How Organizations Can Benefit from Flextime

Karen Christensen:Why is it so important for today’s managers to embrace the idea of flextime?
Sanford Devoe: The passing of a demographic milestone in the U.S. – women comprising fully half of the workforce – has renewed calls for updating the structure of work to meet the needs of the 21st century family. The availability of flexible work schedules, or flextime, is one tool that is critical to addressing the challenges families confront.  In fact, it has been the most widely adopted work-family practice among medium and large private-sector employers. 

Can you describe some of the key benefits of flextime?
Broadly defined, flextime is the ability to schedule flexible starting and quitting times, and research shows that this has positive effects on employees: it is associated with an increase in job satisfaction, a decrease in absenteeism, and an increase in productivity -- all of which can translate into increased organizational profitability.  Flextime can also increase firm revenues by attracting higher-quality candidates and reducing turnover.

In my own research, my colleague Byron Lee and I looked at the interaction between flextime policies and organizational strategy as they relate to profitability.  Working with a dataset representative of Canadian organizations, we found that flextime increased both revenues and payroll costs – because it can be costly to implement. But on average, it increased revenues more than it increased costs. Thus, implementing flextime does, on average, increase profitability.

You have noted that flextime is ideal for a certain type of employee; please describe this ‘type’.
Research indicates that flextime has its greatest possible impact on organizational profitability when it is offered to employees who can be trusted, who are motivated to do their jobs well and who are highly committed to the goals of the organization.  Of course, it is always possible that there will be employees who abuse this practice if they are not properly motivated and satisfied with their work.

Given the recent economic turbulence, cost reduction has become a key focus for many organizations.  But you found that flextime is likely to be misaligned with a cost-reduction strategy.  Please explain.
Our analysis was the first to identify specific organizational contexts in which flextime had negative consequences for profitability.  When an organization’s strategic focus is on competing on the basis of low costs, employees are seen as ‘replaceable’-- not as a source of competitive advantage -- and the associated human resources strategy emphasizes reducing costs per employee.  We found that cost reduction as a primary goal is unlikely to support -- and may even undermine -- the benefits flextime has on employees. That’s because when a firm is focused on reducing its costs, there may be  negative outcomes to that, such as a lack of employee trust and turnover, and you cannot expect the positive outcomes associated with flextime to override these negative consequences.  In short, if flextime is provided to an employee who feels negative emotions related to a cost-reduction strategy, it is not likely to lead to more productive behaviour (such as decreased absenteeism) on the part of the employee.

You also sought to identify the conditions under which flextime most benefits profitability.  What did you find?
We found that a firm-wide quality-enhancement strategy is likely to fit very well with flextime.  When a firm adopts such a strategy, its employees are treated as assets that are required to produce high-quality goods or services.  We define a quality strategy in which employees are viewed as assets as an ‘employee-centered strategy’.  An organization that is focused on its employees pays attention to things like enhancing labour-management cooperation, increasing employee skills, and increasing employee involvement and participation – all of which further reinforce the positive effects that flextime has on employees.  Employee-centred strategies have been found to relate to profitability and have also been found to create employees who are more likely to give back to their employers.

You looked at the effects of flextime on both payroll costs and revenue.  What did you find?
We found that flextime coupled with an employee-centred strategy increases costs, but to an even greater degree, it increases revenue.  While flextime can be costly to implement, when combined with a strategy that invests in the workforce, it has the best positive impact on the overall bottom line.

Research indicates that flextime tends to have the largest effect on ‘general employees’, and has little to no effect on professionals and managers.  Why is this?
Since professionals and managers are likely to already have a high degree of work autonomy, the implementation of flextime tends not to really affect them much at all – it’s really the general employee that experiences a significant positive change.

Elsewhere in your research, you have studied the ‘economic value’ of time and its effect on workplace stress.  Please describe your work.
The economic value of time is the view of time primarily born out of the Industrial Revolution, where time was thought of in monetary terms and viewed as a scarce resource that should be used as efficiently as possible.  We found that a higher perceived value of time induces greater feelings of being pressed for time, with effects on things like making time to mentor others and other organizational citizenship behaviours that require investing time.  If feelings of time pressure are directly related to a higher economic value of time, it may be that rising income over the past several decades within many countries can help explain the so-called ‘modern time bind’ experience.

Do you believe ‘time pressure’ has increased in recent decades?
Clearly, the fact that we all continue to have 24 hours in a day hasn’t changed, but as our expectations about what we can and should be doing with that time rise, it leaves us feeling more and more pressed for time. There is good evidence from time diaries that the number of hours we are working hasn’t increased that much over the last five decades, and we tend to actually have more leisure time; but nevertheless, we feel more stressed out.  My co-author on that paper [Stanford Professor] Jeffrey Pfeffer and I identified that one factor in all this is the perceived increase in the economic value of our time: as it rises, we feel like we can and should be doing more in the same amount of time. Feelings of time pressure are not just a function of individual differences, the quantitative amount of time spent working, or even people’s working conditions, although these factors are obviously important. Time pressure is at least partly a result of psychological processes and the perception of time’s value.

Sanford Devoe is an assistant professor of Organizational Behaviour and HR Management at the Rotman School of Management.  He is the co-author of "Flextime and Profitability," which was published in the journal Industrial Relations, Volume 51, and "Time is Tight: How Higher Economic Value of Time Increases Feelings of Time Pressure," which appeared in the Journal of Applied Psychology, Volume 96. Rotman faculty research is ranked in the top ten worldwide by the Financial Times.

[This article has been reprinted, with permission, from Rotman Management, the magazine of the University of Toronto's Rotman School of Management]