manage in the office. 

**Empowering Workers**

Telework has the potential to shift power toward the individual. Sociologist George Gilder wrote in 1989, "Rather than pushing decisions up through the hierarchy, the power of microelectronics pulls them remorselessly down to the individual." 

In workplace mythology, the employer has often been seen as the all-wise, all-powerful parent. Yet modern technology encourages workplace paternalism to give way to self-actualization. Management may evolve from parent to partner. One writer calls this the end of America's adolescence, as the worker becomes a responsible adult who takes responsibility for decisions. One of the basic goals of the Clinton-Gore Administration's far-reaching reinvention of government was to empower front-line workers to make more decisions. Telework can accelerate that trend both in government and the private sector of the economy.

**Unanswered Questions**

Telework raises far more questions than we have been able to address in this summary. Some of these questions are examined in the collection of papers from the New Orleans symposium and we recommend it to those seeking more information. 

Many questions exist relating to telework tax incentive programs, the impact of telework on unions and unionization, pay policies and overtime for telework, how telework should be defined, how it can be made accessible to more workers, how managers can be made to understand and accept it, and its potential for abuse. One participant in the New Orleans symposium suggested a future in which a core of central employees would direct a much larger staff of contract workers. If so, what would be the terms of employment for those contract workers? Would they have to fight for status and benefits as today's "temp" workers have? Some argue that, in exchange for the benefits of working at home, teleworkers should accept lower pay -- and others respond that increased productivity might just as well justify *higher* pay.

Amid all the questions surrounding telework, we have two certainties: it will continue to grow and we need to know more about it. The potential of telework cannot be realized without an expanded national research and demonstration effort that more fully evaluates the costs and benefits of this powerful new force in our society.

**Summing Up**

The United States has a rich history with regard to telecommunications and transportation policy. In the 1950s, we built the greatest national highway system in the world. In the late 1970s and 1980s, we originated the information superhighway that came to be known as the Internet. We must continue our pioneering commitment to universal access into the realm of telework. Our education system must do more to train teachers and students in the use of information technology and entire communities must create economic development plans that maximize technology's role. In today's economy, the traditional Three R's are not enough - we all need the Fourth R of Technological Readiness. 

We do not yet know the full potential of telework to change our society, but we do know that technology can break down many walls. As John Chambers, CEO of Cisco Systems, says, "There are two fundamental equalizers in life - the Internet and education." We must make full use of them both.

Telework is not a silver bullet for solving skills shortages, helping workers balance work and family, and increasing diversity in the workplace. But it provides a unique example of the power of technology to break down barriers. What will be the impact of telework on our society? The answer depends on whether or not we grow to understand telework and then to manage it properly.