Harvard Business Online

Flex Time: A Recession Triple Win


Posted on Winning the Talent War: August 17, 2009 4:33 PM

Tough times are the right time to formalize flexible work schedules. Remote work options, staggered hours, reduced schedules and mini-sabbaticals are often seen as work perks for the fat years, one of the first targets of corporate belt-tightening. But as research in my forthcoming book Top Talent: Keeping Performance Up When Business Is Down (Harvard Business Press; October 2009) shows, companies that treat time as currency have tapped into one of the secrets to surviving in a recession.

With brutal job cuts leaving shell-shocked survivors struggling to handle radically increased workloads, the need for flexible work arrangements is going through the roof. Yet it's becoming harder and harder to take it. According to a survey from the Center for Work Life-Policy, face-time pressures more than doubled between June 2008 and December 2008, from 22% to 55%. Professionals worried about their job security are chaining themselves to their desk 12 hours a day to prove they're indispensable. As one manager explained, "Working remotely from home looks less 'dedicated' even though most people work even harder at home, and, interestingly, are more often available."

Women are especially hard-hit. 80% of the 5.1 million people who have lost their jobs in this recession are men, leaving many working wives and mothers as the sole breadwinner. Since women shoulder a disproportionate load of family responsibility and generally earn 20% less than men, it makes sense for employers to find ways to help them to perform at their peak.

Leading-edge companies realize that committing to flex or revamping existing policies in tough times is a triple win. Flexible work arrangements allow organizations to cut payroll costs without large-scale staff reductions. Furthermore, at a time when 73% of managers surveyed for Top Talent reported feeling "demoralized," taking the stigma out of asking for time off boosts employee engagement and helps retain top talent so the firm can quickly gear up for new business when the economy turns around.

Who's pointing the way?

In January 2009, accounting giant KPMG unveiled its new Flexible Futures program for its 11,000 UK-based employees. The options include: a four-day workweek and a 20% reduction in base pay; a four- to twelve-week sabbatical at 30% base pay; a combination of the two options; or sticking with the status quo.

Positioned as a way for the firm to "come together" in tough times, Flexible Futures is already seen as a winner. "We were trying to deal with reality but also give employees some control over their own destiny," says Rachel Campbell, head of people for KPMG Europe and the architect of Flexible Futures. To date, 85% of KPMG's UK-based employees have signed up. The most popular choice is option #3 which features both a shorter workweek and a sabbatical—which gives some sense of how time-starved professionals are these days. According to Campbell, the company looking at a potential savings opportunity of up to 15% of payroll costs.

Similarly, Booz & Company's new Partial-Pay Sabbatical aims to increase employee engagement as much as cut expenses. The global consulting firm had an unpaid sabbatical program in place for many years, but 2009 marks the first time that company-approved breaks have been made available to all of its nearly 4,000 employees—not just consultants—with pay as well as a guaranteed job when they return. The sabbatical can range from a minimum of one month to a maximum of 12, during which employees receive 20% of their base salary and full healthcare benefits. To make the program even more attractive, Booz offers "salary smoothing," so that a sabbatical-bound employee may opt to have 20% deducted from his or her salary during a period before the break rather than get substantially reduced paychecks.

Since the program's launch in April 2009 in the United States, some 20% of 1,000 U.S.-based employees have signed up, with the average request for three months off. (In Europe, the uptake has been 32%.) The company encourages employees to use their break to relax, advance their education, spend time with family, volunteer with a charitable organization and even take on another job part-time (so long as it's not at a competing firm). Many women have tacked their sabbatical time on to their six-week maternity leave; one employee is working in his area of expertise to improve his industry knowledge; another is working for the Peace Corps. Says Michelle Koss, who heads Booz' HR department in North America, "It will be interesting to circle back with employees and hear stories about how they benefited" from their breaks.

Using time as currency will continue to provide sizable returns as a talent lure when the economy picks up. A recent CWLP study of baby boomers and Generation Y workers found that an overwhelming percentage of both sexes in both age groups valued flexible work options: 87% of boomers and 89% of Gen Ys rated flexibility an important consideration in choosing an employer.
Sylvia-hewlett2
Sylvia Ann Hewlett is the author of Forget a Mentor, Find a Sponsor: The New Way to Fast-Track Your Career. She is an economist and founder of the Center for Talent Innovation, a think tank. She is also Co-Director of the Women's Leadership Program at the Columbia Business School.

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