the benefits and costs
the following sections we will illustrate by example some of the
benefits that have already been achieved by organisations that
have embraced new ways of working.
These are of course not necessarily all achievable at the
same time! Most importantly, there is no substitute for detailed analysis
in each case. What
has been achieved in another organisation can be a useful
indicator, but no more.
and efficient service delivery:
organisations, in both the private and public sectors, are keen to
improve the ways they deal with customers, clients, business
partners and the general public.
working can contribute to this in a number of ways:
can be "open for business" for longer hours, even
anti-social hours, for example, telephones can be answered by
home-workers or by people working in different time zones.
centres and switchboards can improve their answering
statistics by diverting overflow calls to contingent workers.
staff can spend more time with their customers and clients and
less time visiting the office or travelling.
can be relocated closer to their markets and customers, yet
still remain part of the employer's virtual office.
gains can be substantial. It
has been estimated that 80% of callers will phone a competitor if
the phone is not answered or they are put in a long queue.
One sales and marketing operation, with a million inbound
calls a year, estimated that increasing the percentage of calls
answered in three rings from 70% to 95% allowed them to increase
sales by 15% without taking on more staff.
organisation, in the public sector, was able to increase the
average number of visits to the public made daily by its mobile
professionals from 3 to 4, in effect a productivity improvement of
operating and administrative costs:
most visible area of fixed cost addressed by flexible working is
property. Apart from
call centres and other highly structured environments, which
already implement shared desk policies and operate
round-the-clock, most office buildings are seriously
call-centres may run less than half-full during quiet periods.
transition from a personal to a shared space environment can have
a dramatic impact on space needs.
One engineering consultancy in the north of England
calculated it needed only 30% of its previous space.
In fact it chose to only half its space, creating staff
facilities including a gym in the process.
Annual facility costs per employee reduced from £6,500 to
cost reductions come from lower secretarial ratios and
streamlined, paper-free processes.
Some of these are, of course, partly achievable in a
conventional working environment.
In some forward-thinking organisations staff no longer
needed in back-office administrative roles are redeployed into
business efficiency and team / personal productivity:
the greatest financial benefits from flexible working result from
efficiency and productivity improvements, yet they are often
difficult to quantify in advance.
The point here is that flexible working enables substantial
gains, but it is up to managers and their teams to deliver them in
the context of new ways of working.
efficiency implies raising the business output per unit cost.
Technology-enabled process and communications improvements
can deliver substantial improvements, even in a conventional
working environment. Additional
gains attributable to flexible working include:
time spent travelling on business:
according to the AA the actual cost of business car travel is
around 50p per mile. To
this must be added the cost of the employee, who is largely
unproductive whilst driving: for an average professional this
is around £20 per hour, or a further 75p per mile at average
driving speed. A
modest reduction of 2,000 miles per year per mobile
professional translates into a saving of £2,500.
to work anywhere and anytime:
a similar approach can estimate the improvements in
productivity from staff being able to work wherever and
whenever they happen to be.
Common scenarios include working at business partner
sites, working at home before or after meetings and working on
trains, planes, at railway stations or airports.
Based on employment costs of £20 per hour, an extra 2
hours of productivity per week is worth almost £2,000 a year.
the work itself can be substantially more productive. For example being able to respond rapidly to messages from
colleagues or business partners helps avoid "catch-up"
time, which many executives estimate as taking 3-4 hours per week
of their time.
staff motivation and retention:
companies report that attracting good staff and retaining them in
a competitive labour market is a problem, especially in certain
sectors such as the IT industry.
All else being equal, employees often seem to be prepared
to move for just a modest increase in salary.
surveys show that many people put lifestyle and work-life balance
above salary in their priorities for a new job.
Commuting, especially through congested traffic or on
unreliable, overcrowded trains, is another disincentive.
is a cost associated with staff turnover:
direct recruitment costs for replacement labour
direct cost of training new staff
low initial productivity of new staff.
are also financial implications associated with knowledgeable
staff leaving and joining competitors.
an example, outsourced recruitment cost via an agency is typically
15% of first year salary. Training
a new recruit might cost around £1,000.
Productivity for the first six months may average 50% of
the ultimate level. On
this basis, the cost of replacing an employee on a salary of £25,000
per year, and all-in employment costs of £50,000 per year, would
be over £15,000.
the average stay at an employer from three to five years results
in a saving of £30,000 per employee over fifteen years, or £2,000
is a burden that many employees treat as a necessary evil.
Whilst any savings from not commuting strictly go directly
to the employee - season ticket, second car, expensive housing -
employers may also gain by being able to attract employees, who do
not need to commute, with lower salaries.
In London, many commuters spend over £2,000 per year of
post-tax income on their season tickets alone.
opportunities, environmental and social sustainability:
is probably artificial to attempt to translate gains in these
areas into financial benefits, though aspects of the following
approach may be appropriate in some situations:
of compliance with legislation by alternative means, access
to a higher quality pool of labour.
Agenda 21 compatibility, avoidance of green taxes and
of work into areas attracting grants, low labour costs,
access to a high quality and less mobile workforce.
An additional benefit, again hard to
quantify, might be associated with positive press comment and
other PR activities.
Planning for results