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Making the Virtual Office a Reality

September 1, 1994
It's 2 o'clock on a Wednesday afternoon. Inside the dining room of Chiat Day Mojo's Venice, California, offices, Nancy Alley, manager of HR, is downing a sandwich and soda while wading through phone and E-mail messages. In front of her a computer—equipped with a fax-modem—is plugged into a special port on the dining table. The contents of her briefcase are spread on the table. As she sifts through a stack of paperwork and types responses into the computer, she periodically picks up a cordless phone and places a call to a colleague or associate. As she talks, she sometimes wanders across the room.

To be sure, this isn't your ordinary corporate environment. Alley doesn't have a permanent desk or workspace, nor her own telephone. When she enters the ad agency's building, she checks out a portable Macintosh computer and a cordless phone and heads off to whatever nook or cranny she chooses. It might be the company library, or a common area under a bright window. It could even be the dining room or Student Union, which houses punching bags, televisions and a pool table. Wherever she goes, a concierge forwards mail and phone pages to her and a computer routes calls, faxes and E-mail messages to her assigned extension. She simply logs onto the firm's computer system and accesses her security-protected files.

"I'm not tethered to a specific work area; I'm not forced to function in any predefined way," says Alley, who spends mornings, and even sometimes an entire day, connected from home via sophisticated voicemail and E-mail systems, as well as a pager. "My work is processand task-oriented. As long as I get everything done, that's what counts. Ultimately, my productivity is greater and my job-satisfaction level is higher. And for somebody trying to get in touch with me, it's seamless. Nobody can tell that I might be in my car or sitting at home reading a stack of resumes in my pajamas. The call gets forwarded to me wherever I'm working."

You've just entered the vast frontier of the virtual office—a universe in which leading-edge technology and new concepts redefine work and job functions by enabling employees to work from virtually anywhere. The concept allows a growing number of companies to alter their workplaces in ways never considered just a few years ago. They're scrapping assigned desks and conventional office space to create a bold new world where employees telecommute, function on a mobile basis or use satellite offices or communal work areas that are free of assigned spaces with personal paraphernalia.

IBM, AT&T, Travelers Corporation, Pacific Bell, Panasonic, Apple Computer and J.C. Penney are among the firms embracing the virtual-office concept. But they're just a few. The percentage of U.S. companies that have work-at-home programs alone has more than doubled in the past five years, from 7% in 1988 to 18% today. In fact, New York-based Link Resources, which tracks telecommuting and virtual-office trends, has found that 7.6 million Americans now telecommute—a figure that's expected to swell to 25 million by the year 2000. And if you add mobile workers—those who use their cars, client offices, hotels and satellite work areas to get the job done—there's an estimated 1 million more virtual workers.

Both companies and employees are discovering the benefits of virtual arrangements. Businesses that successfully incorporate them are able to slash real-estate costs and adhere to stringent air-quality regulations by curtailing traffic and commuters. They're also finding that by being flexible, they're more responsive to customers, while retaining key personnel who otherwise might be lost to a cross-country move or a newborn baby. And employees who successfully embrace the concept are better able to manage their work and personal lives. Left for the most part to work on their own terms, they're often happier, as well as more creative and productive.

Of course, the basic idea of working away from the office is nothing new. But today, high-speed notebook computers, lightning-fast data modems, telephone lines that provide advanced data-transmission capabilities, portable printers and wireless communication are fueling a quiet revolution. "As a society, we're transforming the way we work and what's possible," says Franklin Becker, director of the International Workplace Studies Program at Cornell University and a leading expert on the virtual office. "It's creating tremendous opportunities, but it also is generating a great deal of stress and difficulty. There are tremendous organizational changes required to make it work."

Adds Loree Goffigon, a consultant at Santa Monica, California-based Hellmuth, Obata & Kassabaum (HOK), which helps companies implement alternative office strategies: "As markets have changed—as companies have downsized, streamlined and restructured—many have been forced to explore new ways to support the work effort. The virtual office, or alternative office, is one of the most effective strategies for dealing with these changes."

Of course, the effect of alternative officing on the HR function truly is great. HR must change the way it hires, evaluates employees and terminates them. It must train an existing work force to fit into a new corporate paradigm. There are issues involving benefits, compensation and liability. And, perhaps most importantly, there's the enormous challenge of holding the corporate culture together—even if employees no longer spend time socializing over the watercooler or in face-to-face meetings. Notes Goffigon: "When a company makes a commitment to adopt a virtual-office environment—whether it's shared work-space or basic telecommuting—it takes time for people to acclimate and adjust. If HR can't meet the challenge, and employees don't buy in, then the program is destined to fail."

Virtual offices break down traditional office walls.
Step inside Chiat Day and you quickly see how different an environment the ad agency has created. Gone are the cubicles in which employees used to work. In their place are informal work carrels and open areas where any employee—whether it's Chairman Jay Chiat or an administrative assistant—can set up shop. Teams may assemble and disperse at any given spot, and meetings and conferences happen informally wherever it's convenient. Only a handful of maintenance workers, phone operators and food-services personnel, whose flexibility is limited by their particular jobs, retain any semblance of a private workspace.

Equally significant is the fact that on any given hour of any day, as many as one-third of the salaried work force aren't in the office. Some are likely working at a client's site, others at home or in a hotel room on the road. "The feeling," says Adelaid Horton, the firm's managing director of operations, "is that the employees of Chiat Day are self-starters. To empower the work force, we felt we could dispense with traditional structure and discipline. The work environment was designed around the concept that one's best thinking isn't necessarily done at a desk or in an office. Sometimes, it's done in a conference room with several people. Other times it's done on a ski slope or driving to a client's office. We wanted to eliminate the boundaries about where people are supposed to think. We wanted to create an environment that was stimulating and rich in resources." As such, employees decide on their own where they will work each day, and are judged on work produced rather than on hours put in at the office.

"It takes time for people to acclimate to a virtual-office environment. If HR can't meet the challenge, and employees don't buy in, the program is destined to fail."

Another company that has jumped headfirst into the virtual-office concept is Armonk, New York-based International Business Machine's Midwest division. The regional business launched a virtual-office work model in the spring of 1993 and expects 2,500 of its 4,000 employees—salaried staff from sales, marketing, technical and customer service, including managers—to be mobile by the beginning of 1995. Its road warriors, equipped with IBM Think Pad computers, fax-modems, E-mail, cellular phones and a combination of proprietary and off-the-shelf software, use their cars, client offices and homes as work stations. When they do need to come into an office—usually once or twice a week—they log onto a computer that automatically routes calls and faxes to the desk at which they choose to sit.

So far, the program has allowed Big Blue's Midwest division to reduce real-estate space by nearly 55%, while increasing the ratio of employees to workstations from 4-to-1 to almost 10-to-1. More importantly, it has allowed the company to harness technology that allows employees to better serve customers and has raised the job-satisfaction level of workers. A recent survey indicated that 83% of the region's mobile work force wouldn't want to return to a traditional office environment.

IBM maintains links with the mobile work force in a variety of ways, says John F. Frank, project manager for mobility. All employees access their E-mail and voicemail daily; important messages and policy updates are broadcast regularly into the mailboxes of thousands of workers. When the need for teleconferencing arises, it can put hundreds of employees on the line simultaneously. Typically, the organization's mobile workers link from cars, home offices, hotels, even airplanes.

Virtual workers are only a phone call away.
To be certain, telephony has become a powerful driver in the virtual-office boom. Satellites and high-tech telephone systems, such as ISDN phone lines, allow companies to zap data from one location to another at light speed. Organizations link to their work force and hold virtual meetings using tools such as video-conferencing. Firms grab a strategic edge in the marketplace by providing workers with powerful tools to access information.

Consider Gemini Consulting, a Morristown, New Jersey-based firm that has 1,600 employees spread throughout the United States and beyond. A sophisticated E-mail system allows employees anywhere to access a central bulletin board and data base via a toll-free phone number. Using Macintosh Powerbook computers and modems, they tap into electronic versions of The Associated Press, Reuters and The Wall Street Journal, and obtain late-breaking news and information on clients, key subjects, even executives within client companies. And that's just the beginning. Many of the firm's consultants have Internet addresses, and HR soon will begin training its officeless work force via CD-ROM. It will mail disks to workers, who will learn on their own schedule using machines the firm provides. The bottom line of this technology? Gemini can eliminate the high cost of flying consultants into a central location for training.

"Today, the technology exists to break the chains of traditional thought and the typical way of doing things," says Gordon Stone, senior vice president for Gemini. "It's possible to process information and knowledge in dramatically different ways than in the past." That can mean that instead of one individual or a group handling a project from start to finish, teams can process bits and pieces. They can assemble and disassemble quickly and efficiently.

Some companies, such as San Francisco-based Pacific Bell, have discovered that providing telecommuters with satellite offices can further facilitate efficiency. The telecommunications giant currently has nearly 2,000 managers splitting time between home and any of the company's offices spread throughout California. Those who travel regularly or prefer not to work at home also can drop into dozens of satellite facilities that each are equipped with a handful of workstations. At these centers, they can access proprietary data bases, check E-mail and make phone calls.

Other firms have pushed the telecommuting concept even further. One of them is Great Plains Software, a Fargo, North Dakota-based company that produces and markets PC-based accounting programs. Despite its remote—some might say undesirable—location, the company retains top talent by being flexible and innovative. Some of its high-level managers live and work in such places as Montana and New Jersey. Even its local employees may work at home a few days a week.

Lynne Stockstad's situation at Great Plains demonstrates how a program that allows for flexible work sites can benefit both employer and worker. The competitive-research specialist had spent two years at Great Plains when her husband decided to attend chiropractic college in Davenport, Iowa. At most firms, that would have prompted Stockstad to resign—something that also would have cost the company an essential employee. Instead, Stockstad and Great Plains devised a system that would allow her to telecommute from Iowa and come to Fargo only for meetings when absolutely necessary. Using phone, E-mail, voicemail and fax, she and her work team soon found they were able to link together, and complete work just as efficiently as before. Today, with her husband a recent graduate, Stockstad has moved back to Fargo and has received a promotion.

Great Plains uses similar technology in other innovative ways to build a competitive advantage. For example, it has developed a virtual hiring process. Managers who are spread across the country conduct independent interviews with candidates, and then feed their responses into the company's computer. Later, the hiring team holds a meeting, usually via phone or videoconferencing, to render a verdict. Only then does the firm fly the candidate to Fargo for the final interview.

"The virtual office radically changes thinking. It totally changes the corporate culture," notes Cornell's Becker. "Although many companies are attracted to the cost savings—real estate, maintenance, security, landscaping, energy and insurance can all be cut—many discover it has a lot of other benefits. It's forcing organizations to fundamentally rethink how they function."

HR must lay the infrastructure to support a mobile work force.
Just as a cafeteria offers a variety of foods to suit individual taste and preferences, the workplace of the future is evolving toward a model for which alternative work options likely will become the norm. "Nobody says you have to work the same way, even if you have the same job," says Becker. "One person may find that telecommuting four days a week is great; another may find that he or she functions better in the office. The common denominator for the organization is: How can we create an environment in which people are able to produce to their maximum capabilities?"

Creating such a model and making it work is no easy task, however. Such a shift in resources requires a fundamental change in thinking. And it usually falls squarely on HR's shoulders to oversee the program and hold the organization together during trying times. "When a company decides to participate in an alternative officing program, people need to acclimate and adjust to the new etiquette," says HOK's Goffigon. "Workers are used to doing things a certain way. Suddenly, their world is being turned upside down."

"Just as a cafeteria offers a variety of foods to suit individual tastes, the workplace is evolving toward a model for which alternative work options will be the norm."

From an HR perspective, one of the biggest problems is laying the infrastructure to support such a system. Often, it's necessary to tweak benefits and compensation, create new job descriptions and methods of evaluation and find innovative ways to communicate. Sometimes, because companies are liable for their workers while they're "on the clock," HR must send inspectors to home offices to ensure they're safe.

When Great Plains Software started its telecommuting program in the late 1980s, it established loose guidelines for employees who wanted to be involved in the program. "We pretty much implemented policies on an unscientific basis," says Lynn Dreyer, director of HR for the company. Over time, the company has evolved to a far more stringent system of determining who qualifies and how the job is defined.

For example, as with most other companies that embrace the virtual-office concept, Great Plains stipulates that only salaried employees can work in virtual of-fices because of the lack of a structured time schedule and the potential for working more than eight hours a day. Those employees who want to telecommute must first articulate how the decision will benefit the company, the department and themselves. Only those who can convince a hiring manager that they meet all three criteria move on to the next stage.

Potential telecommuters then must define how they'll be accountable and responsible in the new working model. "We ask them to specify their performance expectations—particularly in communication," notes Dreyer. "The last thing you want is someone feeling like an outside consultant rather than part of the company."

Finally, once performance standards and guidelines have been created, Great Plains presents two disclaimers to those going virtual. "We tell them that if their performance falls below certain predetermined standards, we'll review the situation to determine whether it's working. And if the position changes significantly and it no longer makes sense to telecommute, we will have to reevaluate," says Dreyer. She explains that early on, some workers assumed the arrangement would be permanent and were taken aback when changes warranted ending it. "We learned that you can't create the assumption that this is a lifetime program," she says.

"We ask telecommuters to specify their performance plans - particularly in communication. The last thing you want is someone not feeling a part of the company."

Other companies have adopted similar checks and balances. "We're training HR advisers to make accommodations for the individual, but to not make accommodations for the person's job responsibilities," says Frank. "[But] we don't want to create artificial safety nets that make it easy to go back to traditional ways of working. Otherwise, the program is doomed to failure."

IBM provides counseling from behavioral scientists and offers ongoing assistance to those having trouble adapting to the new work model. By closely monitoring preestablished sales and productivity benchmarks, managers quickly can determine if there's a problem. So far, Frank says only approximately 10% to 15% of its mobile work force has required counseling, and only a handful of employees have had to be reassigned.

Virtual workers need guidance from HR.
Not everyone is suited to working in a virtualoffice environment. Not only must workers who go mobile or work at home learn to use the technology effectively, but they also must adjust their workstyle and lifestyle. Says Cornell's Becker: "The more you get connected, the harder it is to disconnect. At some point, the boundaries between work and personal life blur. Without a good deal of discipline, the situation can create a lot of stress."

Managers often fear that employees will not get enough work done if they can't see them. Most veterans of the virtual office, however, maintain that the exact opposite is true. All too often, employees wind up fielding phone calls in the evening or stacking an extra hour or two on top of an eighthour day. Not surprisingly, that can create an array of problems, including burnout, errors and marital discord.

IBM learned early on that it has to teach employees to remain in control of the technology and not let it overrun their lives. One of the ways it achieves the goal is to provide its mobile work force with twoline telephones. That way, employees can recognize calls from work, switch the ringer off at the end of the workday and let the voicemail system pick up calls.

Another potential problem with which virtual employees must deal is handling all the distractions that can occur at home. As a result, many firms provide workers with specific guidelines for handling work at home. "It's essential to give the company one's full effort," says Great Plains' Dreyer. "We expect that those who work at home will arrange child care or elder care." And although she recognizes there are times when a babysitter falls through or a problem occurs, "If someone's surrounded by noisy children, it creates an impression that the individual isn't working or is distracted."

Still, most say that problems aren't common. "The majority of workers adjust and become highly productive in an alternative office environment," says HOK's Goffigon. "The most important thing for a company to do is lay out guidelines and suggestions that help workers adapt."

At many firms, including IBM, HR now is providing booklets that cover a range of topics, including time management and family issues. Many companies also send out regular mailings that not only provide tips and work strategies but also keep employees informed of company events and keep them ingrained in the corporate culture.

This type of correspondence also helps alleviate workers' fears of isolation. IBM goes one step further by providing voluntary outings, such as to the Indianapolis 500, for its mobile work force. Even without these events, however, virtual workers' isolation fears often are unfounded. "The level of interaction in a virtual office actually can be heightened and intensified," says Becker. "Because workers aren't in the same place every day, they may be exposed to a wider range of people and situations. And that can open their eyes and minds to new ideas and concepts."

However, dismantling the traditional office structure can present other HR challenges. One of the most nettlesome can be dealing with issues of identity and status. Workers who've toiled for years to earn a corner office suddenly can find themselves thrown into a ubiquitous work pod. Likewise, photographs and other personal items often must disappear as workspace is shared. But solutions do exist. For instance, when IBM went mobile, top executives led by example. They immediately cleared out their desks and began plugging in at common work pods.

Not surprisingly, one of the most difficult elements in creating a virtual office is dealing with this human side of the equation. Indeed, the human factor can send shock waves reverberating through even the most staid organization. "When all the accessories are stripped away, a company must redefine its success indicators," says Goffigon. "They're saying they don't just value people sitting at their desk, they value results. Suddenly, there's a huge paradigm shift in the workers' heads. It's a tremendous challenge for HR."

According to Goffigon, this challenge requires HR to become a proactive business partner. That means working with other departments, such as real estate, finance and information technology. It means creating the tools to make a virtual office work. In some cases, that may require HR to completely rewrite a benefits package to include a $500-or $1,000-a-month stipend for those working at home. That way, the company saves money on real-estate and relocation costs, while the employee receives an incentive that can be used to furnish a home office.

HR also must change the way supervisors evaluate their workers. Managers easily can fall into the trap of thinking that only face-to-face interaction is meaningful and may pass over mobile workers for promotions. Great Plains has gone to great lengths to ensure that its performance-evaluation system functions in a virtual environment.The company asks its managers to conduct informal reviews quarterly with telecommuting employees, and formal reviews every six months. By increasing the interaction and dialogue, the company has eliminated much of the anxiety for employees—and their managers—while providing a better gauge of performance. In the final analysis, the system no longer measures good citizenship and attendance, but how much work people actually get done and how well they do it.

Adds Becker: "Today, the odds that a manager will find a specific employee at a desk on the spur of the moment isn't always so great. People now have more channels of communication then at any time in the past. Face-to-face interaction is less important than ever before."

Still, many experts point out that too much reliance on voicemail and E-mail can present problems. Although instantaneous messaging is convenient and efficient, it can overload virtual workers with too much information and not enough substance. "It isn't what you communicate, it's how you communicate. Without some human interaction it's impossible to build relationships and a sense of trust within an organization," Dreyer points out.

Sending workers offsite can boost productivity, while saving costs.
Those who have embraced the virtual office say that it's a concept that works. At Pacific Bell, which began experimenting with telecommuting during the 1984 Summer Olympics in Los Angeles, employees routinely have reported 100% increases in productivity. Equally important: "They tell us that this fits into family and flexibility issues and that they enjoy working for the company more than ever before," says Gary Fraundorfer, manager of HR quality communications strategy.

Emily Brassman, the company's director of virtual office development, plunged into the lifestyle with unwavering commitment. She now spends three to four days a week at home, and schedules face-to-face meetings all on the same days. Using a notebook computer, portable printer and a separate business line in her home, she's in constant touch with the office. "In most cases, nobody has any idea where I'm working. It's completely invisible to them."

Although the final results aren't yet in, IBM's mobile work force reports a 10% boost in morale and appears to be processing more work, more efficiently. What's more, its customers have so far reported highly favorable results, says Andre'a Cheatham, manager of the National Mobility Project. "People are happier and more productive because they can have breakfast with their family before they go off to client meetings. They can go home and watch their child's soccer game and then do work in the evening. They no longer are bound by a nine-to-five schedule. The only criterium is that they meet results."

And at Chiat Day, the outcome speaks for itself. After the Los Angeles earthquake in January, the organization used virtual-office technology to link work teams and keep operations running at full speed. Now, long after the disaster, employees adhere to their own timetables and work preferences. "There's a fundamental change in philosophy," says Horton. There's a focus on quality and not physically being someplace."

In the end, says Becker, HR must become a major player in the transformation and keep both management and workers on track. "There's a need to support people through all the changes," he says. "And that requires mechanisms to encourage discussion and ways to solve problems. Migrating to a virtual office can be a positive and rewarding experience—but only if all the pieces are firmly in place."

HOK's Goffigon says that she believes society is on the frontier of a fundamental change in the way the workplace is viewed and how work is handled. "In the future, it will become increasingly difficult for traditional companies to compete against those embracing the virtual office," she says. "Companies that embrace the concept are sending out a loud message. They're making it clear that they're interested in their employees' welfare, that they're seeking a competitive edge, and that they aren't afraid to rethink—even reengineer—their work force for changing conditions. Those are the ingredients for future success."

Personnel Journal, September 1994, Vol.73, No. 9, pp. 66-79.