The benefits of working at home

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The benefits of working at home

Diane Stiemer

10194134

University of Amsterdam

Economics and Finance

July 2015

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Abstract

In this study, the benefits of working at home have been investigated, This was done mainly from the employer's perspective. Some previous studies have been compared in a literary review and the differences of these studies are accounted for.

There are three possible benefits for the employer.

The first benefit could be an increase in productivity. Some studies have indeed shown such an increase but the results are different.

The second benefit could be an increase in working hours. The studies have indeed shown an increase in working hours of employees who are working at home.

The third benefit could be a reduction in costs, like the costs for travelling and the rent of the office. A reduction in costs was not found in these studies.

This paper will first give an introduction about the subject 'working at home'. After that a theoretical part is included in which the possible advantages and disadvantages as well as the hypotheses will be mentioned. In the next paragraph, the previous studies will be evaluated and the differences between these studies will be accounted for. The paper ends with a conclusion and with some suggestions for further research.

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1. Introduction

Over the past decades there has been a change in the working environment of the employee. Previously, every employee used to work at the office building. But over the years more employees started to work at their own residence. The magazine Business Insider of Australia (2015) found that this was a trend that would redefine the workplace. In the United Kingdom in 1997 2.3 million people were working at home, while this has risen to 3.1 million people in 2005 (Ruiz & Walling, 2005).

Business Insider predicts that working at home will not only increase, but it will become mainstream in the coming year (2015). This conclusion is based on a recent survey done by the company Cisco. In this study it is found that 89 percent of Cisco's employees work at home at least once a week. When their employees work at home, they do not need to travel.

Cisco calculated that this decrease in travel time will amount up to three million hours. They also estimate a saving in real estate costs, amounting up to one billion dollar.

While in the past most employers were against their employees working at another place than the office, this aversion has almost disappeared. Employers perceived some disadvantages from working at home, but this could also be beneficial. As became clear from Cisco's survey, there are cost advantages, making it profitable for the company to have their employees working at home.

The question that arises is if the possible advantages outweigh the possible disadvantages. If this is the case, it will be beneficial for the employer to have his employees working at home. The research question of this paper will therefore be: ‘Are there benefits to the employer if his employees are working at home compared to them working at the office?’

Preliminary thoughts on this question developed the following hypothesis: it is expected that the advantages of working at home instead of working at the office, do outweigh the disadvantages. It will therefore be recommended to the employer to allow his employees to work at home.

In this paper the advantages and disadvantages of working at home are being investigated. In order to investigate this, a comparison will be made between different previous studies. The main focus of this study will be on the employer's benefits. These studies will not only contain numerical advantages and disadvantages but also the views of managers and

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employees on the perceived benefits. The data are in great part received by surveys at

companies that allow their employees working at home. Some other studies are case studies in which a company that allow employees to work at home, is investigated. This paper also contains information about some experiments that were set up to investigate the efficiency of working at home.

This paper will start with a theoretical part in which the possible advantages and

disadvantages of working at home for the employer are stated. Possible differences between working at the office and working at home are discussed. There will be no discussion of results based on numerical data.

After this theoretical part, there will be a part about previous studies. In this section the previous studies will be summarized and the methods used to obtain the results will be explained. Then a comparison will be made between these previous studies and the

differences will be accounted for.

At last a conclusion will be formed on whether there are more advantages or

disadvantages to working at home. Also a recommendation will be made to investigate this matter in further studies.

2. What is working at home?

Working at home in this case will be defined as an employee working one or more days per week in the comfort of their own home. The employees have set up a spot at home in which they will perform the same tasks as performed at the office. The sector in which most of these home workers operate, would be the information sector. In the information sector it is

convenient to work at any place else than the office. In some cases the employee will work at home on a full-time basis, but this is not necessary. One demand however, is that the

employee is working more days at home than at the company's office.

Another term for working at home is telecommuting. This actually consists of an employee working by computer at another place than the company's office. The use of a computer allows employees to perform the same tasks as they would perform at the office.

However there is a slight difference between working at home and telecommuting. Working at home specifically states that an employee is working at his own home, where telecommuting just requires the employee to perform his work at any place different than the

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office. While telecommuting allows an employee to work at any place he would like, this will usually be done from the employee's home. By making this assumption, it is possible to use the results obtained from studies on telecommuting to investigate the benefits of working at home. The results of studies on telecommuting can, just as studies on working at home, be compared with results obtained from working at the office.

For researchers, the place employees work at, might be their research location and not their home (Hesse & Grantham, 1991). Therefore, in jobs that require research these different studies are not always comparable.

Since this study does not look at researchers, but instead looks at employees in the information sector, it is plausible to say that telecommuting and working at home refer to the same.

Another term that is used is teleworking. The definition of teleworking is the same as telecommuting. In this paper both terms will be used interchangeably.

3. Theoretical part and hypothesis

In this section the possible advantages and disadvantages of teleworking are mentioned. The main focus of this paper will be on the possible advantages and disadvantages for the

employer. There are also benefits for the employee. The focus will be on the employer, so his advantages will be discussed first. Since the employee's advantages may influence the

employer, there is a slight correlation between those advantages. Therefore, these correlating advantages will be mentioned as well.

3.1. Advantages for the employer

Now, the possible advantages for the employer will be listed.

The first advantage might be an increase in the company's productivity. Productivity is measured by the output of an employee per given time period (Gordon, 1997). Employees who work at home could be more motivated to perform their tasks, causing them to work more efficient (Harpaz, 2002). This might lead to an increase in output per hour for the company and will therefore increase the productivity of the company. Also, the employees that work at home could feel a decrease in distractions, that are experienced at the office. Since they don’t have their co-workers around them, they will feel less distracted and could therefore be able to work more efficiently (Hesse & Grantham, 1991). Also, since employees

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are allowed to work at home, they can schedule their own working hours. This gives them the opportunity to work when they are most productive, increasing their productivity, even though they work the same amount of time (Katz, 1987).

The second advantage could be an increase in the working time (Harpaz, 2002). When

employees are sick, this usually causes them to call in sick for work. In case of sickness of the employees, travelling might be an obstacle, which could be a reason to call in sick. When the employee is allowed to work at home, this reason does not apply. Another obstacle for some employees might be the contagiousness of their illness, since they don't want to bring the sickness to their co-workers. But when the employee can stay at home, he can still perform some tasks.

Another reason for an employee to work less hours, might be a dentist appointment. While the employee has to be away from the office for a few hours, working at home allows them to be absent less hours.

Children may cause reasons for an employee to be absent from work as well. When a child is sick this usually leads to one of the parents being absent from work. When employees are able to work at home, they are able to take care of their child as well as being able to work.

Sometimes employees will not be able to travel due to environmental issues (Hesse & Grantham, 1991). An environmental issue could for example be a snowstorm or problems with public transport. When the employees are able and allowed to work at home, this will not cause a problem and therefore this will no longer be a cause for an employee to miss out on working time. Employees might therefore spent more time on their tasks when they are allowed to work at home (Harpaz, 2002).

The third advantage is a decrease in costs that might occur (Harpaz, 2002). Since employees do not need to travel to their job, this will decrease the travel costs the company has to pay. This includes money for gas, in some cases a car or money spent on public transportation. Another reduction in the costs could come from the rent of office space that will be eliminated (Goodrich, 2001). If all employees were to work at home, there will be no need to rent

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3.2. Advantages for the employee

As already mentioned teleworking also provides some advantages for the employee. These advantages could be beneficial to the employer as well.

Employees might feel an increase of responsibility, which can lead them to feel more challenged. When employees will feel more challenged, their motivation could go up. Due to an increase in motivation, employees could be more focused on work and more determined to finish tasks. A lack in motivation would make an employee easily distracted and not as

focused. If motivation were to increase, work could be performed faster, which could mean an increase in productivity.

The employee is also able to schedule his own working hours, which will allow him to work at a time that is most convenient to him. At times the employee will not feel motivated or distracted, he is allowed to reschedule his working hours or take a break. At the times the employee does work, he is able to work better. This could mean an increase in productivity.

The employer obviously benefits from the increase in productivity from his employees.

3.3. Disadvantages for the employer

While there are a lot of advantages of teleworking, there are also disadvantages.

Even though the productivity could increase, a decrease might also occur. This is the main disadvantage for the employer. There are several causes that might lead to this decrease in productivity.

One of the causes is the lack of supervision from managers (Harpaz, 2002). This could cause employees to shirk. The lack of supervision could also cause a lack of motivation of the employees. They are afraid that good work will not be rewarded and that bad work will not be punished.

When employees are working at home, they are more isolated compared to them working at the office (Katz, 1987). Communication with their co-workers is therefore a lot harder and this causes a decrease in professional support to solve work-related problems (Harpaz, 2002).

When employees are working at home, they might easily be distracted by their home surroundings, like family members. The distinction between their work and their personal lives fades. This could cause interruptions and possibly add stress to the employee for feeling

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the need to overcompensate (Katz, 1987).

Costs for the company could also go up. The company would like to eliminate the decrease in productivity. In order to obtain this, managers and employees need training. These trainings have to be paid by the company, which therefore will increase the costs.

The switch itself might also increase the costs for the company since there could be a need for new technology (Harpaz, 2002). Every employee will need their own personal computer at their home including the software needed to be able to work at home.

Another issue is the principal-agent problem. Since the employees will not be supervised and their work cannot be checked by their employer, they might feel like shirking. Employees only get paid an hourly wage and this wage does not depend on their productivity, so working hard will not be rewarded extra.

4. Survey of past literature

To investigate if the mentioned advantages are actually correct and beneficial to a company, a review has been done. In this review thirteen different studies have been compared.

Conclusions will be drawn based on their outcomes. Every possible benefit is investigated separately. To get clear overview of the studies that were investigated, two tables are included. These tables contain the relevant data that was used in order to compare these studies. Besides these tables a brief description of every study with its outcome is given.

4.1. Study on productivity

At the company BC Drinks a case study was done. This company had a sales department, but they closed this office completely. This forced all employees to work at home and only meeting with their co-workers occasionally (Harris, 2003). In order to obtain results a survey was held among employees and managers. In this survey questions were asked, that covered seven areas: physical environment, productivity, balancing home and work life, socialization, communication, tools and general issues. In addition to the survey, two focus groups were set up, in which the participants could talk about their perceived problems and advantages. Furthermore interviews were taken with the participants. This case study showed no increase in productivity.

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to the office. However they had to spent more time on administrative tasks and therefore their increase in working time did not lead to an increase in productivity. 30 percent even indicated they had less time for their customers (Harris, 2003).

From the survey, Harris (2003) also found a relation between the family structure and the efficiency of the employee. Only workers who were living alone or with non-present family members found the switch in working environment beneficial. Employees with, for example, small children indicated they found the switch more difficult (Harris, 2003).

In order to investigate if working at home could benefit the company, Bloom, Liang, Zhichun and Ying (2015) set up an experiment at the call centre company CTrip. In this experiment employees were given the choice between staying at the office or make a switch to working at home. Half of the employees agreed to working at home, while the other half stayed at the office. The experiment lasted for nine months. Except the change of location, everything was held constant, so the two groups could be compared.

As a result of the switch in working environment the total performance of the employees who agreed to work at home, went up by 13 percent (Bloom et al., 2015). 9 percent of this increase was due to the fact that employees started working more hours. The remaining improvement of 4 percent was a result of an increase in productivity. Employees indicated that their increased productivity was due to a better working environment. Since the investigated company was a call centre, the productivity was measured by the amount of phone calls that were made each minute.

In addition to this research, Bloom, Liang, Zhichun and Ying (2015) made an estimation for the company as a whole. They estimated that the overall productivity of the firm would go up by 30 percent if all employees were to work at home.

Another study that investigated the results of working at home was done by Grantham and Paul (1995). In this study three case studies were compared. The tasks performed by the employees in these studies were quite diverse, ranging from administrative tasks to building inspectors to social service case-workers.

The first case study covered the government department of the Sacramento County in California. A pilot program was set up, in which 35 employees started working at home. All employees decided to work at home voluntarily for a period of six months. During this period they were supervised by 28 managers (Grantham & Paul, 1995).

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employees who started working at home. Prior to the study, the employees had a training. During the study, employees were asked to fill out evaluation forms.

The third study was performed by 'The institute of the study of distributed work'. 88 managers were asked about their company's statistics, covering current teleworking and their expectations of the growth in teleworking.

All employees and managers worked at different companies and even different sectors of work. By comparing the three case studies a brief conclusion was drawn. This conclusion stated an increase in productivity. Furthermore it was estimated that the increase in

productivity would be between 10 and 16 percent.

To investigate the benefits of working at home Pratt (1984) held a questionnaire. Employees from 36 different companies, coming from fourteen different industries were asked about working at home. All employees were working at home voluntarily. The tasks they performed were diverse, including academic tasks, banking, computer tasks, creative media, transport, insurance, manufacturing, consulting, services, publishing, retail, research and utilities.

67 percent felt an increase in productivity. However 26 percent felt no difference in their productivity and 7 percent even felt a decrease in their productivity (Pratt, 1984). These employees felt more distracted at home, which did not allow them to work more productive. Overall, however, it could be concluded that productivity had gone up.

Baruch and Nicholson (1997) held a questionnaire with teleworking employees, working in the information sector. They set up a group of 62 employees. The employees in this group were randomly drawn, therefore not all employees were working at home voluntarily. Because these employees were randomly chosen, they worked at different companies. The questionnaire included questions on the perceived productivity of the employees and the amount of time they worked.

In this investigation 75 percent of employees indicated to be working more efficient at home. 48 percent indicated to be working more hours. Since the amount of employees who were working more efficiently is larger than the amount of employees that started working more hours, the productivity had gone up (Baruch & Nicholson, 1997).

The percentage of people who worked at home voluntarily was also close to 75 percent. Baruch and Nicholson (1997) therefore suggested that only employees who worked at home voluntarily increased their productivity. This would mean that productivity would only increase in case of a voluntary switch in working environment.

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In a study done by Ford and McLaughlin (1995) a questionnaire was held among managers. These managers were asked about their opinion on teleworking. All managers supervised employees that were working at home. These employees were performing sales tasks, telemarketing, clerical tasks and data-entry tasks.

In order to investigate the manager's beliefs on teleworking, the questionnaire included questions on perceived productivity and quality of work. 75 percent of the managers indicated to be satisfied with their employees. However, regarding productivity, the results were quite diverse. 50 percent of the managers did not indicate a difference between their employees who work at the office and those who work at home (Ford & McLaughlin, 1995) The other 50 percent of the managers did indicate a difference. They found their teleworking employees to be more productive. Not only did they believe those employees to be more productive, they also believed the quality delivered by teleworkers was higher. No managers found a decrease in productivity due to teleworking (Ford & McLaughlin, 1995).

Another study was conducted to explore the different factors that influence people to work at home (Belanger, 1998). To find these different factors a questionnaire was held. This

questionnaire also covered questions on productivity and performance. The people who were questioned, were working at home for at least one day a week and they worked at home voluntarily. Most employees were information workers. They were analysts, system-administrators, system-engineers, system-programmers and helpdesk specialists.

168 questionnaires were sent to both employees and their managers, but only 76 were actually filled out. To accurately test the differences a test had been performed, based on the results of the filled out questionnaires. From this test it was concluded that productivity had gone up significantly (p-value = 0.041) (Belanger, 1998).

In order to investigate the implications of working at home Büssing and Aumann (1996) have been looking at the German department of the company IBM. IBM started to allow their employees to work at home, since they thought this could increase their attractiveness to employees. IBM provided their employees with a fully set up working place at home. The tasks employees performed were programming, supervising and training the users of software, system-maintenance and program monitoring. 33 employees started working at home and were questioned about their experiences.

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indicated to be unsatisfied with the new situation (Büssing & Aumann, 1996). Before the results of the questionnaire were known IBM was already expecting an increase in

productivity from teleworking. Their estimate was an increase of 72 percent. However, after the questionnaire this number appeared to be even higher. 85 percent of the employees found an increase in their efficiency.

In a study done by Wheeler and Zacklin (1994) employees were offered to work at home voluntarily. The employees that agreed to work at home mentioned several reasons for their switch. Among these reasons were an increase in flexibility, improved technology and environmental factors. In this study the employees came from corporate companies and academic and government agencies. To be allowed to work at home, an employee had to get permission from his manager. The result was that only the most motivated and most

productive employees were allowed to work at home. To investigate the benefits both the employees and the employers were questioned on their experiences.

Half of the employers indicated they had found an increase in productivity from their individual employees. The other half did not find a change in productivity (Wheeler and Zacklin, 1994). However a remark has to be made. Since only the best employees were allowed to work at home, the increase in productivity appears to depend on the responsibility and motivation of the employee. Therefore it may not be possible to generalize the results found in this study.

DuBrin (1991) also wanted to know the differences between working at home and working at the office. In order to investigate these differences he compared 34 employees who were working at the office with 34 teleworkers. All employees were working for the same company, which was a research company called the NPD Group. Tasks performed by employees involved recording raw data, coding this data and entering the data. The productivity of the employees was measured by the number of transactions the employee made in one hour. All employees were given the same kind of tasks, so their productivity could be compared.

From this study it was found that productivity was higher for the employees who were working at home. The number of transactions of teleworkers was 29.9 percent higher

compared to employees at the office. DuBrin (1991) therefore concludes an increase in productivity will be realized when employees are working at home.

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4.2. Causes of differences in productivity results

These studies show some differences in their results. The first study concludes neither an increase nor a decrease in productivity (Harris, 2003), while the second study shows an increase in productivity (Bloom et al., 2015). The third study found an increase in productivity between 10 to 16 percent (Grantham & Paul, 1995) and the fourth study concluded that the productivity had increased (Pratt, 1984). The fifth study also found an increase in productivity (Baruch & Nicholson, 1997). The sixth study done by Ford and McLaughlin (1995) found that half of the managers perceived an increase in productivity and the other half perceived no difference. The study of Belanger (1998) was not set up to test the productivity, but questions on this matter were nevertheless included in the questionnaire. This study also showed a positive effect of teleworking on productivity. Büssing and Aumann (1996) also found that productivity had gone up due to teleworking and DuBrin (1991) found the same result. In the study of Wheeler and Zacklin (1994) an increase in productivity was found as well.

There are four possible reasons for these different results.

The first reason is the fact that employees were not all telecommuting voluntarily. At the company BC Drinks (Harris, 2003) the office closed completely, which forced employees to work at home. These employees were not voluntarily working at home and this study did not find an increase in productivity. In the study done by Baruch and Nicholson (1997) employees came from a randomly drawn sample. Only 75 percent of these employees were working at home voluntarily. Since the productivity also increased for 75 percent of

employees, Baruch and Nicholson (1997) proposed some correlation between the two. In the other studies employees were given a choice in their working environment (Bloom et al., 2015; Grantham & Paul, 1995; Pratt, 1984; DuBrin, 1991; Wheeler & Zacklin, 1994; Büssing & Aumann,1996). These studies found an increase in productivity. Therefore it seems to be beneficial for the company to provide employees with the choice of teleworking. Provided with this choice, only the employees that would feel like they benefit from

teleworking, make the switch. Employees that do not feel they benefit from teleworking, were allowed to keep working at the office. The productivity of the employees who choose to work at home, appears to have been increased.

The second reason for the different results is the type of research that was conducted in order to obtain results. In the studies from Harris (2003), Bloom, Liang, Zhichun and Ying (2015)

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and Grantham and Paul (1995) case studies were conducted by the company. Harris (2003) did not find an increase in productivity, but the other studies did find this increase. Therefore a clear conclusion cannot be drawn.

The results of the studies that investigated the productivity by taking a questionnaire, were not similar. Belanger (1998), Ford and McLaughlin (1995), Büssing and Aumann (1996) and Wheeler and Zacklin (1994) found an increase in productivity. Pratt (1984) and Baruch and Nicholson (1997) also held a questionnaire, but they didn’t find an overall increase in productivity. The studies were all done by holding a questionnaire, but the results were not the same.

Since studies done in the same way do not show the same results, it cannot be stated that a different type of research will show different results.

The third reason for a difference between the results is the characteristics of the tasks that were performed. In the studies done by Baruch and Nicholson (1997) and Pratt (1984) the performed tasks were diverse. The employees they investigated, came from different

companies, operating in different sectors. These employees were working in a wide range of job categories. These two studies didn’t find an increase in productivity for all employees. The diversity of the tasks and the different outcomes of these studies could be related. This could mean that productivity will only increase in certain sectors of work.

The other studies covered employees performing tasks in the service sector or the information sector. These kind of tasks can be performed without much interaction with co-workers. The contact with customers happens mainly by telephone. The studies that covered these sectors found an increase in the productivity, with the exception of Harris (2003). It could be concluded that the characteristics of the tasks have an effect on whether the switch would increase productivity or not.

The fourth reason for the difference between the studies is the characteristics of the employee. At BC Drinks (Harris, 2003) all employees were forced to work at home, so their

characteristics were quite diverse. In the study of Baruch and Nicholson (1997) teleworking was also not completely voluntary. These studies don’t show a clear increase in productivity.

Except from Pratt (1984) the productivity had gone up in all other studies. In these studies employees had to get permission to work at home. Wheeler and Zacklin (1994) argued that in order to get permission, employees had to be independent and efficient. So the

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found increase in productivity could therefore only apply to some employees.

4.3. Study on working time

The second advantage is an increase in the time employees spend on their work. At the previously mentioned call centre company CTrip (Bloom et al., 2015) an increase was indeed found. Employees indicated to be working 9 percent more at their home, compared to the office.

Frolick, Wilkes and Urweiler (1993) also investigated this advantage. They held a

questionnaire over the phone, to investigate the perceptions on teleworking. 45 employees and employers from ten different companies were interviewed. These participants all came from American companies that allowed telecommuting. The employees were program-analysts, legal professionals, technical writers and engineers.

In this study 36 percent of the employees indicated to be working more hours at home compared to the office. Not only did the employees indicate an increase in their daily working time, they also indicated that they were less hours absent. Previously they would call in sick and not work at all if they didn't feel well enough to go to the office. Due to the fact that they were now allowed to work at home, the employees indicated to still work some time, even if they didn't feel well. This was also the case for other personal circumstances that would previously lead to them being absent (Frolick et al., 1993)

To explore more possible workplaces and to investigate the benefit of telecommuting the company Textron initiated a pilot study (Katz, 1987). In this study one representative employee made the switch to working at home. The tasks performed by this employee were developing specifications, determining feasibility and evaluating computer-hardware. To get results from this study the employee had to keep a log-file on the tasks completed and her mental state. In addition to these log-files the employee also had to keep a voice-recorded diary. In order to find a difference between working at the office and working at home, the employee started working at the office for two months. Then the employee started working at home for two days a week and this went up to four days a week. The period of teleworking would last for six months. To measure the productivity a subjective measure was used, consisting of the lost time and the completion of tasks.

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this ratio was 0.00 but by teleworking this ratio increased to 0.94 (Katz, 1987). This increase was for the most part due to an increase in time spent on actual work. After this pilot, an estimation was made on the increase in working time. According to this estimation there would be a benefit of 10,800 dollar per year per employee (Katz, 1987).

In the questionnaire held by Pratt (1984) employees were asked about their findings on working at home. The employees that were questioned, came from 36 different companies, operating in fourteen different industries. They were working at home voluntarily and

performed a wide range of tasks. In the questionnaire the employees were also questioned on their time spent on the job.

Since the employees didn’t need to travel to and from work, they indicated to save time. The average time saved by the employees ranged between one and two hours every day (Pratt, 1984). Pratt (1984) suggested this saved time could be spent on work, therefore

creating more working hours. However, employees might also use this time for leisure, which would mean no difference in working time. This study shows no clear increase in working time.

In the study done by Büssing and Aumann (1996) a questionnaire was held at IBM. 33 employees were questioned on their findings towards working at home. IBM started to allow their employees to work at home, because the company felt this could increase their

attractiveness to potential employees. IBM also expected other benefits from teleworking. For example they expected their employees to be less distracted. IBM feels that a reduction of distractions, could mean more time spent on work.

IBM expected the distractions to go down by 74 percent. From the questionnaire it was found that 82 percent experienced less distractions (Büssing & Aumann, 1996).s This could mean an increase in time spent on work.

4.4. Causes of differences in working time results

At the call centre company CTrip a clear increase in working time was found (Bloom et al., 2015). In the study performed by Frolick, Wilkes and Urweiler (1993) employees also indicated to be working more hours at home than they would at the office. And the study of Katz (1987) at the company Textron also showed an increase in working time.

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Wilkes and Urweiler (1993) was done by a questionnaire. Even though there are differences in the way the results are obtained, the same result has been found. This would imply that an increase in working time would occur and doesn’t depend on the research method. An increase in working time is found in all cases.

All these studies showed an increase in working time. But in these studies all employees were working at home voluntarily and no companies were investigated, which forced employees to work at home. Even though an increase in working time was found, it cannot be concluded that working time would go up in every situation, since no study was done on employees who were forced to telecommute.

The other two studies didn’t show a clear increase in working hours. This increase was, however, implied by both studies.

The study of Pratt (1984) showed an increase in the time saved by employees due to less travel time. Pratt (1984) predicts that since the employees save time, they will spend this extra time on work. Therefore working hours would go up. However, this is not a clear result. Employees might use this time for pleasure purposes and not on their job. Even though time is saved due to a reduction in travel time, this would not necessarily mean an increase in

working time. From this study therefore an increase in working time cannot be concluded. The study of Büssing and Aumann (1996) at the company IBM indicated that

employees were less distracted. This distraction could mean that employees are more focused on their work and this could therefore cause an increase in working hours. But the actual increase in working hours was not investigated. Even though this increase in working time might look like a plausible result from the decrease in distraction, this cannot be stated with certainty. The results from this study are not sufficient to conclude an increase in working time.

There was no study that found a decrease in working hours. From these studies it therefore seems that working hours will increase or at least remain the same by teleworking. However, the studies used to investigate this change in working hours, were somewhat similar. To make the conclusion of an increase in working time reliable, more studies have to be done. These studies should differ in at least one aspect from the studies that were already conducted. For example, the working time of employees who are forced to telecommute, should be

investigated. Also different types of studies should be done, for example a review of a company's statistics.

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4.5 Studies on cost reduction

As mentioned earlier, the third advantage is a reduction in costs. This was mainly a reduction in overhead costs. Bloom, Liang, Zhichun and Ying (2015) investigated this advantage in their study on the call centre company CTrip. In this company the tasks performed by employees consisted of making calls with customers and their productivity was measured by the amount of phone calls made each minute. In this study the employees were given the choice between staying at the office or making a switch to working at home. Half of the company's employees decided to make this transfer.

After the experiment, that lasted for nine months, the company made an estimation on how much they could save if employees would be working at home. According to their estimation the company could save 2000 dollars per employee per year if employees work at home (Bloom et al., 2015). This was thought to be explained by the fact that employees and managers didn't need as much training as before.

However, the company found an increase in money spent on IT requirements. But since the employees wouldn’t need an office, costs for rent went down. This reduction in the costs was bigger than the increase in costs for IT requirements. This would mean that total costs went down (Bloom et al., 2015).

In the Textron pilot study, performed by Katz (1987), the financial side of teleworking was being reviewed. In this study one employee, who was a mechanical engineer, started to work at home. In addition to the previously mentioned increase in productivity and working hours, there were also some other findings.

First of all employees were less likely to change to a different job. Previously

employees would change their jobs if they were forced to move, due to, for example, a change in the work location of the partner. Since with teleworking the distance between home and the office doesn’t matter, employees were more likely to stay in the same job. Also employees were less likely to leave when starting a family, since they could combine the two. Labour turnover for the company will decrease. Since the already trained employees are less likely to leave, there will be no need to hire new employees and train them. The company estimated that this decrease in labour turnover could provide the company a saving of twenty to sixty thousand dollars per year (Katz, 1987).

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Employees were less absent and working more hours. Since the increase in working time could increase the output of the company, there would be a financial benefit. The company Textron estimated that this benefit could be as high as 10,800 dollars per year (Katz, 1987).

Thirdly, since the company had less need for office space, rent would go down. Other overhead costs that would occur if the employees were working at the office, also went down according to Textron(Katz, 1987). The company estimated a decrease in overhead costs, consisting of a hundred dollars each month per employee (Katz, 1987).

The company found neither an increase nor a decrease in the costs for technical

supplies. The estimate of the company was therefore that total overhead costs would go down, due to teleworking (Katz, 1987).

At the company BC Drinks the sales office was closed completely, forcing all employees to work at home (Harris, 2003). To investigate the advantages and disadvantages, six months after the switch a survey was done. This study found a reduction in overhead costs, which was an important advantage to the company.

However 63 percent of employees indicated they felt isolated when they were working at home (Harris, 2003). Since the employees were forced to work at home, they indicated to feel less committed to the firm. To deal with these issues the managers, as well as the employees, would need training. Also an increase in human resource management would be needed, to make the switch profitable (Harris, 2003). This extra training and extra human resource management would cost the company money.

So even though there could be an advantage due to a reduction in overhead costs, an increase in costs for training is needed. It can therefore not clearly be stated that the company would experience a financial benefit from teleworking (Harris, 2003).

In a questionnaire held at 36 companies from fourteen different sectors the employees and managers could indicate their findings on working at home (Pratt, 1984). The employees performed a wide range of tasks. Some questions in the questionnaire covered the change in costs when the switch between home and the office was made.

Managers indicated to save money. They indicated that expenses in hiring additional personnel and less need for work stations went down (Pratt, 1984).

However they also indicated that in order for their employees to work at home, an IT investment had to be made. The managers expected this investment to range from 700 to 16,000 dollars (Pratt, 1984). Since this investment had to be made, managers felt that overall,

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there would be no financial benefit of teleworking. In addition they felt a need for training, which could increase the costs.

Employees were also asked to fill out the questionnaire. They indicated that their costs went down. Their savings averaged 400 dollars each month, consisting of savings on food, gas and clothes (Pratt, 1984).

At the telecom company AT&T employees are allowed to work at home (Apgar, 1998). This was done to reduce the costs for the company. The tasks performed by the teleworkers were personal sales, telemarketing, project-engineering and over-the-phone consulting.

Due to the fact that the company had less need for office space, their rent costs had gone down. Other financial benefits were due to a better service provided by the employees and better teamwork between employees. The costs for the company had gone down 30 percent (Apgar, 1998).

AT&T also conducted a new plan of teleworking, lasting for the next five years. This program was called the 'AT&Ts Creative Workplace Plan'. With this program the company aims to reduce the space that has to be rented even further. The company estimated that this would save them between five and ten thousand dollars per employee annually (Apgar, 1998).

The company IBM felt the need to reduce their costs in rent. They needed a cost reduction in order to gain competitiveness, which had previously gone down. In order to reduce their costs, just like at AT&T, they allowed their employees to work at home. The share of employees who are able to work at home was 17 percent of the total number of employees (Apgar, 1998).

In the year 1992 the company started to investigate the benefits of teleworking. To investigate these benefits, the expenses and the reduction in these expenses were evaluated. By the year 1997 their expenses were reduced by 42 percent (Apgar, 1998). This reduction was mainly due to the savings in rental costs. In those five years also the costs per employee had dropped by 38 percent (Apgar, 1998).

In addition, IBM started a program to reduce the costs further, by making the working environment more flexible. This program was called 'The Mobility Initiative'. This again saved them more than a hundred million dollars annually.

4.6. Causes of differences in cost reduction results

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by Bloom, Liang, Zhichun and Ying (2015), Katz (1987) and Apgar (1998) a reduction in costs was found. Apgar (1988) investigated two companies and found a reduction in costs for both. However the studies of Harris (2003) and Pratt (1984) showed no clear reduction of costs.

The difference between the results could be due to the fact that not all employees were working at home voluntarily. In the study done by Harris (2003) at the company BC Drinks a reduction in costs was found due to a decrease in rental costs. However, costs increased due to the training that would be needed to resolve the issues that employees and the managers experienced. Due to this increase in training, a clear reduction in costs cannot be found. In the studies of Katz (1987) and Apgar (1998) a reduction in costs was found. In these studies the employees were working at home voluntarily. The fact that the employees are working at home voluntarily, could mean they are more motivated to perform their job. Therefore these employees do not need as much training and human resource management compared to employees that are forced to work at home.

These results show that a company could indeed experience a reduction in costs due to teleworking. However, in order to realize this reduction, the employees have to work at home voluntarily.

Another reason for the difference between the studies is the way the data was retrieved. Both Bloom, Liang, Zhichun and Ying (2015) and Katz (1987) held a case study. Apgar (1998) obtained its results from company’s statistics. These studies all measured the reduction in costs by looking at numerical values and all found a reduction in costs.

Pratt (1984) received its result by holding a questionnaire among employees and managers. The managers in this study indicated a reduction in overhead costs. They were afraid the need for training would increase the costs and therefore they didn’t expect a

reduction in overall costs (Pratt, 1984). In this study no empirical values were found, only the costs as perceived by the managers.

It could be concluded that the way data was retrieved, is a source of the differences between the results. Looking at case studies a reduction in costs was found. Looking at the perception of managers this reduction wasn’t found.

A third reason for the difference in results could be the characteristics of the tasks, performed by employees. In the studies done by Bloom, Liang, Zhichun and Ying (2015), Katz (1987)

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and Apgar (1998) the employees had to perform tasks in the information sector. These studies found a reduction in costs.

The study performed by Pratt (1984) included a wide range of tasks. This study

showed no clear result in the change of costs. The managers expected an increase in costs due to a need for IT requirements and training. Since the performed tasks were diverse, it can be stated that a reduction in costs will not occur in every sector.

It seems that only companies that work in the information sector will experience a reduction in costs due to teleworking.

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5. Disadvantages

A few disadvantages were also found from the studies. Some of these disadvantages only affect the employer. Other disadvantages affect both the employer and the employee.

One disadvantage that was indicated by the employees was a feeling of detachment from the company (Harris, 2003). At the company BC Drinks 63 percent of employees indicated that they felt isolated by working at home. This led them to change jobs, which increased labour turnover for the company (Harris, 2003). The labour turnover appeared to have been risen from 6 percent to almost 20 percent. This increase in labour turnover would result in costs for the company. For instance the company had to search for new employees. After new employees have been found, these employees have to be trained, which would also mean an increase in costs (Harris, 2003). Furthermore they would lose their high-skilled and already trained workers.

The study performed by Frolick, Wilkes and Urweiler (1993) consisted of a

questionnaire held over the phone. In this questionnaire 45 employees were interviewed. 68 percent indicated to feel less attached to the company, due to teleworking. Therefore these employees felt the need for a change in jobs. This led to an increase in labour turnover.

To eliminate the detached feeling experienced by employees, a training might be needed. Both the employees and their managers need training. These trainings are costly and are therefore a disadvantage to the company. Also to make sure employees stay satisfied with teleworking, an increase in human resource management could be needed. This would also increase the costs for the company.

Another reason for an increase in costs for the company could be due to an increase in IT requirements (Pratt, 1984). By teleworking the company could have a need for different IT supplies besides the IT supplies at the office. This would mean the switch would be costly, since new technology has to be purchased.

Previously two other disadvantages were mentioned. One was a lack in supervision from the managers and the other a decrease in motivation of the employees. However, in the studies no results were found on these disadvantages.

6. Conclusion

In this study the potential benefits of working at home were investigated. The focus of this study was on the employer, so mainly his benefits were discussed. Other terms used for working at home were teleworking and telecommuting. The study started with a theoretical

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part in which the potential advantages and disadvantages were discussed. In order to find the actual benefits, previous studies were evaluated. In case the studies showed different results, their differences were accounted for. After this the disadvantages were discussed.

The question proposed in this study was: ‘Are there benefits to the employer if his employees are working at home compared to them working at the office?’ By comparing previous studies, benefits were indeed found.

The first possible benefit is the increase in productivity. Several studies did indeed find this increase.

There appear to be differences between the results of these studies. There are four possible reasons for these differences.

The first reason is the fact that not all employees were working at home voluntarily. If teleworking is allowed on a voluntary basis, only employees who feel to benefit from

teleworking will choose this option. This might lead to an increase in motivation, causing productivity to rise.

The second reason for the differences could be the way in which the data was retrieved. Some studies were conducted by holding a questionnaire and other studies were done by performing a case study at a company. The results of the studies were not the same, even though the data was retrieved in the same way. The differences between the results of the studies therefore don’t seem to depend on the way the data was retrieved.

The third reason for the different outcomes of the studies, could be the characteristics of the tasks that were performed by employees. The studies have shown that the

characteristics of the tasks seem to influence the change in productivity due to teleworking. The fourth reason for the differences between the studies could be the characteristics of the employees. If teleworkers had to get permission to telework, the company would only allow employees with certain characteristics to work at home. Therefore it could be stated that an increase in productivity will only occur for certain employees.

The second possible benefit is an increase in working hours.

According to these studies an increase in working time seems a clear conclusion. Even though in some studies the data was retrieved from a questionnaire and in some studies a case study was performed, all found an increase in working time.

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working at home voluntarily and the characteristics of the tasks were also quite similar. In order to conclude that teleworking will cause an increase in working time, more studies have to be performed. These studies should differ in some aspects to get a clear result.

The third possible benefit is a reduction in costs for the company. From the studies a reduction in costs cannot be concluded. The studies show some different results. There are three possible reasons for the difference.

The first reason concerns the aspect of employees working at home voluntarily or not. A company could indeed experience a reduction in costs due to teleworking, if the employees are working at home voluntarily.

The way the results were obtained, could be a second reason. The case study and company statistics which were investigated, showed a decrease in costs. The studies based on a questionnaire, showed that managers did not feel a decrease in costs as a result of

teleworking.

The third reason could be the characteristics of the tasks. The studies that involved employees who were operating in the information sector, showed a decrease in costs. The study in which a wide range of employees were investigated, showed no clear result in the change of costs. It can be stated that a reduction in costs will not occur in every sector.

In addition to these three benefits, some disadvantages were found. The employees could experience a feeling of isolation or detachment from the company, when working at home.

These disadvantages for employees also affect the employer in some way. To resolve the feeling of isolation and detachment, both employees and managers would need training. Another possible solution could be an increase in human resource management. Both the increase in training and the increase in human resource management will cost the company money.

Even though there appear to be benefits from teleworking, some remarks have to be made. In all studies used, the samples consisted of less than hundred employees. These samples are small and therefore may not be sufficient to draw a clear conclusion. In future research larger samples should be used.

In this study only several previous studies have been compared. To conclude if the benefits hold, more studies have to be compared. However these studies still have to be performed.

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Another problem that has to be accounted for is the composition of the kind of people that mostly work at home. These employees could for example all have one aspect in

common, like their age or some specific skills. If this is the case, it could be that the

differences found between home workers and workers at the office would not be exclusively due to the different location.

Furthermore the way productivity is measured, proposes another problem. In the previously mentioned studies, no exclusive measures were found; different studies showed different measures. In future studies it would be recommended to measure productivity on empirical numbers.

The last problem is the generalization of the research. Since the studies were not done on a large scale, this could mean that the benefits found do not benefit all companies. The benefits might be firm specific.

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The benefits of working at home