Telecommuting Productivity Research: Hypotheses about Telecommuting and ProductivityDoes Telecommuting Really Increase Productivity?F i f t e e n R i v a l H y p o t h e s e sProceedings of the AIS Americas Conference, Indianapolis, IN, 1997, pp. 405–407 Ralph D. Westfall [click to reveal this e-mail address]@acm.orgSchool of Business, Biola University, La Mirada, CaliforniaPostyour comments regarding this paper to Telecommuting Productivity CommentsView another telecommuting productivity analysis from a different perspectiveThe telecommuting literature includes frequent referencesto increases in productivity (e.g., Duxbury, Higgins and Mills, 1992; Venkateshand Vitalari, 1992). Huws, Korte, and Robinson note the "surprising degreeof unanimity" in regard to productivity impacts (1990, p. 44). Howevermany of the claims in the literature derive either from unpublished studies(e.g., Caudron, 1992; Weiss, 1994), or from subjective evaluations of productivityrather than objective measures of output (e.g., JALA Associates, 1990;Nilles, 1994). It is possible that some or all of these gains representartifacts of the research process or of the specific implementations oftelecommuting. Alternative explanations for the reported gains are summarizedbelow under five propositions, which subsume 15 testable rival hypotheses.PROPOSITION 1. Telecommuting productivity gains may be overstated.This proposition embodies the concept that reported gainsmay, in whole or part, reflect inaccurate subjective perceptions or otherartifacts of the evaluation process.Placebo effects are a possibility in any research involvinghuman behavior. Studies concerned with working conditions refer to theseeffects as "Hawthorne effects." Regardless of the nomenclature, the effectsusually do not persist.H1A. Placeboor "Hawthorne" effects generate temporary telecommuting productivity gains.Employees tend to overestimate their work performancerelative to peers (Meyer, 1975; Zenger, 1994). Perceptions of productivitygains from telecommuting may be another expression of employees' inabilityto objectively evaluate their own performance.H1B. Inflatedself-evaluations create perceptions of telecommuting productivity gains.Telecommuters often do work that requires the most concentration,and which may represent the most creative aspects of their jobs, when awayfrom the office. Employees would probably consider such activities themost productive part of their work, regardless of the location.H1C. Perceptionsof productivity gains are an artifact of the type of work done while telecommuting.Telecommuting programs typically select more desirablecandidates from a pool of volunteers (Gordon and Kelley, 1986; Nilles,1994).H1D. Telecommutingproductivity gains are an artifact of the selection process for telecommuters.PROPOSITION 2. Productivity gains may result from non-telecommutingaspects of the implementations.When implemented with groups of employees, telecommutingprograms usually incorporate or result in other changes in the work situation.The following changes, although often included in telecommuting programs,could produce productivity gains even in the absence of telecommuting.Gordon and Kelley (1986) and Nilles (1994) mention specifictraining for managers of telecommuters. These authors also recommend changesin managerial practices to deal with the challenges of supervising remoteworkers.H2A. Telecommutingproductivity gains result from higher levels of and/or more effective managementsupervision of telecommuters as opposed to non-telecommuters.Gordon and Kelley (1984, ch. 8) include a chapter on trainingtelecommuters. Nilles (1994) recommends formal training sessions. Thistraining may include general issues such time management along with coverageof telecommuting-specific items.H2B. Telecommutingproductivity gains result from increased training in time management, informationtechnology, etc. provided to telecommuters.Telecommuting implementations with groups of employeesmay include changes in the tasks or organization of work. Implicitly orexplicitly, such implementations may fall into the category of reengineering,which has its own history of claims of large productivity increases.H2C. Telecommutingproductivity gains result from concurrent changes in work processes (reengineering)rather than from telecommuting per se.Information technology can increase individual productivity.Some implementations may provide additional information technology (hardware,software, telecommunications) to telecommuters. Even if the amount of technologyis comparable to that of on-site workers, usage is likely to be higherfrom remote locations.H2D. Telecommutingproductivity gains result from increases in information technology availableto and/or used by telecommuters.Discussions of telecommuting (e.g., Gordon and Kelley,1986; Nilles, 1994) typically mention the freedom from distractions andinterruptions as a contributor to increased productivity. However relativelyhigh levels of privacy are also available in office environments throughinnovative systems furniture. For example, Steelcase offers "harbors,"cubicles with high walls and doors that can be shut (discussed in Becker,PonTell, Gray, and Markus, 1996, p. 30).H2E. Productivitygains are an artifact of the isolation from interruptions while telecommuting.PROPOSITION 3. Increased costs may offset telecommuting productivitygains.The following hypotheses identify explicit and implicit coststo the organization, or to the individual telecommuter, that could offsetany gains from telecommuting.Part-time telecommuters are likely to require substantialduplication of computer equipment. Telecommuters will generally incur highertelecommunications charges and require additional software.H3A. Increasedcosts--for computer hardware, software, telecommunications, supplies, etc.--offsetthe productivity gains from telecommuting.Telecommuters may require additional support from on-siteemployees, e.g., faxing organizational files to the employee's home. Fritz,Higa and Narasimhan (1995) note that telecommuting invariably results inextra work for managers.H3B. Work displacedto other employees and/or increased supervisory requirements offset productivitygains from telecommuting.Telecommuting may result in additional work when the employeeis at the office, e.g., planning for off-site work, photocopying materialswith which the employee will work on telecommuting days, etc. (Gray, 1996).H3C. On daysat the office increases in personal work, resulting from telecommuting,offset an individual's productivity gains on telecommuting days.Telecommuters can still participate in planned and adhoc meetings through audio or video- conferencing, but the quality of thisparticipation and resulting decisions may be lower.H3D. Implicitcosts of reduced face-to-face access to telecommuters offset productivitygains.PROPOSITION 4. Telecommuting productivity gains may not bescaleable.It is possible that employees will perform some tasks moreproductively while telecommuting. However it is likely that they will dischargeother job responsibilities more efficiently at the traditional workplace.H4. Productivity gains from the first day(s) of telecommutingin a week are offset by inefficiencies in the subsequent day(s) away fromthe office.PROPOSITION 5. Telecommuting may not increase net productivity.In relation to future research, the preceding hypothesessuggest controls for differences not intrinsic to telecommuting, and adjustmentsfor associated increased costs. Taking all these factors into considerationmay cause observed productivity gains to disappear.H5. Productivity gains resulting from telecommuting perse may be less than indicated by previous studies and these gains, of whatevermagnitude, are offset by increased organizational and/or personal costs. Testing Hypotheses through Economic AnalysesPending empirical data collection, hypotheses listed underpropositions 3 and 4 can be tested via economic analyses incorporatingpublished data or informed assumptions. Westfall (1997) includes economicanalyses which test Hypotheses 3A,3B, and 3Dabove. The analysis in Table 1 tests Hypothesis 3A.It illustrates the impact of explicit out-of-pocket support costs of $300per month for full-time telecommuters (based on Blodgett, 1995) on employeesat varying salary and telecommuting levels. The analysis assumes that halfof these costs are fixed, with the remainder prorated according to thenumber of telecommuting days.Table 1 incorporates an estimated 10 percent productivityimpact for full-time telecommuting. This figure is at the high end of therange reported by Olson (1988) for managers' estimates of gains for theirtelecommuting employees. However 10 percent is near the low end of therange of other published estimates of productivity gains (see summary inWestfall, 1997, Table 6-1). A 10 percent gain is consistent with employeesusing all of their savings in commuting time to do extra work. The analysisalso assumes decreasing returns as levels of telecommuting increase, andthat fringe benefits approximate 25 percent of nominal salaries.Although a $10,000 salary is a moot issue following passageof higher minimum wage legislation in 1996, it does provide a convenientcase for demonstrating the calculations. The analysis assumes that one-day-per-weektelecommuting provides, relative to comparable work at the office, a 3percent productivity gain for the week (which implies a 15 percent gainon the telecommuting day). The value of the employee's work is conservativelyapproximated by his or her total compensation: $10,000 salary plus $2500for fringe benefits at 25 percent. Multiplying $12,500 by 3 percent indicatesa gross productivity benefit of $375 per year.Fixed out-of-pocket support costs are estimated at $150/month,and a variable cost of $150/month is prorated at 20 percent for one-day-per-weektelecommuting. This results in total support costs of $2160 per year which,net of the $375 annual productivity gain, results in the $1785 annual lossindicated in the corresponding cell of the table. Table 1 - Telecommuting Productivity Gains, Net of Out-of-PocketSupport CostsTelecommuting Days/Week[Productivity Gain]Nominal Annual Salary5 Days[10% gain]4 Days[9% gain]3 Days[7.5% gain]2 Days[5.5% gain]1 Day[3% gain]Break-even Days$10,000 $(2,350)$(2,115)$(1,943)$(1,833)$(1,785)NA20,000 (1,100)(990)(1,005)(1,145)(1,410)NA30,000 150 135 (68)(458)(1,035)3.3340,000 1,400 1,260 870 230 (660)1.7450,000 2,650 2,385 1,808 918 (285)1.2460,000 3,900 3,510 2,745 1,605 90 0.9570,000 5,150 4,635 3,683 2,293 465 0.7980,000 6,400 5,760 4,620 2,980 840 0.6890,000 7,650 6,885 5,558 3,668 1,215 0.60100,000 8,900 8,010 6,495 4,355 1,590 0.53Break-even Salary$28,800 $28,800 $30,720 $36,655 $57,600 The analysis in Table 1 partially supports hypothesis3A. Support costs offset productivitygains for lower-salaried employees and for lower levels of telecommuting.The analysis indicates a break-even minimal salary level of around $30,000per year for three to five-day-per-week telecommuting. However for highersalaries, gains exceed the costs even at lower telecommuting levels. ReferencesBecker, F., PonTell, S., Gray, P., and Markus, M.WorkSmart:Gaining Competitive Advantage from Integrated Workplace Strategies,Center for the New West, Denver, CO, 1996.Blodgett, M. "Tips for Telecommuting,"Computerworld,November 20, 1995, p. 40.Caudron, C. "Working at Home Pays Off,"Personnel Journal(71:11), November 1992, pp. 40-49.Duxbury, L. E., Higgins, C. A., and Mills, S. "After-HoursTelecommuting and Work-Family Conflict: A Comparative Analysis,"InformationSystems Research (3:2), 1992, pp. 173-190.Fritz, M. E. W., Higa, K., and Narasimhan, S. "Towarda Telework Taxonomy and Test for Suitability," Group Decision and Negotiation,(4:4), 1995, pp. 311-334.Gordon, G. E., and Kelley, M. M. Telecommuting: Howto Make it Work for You and Your Company, Prentice-Hall, EnglewoodCliffs, NJ, 1986.Gray, P. Personal communication, 1996.Huws, U., Korte, W., and Robinson, S. Telework: Towardsthe Elusive Office, John Wiley & Sons, Chichester, England, 1990.JALA Associates, Inc. The California TelecommutingProject Final Report, State of California, Department of General Services,North Highlands, CA, 1990.Meyer, H. H. "The Pay-for-Performance Dilemma,"OrganizationalDynamics (3:3), Winter 1975, pp. 39-49.Nilles, J. M. Making Telecommuting Happen: A Guidefor Telemanagers and Telecommuters, Van Nostrand Reinhold, New York,1994.Olson, M. H. "Corporate Culture and the Homeworker," inTheNew Era of Home-Based Work: Directions and Policies, K. E. Christensen(ed.), Westview Press, Boulder, CO, 1988.Venkatesh, A. and Vitalari, N. P. "An Emerging DistributedWork Arrangement - An Investigation of Computer-Based Supplemental Workat Home," Management Science (38:12), December 1992, pp. 1687-1706.Weiss, J. M. "Telecommuting Boosts Employee Output," HRMagazine,February 1994, pp. 51-53.Westfall, R. D. Remote Work: A Conceptual Perspectiveon the Demand for Telecommuting, unpublished doctoral dissertation,Claremont Graduate School, Claremont, CA, 1997.Zenger, T. R. "Explaining Organizational Diseconomiesof Scale in R & D: Agency Problems and the Allocation of EngineeringTalent, Ideas, and Effort by Firm Size," Management Science (40:6),June 1994, pp. 708-729.var sc_project=320807; var sc_partition=1;  Previous Hitometer count was 7776 as of 09/02/02before it was replaced |
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