When managers say suit yourself
By Alison Maitland
Published: December 22 2008 20:07 | Last updated: December 22 2008 20:07
When a case was made for Chubb employees to choose the hours that suit them, John Finnegan, chief executive of the US insurance group, was unconvinced.
“To be honest, I initially viewed the reported benefits of flexible work hours with some scepticism,” he says. “As most CEOs would, I saw it as an employee accommodation programme with a cost. I didn’t know you could at the same time maintain or increase productivity.”
He was persuaded to back a trial of a programme devised by the Bold Initiative, a New York non-profit organisation, because it incorporated targets for improving performance and held teams and their managers accountable for achieving these.
The results convinced him the approach could work even in tough times, because of its positive impact on productivity and employee engagement. Under the programme, managers set the parameters and approve the work plan, but team members collectively determine “leaner” ways of working that accommodate individual flexibility.
The impact of flexible working in a downturn is the subject of fierce debate. When the UK government announced this month it would press on with extending the right to request flexible working to parents of children up to 16, some business lobbies protested that the measure would impose additional costs. The EEF manufacturers’ body called it “a bad message to business”. A government official countered that the benefits outweighed the costs and would help the economy through recession.
Since its first pilot with 17 people in 2004, Chubb has brought 400 of its 10,000 workforce into the programme and now plans to extend it further.
“It’s a business initiative first and foremost,” says Rolando Orama (pictured left), a senior vice-president who heads Chubb’s Chicago operation, handling claims across the Midwest. Of his team of 163 people, 120 work non-standard schedules. The others stick to a regular 8am-5pm routine by choice.
One team member starts at 6am and finishes at 2.30pm so she can complete her college studies. Another spends Fridays in summer working from his boat on Lake Michigan, using a laptop, mobile phone and instant messaging. A third has cut eight hours of commuting by working at home twice a week, which gives him more time for his young family and essentials such as doctors’ appointments.
Everyone’s schedule is available to view on a shared calendar, so the team knows whom to call in an emergency. The programme is suspended for business presentations that everyone must attend and during holiday peaks.
Mr Orama, who works a day a week from home, reels off a list of improvements in the team’s productivity: an increase from 82 per cent to 91 per cent in customers contacted within 24 hours; a jump from 90 per cent to 100 per cent in timely benefit payments to claimants; and business cover extended by three hours a day thanks to some employees starting earlier and others finishing later.
Team members have also become more adaptable to change – useful in today’s economic turbulence – and more willing to act on their own initiative. “If there’s an unexpected absence, they jump in,” he says.
In the US, Barack Obama, the president-elect, has spoken positively about flexibility. The Washington Post last month cited a letter he wrote to Department of Labor employees, saying: “I believe that it’s time we stopped talking about family values and start pursuing policies that truly value families, such as paid family leave, flexible work schedules and telework, with the federal government leading by example.”
Appraisals prove that system measures up on productivity
What is the payback from flexible working? Benefits such as retention of key staff, reduced absenteeism and increased loyalty have long been associated with flexible working. Now its potential for improving productivity is becoming clearer as evaluations are made available.
● The Bold programme sets measurable goals for teams introducing flexible schedules. Chubb, the insurance group, has seen teams improve productivity by 5 per cent. It has also recorded higher employee engagement.
● A big majority of flexible workers, and their managers and colleagues, in seven large companies surveyed by Cranfield School of Management reported that flexible work had either a positive impact on individual performance or none at all.
● BT, the UK telecommunications group, says its 14,500 homeworkers are 20 per cent more efficient than their office-based peers. Flexible and remote working practices have reduced its annual office running costs by £500m.
●As a Hay Group survey finds companies still concerned about keeping skills, experts say flexible work is an effective retention tool in a downturn. “Leading companies are seeing flexibility as one way they can keep talented employees,” says Ellen Galinsky, president of the US Families and Work Institute. “Flexibility has to work for employer and employee, and there have to be metrics to show this.”
Paul Volcker, former chairman of the US Federal Reserve and head of Mr Obama’s economic recovery advisory board, is also a board director of the Bold organisation. Bea Fitzpatrick, Bold’s chief executive, believes its emphasis on business benefits, as well as individual employees’ needs, makes it a tool for the downturn. “We’re finding the more constrained companies are financially, the more interested they are in spreading this approach,” she says.
Employees have come up with more efficient ways of working at the headquarters of Costco, says John Matthews, head of human resources at the warehouse club chain. Traditionally, for example, people in the accounting department worked overtime during peak periods and were underemployed at slacker times. “When we turned the issue over to our employees, they designed a schedule to eliminate all overtime, speed up the [book] closing process and maintain the high level of accuracy in the reports,” he says.
Productivity has improved, and overtime has fallen by 42 per cent year on year. About 10 per cent of the 3,000 staff at the Seattle HQ are enlisted in a Bold programme, and more will join them next year. “People generally appreciate us listening to them and not wasting their time,” Mr Matthews says.
Flexible schedules offer another business benefit in difficult economic times, according to Patty Dudek, vice-president of IBM’s WebSphere development, which develops software for customers’ e-business applications. The company recently introduced round-the-clock software development, with work passing between 1,000 developers in different time zones. The global team can update a product in four to six months, versus 18-24 months five years ago.
Rather like the Bold initiative, IBM’s approach combines a focus on productivity with individual flexibility. Many developers split their working day into chunks around their personal duties and this makes the team more responsive, Ms Dudek says.
“Customers need something different than they said they needed three months ago, and they need it in days to respond to new business priorities,” she says. “If we did not support flexibility, I’d be so constrained by how quickly I could react.”
As a senior executive, she also works a flexible schedule and believes it is a way of retaining and motivating good people. “If we want top talent to work on something and we give them all the flexibility they need to balance their lives, they’re then more willing and able to step up to the challenge when we need them to drop everything.”
At Chubb, Mr Finnegan does not easily envisage flexibility applying to top executives such as himself, on the grounds that “it’s tough to measure what I do every day in terms of output”.
But he is convinced of the advantages of a performance-driven approach. He likens it to the way Toyota gained competitive advantage in the global motor industry in the 1980s with its “lean” manufacturing methods.
“It’s making people more responsible and accountable for what they do, like the Toyota breakthrough in the way cars are made,” he says. “The test is that they can do it better than they’ve done it before.”
Copyright The Financial Times Limited 2008