EMPLOYER NEED »
INCREASED COST SAVINGS & PROFITS
Content prepared by the Sloan Center on Aging & Work at Boston College

"The cornerstone to good human resources management is an understanding of an employee's experience and perceptions" because human capital is the most valuable resource that a company has. (24) Employers responding to a 2007 national survey estimated that, on average, it costs $12,092 to replace an employee. (69) Flexible work strategies that increase employee satisfaction and engagement and promote work-life balance will yield costs savings by increasing retention and avoiding unnecessary turnover. Reductions in unwanted turnover may result in important benefits to employers, such as less loss of knowledge workers to competitors, and lower recruitment and training costs. (31)

"Workplace flexibility can contribute to organizational nimbleness-an asset during turbulent economic times."(71) In a recent survey of 400 U.S. employers, most reported that they are either maintaining the workplace flexibility they offer (81%) or increasing it (13%) during the recession. ...While more than a quarter (28%) have turned to involuntary reduction in hours, a comparable percentage (29%) have used voluntary reductions in hours and 22% report increasing use of compressed workweeks. Other flexible work options used for reducing labor costs include increasing telecommuting (19%), outsourcing or moving employees to contract work (11%), offering buyouts or other inducements for early retirement (7%), and encouraging phased retirement by working reduced hours (7%). (38)

CASE EXAMPLES

Deloitte has quantified the cost savings that can be attributed to flexibility by calculating the cost of turnover for those professionals who say they would have left the firm had they not had a flexible arrangement. Based on this calculation, the firm determines that it saved an estimated $41.5 million in turnover-related costs in 2003 alone. (24)

In February 2010, federal offices closed for four days in the wake of repeated snowstorms in the Washington, D.C., metropolitan area. Because many employees of the Executive Office of the President (EOP) had devices that allowed them to work off site, more than 60% of EOP employees logged on remotely and worked during those snow days. The office estimates that "telecommuting capabilities saved over $30 million per day, for a total savings of more than $150 million over the five snow closures in December 2009 and February 2010." (26)

The founder of a law firm said flexibility isn't something she ever thought about when she founded the group eight years ago, but when two of her employees decided to move with their husbands to distant states, she retained them both. "They knew our main clients and understood their businesses inside and out," she said. Her focus is on client retention and growth, she explained. She believes flexibility is key to her company' s revenues, which have tripled over the last eight years. For one thing, she said one of her relocated lawyers has brought in a whole new portfolio of clients in her new region. (34)

At a large insurance company, "We've seen benefits from flexibility that include extremely low turnover (less than 6% this year), a great reputation as an employer of choice and the ability to spend almost nothing advertising job openings or paying head hunter fees." (34)



Survey Findings

A study to investigate the impact on firm profits of the implementation of workplace flexibility tracked the announcements of new work-life balance policies (such as dependent care or flexible work arrangements) by Fortune 500 companies in the Wall Street Journal. It found that on average, firms' stock prices rose 0.36% on the days following announcements of work-life balance initiatives. (4) A 2002 Australian report into the retail sector suggests that work-life balance policies are just as important and relevant in an industry with extremely low profit margins (3.4% in 1997/1998). This is because the cost of recruiting and training low-skilled part-time employees is high, relative to the employees' wages. Work-life balance policies can reduce these costs by reducing staff turnover rates. (91)