Alternative work arrangements that offer flexibility are beneficial to both employers and employees. Work arrangements that cater to the varied needs of employees boost employee recruitment, productivity and retention, and ultimately enhance the company’s bottom line. Chubb Group of Insurance Cos. found this out with its innovative paid time-off and snowy day child-care programs, which it added to other programs such as flextime, short work weeks, job sharing and telecommuting.
With programs to suit different needs, Chubb’s employees are better able to balance work and family lives, which will redound to maximum return on investment for the company. Full Text: COPYRIGHT 1996 Society for Human Resource Management A paid time-off bank and a snowy day child-care program have helped improve productivity and employee retention at Chubb & Son Inc. Innovative companies are trying to help employees maintain control of their lives in today’s increasingly demanding work environment. Cutting-edge alternative work arrangements are intended to give employees the flexibility they need to balance work and family responsibilities.
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But even the best developed programs won’t be successful unless company managers believe they’ll still be able to supervise their staffs and that these efforts will help the company meet its goals, improve productivity, and increase employee retention and customer satisfaction. The key to making new human resource initiatives work, particularly those that break established patterns for manager-employee relationships, is developing programs that satisfy both employee and senior management concerns. At the Chubb Group of Insurance Companies, a 1991 work-and- family needs analysis determined that of 7,800 U.
S. employees, 60 percent were in dual-career families. About 50 percent had child- or eldercare responsibilities and another 20 percent anticipated having such responsibilities within three years. Almost one-third of employees who left the company thought their decision would help them balance their work and family lives. The analysis raised concerns about Chubb’s ability to recruit and retain high-performing employees and thereby continue to progress toward its goal of being an employer of choice. The loss of key staff members may impede customer relationships and continuity.
Recruiting, training and developing new hires results in significant costs, as does the inefficiency and loss of critical skills created by an employee’s departure. It costs 97 percent of salary to replace the average insurance industry employee. In the case of exempt employees, the average replacement cost is 150 percent of salary. On the basis of this data, it cost Chubb more than $3 million to replace the 50 exempt employees who left the company in 1992 and 1993 for child-care reasons. Turnover statistics, however, don’t tell the whole story.
When unhappy employees remain with the company, they are less productive and likely to be absent more often. The analysis showed that 47 percent of workers took off an average of eight days per year to attend to dependent-care responsibilities. Total salary expenses for this number of workers equals more than $500,000 per day. Imagine the value of the productivity Chubb would gain if these workers were in the office just one more day per year. Productivity is also lost when employees are distracted from their work. Employees can spend hours or even days on the phone making arrangements with dependent-care providers.
Chubb’s response was to replace the one-size-fits-all approach with a variety of alternative work arrangements to suit differing needs of employees. We established flextime, short work weeks, job sharing and telecommuting programs. In 1994, we re-evaluated the options by conducting focus groups at 14 offices around the country. We found that employees were looking for even more flexibility. Chubb introduced two more programs: paid time-off (PTO) and a snowy day child-care program. Along with telecommuting, these new programs are among the most innovative flexible arrangements offered.
They’re also the ones that raised the most managers’ eyebrows when they were being developed. As each program has been rolled out, HR has worked to help managers become more comfortable. By giving employees options and managers the right tools, we anticipate that these new programs will achieve the objective of improving employee recruitment, retention, productivity and, ultimately, the company’s bottom line. PAID TIME OFF Our new paid time-off policy, or PTO, places into an annual account all of an employee’s paid days off.
These include vacation, sick time not covered under Chubb’s medical absence policy (which covers serious illnesses, short- and long-term disabilities and work-related injuries); and personal days taken for family illnesses, inclement weather or other reasons. PTO days may be taken any time during the calendar year in increments as small as a half-day and as large as four weeks. However, employees usually must secure their supervisor’s approval before taking one or two weeks of PTO days in consecutive weekly periods.
A maximum of 10 days may be carried over into a reserve account for future use, but the number of days in the account may never exceed 10. On the surface, the PTO policy appears noncontroversial. However, the concept has caused managers to raise more red flags than perhaps any other flexible arrangement. Unlike many other flexible programs, PTO is automatically provided to full-time employees and part-timers working 20 or more hours per week. Managers are not asked to approve employee participation. Some managers were concerned that the program would provide employees five extra days off a year.
In the past, employees received five personal absence days a year, but managers expected these days to be used sparingly, if at all. On average, employees took off only three of the days. But now that first-year results have been calculated, managers’ fears are beginning to subside. A recently completed study of a random sample of several hundred employees at several branch offices compared employees’ time off last year and this year. The study found that the group took off a total of 12,120 days in the last year of the old, less-flexible system compared with a projected 10,549 days this year.
Providing managers with this sort of information helps win their support for a flexible program. So does putting in place the proper controls. For example, employees must determine how their workloads will be managed while they’re away. In the event of scheduling conflicts, company policy provides for resort to seniority in most cases. SNOWY DAY CHILD CARE Our snowy day child-care pilot is now ready to be tested at Chubb’s Warren, N. J. , headquarters. Like PTO, it grew out of the 1994 focus groups, in which employees from around the country were asked what causes them to miss time from work or be less productive.
The program will allow parents to bring children ages 5 to 12 to work when schools are closed. Caregivers will supervise the children from 8 a. m. to 5 p. m. in training and conference rooms. Activities will include arts and crafts, reading, physical play in the company’s fitness center and board games. There are virtually no costs to the company. Parents pay a one-time registration fee of $25, plus $15 per day per child. The daily fee includes morning and afternoon snacks. While the pilot was being developed, managers expressed several concerns.
Potential fears that having children on-site might distract parents from their work were eased by assuring managers and parents that children would be closely supervised by trained caregivers. In addition, the schedule is designed so that parents may see their children at lunchtime. Finally, some managers were worried that the program would encourage employees to drive to work – along with their children – when road conditions are hazardous. However, schools may be closed for other reasons, such as heating problems. If an employee deems it dangerous to drive, he or she may take a day off under the PTO program.
TELECOMMUTING Telecommuting, which enables an employee to regularly work from home or at an alternative worksite for part of the week, is perhaps one of the most complex flexible work arrangements. Managers are concerned about their ability to monitor work and communicate with employees. They also must contend with the costs of providing telecommuters with computer equipment, fax machines and telephone lines, in addition to absorbing ongoing telecommunications charges. But by crafting and communicating a basic set of policies and procedures, the human resource department has been able to allay some managers’ fears.
First, we stress that telecommuting is not for everyone, and that managers must approve each request. The arrangement makes sense only when the right positions, employees and managers are involved. Typically, the most suitable positions involve independent projects that require uninterrupted periods of concentration and few unplanned, face-to-face meetings. Employees must have a record of solid experience and performance. They should be self-motivated and disciplined and possess strong communication and organization skills.
They also must be able to set up a dedicated office in their home, away from household activities yet quiet, well-lit and safe. Take the example of one of our company’s loss control consultants. She began telecommuting one day a week to spend more time with her new baby. The arrangement reduced her commuting time between Chubb and a research library near her home. Since much of her time at Chubb is spent “putting out fires,” her home office provides her with the peace and quiet she needs to analyze volumes of research and put together detailed proposals for her clients.
Since the consultant began telecommuting in 1993, her manager has seen a marked increase in her productivity. He subsequently approved four other employees’ requests to telecommute up to three days a week. The experiences have been so successful that the manager is working to equip field staff with laptops, allowing them to work out of their homes and on the road for up to four days a week. Supervisors of telecommuters must be experienced. Managing from a distance is more complex than managing in-office staff. Without the manager’s support, the trust and communication so essential to successful elecommuting is lost. To enable a smooth transition, work flows should be analyzed to determine the best days for telecommuters to work from company facilities. Co- workers and customers should be informed about telecommuters’ new schedules and locations. Telecommuters should provide managers with specific schedules and track their work hours and the rate at which they complete assignments. To facilitate communications, managers may require that employees maintain certain core hours during which they are accessible by telephone or e- mail.
Managers also are concerned about the costs of providing telecommuters with PCs and software. But in some cases, employees may be able to use their own equipment. If they are working primarily from home, they may be able to share or borrow a workstation when they’re at the office. And while telecommuting can increase equipment costs, managers may be able to reduce the cost of office rentals, which run thousands of dollars per year per Chubb employee. In offices that are tight on space, the telecommuter’s office space may be reduced or the telecommuter may be able to share a cubicle with another employee.
CONTINUED SUPPORT AND FLEXIBILITY Even after flexible work programs are launched, human resource professionals must continue to monitor their use and appropriateness and refine them as necessary. Our extensive 1994 work family needs analysis, for example, found that many employees still perceive that there are negative ramifications to requesting or using any type of flexible work arrangement. Employees fear that they’ll be blocked from promotions or will be assigned all the undesirable projects.
As a result, HR developed a series of programs and tools to help managers and employees adjust to the flexible arrangements. We made it clear that the effective use of alternative work arrangements is one of the evaluation criteria on managers’ performance reviews. We also provided all managers with a “Guidebook for Managing Alternative Work Arrangements,” which explains how they can analyze, manage, communicate and monitor these situations. The guide refers managers to information services, books and videos, as well as other sources within and outside the company, for more information on flexible arrangements.
It also contains several success stories that show how productivity and retention improve when employees are better able to manage their personal affairs and it encourages managers and employees to talk to those who have had positive experiences. No matter how well-planned, flexible work arrangements must be continually re-evaluated at both the individual and corporate level. When an individual’s needs change, the arrangement may have to be modified. For example, the loss control consultant reduced the number of days she telecommuted from two to one after her child was able to enter a formal day-care program.
Likewise, when business requirements change, a manager must be able to modify an employee’s arrangement. Programs also must be created or altered company-wide in response to emerging business issues, new employment laws and changes in competitors’ work arrangements. From Chubb’s experience, it’s clear that companies large and small, must recognize the relationship between employees’ personal lives and their careers. Flexible work arrangements are helping Chubb’s high-performing workers achieve the proper balance. In turn, the company anticipates a maximum return on the substantial investments made in its employees.
Improving productivity, employee retention and customer satisfaction simply makes business sense. For a bibliography of sources on the benefits of on-site child care see the HRMagazine section of SHRM’s Home Page on the World Wide Web (http://www. shrm. org). Baxter W. Graham is senior vice president and managing director of human resources worldwide for Chubb & Son Inc. The Warren, N. J. -based subsidiary of The Chubb Corp. manages operations of the Chubb Group of Insurance Companies, a multi-billion dollar property and casualty insurance company. http://www. benefits. org/interface/benefit/eap2. tm Employee Assistance Program Cost Benefit Analysis Disclaimer: The following information was developed in 1987 and updated where possible as recent as 2000. Please obtain current stats from your employee benefit consultant. Cost The cost of an Employee Assistance Program is often based on utilization. If 5% of employees used the program for an average duration of 7 visits at $120 each, the monthly cost would be $3. 50 per employee. Benefits Competitive Advantage The reduction of stress will enable your staff to be more courteous, creative, and able to concentrate longer.
This will give you a significant advantage in today’s competitive and rapidly changing market. Absenteeism 15% of the work-force causes 90% of absenteeism. Emotional factors account for 61% of time lost through absenteeism. Statistics Canada reports that the typical employee is absent 8 days per year. Their studies also show that absenteeism costs the employer 1. 75% of an absent employee’s wages. Companies spend 5. 6% of their payroll on absenteeism. Productivity The Canadian Mental Health Association estimates that 10% to 15% of employees have severe personal problems. The work performance of these employees is at least 35% below normal.
The reduced productivity of troubled employees costs companies 3. 5% to 5% of payroll. An employee with problems disrupts the working environment of others. The effects of one employee’s problems on the productivity of co-workers are considerable, but difficult to measure. Turnover Only 15% of terminations are the result of employees’ inability to perform their job function. Personal and interpersonal factors account for 65% to 80% of all terminations. The EAP helps employees resolve personal and interpersonal problems before termination is necessary. Disability Stress contributes to 85% of accidents.
An EAP will reduce the stress of your workforce This will reduce the claims and rates of your extended health care and short term disability plans. Your long term disability rates should also be reduced as a result of the lower risk of your employees. Others Personal problems contribute significantly to tardiness, theft, arson and fraud. Stress adversely effects physical health and quality of life. Analysis If 5% of your employees used the EAP the potential monetary savings would be 3. 45% of payroll for reduced absenteeism and improved productivity from problem employees. The savings from these areas alone justify the cost of 0. 4% of payroll. ———————– usage guide ref: name: org/division/dept: position: location/based at: appraiser: appraisal venue: appraisal date & time: year or period covered: time in present position: length of service: A1 State your understanding of your main duties and responsibilities. 5. What elements of your job interest you the most, and least? 4. What elements of your job do you find most difficult? 3. What do you like and dislike about working for this organisation? 2. What do you consider to be your most important achievements of the past year? 1. Has the past year been good/bad/satisfactory or otherwise for you, and why?
A3 List the objectives you set out to achieve in the past 12 months (or the period covered by this appraisal) with the measures or standards agreed – against each comment on achievement or otherwise, with reasons where appropriate. Score the performance against each objective (1-3 = poor, 4-6 = satisfactory, 7-9 = good, 10 = excellent): objectivemeasure/standardscorecomment 9. What sort of training/experiences would benefit you in the next year? Not just job-skills – also your natural strengths and personal passions you’d like to develop – you and your work can benefit from these. 8.
What kind of work or job would you like to be doing in one/two/five years time? 7. What action could be taken to improve your performance in your current position by you, and your boss? 6. What do you consider to be your most important aims and tasks in the next year? others (for current or new role): 18. corporate responsibility and ethics 1. commercial judgement 2. product/technical knowledge 3. time management 4. planning, budgeting and forecasting 5. reporting and administration 6. communication skills 7. delegation skills 8. IT/equipment/machinery skills 9. meeting deadlines/commitments 0. creativity 11. problem-solving and decision-making 12. team-working and developing others 13. energy, determination and work-rate 14. steadiness under pressure 15. leadership and integrity 16. adaptability, flexibility, and mobility 17. personal appearance and image A4 Score your own capability or knowledge in the following areas in terms of your current role requirements (1-3 = poor, 4-6 = satisfactory, 7-9 = good, 10 = excellent). If appropriate bring evidence with you to the appraisal to support your assessment. The second section can be used if working towards new role requirements.
A5 In light of your current capabilities, your performance against past objectives, and your future personal growth and/or job aspirations, what activities and tasks would you like to focus on during the next year. Again, also think of development and experiences outside of job skills – related to personal aims, fulfilment, passions. B2 Review the completed discussion points in A2, and note the points of and action. B1 Describe the purpose of the appraisee’s job. Discuss and compare with self-appraisal entry in A1. Clarify job purpose and priorities where necessary.
B3 List the objectives that the appraisee set out to achieve in the past 12 months (or the period covered by this appraisal – typically these objectives will have been carried forward from the previous appraisal record) with the measures or standards agreed – against each comment on achievement or otherwise, with reasons where appropriate. Score the performance against each objective (1-3 = poor, 4-6 = satisfactory, 7-9 = good, 10 = excellent). Compare with the self-appraisal in A3. Discuss and note points of significance, particularly training and development needs and wishes, which should be noted in B6. bjectivemeasure/standard self-score/app’r scorecomment B4 Score the appraisee’s capability or knowledge in the following areas in terms of their current (and if applicable, next) role requirements (1-3 = poor, 4-6 = satisfactory, 7-9 = good, 10 = excellent). If appropriate provide evidence to support your assessment. The second section can be used for other criteria or if the appraisee is working towards new role requirements. Compare scores with the self-appraisal in B4. Discuss and note agreed points training/development needs and wishes (to B6). others (for current or new role): 8. corporate responsibility and ethics 1. commercial judgement 2. product/technical knowledge 3. time management 4. planning, budgeting and forecasting 5. reporting and administration 6. communication skills 7. delegation skills 8. IT/equipment/machinery skills 9. meeting deadlines/commitments 10. creativity 11. problem-solving and decision-making 12. team-working and developing others 13. energy, determination and work-rate 14. steadiness under pressure 15. leadership and integrity 16. adaptability, flexibility, and mobility 17. personal appearance and image
B5 Discuss and agree the appraisee’s career direction options and wishes, and readiness for promotion, and compare with and discuss the self-appraisal entry in A5. (Some people do not wish for promotion, but everyone is capable of, and generally benefits from, personal development – development and growth should be available to all, not just people seeking promotion). Note the agreed development aim(s): B7 Discuss and agree the specific objectives that will enable the appraisee to reach competence and to meet required performance in current job, if appropriate taking account of the coming year’s plans, budgets, targets etc. and that will enable the appraisee to move towards, or achieve readiness for, the next job level/type, or if no particular next role is identified or sought, to achieve the desired personal growth or experience. These objectives must adhere to the SMARTER rules – specific, measurable, agreed, realistic, time-bound, ethical, recorded. B6 Discuss and agree the skills, capabilities and experience required for competence in current role, and if appropriate, for readiness to progress to the next role or roles.
Refer to actions arising from B3 and the skill-set in B4, in order to accurately identify all development areas, whether for competence at current level or readiness to progress to next job level/type. ) Note the agreed development areas: Grade/recommendation/summary as applicable: Signed and dated by appraisee: and by appraiser: B9 Other issues (to be covered separately outside of this appraisal – continue on a separate sheet if necessary): Refer to the guidance notes. Personal development and support must be offered to all employees, irrespective of age, gender, race, disability, etc. and not just to those seeking promotion. Development is not restricted to job skills – it includes ‘whole person’. Use your imagination. Job skills training isn’t restricted to courses. Think about coaching, mentoring (by and of the appraisee), secondment to another role, holiday job cover, shadowing, distance-learning, e-learning, books, videos, attending meetings and workshops, workbooks, manuals and guides, researching, giving presentations; anything relevant, helpful and agreed to help the person develop. Avoid committing to training expenditure before suitable approval or availability has been confirmed.
Understand development options and procedures before conducting the appraisal. Develop the whole person. B8 Discuss and agree (as far as is possible, given budgetary, availability and authorisation considerations) the training and development support to be given to help the appraisee meet the agreed objectives above. © alan chapman 2001-06. Guide to use and more personal development materials are at www. businessballs. com. Not to be sold or published. Sole risk with user. Author accepts no liability. Distribution of copies/confidentiality/accessibility details: