Cut Costs

Employee friendly, work-life accommodating businesses can cut costs by reducing turnover and recruitment costs, absenteeism costs, real estate costs, and healthcare costs. For example, it costs about 150 percent of a salaried employee’s yearly pay, and 50-75 percent of an hourly worker’s yearly pay, to replace him or her. Absenteeism can cost large employers over one million dollars each year. Often stress is the cause of tardiness, absenteeism, and turnover as well as workplace accidents—with these three together costing U.S. industry over $300 billion per year in lost productivity, healthcare costs, and recruitment and retraining costs.

Studies and companies reported cost savings when customized, flexible work options and other work-life initiatives are implemented:

• Custom work arrangements and time off to attend to personal needs can help limit unscheduled absences. In one study, 63 percent of workers utilizing flexible work arrangements credited them as the reason for being absent less often.

• Flexibly scheduling work hours so that employees can pick up their children from school alleviates stress on workers with children. It is estimated that one third of the workforce experiences such stress, with associated productivity losses amounting to $469 to $1,984 per employee, per year.

• The Sloan Work and Family Research Network reports that telecommuting cuts absenteeism by nearly 60 percent.

• Deloite & Touche credits its flexibility programs in saving approximately $41.5 million in costs related to turnover.

• Businesses can save in real estate and other overhead costs when their employees telecommute. In 1996 Bell Atlantic reported that telecommuting saved between $1500 and $5000 per telecommuter, per year.

• Earnst & Young estimates it saved $14 million to $17 million by instituting a program of flexible work arrangements to cut turnover of both male and female employees with client contact.

• Workers with lower stress (created by being offered custom and other flexible work arrangements) create health expenditures nearly 50 percent less than those with high stress.

• Chubb Insurance reduced its unscheduled absences (by 50% each month) and overtime (40% per employee) with a team based approach to flexible scheduling.

• IBM Sun Microsystems, JetBlue, ARO and Holland America saved millions in real estate and other expenses with telecommuting. A 1999 study by the International Telework Association and Council estimated savings of $10,000 per employee.

• Johnson & Johnson’s wellness program was studied over a nine year period and found to save $225 per employee per year in reduced hospital admissions, mental health visits and outpatient services.

• Steelcase reported a 55 percent reduction in medical claims for participants in their wellness program.

• Managers of hourly workers at a large US retailer reported that offering employees the chance to customize their schedule to suit their off-the-job responsibilities reduced operational costs, particularly those associated with recruiting and re-training.