Why remote working succeeds at some companies and not others

CHICAGO – Marilu Arce loves her job, but for a time she considered leaving.

The traffic-plagued commute from her distant suburban home to her downtown Chicago office, nearly two hours each way, meant her daughters couldn't enroll in after-school activities because she couldn't get home in time to take them.

Then her employer adopted a policy permitting her to work from home two days a week. Her stress level has dropped. Her daughters are thrilled that they can play travel softball. She tackles household chores with more energy. She likes her job more.

"It's the best of both worlds," said Arce, an assistant controller in the corporate accounting department at National Equity Fund, a Chicago-based nonprofit. "If I ever thought about leaving this place, I would think twice."

That's the type of reaction Arce's boss, CEO Joe Hagan, likes to hear as the company measures the success of the work-from-home policy it instituted three years ago in hopes of improving employee retention. So far, it seems to be working: turnover was less than 5 percent last year, its lowest ever.

But Hagan is cautious. Though a growing number of U.S. employees are working remotely, thanks in large part to technology that enables flexibility and young workers who expect it, the perk has been getting mixed reviews of late as some high-profile companies call employees back to the office for more face time.

Those stories "make me vigilant," Hagan said. "I want to see what went wrong there."

The most scrutiny recently has been on IBM, which in May announced it would require some of its remote staff in the U.S. and Canada to work out of regional offices. The change was particularly jarring because the technology giant was a pioneer in letting employees work remotely and in the software to facilitate that trend. Honeywell, Bank of America, Best Buy and Yahoo have made similar shifts away from remote work in recent years.

Skeptics wondered if the goal was to cut staff through voluntary departures, but IBM said it is building a "workforce of the future" composed of small "agile" teams that work quickly.

To be sure, remote work is not dead at IBM. The change only applied to about 2 percent of its 380,000 employees worldwide, or roughly 7,600 people.

Flexible work policies top employee wish lists when they look for a job, and employers increasingly have been offering them.

Nationally, about 3.7 million employees, or 2.8 percent of the workforce, work from home the majority of the time.

Studies have shown working remotely increases employee engagement, but in moderation because there is still value in the relationships nurtured when colleagues are face to face. The most engaged employees are those who work off-site three to four days out of a five-day workweek, according to a report this year from Gallup.

The key, advocates of flexible work policies say, is to match the environment with the type of work that needs to be done.

"The office is becoming a place for collaboration, while home is a place for concentration," said Kate Lister, president of Global Workplace Analytics.

As more employers allow people to work from home they also are shrinking and revamping their offices to make employees excited to come in.

"I want to kill the notion that it's one or the other," said Kate North, managing director of workplace innovation and strategy at the Chicago office of Colliers, a commercial real estate firm. "We're working everywhere."

At National Equity Fund, adopting a work-from-home policy coincided with the end of its office lease and a move to a new building. The new office is 25 percent smaller and saves $2.5 million over the course of the 10-year lease, said Gaylene Domer, vice president of facilities management.

The company hired a consultant and did a pilot to test the remote policy, which many managers opposed at first, CEO Hagan said. The toughest hurdle was that people used to walking over to someone's cubicle to talk had to get used to calling or sending an e-mail instead.

Now 91 of its 176 employees nationwide work from home two or three days a week, spread out in such a way that 22 people are out of the office at a time, Domer said. On their home days, employees tend to start work earlier and end later, but take longer breaks throughout the day to take care of personal business, Hagan said.

"You're always concerned people will not work as hard if they're outside the office, which has proven here at least to be a fallacy," said Hagan, who can see when people are logged in and active on the company's work system.

The flexibility hasn't hurt productivity, which is up 50 percent. There is "something lost" when colleagues don't gather at the water cooler, but it's outweighed by the retention and happiness gains, he said.

"We used to get beat up all time [in employee surveys], I think because people were angry, they were stressed," Domer said. "People are happier now."

When remote programs fail it is often a failure of management, as many managers don't know how to mentor people they can't see, said Colliers' North. Doing it right means setting clear expectations, evaluating performance based on results and setting protocols around communication to ensure that everyone is upholding their end of the bargain.