Putting Flexible Work Options to the Test.

When I became executive vice president and chief executive officer of the National Association of Insurance Commissioners, Kansas City, Missouri, three years ago, employee turnover was nearing 30 percent annually. In other words, every two years NAIC had to replace more than half of its staff, which currently numbers close to 360.

A voluntary organization of the chief insurance regulatory officials of the 50 states, the District of Columbia, and the four U.S. territories, NAIC is seen by many as a good place to work, but at the same time, 40 percent of our employees work in the highly competitive information systems area. The other 60 percent is sought after for their experience in accounting, finance, economics, and insurance. Add to that a low national unemployment rate, a booming local economy, and the usual issues of a nonprofit organization competing with for-profit companies for talent, and it's not difficult to explain a high turnover rate. But with recruiting costs in the six digits and lost productivity hampering NAIC's ability to serve members, it was clear that we needed to make some important changes--and make them quickly.

Assessing the problem

Through a series of informal staff meetings, employee comments drew us to the conclusion that the traditionally-structured work environment at NAIC was partially responsible for employees looking elsewhere for work. Many were looking for situations that provided a better life-work balance.

After consulting with our management team, I then decided that the most active and targeted response to the issues raised by employees was the development and implementation of a strategy to create a great environment for employees. We made a commitment to offer all staff members a menu of flexible work options supported by up-to-date technology.

Because some of our preliminary research showed that many companies offer flexible work options that are often not used, we wanted our programs to be simple and easily understood by employees and managers. Our goal was for all staff and management to actually use the programs.

The work options we put in place included telecommuting, compressed work schedules and flextime, infants in the workplace, business casual attire, a number of recognition programs, and a better communication system. To date, the programs have proved to be low in cost and highly successful in reducing our turnover rate and in keeping valued employees.

Tailoring the telecommute 

We tackled telecommuting first, with a pilot program that included five employees--both part-time and full-time telecommuters--who participated in the nine-month test. During that time we determined that for our association, full-time telecommuting--four days at the employee's home office and one day at NAIC--yielded better results than part-time telecommuting. At the conclusion of the pilot program, we created 15 telecommuting slots, representing approximately 5 percent of our total workforce at that time.

During the first year of the permanent telecommuting project, we gradually added telecommuters until all 15 slots were filled. Employees interested in telecommuting must complete an application, which includes in-depth inquiry into the applicant's work habits, duties and responsibilities of the position, whether the tasks can successfully be completed from a remote office; and whether the supervisor supports the application and believes the applicant has the ability to achieve the position's goals via telecommuting. Applications are then reviewed by a committee of five individuals representing employees, managers, directors, and the information systems division. The committee's recommendations are then sent to me for final review and approval.

We have found that telecommuting is not for everyone. Some people like to telecommute and can successfully perform their jobs, while others cannot. Some jobs, of course, are better suited for telecommuting--typically those that require infrequent face-to-face communication and that are characterized by clear, measurable assignments and deliverables. We insist that an employee gain complete support of his or her supervisor or manager before applying for the telecommuting program.

As for equipment, we find that providing technical support for telecommuters is easier when all of the hardware is consistent. NAIC provides a standard personal computer, modem, ZIP drive, printer, telephone, ISDN telephone line, voice mail, desk chair, remote access to NAIC's computer systems, and general office supplies. In addition, telecommuters and their managers attend a two-hour training session on what to expect and what each can do to make the program successful.

In the 2 1/2 years NAIC has supported this project, we have not lost a single telecommuting employee to turnover--and we've found that all levels of employees are satisfied with the program. Regarding costs, the pilot program was virtually cost-free, using existing computers, software, and other technology. As we gradually added telecommuters, the cost of new equipment increased, but it was offset by a reduction in leased space. Since full-time telecommuters no longer have individual offices, we provide a small hoteling room that is available for their use when they are in the building. In all, the results of the telecommuting program have been positive.

Customizing schedules

Two years ago we implemented a 60-day pilot program that included flextime and compressed work schedules. After a successful test, we adopted policies permanently. Our flextime policy allows employees to establish individualized starting, ending, and lunch-period times. Flexible scheduling is an option available to all employees. Employees are required to work designated core hours of 9 a.m.-4 p.m., and may choose between an hour or half-hour lunch period. While each employee's supervisor must approve individual schedules, we were determined from the outset that unless there was a legitimate business reason not to approve the schedule, it should be approved. The policy also requires that employees stay on a selected schedule for 90 days at a time, but often managers allow more flexibility when possible.

Compressed work schedules were also included in the pilot, allowing both exempt and non-exempt employees to compress their total weekly hours into a 4 day or a 4 1/2 day workweek. Exempt employees are also eligible to work nine days on and one day off. Employees must stay on a compressed schedule for 90 days. This benefit is clearly identified to employees as a privilege, with each department responsible for ensuring work area coverage Monday through Friday. If the schedule does not provide the necessary departmental coverage, employees may be required to go back to the normal five-day workweek. Again, managers must approve each employee's request, while maintaining the principle that unless there is a business reason not to accept the schedule, it should be approved.

Approximately 40 percent of our employees have chosen a compressed schedule and nearly 80 percent participate either in flextime or compressed schedule programs. The compressed schedule program is the most popular benefit we offer and has contributed the most to NAIC's reduction in turnover. Happily, we've seen no noticeable reduction in productivity nor any other significant problems.

Like any policy, schedule variations must be managed. Because many employees predictably take Monday or Friday off as part of their compressed work schedule, it is usually necessary to schedule meetings Tuesday through Thursday. Occasionally, particularly during the summer when employee use of compressed time increases dramatically, we may find a department that is lightly staffed on Friday, but for the most part this is not a problem.

For obvious reasons, employees and managers are extremely motivated to find ways to make this program work. Fortunately, members have not voiced complaints--due in part because the departments are often staffed during the longer hours reflected in the expanded workdays required for employees to meet their required work schedules. Finally, there is no cost impact to this option.

Sharing parenting

For nearly two years NAIC has allowed parents to bring infants--initially up to four months old and later up to six months old--to the workplace. All regular, full-time NAIC employees are eligible. The association constructed a quiet room, complete with furnishings, where parents can take their infants for lactating, changing diapers, and attending to other infant needs.

Initially, some managers were skeptical of the program, no doubt envisioning screaming infants and a disruptive environment. However, having participated in such a program myself, albeit a more informal one, I believed we could make such a program work at NAIC.

While NAIC provides the environment and support, the parent participating in the program must assume the major responsibility for making it work. First, the parent must sign a release form indemnifying NAIC. Then the employee develops a plan of the hours that he or she will work, and lists any special needs relative to getting the work done, such as making minor adjustments to the workspace to accommodate the baby. The parent then designates two on-site employees as alternate caregivers able to watch the infant when the parent attends a meeting or participates in a conference call. Employees are allowed to bring portable cribs, strollers, and walkers to their offices or cubicles.

To date, we have had 10 infants graduate from the program. We've had no liability issues and we have not lost to turnover any employees who have taken advantage of the program. Interestingly, we have not experienced any complaints from co-workers regarding noise or other disruption. The presence of the babies actually seems to soften the workplace, and it is not uncommon to see men and women balancing babies on their knees while they continue to work. Admittedly, productivity is not at 100 percent compared to the parenting employee's output prior to bringing the infant to work; we estimate productivity at approximately 75 percent of prior performance. However, most employees return to work sooner after the child's birth than they might otherwise, a fact that offsets the productivity loss somewhat. Coupled with the reduction in turnover, we think the program is worth it.

The program works best if the employee has been in his or her current job for at least a year. We find it difficult for a new employee to master the learning curve of a new position and manage a baby at the same time.

Establishing other pluses

A relaxed dress code has added to the staff-friendly environment at NAIC. More than two years ago, we made the decision to move from a formal dress code to one of business casual attire. While the new dress code includes the option to wear jeans on Fridays, employees are expected to dress appropriately for their work situation on any given day. This policy has been well received and we have not experienced any complaints from our members, who also enjoy the business casual option when attending meetings at NAIC offices.

Recognition programs are also very popular. We've instituted a number of prizes and awards that allow us to celebrate staff accomplishments and outstanding work. For two years, we've recognized employees as "NAIC STARS," with supervisors and managers nominating individuals in their departments. I approve the final STAR award selections. Winners receive a letter of thanks from me, a framed certificate, the original nomination form signed by management, a gold engraved STAR paperweight, a photograph with their manager, their photo displayed in our offices, and their choice of NAIC logo clothing or gift certificates valued at $50-$150. STAR recipients are also introduced and congratulated at quarterly meetings of the entire staff.

The "Way to Go" initiative encourages employees to give special cards to other employees for outstanding service or exceptional work efforts that warrant particular recognition. Unlike the STAR program, employees can give "Way to Go" cards to any other employees including peers, subordinates, and supervisors without prior approval. Recipients are then entered into monthly and quarterly drawings for gift certificates, tickets to sporting events, NAIC clothing, and other gifts.

We find the special awards programs build enthusiasm and add excitement to the workplace while encouraging high-level work.

Communication is key

Establishing consistent and interactive communication with employees--not only to clarify the details of flexible work options, but to share information about the association's mission, goals, budget, financial position, and other details--is key to employee satisfaction and motivation. What employees are in on, and up on, they are seldom down on.

To ensure that NAIC's staff is involved in association plans and processes, I schedule at least four employee meetings a year. I also meet quarterly with employees in our satellite offices via videoconferencing. Meetings typically include an overview of the association's budget, a review of policy and management issues, a summary of the overall activities of the organization, and the awarding of employee recognition prizes. We update employees on the details of flexible work options, which represent an important aspect of our organizational culture, and schedule ample time for questions and answers. We further inform all staff of NAIC's activities by routing via e-mail a summary of each week's significant press clippings.

Another way I've found to successfully convey NAIC's culture is to correspond personally with the staff. I send welcome cards to each new employee, birthday cards, and anniversary cards to celebrate each year of employment with NAIC.

NAIC's current annual turnover is 15 percent. While we believe that we do have further work to do, this percentage is half what it was three years ago. Flexible work options have played a key role in this dramatic improvement. Coupled with improved management-staff communication, the new programs have helped create a work environment that motivates and satisfies employees. The fact that we can also better serve our members is a bonus.

Catherine Weatherford is executive vice president and chief executive officer, the National Association of Insurance Commissioners, Kansas City, Missouri, and former insurance commissioner for the state of Oklahoma.