ICA-text-d46                                       1966 words

Teleworking for Accountants

Noel Hodson 2 March 1997

1500 words for Teleworking - For Institute of Chartered Accountants


The Quiet Revolution

Teleworking, or in the USA -Telecommuting, means "working at a distance".  In modern terms it implies working at a distance from colleagues, from central office and even from local offices.  Teleworking is enabled and fuelled by the advances and price reductions in communications technology. It has grown in scale alongside the use of computers in organisations.  It is a work method particularly suited to the main tasks of accountants. 


On the Apollo 13 Mission, landed 17 April 1970, the endangered astronauts and Houston Mission controllers calculated their dwindling oxygen supply with pencil, paper and mental arithmetic - there were no pocket calculators and no computing power for such unimportant task as saving their lives;  what would they have paid to have a CA on board?  In the same year, the ICL 1900 series computers at Pergammon Press in Oxford, filled two rooms, had 44 cubic feet of air conditioners and 12K memory. Less memory than today's pocket computers. In 1997 there are, worldwide, more than 250 million, powerful personal computers,  80%  running Microsoft programmes.


Investment Driven

The USA and the European Union are,  from 1994-99, pump-priming $300 billion (£200B) and 87BECU (£68B) investment into the technologies for tele-working, tele-medicine, tele-learning and other tele-applications.  Singapore claims to be the most wired community on Earth, though the prize might actually belong to Hawaii. Why are Governments encouraging these vast investments  and is teleworking  good  for  your  practice?

National Interests

Governments address national issues.  Traffic congestion, street level air pollution and the nation's health all affect national productivity.  CATRAL, a government agency  in Paris, showed that reducing peak traffic by just 4% would allow  peak hour traffic to flow freely on the vital Route Peripherique. CATRAL recommend teleworking at Neighbourhood Offices to effect the reduction.  The USA Federal Clean Air Act is applied in California, as in most States, to enforce,  for firms of 100+ people, a 25% reductions in cars commuting to workplaces. Fines for non-compliance are $24,000 per day - reflecting the perceived benefits to businesses and the whole community of free flowing traffic. CALTRANS recommend telecommuting.  In the UK, Steve Norris, when Minister for Transport in London, a businessman and currently chairman of the AA, wrote in 1993 "teleworking can provide many benefits to industry with greater output of work, more flexible employment opportunities, cleaner air and fewer traffic jams". 


Equipment and Call Charges

The first obvious cost to enable telework is the equipment. It must be sufficient to replicate the communications which happen in a busy office. Although in theory it is possible to telework using only the postal services.  Mr. Witherings, postmaster general to Charles 1 marvelled in 1625, that letters from London to Edinburgh carried by relays of horses over three days, moved "faster than thought". In practice, modern employers may hope for slightly quicker thinking staff .  Sending and receiving  video-phone, telephone, fax and E-mail messages, all of them electronic data transactions, happens at slightly less than the speed of light, 198,000 miles (300,000 kilometers) per second. The peripherals on people's desks or in their vehicles - workstations - and the wiring or wireless networks - cost at 1997 prices between £2,000 to £5,000 per person.


The transmission costs depend, within the constraints of the telephone and cable companies' pricing, on how fast the peripherals operate and how many human senses are involved.  E-mail, the most remote and least sensual, is the cheapest by far while video-conferencing, with sight, sound and data links, is the most expensive.  People who need constant access to the company's central computer, such as tele-salespersons, will require an additional telephone line rented and may use it 3-7 hours a day to "speak to" the central computer.  Long distance or local call rates make a significant difference.


It is worth spending time to get the right system. Communications are so important to modern business that many major organisations have promoted the once humble DP (data-processing) manager to IT (information technology) or IS (information systems) Director.  Advanced communications have a seat on  the Board.  In contrast, many national organisations still do not have ansa'phones and switch their faxes off at week-ends. They clearly do not wish to join the 24 hour society or cater for customers in different time zones.  The international reach of teleworking has implications for the import of cheap labour and the export sales of UK knowledge (high added value traffic).


We are working hard to abolish work.

The primary telework cost is the cost of change. All change is stressful which in turn reduces productivity.  The electronic revolution in the office is automating white collar work,  e.g. in the banking sector, as thoroughly and as inevitably as automation has decimated factory work forces. The office revolution is moving faster and causing more rapid change than the manufacturing revolution did.  We are working hard to abolish work. 


But this generation is unlikely to enjoy the three-day week or the four hour day which is already possible in theory. We must endure the processes of change between the old and the new methods and, resist as we might, change is inevitable.  For example, a traditional UK company is closing three regional offices and repackaging 300 senior fee earners’ salaries, removing their company cars and having them work at home. They are responding to competition from younger, well organised, highly qualified professionals, working at their homes and undercutting them on government and other contracts by 50%.   Adapt or die is the message.


Another cost is in re-training, additional training and re-planning facilities. Appropriately, 1996 was the European Year of Lifelong Learning - its underlying message reflecting one of BT's advertising campaign "work smarter not harder".  For teleworking, employers should provide budgets for at least four half-days training before teleworking, with frequent refreshers and social gatherings thereafter.  Core team colleagues also need attention.


The Productivity Benefits


All the costs of teleworking are usually heavily outweighed by increased productivity and employees' motivation and loyalty.  Productivity should be measured by changes in output multiplied by changes in employment costs and overheads. The large increases in output and average reductions in employment costs of around 25% of salary,  have profound implications for employment. 


An effortless increase in Output.

Most well managed changes from traditional commuting and central office methods to teleworking, at or from home, result in an effortless increase in work output.  The source of this increase has no cost to employers or to employees.  The source is time saved - fee earners need no reminding that time is money.  Every hour per work-day saved from commuting, office gossip, sickness and repetitive business travel is equivalent to thirty work-days a year.  Thirty work-days, or one hour a day, represents 12.5% of a standard work-year.  For example, the writer, as a time charging fee earner, used to commute Oxford->London->Oxford daily spending four hours, 120 work-days or half a work-year sitting in a car, breathing in traffic fumes.  Average professional time is currently priced at £1,000 a day, giving a value of £120,000 to the time wasted each year. 


Teleworkers save around 12% of their year, 29 days, from reduced office gossip; they lose fewer days from illness and lose no days from transport strikes or breakdowns.  Most of the UK's existing 1 million or more teleworkers feel privileged to telework, so they work hard to maintain output and to keep their privileges. 


Across the top 100 Fortune Magazine companies, employing 13 million worldwide, the average output per person-day is $998. In the absence of measurement methods, output can be valued at not less than 3 times salary - in any healthy organisation, whether profit or non-profit making.


Whose Time is it Anyway

Most teleworkers put time saved back into their work. Telework Analytics International Inc., who supply TeleworkAuditstm software disks ($50 approx.) which calculate all the costs and benefits, found that USA managers will contribute 50% of commute time, 75% of Gossip time, 100% of sick leave and 30% of business journeys (see http:\\www.teleworker.com).  The Polling Company, Washington DC, asking ordinary people about Commute Time (Nov'95)  for Telework Analytics found  that 28%  would not give any time - 21% would give half their time, 13% would give ALL their time and 11% would give a quarter of their time, back to their work. SW2000, Oxford and Telework Analytics use eight cost centres in their calculations :  1. Productivity & Time 2. Commuting 3.  Business Travel  4. Property - Space 5. Equipment and Call Charges  6.  Availability  7. Recruit Motivate and Retain    8. Eco-factors.


Individuals Like It

UK surveys show that 68% of teleworkers enjoy it and want to continue. 32% want to return to central office working - and should be encouraged to do so.  Telework Auditstm show that on average UK teleworkers benefit, after all work related costs, by one-eighth to one-sixth of their gross salary, each year. Married couples with children particularly benefit.  There are exceptions of course, such as people with short commutes and subsidised canteen lunches. Each individual's case should be analysed before they start teleworking.


Once Times the Teleworker's Salary

Major Employers (500+) such as financial services companies, telecoms and IT companies and firms in other sectors demonstrate that teleworking works for their organisations. Most large employers will commit sufficient resources to gain the maximum net benefit, after all costs, which is equivalent to the teleworkers annual salary. This includes the days saved and contributed to work valued at Fees, Output or Sales value. 48% of major UK and European employers have some teleworkers (Source - Empirica of Bonn 1994)


Medium Sized Employers (50-500) benefit no less than major employers, but more often arrive at good results by trial and error - actually more costly than committing the budgets at the start but a necessary step when short of capital.  Figures are not available for the UK but the largest recorded growth spurt of teleworking was a 20% increase June 93-94 in the USA medium sized business sector.


Small Sized (2-50) and the Self Employed (1 person) quietly lead telework growth. For example a 4 year old Basingstoke company has ten people in a converted farm building and ten employees at home - to expand they hire teleworkers.  Self-employed teleworkers are by far the largest group - they number 600,000 of the 1 million regular UK teleworkers (Gallup Poll found, March 94, that 20% or over 4 million sometimes telework at home). The benefits for under-capitallised new-start small businesses are obvious and clarify the issues for all organisations. Would you, if starting-up today and risking your own money :- (1) Buy a large car to commute and park for 8 hours a day (2) Rent an Office or work at home (3) Buy a computer or a polished mahogany desk     (4) Commute 1, 2, 3 or 4 hours a day (5) Fly to business meetings you might otherwise tele-conference ? Answers on a postcard to your bank manager please.


Property Note

The UK's 600,000 self-employed teleworkers would formerly have occupied 72 million square feet (7 million metres2) of High Street office space.  The 400,000 employed teleworkers, which includes desk workers and mobile engineers, maintenance, consultants and etc.) used to occupy 48 million square feet (4.5 million metres2) of office and depot space. Todays teleworkers are saving £1.2 billion in Rent and Business Rates, a saving which can be at least doubled for other office overheads.  Large companies are quitting millions of square feet of space. Some City and Wall Street offices are being converted to homes at one-fifth their previous commercial value. 


Spending Patterns

The existing 1 million teleworkers earn and spend approximately £20 billion per annum. They have moved their daily spending  from City Centres to suburban areas, changed from formal to casual clothes, radically altered their transport and energy costs, equipped home offices and a few have converted space or built house extensions. As telework grows, new market opportunities for diverse UK businesses will also grow.   Numbers are expected to reach 4 million by 1999.


Teleworking raises a number of familiar taxation issues and creates some novel ones.   Use of home as office, CGT on home offices,  penalties on low mileage company cars, the risk of business rates on home offices and a host of other items bring anxieties to teleworkers and their employers.  A professor at Maarstricht University proposes adding to teleworkers’ burdens by taxing the Internet - implying taxes on E-mail and Web searches with, of course, necessary monitoring of traffic by the tax authorities.  Tha day of Big Brother may be at hand.   DIPLOMAT, the European Charter for Telework is a project dedicated to reducing barriers to telework and raising it to equal rank with other forms of work contract.  One of the DIPLOMAT themes deals with the fiscal issues of telework, analysing all EU countries treatment of teleworkers and  comparing them with the USA and Pacific Rim nations.