FLEXIBLE WORK: PERCEPTIONS & REALITIES

FINDINGS FROM THE FLEXPATHS-LINKEDIN VIRTUAL THINK TANKS

DECEMBER 2010

December 2010

CONFIDENTIAL 1

BACKGROUND FlexPaths, a global leader in flexible working solutions, and LinkedIn, the next-generation business networking and recruitment-solutions provider, conducted six online Think Tank sessions with 45 CEOs, senior HR professionals, and Workspace decision makers. Participation was real-time, and the discussion centered on the practical realities of managing workers in the “new normal” of a global agile work culture. The sessions were moderated by Digital-MR, a holistic digital market research specialist.

Of the 45 participants in the Think Tanks:

• 24 were Managing Directors or CEOs (mostly from companies with 200-700 employees)

• 16 were senior Human Resources leaders (mostly from companies with over 1,000 employees)

• 5 were senior Workspace/Property leaders (mostly from companies with over 1,000 employees)

• Roughly 60% were based in the US, 30% were based in the UK, and 10% were based in other countries, including Spain, Argentina, El Salvador, and India.

• Some were just starting to think about formalizing flexible work policies, whereas others were operating far along the continuum, with flexible work options being utilized by a significant proportion of the employee population.

The groups were designed to be comprised of peers in terms of leadership level as well as company size, and to span multiple industries. The goal was to enable the participants to brainstorm together, to exchange ideas and best practices, and to simply collaborate around a topic of mutual interest.

Discussions among the Think Tank groups focused on seven themes:

• Defining Flexible Work • Drivers for Embracing Flexible Work • Predicting the Future • Barriers and Obstacles • Regulatory and Legal Landscape • Measuring Success • Software as a Facilitator

Ultimately, it was clear that the companies of all shapes and sizes, across many industries, want to make their workforces more flexible, but that there are a wide variety of (mostly cultural) obstacles to be overcome first.

December 2010

CONFIDENTIAL 2

DEFINING FLEXIBLE WORK While there wasn’t clear consensus among participants about how to simply define “flexible work”, most gravitated to a range of broad definitions that included:

• Flexibility Around “When” – allowing workers to work non-traditional hours and/or create compressed workweeks where 40 hours are ‘compressed’ into less than 5 days a week or 80 hours into less than 10 days bi-weekly.

• Flexibility Around “Where” – enabling workers to be productive outside a main office some or all of the time, including telework, remote office and hub arrangements, as well as work from cafes, airports, etc.

• Flexibility Around “How Much” – utilizing workers

through reduced work hours, job-sharing, seasonality, “right-sizing” according to business cycles, offering sabbaticals, etc.

• Flexibility Around “How” – flexibility around the employment agreement, using contract and freelance workers.

Very few of the CEOs, who were generally running mid-sized companies, had formal flexible work policies in place, but most of those who did not, planned to, particularly in the UK where they were conscious of legislation around flexible work. All of the HR and Workspace leaders from large

companies had some form of flexible work policy in place, but not a single participant felt that his or her company was “there yet” when it came to taking full advantage of flexible work.

DRIVERS FOR EMBRACING FLEXIBLE WORK Amongst both CEOs and senior HR professionals, attracting and retaining top talent was high on the list of reasons for embracing flexible work. Several remarked

upon how saving even a couple of high-performers from leaving had more than paid for their flexible work initiatives. Interestingly, several CEOs remarked they were already being driven to incorporate more flexibility into role descriptions in

order to attract the best Generation Y talent. Others were particularly focused on

customer service, and the potential for more engaged workers (given more flexibility in

their work) to better deliver to customers. Surprisingly, very few outside of the

“I think of flexible

work as allowing the

change of focus to

the customer and

away from the

office/factory

arrangement of work.

Every employee

needs a customer –

an internal one or an

external one.”

George Weathersby,

CEO

YPO International

December 2010

CONFIDENTIAL 3

Workspace leaders cited the reduction of office space or carbon footprint as

major drivers. It is not clear why this was the case, given how much focus large players are putting on both issues. We can only guess that neither is an issue that is truly at the top of mid-market CEOs’ agendas, and that within larger organizations, HR leaders are more focused on HR specifically, leaving physical space and environmental impact to other areas of the organization.

Some CEOs saw flexible work as an obligation (forced by legislation, demanded by employees, and or/necessitated by the economic crisis), whereas others, and all of the

HR and Workspace leaders, tended to view it as an opportunity, remarking on higher

productivity, the ability to attract higher-quality employees, and significant improvements in staff engagement and loyalty.

One Managing Director significantly influenced her

peer group by telling the story of how she used flexible work options to “right-size” her business in 2009, saving $1.5m in payroll without cutting any jobs. The result was an

operating margin over 20% (in the consulting industry), very high staff morale, and low staff turnover. At the end of the year, some employees chose to remain with their flexible work arrangements, and others (particularly younger people) asked if they could have the opportunity to take unpaid leave again in the future.

PREDICTING THE FUTURE When asked for their visions of the workforce of

2015, the majority of participants expected significant increases in the proportion of their workforces that would be engaging in flexible

work, some forecasting as high as 80% or their working population, but most predicting about

50%. Most participants struggled to say what proportion of workers were on flexible arrangements today, and those who could

generally cited numbers around 25%. The majority of CEOs acknowledged that embracing

flexible work would be important to remaining competitive.

“[Embracing flexible work]

has already made us more

competitive. It’s probably

the thing I am most proud of

in my career so far.”

Keryn James,

Managing Director

UK & Ireland

ERM

Food for Thought:

What needs to happen to

move 50-80% of your

workforce to flexible work

by 2015?

December 2010

CONFIDENTIAL 4

Most of the HR and workspace leaders were of the view that flexible working will

move from an exception basis to business as usual. Several stressed frustration with the idea that there needed to be structure around

arrangements for flexible work (inflexible flexibility?) and pointed out the paradox, but they also acknowledged that significant culture change is required to get from today’s “normal” to tomorrow’s “normal,” while avoiding a division of internal cultures, and that that would require some structure as well as the ability to collect data. Some participants were already making headway, but all felt that

obstacles remained to be overcome and that education and support for managers - around not only why a

flexible workforce is worth having and how to facilitate it, but on the competencies of managing dispersed, global teams day to day, would be key to that.

BARRIERS AND OBSTACLES MISUNDERSTANDINGS & MISCONCEPTIONS

Many of the CEO participants originally thought of flexible work only in terms of “less” work, and hadn’t considered full-time contractors as falling into the flexible category at all. Several CEOs entered the conversation with the perception that “flexible working is for mothers” or even “for slackers who want an easy life.” Some felt that flexible work was something that was generally not requested by high performers. Others disagreed and pointed out that they were seeing younger employees, in particular, demanding flexible work. Some of the HR leaders pointed out that their employee data showed that flexible work was desired by a wide range of workers, including high performers, and a

lack of requests from men and/or high performers may often be the result of a culture where employees are afraid that requesting flexible work will jeopardize their career opportunities.

FEAR OF LOST CONTROL AND LACK OF TRUST

It was clear that fear of loss of control is a major obstacle to companies embracing

flexible work as a business strategy. The notion of “If I can’t see them, how do I know they are working?” was raised repeatedly in the discussion. There was also recognized discomfort with forcing managers to work differently. The senior HR participants remarked repeatedly upon how fear of change amongst managers was a

major obstacle to the success of flexible work initiatives, and how buy-in from leadership along with education and support for managers are crucial factors in

overcoming it.

“Flexibility will just be

the way work is

done.”

Stephan Klaschka,

Director, Business

Support Americas

Boehringer Ingelheim

Pharmaceuticals

December 2010

CONFIDENTIAL 5

UNEQUAL TREATMENT

Some CEOs were concerned about setting precedents, particularly in companies where the majority of workers have customer-facing or factory-based roles, which are not necessarily well-suited to location-independent work. However, it was acknowledged that different roles (knowledge-based jobs, for example) could be done flexibly without it impacting roles that are less well-suited, provided that

the company’s policy is clear with regard to each role and reasons for approval or denial of a

flexible work application are well-documented and non-discriminatory. Another common concern across groups was that flexible workers might end up being treated differently to the rest of staff, creating two

separate cultures. The consensus was that rather than try

to distinguish flexible workers as a separate breed, all workers should be educated and supported, whether or not flexible work was relevant to their specific role, as cultural acceptance would be key to success.

MANAGING ISOLATION AND LOSS OF TEAM SPIRIT

Both CEOs and senior HR professionals were concerned about the potential loss of team spirit that may arise from colleagues not working the same physical space and time. At least one participant had already developed an employee resource group to enable flexible workers to come together and others were considering use of work “hubs” to provide places where teleworkers could engage with others. All of the participants agreed that technology, ranging from telecommunications to social networking tools, was key to enabling managers and teammates to collaborate, but all agreed that

face-to-face time, in some quantity, is immensely important.

REGULATORY AND LEGAL LANDSCAPE The majority of Think Tank participants, across all six groups, were representing businesses that operate in more than one country. Most CEOs (outside of those with headquarters in California – see box inset on following page) were not familiar with the regulatory, legislative and legal issues associated with flexible working.

“We need to work out

the complexity of

treating everyone

differently.”

Tim Pointer,

Head of HR

Pentland Brands

December 2010

CONFIDENTIAL 6

The UK HR leaders were more likely to be aware of local legislation, which gives workers the statutory right to request a flexible work arrangement if they have parental or adult dependent care responsibilities. The current UK government has pledged to extend this right to all workers, regardless of care duties. US HR and Workspace leaders were aware of the Obama administration’s support for flexible work initiatives and were “watching this space” for regulatory movement.

MEASURING SUCCESS All of the participants said that their companies reward results, rather than time in the office, but fewer than expected could point to the actual measures used to monitor the effectiveness of their workforces outside of the obvious sales and profit numbers. They did, however, acknowledge that

setting clear goals and performance metrics would be key to cutting through the cultural barrier to flexible work that exists in an organization where physical presence is valued, if not directly rewarded.

Those who were operating formal flexible work initiatives had few metrics in place to measure any improvement in return on human capital that may be being realized as a result. Several

HR leaders commented that they were struggling to measure informal (occasional) flexible working and therefore to track utilization accurately, and that they would like the ability to collect these data, in order to substantiate the business case for flexible work on an ongoing basis.

In US states where daily overtime is required (such as California or Alaska, and

possibly, Nevada), an employee who works less than full-time may still be

entitled to overtime pay if the employee works more than 8 hours in a given

day. An employee may be entitled to daily overtime premiums if the

employee works more than 10 hours in a given day at a mill or factory in

certain states (such as Oregon), or works more than 12 hours in a day or more

than 12 continuous hours in certain states (such as Colorado).

“Mitigate or Litigate: Flexible Working and Legal Exposure,” Forthcoming, 2011

“The challenge of

flexible working is

knowing how well

employees are

achieving their

mission - it is not

about the elements of

the flexibility.”

George Weathersby

CEO

YPO International

December 2010

CONFIDENTIAL 7

THE WAY AHEAD Without exception, all participants agreed that buy-in from senior leadership is crucial to the success of a flexible work initiative. With that in hand, companies need to:

Send a Consistent, Legally-Compliant Message

• Create clear and well-thought-out and legally-compliant flexible work policies.

• Communicate those policies, along with internal case studies that recognize successful flexible work practices, to all staff, in a place where they are sure to find it and in a way that will resonate with them.

Educate to Keep the Focus on Results

• Educate individuals about how to create a results-oriented business case for a flexible work proposal.

• Educate managers thoroughly about why the company is engaging in flexible work, how to leverage it as an asset, and how to manage flexible workers in a way that allows them more freedom without sacrificing results, for example by setting and monitoring clear work deliverables.

Simplify the Process

• Enroll all employees – not just those with formal flexible work arrangements – in a work style, the same way employees are enrolled in medical, pension and other programs. There is no need to create separate cultures if flexible work is just treated as “part of how we do business.”

• Make the administrative process for enrollment as automated, as straight-forward, and as flexible as possible.

Measure Return on Investment

• By enrolling all employees and automating the process, detailed reporting on the true utilization of different types of flexible work is possible, and can be used to make decisions around physical space requirements, as well as correlated with measures of productivity, staff turnover, etc. to prove the return on investment.

Leverage Technology and Redefine “Face Time”

• Arm all employees with the tools they need to collaborate both on- and off-site, and provide them with opportunities and spaces to meet face-to-face.

“Execution of flexible

work is hugely

dependent upon

manager capability.”

Alix Hughes,

Diversity Program

Manager

Microsoft

December 2010

CONFIDENTIAL 8

SOFTWARE AS A FACILITATOR Participants in the Think Tanks recognized various ways for software to help in the process of moving to and facilitating the day-to-day functioning of a flexible workforce. Specific areas cited included:

• Centralizing and communicating policies and information in a simple and engaging way

• Offering on-demand e-learning courses and tools for managers, employees and HR alike

• Automating the workflow around filing and approving flexible work arrangements, in real time, to reduce admin burden

• Measuring different aspects of flexible work utilization and reporting on productivity and other measures of ROI

• Helping managers to set goals for teams and individuals and monitor progress as well as who is working when and where

• Allowing colleagues to collaborate across space and time using video, audio and instant messaging, both at their desks and using mobile devices

• Existing “in the cloud” but Interfacing with other internal systems

CONCLUSIONS The Think Tank sessions were virtual peer group knowledge exchanges, and as such, they served as a powerful mechanism for participants across companies, industries, and geographies to collaborate on the subject of flexible work. The feedback from the experience was overwhelmingly positive. The participants felt they gained knowledge and insight from sharing ideas and perspectives with peers across industries and geographies, a clear demonstration of the value of this sort of virtual collaboration.

The majority of participants expected to see dramatic increases in flexible work over the next five years (anticipating that 50-80% of their employees would be working flexibly), driven largely by the need to attract and retain superior talent. And yet they also recognized that their organizations have a long way to go to overcome the current skepticism, develop manager capability at managing flexibly, and create the infrastructure and systems for this ‘new normal’ – including how to confidently measure performance in a virtual asynchronous environment. They recognized that the cultural change that is required will not necessarily happen overnight.

December 2010

CONFIDENTIAL 9

Several participants had compelling stories and data to support the progress of their efforts toward a fully flexible working culture that were inspiring to the others. Many (particularly CEOs) who joined the conversation with significant skepticism came away with modified views and remarked on intentions to put some of what they learned to work. On that basis, and on what we learned as observers, we look forward to extending the series in future, to enable the participants to continue their conversations and to provide others with the same opportunity.

FOR MORE INFORMATION about the FlexPaths-LinkedIn Virtual Think Tanks on

Flexible Work, or to participate in future sessions, please contact Clare Flynn Levy on clare.flynnlevy@flexpaths.com.

ABOUT FLEXPATHS LLC FlexPaths®, a certified women-owned business founded in 2005, is a leading provider of web-based and consultative flexible working solutions for corporations, governments and people seeking employment in organizations that have a flexible working culture. http://www.flexpaths.com

ABOUT LINKEDIN LinkedIn is the world’s largest professional network with over 80 million members and growing rapidly. LinkedIn connects you to your trusted contacts and helps you exchange knowledge, ideas, and opportunities with a broader network of professionals. http://www.linkedin.com