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Telework and Telecommuting: the first half

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Telework and Telecommuting: the first half
Telework and
Telecommuting:
the first half-century
Jack M. Nilles
JALA International
www.jala.com
This is an overview of the past and future of telework and telecommuting in the US and, to a lesser extent, the rest of the world. This
presentation also covers the key issues in the development of telework and the forces promoting its growth.
1973-1974: our first test
• Where
• Los Angeles, the Western division of a major national
insurance company
• Who
• Clerical and professional workers
• University of Southern California, Office of Interdisciplinary
Programs, National Science Foundation funding
• The test
• 6 months in a satellite office, San Fernando Valley
• The results
• A potential
$4M to $5M annual net benefit to the company
• The aftermath
• Project abandoned for fear of union takeover
• Revived after two decades because of business
pressures
Copyright © 1998-2012 by Jack M. Nilles. All international rights reserved.
2
The official story began in 1973 when Nilles and his interdisciplinary team at USC received a grant from the National Science
Foundation to investigate “Development of [Public] Policy on the Telecommunications-Transportation Tradeoff.” Nilles coined the
words “telecommuting” and “telework” in 1973 as a more concise substitute for the project title. The grant, for $83,000 covered a
year of research centered about a case study of the West Coast (US) division of a major insurance company. The company’s
primary motivation to participate were business problems rather than a desire to explore telecommuting. These problems were an
excessive turnover rate of its clerical employees and an aging central facility. The project was to test the feasibility of having workers
work at a “satellite office” near their homes, using available information technology to substitute for their daily presence at the
central facility.
The real-life project succeeded beyond the research team’s expectations, with major reductions in turnover rate and operating costs
and an 18% increase in worker productivity. The concept proved successful.
However, the East Coast headquarters of the company was more concerned with avoiding unionization, thinking that dispersal of
the company’s facilities would make it easier for the unions to organize the workers. That, together with some other facility
development factors, caused them to discontinue telecommuting after the end of the project.
A book, expanding on the final project report, was published by John Wiley & Sons (NY) in 1976.
Ironically, planners for the labor unions were equally reluctant to get involved in telecommuting, reasoning that it would be too hard
to organize the workers if they were scattered among several facilities. So the matter stood for almost 40 years until other market
and technological forces conspired to get the company to adopt telework.
The Moral
Just because you have a
better mousetrap, it doesn’t
mean the world will beat a
path to your door.
El hecho de que tengas la
mejor trampa del mundo no
hace que los ratones hagan
fila en la puerta de tu casa…
Copyright © 1998-2012 by Jack M. Nilles. All international rights reserved.
3
One main message of the project: a wild success may be necessary, but it wasn’t sufficient in this case to keep the momentum
going. Management resistance to change was a formidable barrier.
The following decade was characterized by a series of rebuffs, first by federal agencies asked to support more research. Their
general response was: “Telework is not in our mission statement; we support [for example] ways to make automobile travel more
efficient, not to do away with it.” A few corporations tested telecommuting but, typically, each project withered after its innovator
moved up or out.
The momentum picked up in the mid-1980s as personal computers became more practical and prevalent. We helped design a
number of demonstration projects with Fortune 100 corporations; they managed to continue past the demo stage. As time passed,
the momentum continued to build, for the following reasons.
The Conditions Then
Serious daily urban traffic congestion
Growing air pollution
Increasing numbers of office workers
Energy crises
Growth in multi-earner households
Increasing commute times
Deepening dependence on information
technology
Copyright © 1998-2012 by Jack M. Nilles. All international rights reserved.
4
In 1973, in most large cities around the world, the automobile was the dominant means of transportation. As new roads and
freeways were built, traffic congestion inevitably followed. Automobile exhausts constituted a growing proportion of urban air
pollution. The information revolution, surfacing in the US two decades earlier, was continually producing demand for more
information workers. The mid-East oil embargo shook the confidence of Americans in their energy self-sufficiency, as well as
focusing emphasis on energy-related environmental issues. More and more women were entering the workforce, eroding the
stereotypical image of the bread-earner father, mother-at-home and 2.3 kids as the ideal American family. As productivity and wages
grew, more people opted for the dream home in the growing suburbs—to the point where a substantial fraction of commuters were
traveling between suburbs rather than from suburb to central city. Complex office machines and computers were vital to big
business and government and were rapidly moving to smaller organizations.
The Underlying Factors
 People
 Information
technology
 Traffic
 Global
competition
Copyright © 1998-2012 by Jack M. Nilles. All international rights reserved.
5
These are the main components driving the inevitability of telework for a substantial portion of developed economies.
The Underlying Factors: People
Copyright © 1998-2012 by Jack M. Nilles. All international rights reserved.
6
6
Here’s a view of the growth of the US workforce. It shows a four-sector economy, not the three sectors normally shown in
government statistics. The key difference is that this chart separates out the information component of the workforce; workers
whose primary economic activity has to do with creating, manipulating, transmitting, or processing information. In about mid-1954
the information sector became the largest part of the US workforce. Today, roughly three of every five American workers is in the
information sector. This same historical process has happened in all the developed world and in most of the developing world.
Personal costs of commuting
Copyright © 1998-2012 by Jack M. Nilles. All international rights reserved.
7
Here’s how to personalize the congestion issue. Assume a typical American working pattern, with work-bound commuters driving
their own cars – with no passengers – from home to the distant office and back each day. This graph shows how many waking days
are lost each year in commuting as a function of the one-way commute time. It’s a simple formula; divide the number of commute
minutes by 2 to get the number of waking days lost each year. A waking day is a 16-hour day, using the assumption that the worker
is sleeping or otherwise occupied 8 hours daily and that this does not occur while the worker is driving.
The Underlying Factors:
Information Technology
•Computers
•Telecommunications
•Networks
8
The Underlying Factors:
the Internet
WORLD&INTERNET&USAGE&AND&POPULATION&
STATISTICS&
2,500,000,000"
2,000,000,000"
Oceania/Australia"
1,500,000,000"
La:n"America/Carib."
North"America"
1,000,000,000"
Middle"East"
500,000,000"
Europe"
Asia"
0"
Internet"Users"Dec."31,"
2000"
Africa"
Internet"Users"Dec"31,"
2011"
Copyright © 1998-2012 by Jack M. Nilles. All international rights reserved.
9
And a crucial result of all this computer use and availability of telecommunications is the phenomenal growth of the Internet, at annual rates of
more than 1000%. While the US is still the dominant player, the rest of the world is availing themselves of these opportunities at dizzying
speed.
The Underlying Factors: Traffic
10000.00
1992 IVHS America Estimate
2030
1000.00
♦
100.00
Annual US
Congestion
Productivity
Cost
($Billions)
2020
2010
2030
10.00
2000
1984
1.00
30
50
Rural
Urban
1990
70
90
110
130
150
170
0.10
0.01
Number of Commuting Cars (millions)
Copyright © 1998-2012 by Jack M. Nilles. All international rights reserved.
10
Although estimates vary, it is possible to assess a cost of traffic congestion. In this case, it is an estimate of the costs to US
employers of their employee commuting snarls, as measured in terms of productivity losses. The estimate for 2010 is about
USD200 thousand million.
The Underlying Factors:
Competition

It’s on the Increase Everywhere

Competition for What?
 Human
Resources
 Customers

and Clients
By Means of . . .
 Price
and/or
 Product
differentiation
Copyright © 1998-2012 by Jack M. Nilles. All international rights reserved.
11
All of this affects business. One of the prime effects of this ubiquitous computer-person-interconnectivity is accelerated competition.
Where once an organization could think primarily locally, now, and to an increasing extent, that view must be regional, national, or
even global—for small as well as large organizations.
One of the major areas of competition, particularly in the US with its relatively low unemployment rate, is for people—skilled
employees. If the local market is saturated, companies can use telework to find effective out-of-town workers. Because of the new,
low cost global reach of information technology even small companies can compete for customers anywhere in the world.
There are two fundamental ways to compete for customers: have a better price or a better product. Low cost information technology
helps do both. Telework is particularly useful for economic development; many second- and third-world countries are discovering
that their educated workers can find attractive jobs elsewhere—but without leaving town.
The Conditions in 1973
Serious daily urban traffic congestion
Growing air pollution
Increasing numbers of office workers
Energy crises
Growth in multi-earner households
Increasing commute times
Deepening dependence on information
technology
Copyright © 1998-2012 by Jack M. Nilles. All international rights reserved.
12
To repeat: in 1973, in most large cities around the world, the automobile was the dominant means of transportation. As new roads
and freeways were built, traffic congestion inevitably followed. Automobile exhausts constituted a growing proportion of urban air
pollution. The information revolution, surfacing in the US two decades earlier, was continually producing demand for more
information workers. The mid-East oil embargo shook the confidence of Americans in their energy self-sufficiency, as well as
focusing emphasis on energy-related environmental issues. More and more women were entering the workforce, eroding the
stereotypical image of the bread-earner father, mother-at-home and 2.3 kids as the ideal American family. As productivity and wages
grew, more people opted for the dream home in the growing suburbs—to the point where a substantial fraction of commuters were
traveling between suburbs rather than from suburb to central city. Complex office machines and computers were vital to big
business and government and were rapidly moving to smaller organizations.
The Conditions Today


Serious daily urban traffic congestion
Growing air pollution
• Except in some greening regions (LA, Bogotá)






Increasing numbers of office workers
Energy crises
Growth in multi-earner households
Increasing commute times
Deepening dependence on information
technology
Accelerating globalization
Worldwide
Copyright © 1998-2012 by Jack M. Nilles. All international rights reserved.
13
The conditions of the early 1970s are still with us today—only more so in many ways! Traffic congestion is worse because
population has increased faster than road building—even where there is space left for more roads. In the US, required smog
controls on cars have helped to keep pollution levels the same, or even slightly lower. The rest of the world has not fared as well.
Every major city has serious air pollution problems. The size of the information workforce continues to grow in every country. We are
entering a period where the ultimate depletion of fossil fuel resources will become evident to even the most skeptical – as is the
growing impact of man-induced global warming and climate change; the popularity of sports utility vehicles only accelerates the day
of dearth. More women are entering the paid workforce worldwide. The suburbs are growing and spreading; commute distances are
increasing; commute times are exploding.
Why are we doing this?
A Potent Solution: Telework

Productivity improvements
 Worker retention/recruitment
 Organizational flexibility
 Management revitalization
 Office space demand reduction
 Energy savings
 Pollution avoidance
Copyright © 1998-2012 by Jack M. Nilles. All international rights reserved.
14
All of these trends lead to a firm conclusion: something must be done to slow them.
Telework is one of the most promising approaches, since it has a number of benefits, as listed above, with very little cost; typical
long-term benefit-to-cost ratios exceed 20 to 1, based on our tests of a variety of organizations, both public and private.
The claims listed above are not just dreams. They are the results of years of quantitative testing.
Teleworkers ARE more productive than their non-teleworking colleagues
Teleworkers are more loyal to their employers and teleworking has become an important tool in attracting new employees.
Because companies are able to hire workers regardless of where they live, even small companies can have national or even global
scope.
Telework requires competent management. Consequently, telework sparks improved management skills companywide.
If there are enough teleworkers, significant office space savings can be achieved.
Teleworkers generally do not drive their cars on days they are teleworking. The result is that fuel energy is saved and air pollution
prevented.
What IS Telework?

ANY form of substitution of information
technology for work-related travel
 Telecommuting
(Televiajando diario?)
 Teleconferencing (audio, video, computer)
 Telemeeting
 Plain old telephoning

The technology spectrum
 From
telephone, paper and pencil . . .
 To state-of-the-art everything
Copyright © 1998-2012 by Jack M. Nilles. All international rights reserved.
15
After all this talk about telework, just what is it exactly? Here are my definitions. They are generally accepted around the world. Note
that I talk about telecommuting: the form of telework in which the substitution is for the daily commute between home and office.
This form of telework is still the most dominant but the amount of telework with more distant endpoints is steadily growing.
The key acceptance issues

Is it real, when and for whom?

Will it grow?

How fast, how much?

Who benefits, who loses?
Copyright © 1998-2012 by Jack M. Nilles. All international rights reserved.
Now that we know what telework is, what are the factors involved in making it happen?
16
Some Fears and Assumptions

MANAGEMENT

 I’ll
lose control
 Productivity will
crash
 Serendipity will
cease
 It costs too much
 The unions will take
over

SOCIOLOGISTS
A
new, divisive
elitism
 Galloping anomie
UNIONS
 Another
excuse for
exploitation
 How can we organize
them?
 How can we demand
it?

TRANSPORTATION
PLANNERS
 There’s
no real
impact
 Stick to improving
traditional
transportation
Copyright © 1998-2012 by Jack M. Nilles. All international rights reserved.
17
Telework still, after decades, is plagued by a number of fears and assumptions about it. Here’s a list of the ones we worried about
the most in the mid 1970s
Adoption Forces &
Requirements

ECONOMIC
 Productivity
impact
 Retention/Attraction of skilled employees
 Reduced facility costs
 Operating costs, risks
 Infrastructure costs

REGULATORY
 Air
quality requirements
 Energy conservation
 Greenhouse gas reduction
 Skills redevelopment
Copyright © 1998-2012 by Jack M. Nilles. All international rights reserved.
18
My experience has been that a vital factor in making telework an effective management tool is this set of business motivations. The
first group focuses on the direct bottom line impacts for the business, both positive and negative. The second group covers the
“externalities” imposed either by government or competitiveness issues.
Telework Economics: Five Rules
• Rule 1: Telework MUST provide a positive economic
•
•
•
•
benefit to employers
Rule 2: Although necessary, economic incentives
are not sufficient for an organization to commit to
telework
Rule 3: Organizational culture/management-attitude
issues and proper training are by far the most
important factors in acceptance
Rule 4: Regulatory pressures, particularly those
involving economic pain/gain, can be effective
acceptance catalysts
Rule 5: Information technology use and acceptance
trends are transforming traditional economic
models, decreasing resistance, and enabling
widespread global teleworking.
Copyright © 1998-2012 by Jack M. Nilles. All international rights reserved.
Here are the results of our experience in making telework happen: All 5 rules.
19
Results to Date

MANAGEMENT

UNIONS
 Another
excuse for
exploitation
 How can we organize
them?
 How can we demand
it?
 I’ll
lose control
 Productivity will
crash
 Serendipity will
cease
 It costs too much
 The unions will take
over


TRANSPORTATION
PLANNERS
SOCIOLOGISTS
A
new, divisive
elitism
 Galloping anomie
 There’s
no real impact
 Stick to improving
traditional
transportation
Copyright © 1998-2012 by Jack M. Nilles. All international rights reserved.
Let’s review those concerns we saw in the mid-1970s in light of our experiences so far.
20
Cost and Benefit Factors


Costs
 Employee/
 Planning
 Recruiting
Benefits
and
Selection
 Technology
 Facilities
 Training
 Administration
 Operating
Expenses
 Evaluation
organization
effectiveness
 Turnover rate
reduction
 Recruiting
advantage
 Space saving/cost
reduction
 Traffic decongestion
 Environment
enhancement
 Quality of life
improvements
Copyright © 1998-2012 by Jack M. Nilles. All international rights reserved.
21
These are the primary cost of telework as compared to its benefits. The details vary from organization to organization but most find
that the economic benefits far exceed the cost, even in the first year of adoption of telework and even though some of the benefits
accrue to the community at large rather than the individual organization.
Making it happen -- Companies
• Pre-implementation planning
• Setting strategic goals
• Top management support
• Appropriate rules and procedures
• Employee selection process
• Administrative systems
• Technology selection and testing
• Participant selection for demonstration
program
• Custom training program
• Evaluation and fine tuning
• Expansion
22
Now that we’ve covered the reasons why a company should consider telework, here’s how to go about it. There are six often
overlapping phases that we’ve found are most likely to insure success. Four of these phases should be completed before formal
telework begins. In chronological order the first four are: planning; technology selection and testing; participant selection -- noting
that not all employees and/or managers do well at teleworking; training of both the potential teleworkers, their colleagues and their
supervisors. I should also note that we recommend starting with a demonstration project involving some fraction of the ultimate
number of teleworkers; enough to feel positive about the experience gained but not enough to scare the CEO about the business
going down the tubes.
Then it’s time to get all the selectees actively teleworking, at which point phase 5 begins: evaluation and fine tuning; comparing the
working results with the goals defined in the planning phase and changing technology, processes or operational details as
appropriate. Finally, the experienced gained over a few months is used to develop the plans, procedures, technology, etc., for a
rollout to the rest of the company.
Making it happen -Government
• Information infrastructure expansion
• Promotion of telework
• Removing regulatory impediments
• Adding regulatory inducements
• Tax incentives for employers & teleworkers
• Zoning changes
• Revising/eliminating inhibitory laws
• Public-private ventures
23
Government also has a role in making telework happen. Here are some of the government actions that can ease the transition from
the 20th century to the 21st. A crucial step is ensuring the the information infrastructure is broad and agile enough to support large
numbers of teleworkers, wherever they are. The there’s the task of educating the public about telework, its options and impacts. We
have also found that a critical factor is that of adjusting laws, rules and regulations so as to encourage rather than impeding
teleworking.
The secret ingredients
•TRUST
•... but verify
•IMAGINATION
•... rethinking how to work
24
What’s Next—the US . . .
Copyright © 1998-2012 by Jack M. Nilles. All international rights reserved.
25
This is my forecast of the growth of telework in the United States until 2020. Note that the US (and some other developed countries)
is entering its maturing phase of telework while the rest of the world is at earlier stages. Also note that most of the teleworkers in this
forecast are home-based, part-time teleworkers. That is, they do need to get to one of their employer’s facilities often enough to
ensure that they are well meshed with the rest of their co-workers.
. . . And Colombia
Copyright © 1998-2012 by Jack M. Nilles. All international rights reserved.
26
.. And for Colombia in particular. Please note that my forecast is based on general demographic and economic fitted to a model
based on the US experience. Therefore, this graph should be taken as one view of what is possible, what the potential is. If, and as,
actual survey data become available the forecast will be revised. Recent government actions, such as the telework laws, act to
increase growth rates of teleworking while continuing concerns about the business impacts tend to retard acceptance. That’s why
we have spent so much effort over the years to make telework management essentially “bullet-proof”.
Colombia’s Challenge

The fundamentals:
 An
educated workforce
 Growing technological infrastructure
 Basic economic competitiveness

The situation:
 Growing
pressures for change
 Apprehensiveness about alternatives

The needed approach:
 In
confusion there is opportunity
 Now is the time to redirect the future
 Telework can work for you
Copyright © 1998-2012 by Jack M. Nilles. All international rights reserved.
27
So here’s the situation as we speak. The fundamentals are in place. The pressures for more teleworking are growing. It’s time to get
started!
The Conditions in 2023







Reduced daily urban traffic congestion
Stabilizing air pollution, global warming
Information work the dominant form
Energy crises as oil reserves dry up
Multi-earner households the majority
Information technology reigns
Telework has become pervasive
Worldwide
Copyright © 1998-2012 by Jack M. Nilles. All international rights reserved.
Here’s how those 1970s conditions may have transformed themselves by the next decade.
28
Si Se Puede
Together we can do it! We can make it happen!
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