TELECOMMUTING

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TELECOMMUTING

• A MAJOR STEP TOWARDS WORKING ANYWHERE, ANYTIME.

BAD 64046 SPRING 2002 PRESENTED BY CHRISTOPHER L.
TOKPAH APRIL 10, 2002
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CONTENTS

• Definition of Telework
• To whom does Telework apply?
• Advantages and challenges of Telework
• a. Teleworker
• b. Employer
• c. Society

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CONTENTS

• Telecommuting in the US
• Summary
• Questions/Comments

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What is Telework ?

• Telework, often referred to as telecommuting,
  occurs when paid workers reduce their commute by
  carrying out all, or part of, their work away
  from their normal places of businesses, usually
  home.
• Tele comes from a Greek word meaning from a
  distance

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TO whom should Telework apply?

• Employees
• Certain self-employed contractors who have
  longer-term contracts that border on
  employer-employee relations
• Certain home-based business consultants whose
  contract would normally require them to work at
  an employers premises but because of technology,
  they work at home (or from some other location)

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Advantages and Challenges of Telework

• Teleworkers
• Employers
• Society

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THE TELEWORKER
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Advantages

• Reduces stress, while improving morale, work
  satisfaction and motivation
• Fewer interruptions allows greater focus and
  improved personal productivity
• Improved job satisfaction
• Save money(food, clothing, dry cleaning, bus,
  parking, fuel, highway tolls, ect.)
• Potential for tax credits and other incentives

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Advantages

• Reduces commuting time (commuting 1 hour a day
  equates to 6 full work weeks/year)
• Gives job access to those in geographically
  remote areas
• Recognizes the importance of family in single
  parent/dual career households
• Meets demands for new lifestyles and flexible
  work environment

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Advantages

• Increases physical comfort custom-fit heat,
  lighting
• Makes getting to work easy for disabled persons
• Reduces exposure to office politics
• Reduces traffic accidents

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CHALLENGES

• Reduced social interaction can lead to social and
  professional isolation
• Fewer career and promotional opportunities
• Potential for longer hours
• Potential for distractions
• Work/family or life balance may be affected if
  teleworker becomes a work addict
• Diminished access to resources found only at
  workplace

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THE EMPLOYER
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BENEFITS

• Saves office-space and parking requirements
• Increases productivity and job performance
• Reduces absenteeism and healthcare-related costs
• Reduces business disruptions due to
  emergencies(snow other storms, floods)

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BENEFITS

• Reduces travel costs
• Increases flexibility to staff during peak
  workloads
• Accommodates those with health problems or
  disabilities

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BENEFITS

• Taps labor markets from geographically remote
  areas
• Improves recruitment retention of key
  employees. Reduced hiring and training costs
• An option to relocating employees

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CHALLENGES

• Start up and operating cost telework policy,
  guidelines, training, evaluation
• Jealous and/or resistant colleagues
• Management resistance and skepticism
• IT equipment and support costs
• May be difficult to coordinate and control staff
  and monitor their performance

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CHALLENGES

• Security of information and files
• Employee safety issues
• May affect teamwork and organizational culture
• Liabilities for home workplace injuries

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THE SOCIETY
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BENEFITS

• Enhances economic development and sustainability
• Reduces traffic congestion and the demand for
  public transportation bus-service
• Reduces wear tear on roadways, the costs of
  road maintenance, etc.

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BENEFITS

• Reduces consumption of transportation fuels and
  pollution 
• Reduces accidents, including those brought on by
  'road rage'
• Helps balance work and family. Can provide an
  option for the care of "latch-key kids" and
  elders

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BENEFITS

• More "eyes on the street" during the day reduces
  break-ins and other crimes
• Provides a financial boost for business sector in
  the suburbs and rural areas
• Recruitment retention capabilities aid economic
  development, global competitiveness and the
  'brain drain'

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CHALLENGES

• Loss of business for downtown merchants
• Loss of business for public transport, fuel
  stations ect.

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TELECOMMUTING IN THE US STATS AND FACTS

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The Typical American Teleworker ITAC Oct 2001

• Works more than one day a week away from the
  office
• Resides in the north eastern or western region of
  the US.
• Possesses a college education
• Age between 35-44 years, married, and earns at
  least 40,000/annum

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Some Historical Milestones

• Dates back to 1877 first telecommuter was
  president of a Boston bank.
• 1963 Arpanet project ( Baby and project delivered
  on time)
• 1973 The term "telecommuting" is invented in by
  Jack Nilles, a rocket scientist (really) working
  on NASA satellite communications projects in Los
  Angeles.

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FACTS AND STATS

• 1990 3.4 million
• 1994 9.1 million
• 1997 11.1 million
• 1998 15.7 million
• 1999 19.6 million
• 2000 16.5 million

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FACTS AND STATS

• 28.8 million (about 24 of workforce)
  telecommuters in 2001
• The average annual growth rate is 14(Cahners
  In-Stat Group Report Feb 2001)
• Amount of greenhouse gas emissions kept out of
  the air each day by telecommuters' not driving to
  work 39,000 tons of hydrocarbons 590,000 tons
  of carbon monoxide 31,000 tons of nitrogen
  oxides (Reason Public Policy Institute, January
  2000)

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FACTS AND STATS

• Average total number of people who collapse and
  die each year from heat waves in the 15 largest
  U.S. cities, where the warming effects of
  greenhouse gases are amplified 1,500
• Expected number by 2020 3,000 - 4,000 (Reuters
  News Service, November 2000)
• Telecommuters will grow to 55 million in 2004
  based on societal demand, increase in bandwidth
  ect(Nov 2000 IDC projection)

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FACTS AND STATS

• Number of lives saved per year through reduced
  highway deaths as a result of telecommuting 350
  (Reason Public Policy Institute, January 2000)
• Percent of U.S. employers that offer
  telecommuting 16

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FACTS AND STATS

• July, 2000 Deloitte Touche
• Survey of 500 CEOs from the fastest-growing US IT
  firms.
• 55 say finding, hiring and keeping qualified
  workers is biggest challenge
• Keeping employees happy is a key component, and
  that often means letting them telework
• 42 of those surveyed said they offered
  telecommuting to their employees

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Cost Saving from Office Space Lets do some math!

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Cost Saving from Office Space

• If you average in common areas (hallways, meeting
  rooms, washrooms, parking, etc), average
  per-office costs in many Canadian cities can
  reach the 6,000 a year range.
• With just a bit of strategic planning,
  organizations can save about one office for every
  three teleworkers. Doing the arithmetic, a
  medium-sized organization with 100 teleworkers
  can save some 200,000 yearly just by cutting 30
  offices.

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Cost Saving from Office Space

• With 1,000 teleworkers, an organization could
  reasonably save some 2,000,000 per year.
• And that's in addition to the other significant
  savings that telework brings to the organization!

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SOME REAL EXAMPLES

• Using telework, ATT was able to reduce its
  office-space costs by 50. Alice Borelli,
  director of federal government affairs at ATT,
  estimated that since 1995, the company has saved
  500 million in office lease costs by promoting
  telecommuting.  In 1998, about 55 percent of the
  company's 55,900 managers telecommuted at least
  once a month, she said.

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SOME REAL EXAMPLES

• Telework allowed IBM to drastically reduced the
  need for office space and save 56 million per
  year across the company.  After 2 years with
  telework the company negated the need for 2
  million square feet of office space  
• Merrill Lynch reported saving 5000 to 6000 for
  each office space eliminated through the use of
  telecommuting. ("Who's in the Home Office?"
  American Demographics, June 1999.)

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SOME REAL EXAMPLES

• Of Nortel's 13,000 teleworkers, 4,000 no longer
  need dedicated office space in a Nortel building.
  Overall, telecommuting allows the company to save
  20 million dollars a year on real estate costs
  equivalent to two 20-story office buildings of
  40,000 square feet per floor

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SOME TAX ISSUES
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Tax Benefit

• IRS Section 179
• Provides deduction for computer, furniture and
  related business equipment.
• Write-offs of pro-rated expenses incurred for
  heating, cooling, insurance, repairs, ect.
• Depreciation against portion of house used as
  office.

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Conditions

• Employer does not provide you with a dedicated
  office space
• Furniture/equipments deductible if it exceeds 2
  of gross income
• Business phone calls/faxes completely deductible
  (use dedicated lines)

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Conditions

• Computers, photographic equipments, and other
  electronic devices must be used more than 50 for
  business purposes.
• The office/work space at home must be used
  exclusively for business purposes

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Tax Benefit Lets do some math!

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Tax Benefit Lets do some math!

• Consider a 2,000 square foot residence
• A 200 square foot office in residence
• Deductions allowed is 10 on mortgage interest or
  rent payments, property taxes, insurance and
  utilities.

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Lets meet some Telecommuters

• A vice president at a major telecommunications
  company telecommutes full-time from his home
  outside Philadelphia, overseeing an operation
  with over 200 locations worldwide. He keeps in
  touch via e-mail, daily teleconferencing and a
  videoconference link installed in his basement.

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Lets meet some Telecommuters

• A group of nuclear engineers telecommute to a
  nuclear generating station in Arizona from
  distances of 60 to 80 miles one way. According to
  their supervisor, telecommuting improves their
  ability to respond to emergencies. "Our engineers
  can get to the plant more quickly electronically
  than they can by car," she says.

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Lets meet some Telecommuters

• A programmer working for a large bank took his
  laptop and cellular phone to the pet hospital to
  sit at the bedside of his dog, who had been
  nearly totaled in an automobile accident.
• The CFO of a toy company telecommutes, mostly as
  a road warrior, toting his laptop with him around
  the world.

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Lets meet some Telecommuters

• A health care manager saves 20 hours a week that
  she used to spend on clogged LA freeways.
  Instead, she drives to a telework center just
  minutes from her home. The telecenter provides
  phone lines, workstations, office support
  services-all the comforts of the main office.

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Overview of Challenges facing Federal Agencies
Presented before Subcommittee on Technology, and
Procurement Policy, Committee on Government
Reform, House of Representatives. 

• By Robert Robertson, Director, Education
  Workforce, and Income Security Issues (Sept. 26,
  2001)

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PURPOSE

• Identify potential regulatory, tax and liability
  barriers that concern private sector employers
  considering telecommuting programs for their
  employees.
• Applicability of findings to the public sector

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FINDINGS
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Major Concerns in establishing expanding
Telecommuting

• Employer has types of positions and employees
  suitable for telecommuting
• Protecting proprietary and sensitive data
• Establishing cost-effective telecommuting
  programs.

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Potential Barriers for Public and Private Sectors

• Laws and regulations governing
• Taxes
• Workplace safety
• Workforce recordkeeping
• Home workplace injuries

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CONCERN 1Employer has types of positions and
employees suitable for telecommuting
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FINDINGS

• Telecommuting is best suited for high-performing
  self-motivated employees with a proven record
  of working independently and with limited
  supervision.
• Organizations without such employees may choose
  not to establish/expand telecommuting.

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CONCERN 2 Protecting propriety and sensitive
data
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Major Issues

• Employers ability to protect data and monitor
  employees access without invading privacy.
• Main concern focuses on employers ability to
  prevent unauthorized copying, manipulation, and
  modification of company info.
• Left unresolved, this could be a potential
  barrier

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CONCERN 3 Establishing cost-effective
telecommuting programs
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FINDINGS

• Some organizations lack resources to provide
  additional computers, modems, phone lines and
  other materials needed in the homes of
  telecommuters.
• Some organizations cannot afford the additional
  cost associated with ensuring the security of
  data accessed from remote locations.

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LAWS AND REGULATIONS
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TAX CONCERNS

• Is there an additional cost to employers who work
  for a company and reside in a state where the
  company has no physical presence?
• Double taxation in Northeastern United States
  (New York state taxing the wages of a Tennessee
  resident)

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WORKPLACE SAFETY

• OSHA states that it would not hold employers
  liable for employees safety or require employers
  to inspect workplaces of telecommuters(Feb 2000)
• Employers are providing training and furniture to
  reduce hazards.

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Wage and Hour law(FLSA)

• Employers must maintain sufficient record to
  document all hours worked, including overtime.
• Most Telecommuters are categorized as executive,
  professional or administrative
• The inability to monitor could serve as a
  potential barrier.

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Home Workplace Injuries

• Injuries at home are not usually witnessed,
  determining whether they are work related is
  problematic.
• Potential for fraud and abuse of workers
  compensation

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SUMMARY

• Telecommuting offers great opportunities that
  could benefit employers, employees and society.
• Government laws and regulations have a pivotal
  effect on whether organizations will
  establish/maintain/expand telecommuting.

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OTHER SOURCES

• http//www.ivc.ca/riskmanagement.html
• http//www.businessweek.com/smallbiz/0003/sb000320
  .htm
• http//rr.sans.org/telecom/telework.php
• http//www.langhoff.com/
• http//user.itl.net/gazza/telecomm.htm

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QUESTIONS/COMMENTS