Saturday, March 11, 2006


A discussion of work habits at Catallaxy, by Jason Soon, discusses teleworking or what is also called telecommuting. This interests me. In my own line of work as an academic, I encounter very productive academics who are rather seldom at work. Apart from giving classes and providing consultation advice to students, they work mainly at home or in libraries and communicate with colleagues by email or - indeed - over a beer in a pub or on a blogsite. They often deliver high-quality research, get consistently good teaching evaluations and meet mainly, for seminars and for the occasional (often resented) administrative discussion. They are instances of the maxim that, provided people don’t have incentives to shirk, work is something they have to do, not something they must travel to. Academics often don't want to shirk because (i) they enjoy their work, and therefore don't face self-control problems, and, (ii) they are, in any event, appraised regularly on teaching and research outcomes.

Successful teleworking programmes require incentives based on outputs rather than the close scrutiny of individual employees. Successful design of incentive contracts can support more liberal and attractive work relationships of this type. This is most feasible for work activities not involving teamwork or, if teams are necessary, when they are small enough not to involve significant free-rider issues. Then meetings can be arranged as needed and, otherwise, people are left to do their own thing.

The benefits of telework are clear. Employees improve their work-life and work-family balances, save commuting time and reduce congestion/pollution emissions. They also get flexibility in working hours and arrangements. There are specific benefits for older and disabled workers, for those with care responsibilities and those living in rural and regional areas. The Australian Telework Advisory Committee (ATAC) sees telework as a good deal that can improve productivity – but it is unclear to me how much of the suggested benefits are due to the teleworking per se or to the incentive contracts that presumably go with it. The ATAC report does not seem to link the scope for teleworking to the contracting issues mentioned above.

By the way, uptake of telework in Australia is significant among small-medium enterprises. ATAC claim 34% of SMEs and 30% of all SME workers sometimes telework. In the US the figures are also very high particularly in the form of homesourcing. In 1997 about 11 million US employees worked from home while in 2004 the figure is 23.5 million or 16% of the American labour force. The firm Jetblue , for example, has 400 agents working at home taking air travel reservations. Many of these employees are stay-at-home mothers. Jetblue saw their employment as a substitute for operating call centres in India. They claim homesourcing yield higher productivity. See the discussion in Thomas Fiedman, The World is Flat, Chapter 1.

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