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Flexible work arrangements: Balancing employee preferences with organizational needs

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In the rapidly evolving modern workplace, the demand for flexible work arrangements has become a prominent feature of both employee expectations and employer tools for strategic workforce management. As businesses navigate the delicate balance between attracting top talent and maintaining organizational productivity, human resources professionals are at the crest of this wave of change.

In this article, we will explore the growing demand for a flexible work environment, with insights for business owners and HR professionals who seek to maximize the value of flexible work for both employer and employee.

A Brief History of Flexible Work Arrangements

Flexible work has been around for a long time. In the early 1900s, Henry Ford determined that a 40-hour week resulted in better work-life balance and raised worker productivity.

After 1916, Ford began to decentralize production by moving work out of Detroit and into remote factory sites. Most of his potential rural team members were already employed as farmers, and although they were very busy during planting and harvest time, they otherwise had substantial periods of minimal productivity that both they and Ford could utilize.

Many of these employees worked factory shifts while keeping up a working farm, sometimes even on land provided by the Ford Motor Company.  These flex time innovations, along with Ford’s top wages, virtually eliminated turnover, enabling many workers to become customers and buy one of the company’s cars. Not surprisingly, Ford started crushing the competition.

In the 1960s, German companies, in order to scale up male-dominated industries, took the lead in drawing female homemakers into the workforce by offering “flexiwork”, which accommodated child care at home. In the 1970s, a NASA engineer, who happened to be working remotely from home, coined the term “telecommuting”.

A serious senior businesswoman gestures as she facilitates a staff meeting while working from home. She is talking with her colleagues during a video conference.

Advances Driven by Technology

Many advances in flexible work arrangements were enabled by technology. Telephones made it possible to connect employees with customers or team members without physical proximity. Automobiles made it possible for workers to travel daily to an office or factory, rather than living within walking distance.

The most powerful enabling technology was the eventual combination of a computer, modem, telephone and video camera into an affordable, home-based production and communication system, which made remote work fully effective.

Throughout the 2000s, flexible work arrangements kept up a steady advance, guided by innovative HR practices in organizations willing to offer remote work or flex time as an incentive to attract top talent or to accommodate work teams that were widely dispersed by offshoring.

Data, People or Objects

All jobs involve working with one of three things: data, people or objects. Data jobs were the first roles that became suitable for remote work since data and images could be delivered using the earliest dial-up network technology.

Accountants, programmers, CAD designers, content writers and graphic artists could send and receive data to the headquarters office from any location. Companies even found that data workers were more productive at home, where they could concentrate without the distractions of office work. Recruiters also found that remote work was an ideal solution for talented workers who were unable to commute for reasons like physical disabilities or impaired vision.

As network speeds and video technology improved, people jobs were the next to leave the office, as salespeople, tutors, financial analysts, support technicians and customer service representatives could both see and talk with customers and team members from any location.

Jobs With No Way to Phone In

The only forms of work that remain inaccessible to remote employment are those involving the manipulation of objects. Until there are significant advances in robotics and artificial intelligence, there will be no way to phone in if you are a firefighter, carpenter, package delivery driver, tree trimmer, plumber, trucker or police officer.

However, any of the aforementioned jobs can be enhanced by other flexible work arrangement tools that can help accommodate employee preferences for flex time, a compressed work week, part-time work, flex location, job sharing, phased retirement and other options available to the HR professional.

The Covid-19 Pandemic

By 2020, the stage was set for the flex work explosion that would follow the Covid-19 pandemic. Many states enacted stay-at-home orders and allowed only essential workers to gather with team members at their workplaces. Once restrictions were lifted, remote work and other flexible work arrangements were familiar to most organizations and were now part of a new normal.

Business owners who were skeptical of the whole idea of remote work received a practical demonstration of how effective flexible work arrangements can be, with reduced operating costs and minimal loss of productivity.

Likewise, employees responded to the enhanced work-life balance of working from home, as they were able to concentrate without distractions and to avoid the hassle and expense of a long commute. When the pandemic was over, very few of these employees were willing to go back to the traditional in-office way of working.

Examples of Flexible Working Arrangements

Flexible Schedules

One of the simplest and most effective flexible work arrangements is what German companies in the 1960s referred to as “flexiwork,” or working outside of traditional working hours. An employee who needs afternoons free can simply start and leave work earlier. Some employers also use flexible schedules as a form of compensation, rewarding a worker with paid time off for a boost in employee satisfaction, rather than a bonus on top of their regular pay.

Flexible Location

Call it remote work, telecommuting or working in the cloud, flexible locations can be arranged in many ways to suit the objectives of both the employer and employee. Flexible location may be 100 percent remote or a hybrid arrangement with planned office days for check-ins or team collaboration. Many organizations today don’t care where the worker is located, so long as their output is satisfactory.

Some companies are skeptical of remote work, requiring more office days or reverting entirely to the in-office model. Not surprisingly, most employees prefer to work remotely. In fact, according to Forbes, 98 percent of workers want to work remotely at least some of the time.

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Reduced Hours

There are many reasons why a valuable employee may not be able to work 40 hours. Preference for reduced or flexible working hours may have to do with a medical condition, caregiver responsibilities, family demands or starting a new business.

When demand is shifting, it may make sense to bring a worker in only for peak hours or special projects. Of course, reduced hours have consequences regarding eligibility for insurance and other benefits, so HR departments must ensure they are compliant before establishing reduced-hour arrangements.

Annualized Hours

In some industries, it may suit both employer and employee to design a flexible work arrangement based on annualized hours. This is often used in industries with fluctuations in labor requirements due to seasonal variations in demand.

An annualized hours employment contract may offer the worker fixed hours and pay for the year, with more hours during the peak season and reduced pay during the slack period.

Compressed Workweek

A compressed workweek allows the worker to earn 40 hours of pay based on four 10-hour days rather than five 8-hour days. This type of schedule offers the worker one extra day off, boosting employee satisfaction with one less day of commuting headaches and costs for a healthier work-life balance, while the company can rebalance production and save one day of operating costs each week.

Leave of Absence

A leave of absence, sometimes referred to as a sabbatical, is an extended period away from work, for which the employee does not lose their employment status. Organizations may agree to paid or unpaid leave of absence for a family emergency, medical treatment, higher education or extended travel.

Depending on the employer, an employee may be paid during a leave of absence or sabbatical and may be allowed the leave in addition to their earned vacation time.

Work Sharing

When a company is experiencing reduced demand for its products or services and the company does not wish to lay off employees, one solution is work sharing. Under this flexible work arrangement, the company maintains its workforce without layoffs and divides the work between all employees.

For example, the company might announce that during a period of limited production, the factory will only run four-hour shifts. Based on their reduced hours, work-sharing employees would receive less pay, but this may be preferable to being laid off.

Job Sharing

Like work sharing, the concept of job sharing is based on two employees each working a half shift. This may be done to accommodate two employees who want a part-time position while still giving the employer the output of one full-time employee.

It is important to document that a sharing arrangement is not being established solely to avoid insurance, taxation or other employment regulations which otherwise apply only to full-time workers.

Phased Retirement

Many organizations have valued senior workers who are libraries of institutional knowledge. Although these workers have earned their retirement, they are often eager to keep contributing on a less demanding level and the company is often eager to keep the value of their mentoring and counsel.

Phased retirement is the solution, a flexible work arrangement in which the senior worker can agree with the company on a schedule of gradually reduced responsibilities and hours over several months or years as the target date for retirement approaches.

Benefits of Flexible Work Arrangements for Employees

Greater Work-Life Balance

Among the flexible work benefits most prized by workers is the freedom to care for young children, attend a function with school-age children or accompany an elderly parent to the doctor. As far as most employees are concerned, there is no going back to the traditional attendance policy of “no show, no dough”.

This enabling of greater work-life balance helps employees meet personal obligations and fulfill family requirements. It also empowers workers to take care of their own needs, to spend the afternoon at the gym to de-stress or to be there when the FedEx man comes with an important delivery. Work-life balance is one of the essentials of employee satisfaction.

Autonomy and Control

Flexible work arrangements give the employee a strong sense of empowerment and autonomy, regarding almost every aspect of the job. So long as job requirements are met, the employee may choose when to begin work, when to take breaks and when to stop. This sense of personal control helps avoid burnout, increases morale and boosts job satisfaction.

Avoiding the Cost of Being at Work

The list of cost savings for remote workers is impressive. First up is avoiding the cost of commuting, with fuel, parking and vehicle maintenance required for a car or fares required to ride the train or subway.

Next is wardrobe cost. Office wear need not be expensive, but it does have a renewal cost based on changes in seasons, styles and ordinary wear and tear. Remote workers need to wear something sharp when they are going to be in a Zoom meeting, but otherwise, a t-shirt is just fine.

With inflation running high, the cost of a daily lunch downtown or just buying something for the microwave at work can add up fast. Eating whatever is in the fridge while working from home can offer significant cost savings.

Avoiding the Cost of Not Being at Home

Small children need babysitting. School-age children need parental support for school activities. Families with elders may need daily care and transport for health care. When the remote worker is at home, they can directly handle at least some of these responsibilities. And, for families in which two partners both have flexible work arrangements, there is the opportunity to coordinate schedules for significant cost savings by avoiding paid child or elder care altogether.

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Improved Attendance

Genetic research from the National Institutes of Health (NIH) shows that some of us are literally “morning people”, while others may do their best work as night owls. With a schedule that suits an individual’s work pace and circadian rhythms, schedules can be adjusted to help employees feel better and produce better results.

Better rest and work-life balance also translate into fewer sick days, as well as fewer tardy arrivals at meetings. One of the primary benefits of remote work is that a worker will never be late because the train ran behind or they were stuck in traffic.

Finally, when an employee is not feeling their best, they are far less likely to call in sick for a day of remote work, because they are already at home with all its comforts.

Enhanced Workspace

In a work-from-home setting, a remote worker’s space is theirs to customize for maximum comfort and productivity. The desk can be standing or seated. The chair can be firm or plush. The thermostat stays where they prefer.

The same goes for artwork, music and lighting. Giving remote workers the autonomy to refine their own workspace goes a long way toward fostering reduced work stress and enhanced employee satisfaction.

Focus on Work Output

One of the under-appreciated aspects of a flexible work environment is that it eliminates many forms of bias that may arise in an in-person workplace. With most of the focus on the work output, rather than the age, race, gender, appearance or physical abilities of the employee, the remote worker is more likely to be evaluated based solely on the quality of work they deliver.

Increased Job Satisfaction

Taken together, the benefits of flexible work arrangements add up to job satisfaction because they go much further to balance the needs of the worker with the needs of the organization. Flex time may be key to getting the kids to school before starting work. A compressed workweek can accommodate a worker who has a weekly dialysis appointment or a family responsibility that requires their time each week.

Reduced hours can be the solution for a worker who needs an improved work-life balance, but does not want to quit. Annualized hours can help retain a top performer in a business that has seasonal fluctuations in demand.

Job sharing can permit two qualified part-time workers to remain employed, rather than leaving the workforce to free up time for personal commitments. Work sharing can enable companies to avoid layoffs by dividing the remaining work between all employees.

A sabbatical or extended leave can enable a valuable worker to pursue a family priority or finish an advanced degree with the option to return to the same job. Phased retirement can help an organization retain the skills of a senior worker who does not want a leading role, but still has great value to contribute.

All these options are based on one principle: the organization can greatly enhance the job satisfaction experienced by the employee by adjusting the terms of work in a flexible win-win arrangement.

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Benefits of Flexible Work Arrangements for Employers

By embracing flexible work arrangements, employers can look forward to powerful recruiting incentives to attract top talent, improved employee morale, enhanced retention, greater employee engagement, improved productivity, reduced office expense, resilience in responding to natural disasters or workplace emergencies and an overall reduced energy footprint.

Disadvantages of Flexible Work Arrangements

Of course, there are challenges that come with flexible work arrangements. Remote workers have limited opportunities to communicate with colleagues. They may feel out of the loop and struggle with employee engagement. Solo workers can be vulnerable to overwork and social isolation, which can lead to mental health effects such as depression and reduced productivity.

Other pitfalls include challenges to data security, proximity bias toward office-based employees, methods of communication between distant teams, pushback from leaders who simply do not believe in flexible work arrangements and office workers who resent special arrangements for flex workers.

Flexible Work Arrangements and Workplace Compliance

HR teams must also be mindful of the need to ensure that wages, hours and other conditions of employment are not offered to flex workers in any manner that is discriminatory. Actual work hours must be tracked for compliance with the Fair Labor Standards Act.

Remote work may make it difficult to document compensable working time, as well as dealing with unauthorized off-the-clock work or unauthorized reported work, as well as obligations for overtime pay.

The Affordable Care Act (ACA) requires large employers to offer health insurance to employees who work more than 30 hours per week and the Employee Retirement Income Security Act (ERISA) requires that any employee who works more than 1000 hours in 12 months may participate in any company retirement or profit-sharing plan. Eligibility for many other benefits may be elective under federal law but mandated by state law. HR teams must verify compliance with the special circumstances presented by remote, part-time and flex-time workers.

Flexible work arrangements also present special challenges for workers’ compensation, OSHA regulations, disability accommodations and clarification of independent contractor status. HR teams should clarify each situation with the company’s employment law advisors.

A Seismic Shift

As the world of work is transformed by artificial intelligence, robotics and other emerging technologies, the demand for a flexible work environment will continue to drive a seismic shift in how employees engage with work. Large and small enterprises must face new challenges to align these preferences with organizational needs and maintain productivity while fostering a positive, resilient culture.

By understanding the needs of each employee, implementing effective policies and leveraging new technology, business owners and HR professionals can successfully navigate the shifting landscape of flexible work arrangements, creating a multi-faceted workplace that meets the needs of the workforce while driving the strategic goals of the business.

Ready to transform your workplace with flexible work arrangements that help drive success? Connect with our Human Resources Services team today and talk to an HR professional who cares.

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