MIP Holdings, one of South Africa's largest software companies, has reported a 20% boost in productivity and enhanced employee morale since introducing a flexible approach to its employees' working hours.
Under the pressure of a soaring oil price last winter, many MIP employees found themselves out of pocket and they lobbied for an increase.
"Given our headcount of 150, this would have had a major impact on revenue," says Richard Firth, CEO and chairman of MIP, "costing us more than R2 million.
"We had a choice: pay our people more, or reduce their running costs. We hit on the idea of allowing as many people as possible to work from home one day a week, initially Tuesday to Thursday. We estimated this would be a saving of as much as a tank of petrol a month.
"A tank of petrol at the time cost R800, or the equivalent of R1 200 a month before tax. To increase salaries by that much across the board would have meant additional costs to MIP of just under R2.2 million."
MIP management understood there was a risk that people might not work as hard at home as they would at the office, which would compensate customer projects.
"We first spoke to the divisional managers and told them to ensure their project plans were tight and well managed, so we could meet our deadlines.
"Not everyone had the technology at home, so employees had to make their own telecommunications investment," Firth reports. "Another big decision was to buy laptops rather than desktops, even though were more costly. This gave manoeuvrability to employees. And while some employees had to put telecoms in place, we gave it to those who need to be available 24x7 for clients."
The impact was immediate and dramatic, Firth says: "We saw a massive increase in productivity, for a variety of reasons. The first was the reduction in travel time, and the fact that people are not being pulled into meetings for one day a week. But what we didn't predict was the appreciation employees had for working at home. They put in more effort at no extra cost to the company.
"While it's impossible to measure, our gut feel is that productivity is up 20%, and people are working harder all five days due to higher morale."
There is also no policing of employees on the work-from-home day: "We've asked people to be available over the core hours of the day: we are flexible, and if they need to take their child to school or the doctor, that's okay. We have observed no slacking off."
MIP expects further savings in reduced cost to company: "At any one time, 30 people are out of the building. That will translate to a big saving over time, especially once we can renegotiate our lease when the current contract expires. Over time we'll also have a virtual workstation infrastructure rather than fixed workstations and offices."
Given the initial success, MIP is now looking to offer employees a second work-from-home day. "The key is the appreciation that comes from both the employee and the company," notes Firth.
But there is one risk: the perk needs to be applied selectively to new employees, otherwise they will not absorb the corporate culture.
"We believe this four-plus-one working week is the way to go," says Firth. "Distances from work are growing and traffic and travelling costs will only continue to be a major burden. For knowledge workers, this makes a lot of sense."
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