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Home Working: Does it Work for the Organization? - Ideas for Leaders
Idea #079

Home Working: Does it Work for the Organization?

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KEY CONCEPT

Although the numbers of employees working from home are increasing, there is still widespread scepticism about introducing this working practice into organizations. The experience of one company, however, showed a notable increase in productivity when employees were given the option of doing so. In this Idea, faculty from Stanford Graduate School of Business suggest that offering such a choice can lead to long-term organizational benefits. 


IDEA SUMMARY

There has been a large increase in employees working from home in recent years; in the US alone, over 10% of the workforce now report regular home-working. But there is still a lack of research into such arrangements and the long-term effects they have on an organization. In this Idea, researchers examined the results of an experiment undertaken in China, involving the country’s largest travel agency (CTrip).

CTrip employs 13,000 employees, and set out to allow employees to work from home in order to save on office space, cut down turnover, and reduce labour costs by tapping into a wider pool of workers. Unsure of what performance would be like in such an arrangement, they experimented with 255 employees first, over a period of 10 months. They then compared the productivity of call-centre workers who worked from home four days a week, with workers performing the same work from rows of office cubicles.

They found that the home workers were more productive, answering more calls and working more hours as a result of taking shorter breaks and using fewer sick leaves. A quieter working environment at home was also a factor in the increased productivity. Moreover, they reported being happier than the office workers. This was a particularly important finding as employee retention is often a key concern for companies in order to keep recruitment and training costs down.

At the end of the experiment, the firm estimated they saved about $2,000 per employee working at home, leading them to roll the option out to the entire firm. However, almost half of the workers who had worked from home chose to go back to the office despite the added cost of commuting.

Often modern management practices like this are rolled out apprehensively and sceptically, or not at all. As demonstrated with this experiment, it can take a long time to gradually learn how they can impact an organization; but it seems that ultimately, such an initiative could be a cost-saver and employee-retainer!


BUSINESS APPLICATION

The process of learning about new management practices is a complex one; as such, CTrip’s idea of running a field experiment as a way of deducing whether a particular new practice will work for them or not is commendable. In this case, the experiment was a success. Other companies should follow suit and emulate similar experiments in their own contexts; they made end up finding a similar initiative could help them reap long-term cost efficiency.

However, with this particular practice (i.e. employees working from home), companies should be weary of introducing it as a mandatory requirement rather than a flexible option. At the end of CTrip’s experiment, some of the younger workers on the low end of the wage scale indicated they were lonely, which could later lead to unhappiness with this type of working arrangement. Flexibility for workers to work where they prefer to work is a better solution.


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Idea conceived

January 1, 2012

Idea posted

Jan 2013
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