HR and Homeshoring

Obviously, most offices will remain traditional.  But Businessweek reports on the growing trend among advant-garde companies to redesign their traditional office spaces to accomodate an increasingly mobile workforce.

What’s should be inspiring to shareholders and managers is the tremendous cost savings combined with productivity enhancements:

Cisco Systems Inc. cut rent and workplace service costs by 37% and saw productivity benefits of $2.4 billion in 2005 from just such an overhaul. Estimates Charles Grantham, co-founder of Work Design Collaborative: “We believe companies could get as much as a 30% to 40% cost savings.”

It is interesting to note that even as workers become more dispersed, working from home, coffeeshops, or on the road, office design is actually becoming more socially oriented:

Paradoxically, as we disperse more, our need to gather in an ideal environment intensifies. So the rethink also includes a growing appreciation for the “social architecture” of offices. Architecture and interior design firms such as Archideas Inc. are creating offices for companies by mapping the informal networks in organizations and then structuring space around concepts such as who employees bounce ideas off of and who they like to hang out with.

This development shows that it is a mistake to believe that trend such as homeshoring will lead to less social interaction.  Rather they will lead to less unproductive and unnecessary social interaction (pointless water cooler chatter) and to more productive engagement so that employees can, lo and behold, focus on what they’re being paid to do, namely create value for shareholders.

Citizen Communications is incorporating a work at home initiative as part of its efforts to improve service quality and market competitiveness (read cost control).  This homeshoring effort will be executed in conjunction with a consolidation drive that will greatly reduce the number of call center and combine them into two large call-centers.

It will be interesting to see if other firms which depend on a high quality call-center force will follow this strategy of consolidation and homeshoring.  It makes sense because one traditional argument for having multiple call centers spread out across different time zones was that the company could offer 24/7 service.  However, homeshoring make diversification across time zones a non-issue for call centers.  Instead, it becomes reasonable to consolidate call center operations into a few physical locations to take care of call volume at peak hours.  Other times can be handled by the work at home workforce.

In this article from Network World, telework advocate respond to the opposition to telework that has grown since a Veteran's Admin. laptop with valuable personal info on it was stolen. In particular I like the point made by Steve O'Keeffe, executive director of Telework Exchange:

"The analyst whose laptop was stolen from his house was not a teleworker, just someone who took work home with him. To link the incident to telecommuting is a mischaracterization, says Steve O'Keeffe, executive director of Telework Exchange. "I don't understand why it has been painted this way," O'Keeffe says. "The chap is not a teleworker. He brought work — sensitive but unclassified information — out of the office. But anyone could do that."

Also, there is at least one politician who not only understands the value of telework, but also understands what motivates managers, money:

To speed things up, lawmakers such as Rep. Frank Wolf (R-Va.) have proposed financial penalties for agencies that resist teleworking. Two years running, Wolf has inserted language in spending bills requiring agencies such as NASA and the Commerce, Justice and State departments show an increase in the number of federal workers telecommuting or forfeit $5 million each.

Unfortunately, the biggest incentive to change is simply the threat that mangers who aren't team players won't be on the team after the next round of layoffs.  Of course, this threat is a non-issue in the federal government since even the most grotesquely incompetent managers linger around for years thanks to federal governments reluctance to demand performance out of them.

It is interesting that tax laws in some states effectively double-tax telecommuters:

Under a longstanding New York tax rule, nonresidents who telecommute some or most of the time for their New York employers may be forced to pay New York taxes, not only on the income they earn when they work in New York, but also on the income they earn when they work at home, in a different state. Because telecommuters’ home states may also tax the income earned at home, these employees may be double taxed on that income. 

 This is an expecially bad practice considering that fuel conservation, emergency preparedness, and achieving work/life balance are all in the public interest.  In effect , NY is taxing conservation of fuel, disaster preparedness, and work/family life balance.  For some reason I am actually surprised by this.  I know I should never be surprised at the stupidity of politicians, but in this case I am.

According to this article in Computerworld, managers of federal agencies are opposed to telework.  This is unsurprising and frankly who can blame them?  As the article points out, federal agencies must return excess funds to the federal government rather than reaping the rewards of effective cost savings.  Why go through the stress and effort of making a significant change (which home-based work will entail) when you are not effectively rewarded by it.  Unfortunately, this lack of incentives is not only applicable to telework initiative but to any effort at cost savings or productivity enhancement.  This yet another reason why the private sector, not government will lead the way in implementing home-based work solutions.

This time it is the Defense Dept. that has successfully expanded its telework force.  One thing to note about this effort is that the telework program simply allows employees to work out of the office only four days every two weeks.  Unfortunately, that means that employees are still in the office half of the time and therefore taking up office space and wasting dollars on rent that could be spent elsewhere (in this its our tax dollars being wasted.

According to an article in the Baltimore Sun, research by the Dieringer Research Group shows the full-time telecommuting workforce has grown by 36% since 2003. This may suggest a strong growth trend for telecommuting.  However, the same researchers also concluded that the number of telecommuters remained unchanged from 2004 to 2005.

It will be interesting to see the growth this year.  I predict that there will be significant growth because of the effort towards fuel conservation and the newfound emphasis on COOP (Continuity of Operations Program) in case of terrorist attacks, pandemics, or other disasters.  Another contributing factor could be the growing cost of living (home prices and rents) in urban areas.
I also think that the growing familiarity with social interaction over the web (e.g. Web2.0) will be the strongest contributor to the growth in telecommuting.  The biggest obstacle to telecommutin, as demonstrated in the abovelinked article, is the lack of social interaction.  Surprisingly, some people think that younger workers are more concerned about this than older workers.  I wouldn’t have thought that, but upon reflection that does make sense.  However, the upside of this is that even tomorrow’s young workers (today’s college and high school students) are VERY familiar with online social interaction, indeed, they are pioneering it with their participation in sites such as Facebook and MySpace.  Overall, I think that telework will grow significantly, but rather slowly over the next 3-5 years, and then really start to explode to the point where it becomes a seriously considered standard option for employees at all levels, including entry-level.

One thing that has been overlooked in the recent controversy over telework and security is that there is very little reason to have large amounts of valuable data on a home computer or laptop's disk drive.   However, this Washington Post column does make the point that VPNs and other network technologies allow workers to log-in into networks remotely and then work on data from there, never having to download any of it to their machines.  Chuck Wilsker of the Telework Coalition sums things up pretty well:

Obviously, these happenings are not the best news for proponents of teleworking, said Chuck Wilsker, president and chief executive of the Telework Coalition.

But on the upside, he thinks this is going to be the "big wake-up that they really can't do things they aren't supposed to do, and violate security issues." The technologies exist, he pointed out, that allow workers to access a server from anywhere in the world. And then when they disconnect, everything they did stays on the server. "There is no reason to physically take things away to work on remotely," he said.

It is quite obvious to anyone who has not lived under a rock for the last 10 years that Mr. Wilsker is right.  Unfortunately,  when it comes to working from home many managers at large corporations and the federal bureaucracy have been living under a rock for the past 10 years.  They are still trying to figure out Web 1.0, much less Web 2.0. 

"These days the spirit of capitalism is stronger in China than it is in America."

So says Pin Ni in this month's Bloomberg's Markets, who operates Xanxiang America, and is the son-in-law and US representative of Chinese billionaire Lu Guanqiu.

Ni goes on to describe how he and Lu are exporting Chinese style capitalism to the US:

"If salespeople come back with business, they get some of the profits, Ni says; if they don't, they're only reimbursed for 65 percent of their travel expenses.  "It's basic stuff-we share together," he says. "It's show me the money, and if you succee, you are a hero.  If you don't, you share in the costs."

This is the type of attitude that absolutely must become prevalent in the US workplace if homeshoring and other work-at-home alternatives are to become popular.   Unfortunatley, pay-for-performance is the least discussed aspect of home-based employment.  However, it simply won't succeed unless employer can be confident that their home-based employee's incentives are properly aligned with the interests of the firm's shareholders. 

As reported by Businessweek, Dell has some serious problems with customers service, in particular, making callers wait and then transferring them.  The solution Dell is coming up with comes from the factory floor: they plan to make call center reps hyper-specialized in a given area.   Read more about in the Dell section in the above linked article.

I think homeshoring has more potential here.  First of all, a major reason for crappy customer service if the low-quality of the workforce.  So you have to improve that first.  how do you do that?  Two ways, by paying them more and making Dell a more attractive place to work.  Nothing of the sort was mentioned in the above article, which makes me seriously doubt Dell's commitment to improving customer service, then again, this doesn't necessarily bode ill for Dell since it's competitors aren't rushing to make serious improvements in customer service.

Homeshoring offers a serious solution because it can keep cost constant (assuming all of the gains from cutting back on office space go to higher salaries, otherwise costs are actually reduced).  It offers a much more attractive employment option than being herded into call center cubicle farms every day.  Furthermore, it make it easier to find emergency replacements in the event of a surge in call center activity.  It also would allow Dell to take advantage of low-cost-of-living parts of the country without having to set up a whole office there.

When will major corporations realize the benefits of homeshoring?  When they start feeling pressure from their competitors, which lead to an increase in the share price of their competitors and a decline in their own share price.