Today, we find that over half of our managers (56%) telework at least one day a month, over a quarter (27%) of our managers telework one day or more per week, and 11% of our managers telework 100% of the time in a "Virtual Office". It was only with the advent of the manufacturing economy of the Industrial Revolution that workers began leaving their homes in droves each day, assembling together for employment, then returning home. Before the industrial revolution, the lines between work and family and education and entertainment were blurry. Everything blended just a little bit, because all activity in an agrarian economy tended to occur around the homesite. Then we drew clear, industrial age lines between everything, and spent time, energy and natural resources moving ourselves back and forth to keep work and family and education separate. Now, as we move into the information age, it seems telework is actually a return to a more organic way of balancing work and family. Blurry lines aren't bad - that's a key learning behind our telework participation. This leads us to an organic view of employee eligibility. In our case (except for contractual obligations with represented employees) we assume all employees are eligible to telework until proven otherwise. We do not start with a universe of jobs, and then segregate out the teleworkable ones; we begin by assuming all jobs are teleworkable. Nor do we identify different locations (e.g. telecenters vs. homes) for different types of work. We believe that location is irrelevant, given the right technology; the work comes to the worker, no matter where she or he is.

We see this same pattern across society. Telework is a predominantly informal or grass roots phenomenon. Two out of three teleworkers in the U.S. are not part of a formal, scheduled, company program. They simply work the arrangements out with their manager, as needed when needed. On a general note, this is why we see incentives for telework that require extensive documentation (such as auditable, detailed records of daily location tracking) as potential dis-incentives to participation by raising administrative hurdles and costs for both the firm and the teleworker. Our yearly, statistically valid telephone survey of AT&T employee teleworkers allows us to drill deeply into the barriers and benefits of telework and measure participation to much better accuracy than a self-reported time system. In brief, a manufacturing economy focuses on place (the factory) because that's where productivity occurs; an information economy focuses on knowledge, which is produced independent of place and time constraints.

AT&T places the actual telework participation decision (along with many other tactical decisions such as specific equipment provided) into the hands of the local manager and the proposed teleworker. These two are in the best position to understand the unique job and environment involved, and manage the culture change involved with successful implementation of telework. They fill out a 'teleworker's agreement' and there are no further approvals required.

This empowered, flexible approach allows an individual employee to work at home as needed, when needed, to meet the competing demands of work, family and society. What we have done is work to eliminate the structural barriers to telework... programs which require teleworker approval by Vice Presidents have less participation than programs which require teleworker approval by direct managers.

We have tools to help determine if a particular job or employee is suited for telework, but they are short in length and very broad in scope. There are examples published on our public telework website (www.att.com/telework).

Essentially, a "good" employee or manager in the office is a good employee at home - a person's work ethic or results focus (as examples) do not change when she or he changes her or his desk. The key issue is really trust. If the manager trusts the employee to be getting work done even when she or he can't be seen, and if the employee trusts the manager to take her or his needs into account even when they aren't right outside the office door, then obviously there's a greater pool of 'eligible' teleworkers. If there's a lack of trust in either of these dimensions, then the eligible pool shrinks accordingly.
Another factor which shrinks the eligibility for telework is the digital divide between home and office. Our employee research has shown that lack of broadband into the home is the top barrier to increased participation.

Lack of high speed access to the inter/intranet draws workers back into the office for the sake of productivity, in this age of larger and larger computer files and applications such as video conferencing.

Overcoming Challenges to the Telework Model

Our research indicates that benefits actually increase, and challenges decrease, as participation rises. Telework is an excellent example of network economics - as the number of existing teleworkers grows, each new teleworker receives more benefit than the one before. Higher telework participation in a work group increases individual teleworker productivity and job satisfaction, which drives even higher participation, which increases the benefit, and so on, in a self-reinforcing cycle. A good example: Larger employers now lead in the adoption of telework, despite a slower start compared to small- and medium-sized businesses.

The first teleworker in a work group is an oddity, and has a difficult time succeeding. When half the people in that work group are working from home, the communication patterns change, and telework is no longer an unusual event. When practically all the people in that work group are virtual - as in my AT&T Environment, Health and Safety organization - we really begin to see rapid business improvement and higher performance. The following AT&T-wide data are from the 2000 AT&T employee teleworker survey:

2000 1999 AT&T Telework Participation (1x/month or more)
56% 49% Percent of AT&T teleworkers describing as "major problem"

16% 27% Reduced visibility for the employee
15% 28% Loss of camaraderie or a sense of being part of the team
15% 23% Isolation of the telecommuter
7% 13% Loneliness for the telecommuter

Part of the reason for AT&T's dramatic levels of telework is our management approach. We believe that telework should not be a separate and distinct area of the business. Instead, telework should be integrated into the business... almost every existing organization plays a role in terms of policies, processes and procedures within the existing business functions. For example, Real Estate takes telework into account when designing space. Security takes remote work into account when implementing new policies, processes and procedures. Information Technology Services takes telework into account when they build out our employee intranet. What this does is ensure a sustainable management system for telework. Specific to the managerial attitudinal dimensions of telework, I've already spoken about our empowerment model and the trust that is needed between the worker and the manager. What we've learned is that many managers are already working with teams and individuals who work elsewhere... perhaps on the other side of the globe, or maybe only the next building over. In other words, in today's environment, it is a basic expectation that managers are able to manage beyond their line of sight. Managers and workers who are sitting in an office working with managers and workers sitting in other offices are ideal candidates for telework.

Another managerial attitude factor is performance management. How successful managers will be in managing remote workers will depend very much on how well they manage workers in a traditional office environment. Organizations (and supervisors) that are successful with "managing by objectives" and outputs will have no problem making the transition. Those who manage by "TAD" (Time At Desk) and by how "busy" they perceive an employee is, will have a difficult time unless they can begin to identify and implement performance measures and success criteria. Measuring TAD is an anachronism from manufacturing days - in a manufacturing plant, time spent on the line is a reasonable correlate to productivity, but it is dysfunctional in an economy where knowledge is the desired product. But, of course, measuring TAD is easier, so a significant barrier to telework is managers who for whatever reason refuse to or cannot adopt more sophisticated performance measures. It
is worth noting that these managers often perform poorly in a knowledge economy in other ways as well.

Nonetheless, old patterns which become embedded in culture are extremely resistant to change, even when external indicators argue that it is economically, socially, and environmentally preferable. It's only when the documentation of productivity gains, real estate savings and employee retention begin to differentiate those companies who offer a more flexible workplace from an earnings perspective that senior management will take notice. In the interim, progressive managers and employees are making their own telework policies.

A key part of this cultural change is the awareness and internal marketing of telework. We continually 'sell' telework so as to help create a culture in which telework is more than 'legal' - telework provides business benefits and it ought to be part of the everyday fabric of our work. Interestingly, on the subject of knowledge transfer, we've seen decreasing demand for teleworker training. In fact, our classroom training for teleworkers and managers has been discontinued for lack of demand. Although an important part of our program ten years ago, before the rise of the knowledge economy, in this age of the PC and the internet people seem to be more confident in their ability to work from home. Once telework is established as part of the culture, the formal processes such as training are less critical.

A major challenge to telework, however, is the difficulty of getting started. The first day working at home can be a difficult day in terms of making all the different components - the PC, the software, the network, and so on - work together. Additionally, this first day at home must be preceded by the manager / teleworker discussion, the review of appropriate polices, and other foundational requirements. What we've done at AT&T is establish an employee telework portal on our intranet which provides links and information designed to streamline the process of beginning to telework. The employee has one-click access to all the different required content and e-enabled processes from across the firm… installing voice and data lines, or accessing the AT&T Telework Policy, or reviewing the standard hardware configurations, or downloading anti-viral software, or submitting an order for cable modem.

We've seen quite an improvement in this particular area of our survey results since building the intranet portal. Going forward, existing labor and employment issues important to both employer and employees that need to be resolved. These issues include the application of telework to the Americans with Disabilities Act, Equal Opportunity/ Affirmative Action, insurance and liability requirements, OSHA compliance, application of workers compensation laws, wage and hour laws, and tax issues. This is not surprising: just as firms and managers are still optimized to a manufacturing economy, so are our public institutions, regulations, and laws.

Telework Benefits to the Company

Telework is often seen as an employee benefit, and it is. But there are major business benefits as well. For example, we estimate that we save about $25 million per year in real estate through virtual office programs. But that's just the tip of the iceberg.

Data indicate that teleworking enhances productivity, both because teleworkers report being more productive per unit time, and because the teleworker has available the previously non-productive commute time. For example, when asked about perceived productive work hours (when tasks are accomplished), office workers reported 6.2 productive hours in an 8 hour day, compared to the teleworker-reported 7.5 hours in an 8 hour day. Over three-quarters (77%) of all teleworkers reported higher productivity at home while only 6% reported higher productivity in the office. Seven-in-ten managers (72%) report beingmore productive when working from home.

Only 5% of managers report higher productivity when working from the office. We calculate that this increased productivity of our teleworkers is worth about $100M per year.

Recruitment and retention are other important benefits. Because of the enhanced quality of life and personal freedom which teleworking fosters, firms are better able to retain valued employees, even when flattening hierarchies so that promotion opportunities are more rare. Among the AT&T teleworkers who have been offered other jobs, about two-thirds (67%) reported that giving up an "AT&T telework environment" was a factor in their decision to remain with the company. And, in the competitive market for high tech employees, firms are finding that it is the companies with more non-traditional work environments that are the most successful in recruiting the knowledge worker.

In fact, one of the most surprising statistics developed by my team is that virtual office managers are more likely to be rated in the very highest performance management category - as measured by the formal, managerial appraisal - than their office-bound peers. Whether the additional productivity from working virtual results in the higher rating, or whether the higher rating results in increased desire and ability to work at home full-time, is a 'chicken and the egg' question. The bottom line is that these higher-rated managers are turning down job offers because they are teleworking, resulting in direct business benefit to AT&T.

Of course, the benefits of telework to employees are well reported. Teleworkers are more satisfied with both their jobs and their personal/family lives. 77% of our employees who work from home reported much greater satisfaction with their current career responsibilities than before teleworking, while 84% said the same of their personal/family lives.

Equally as interesting, not just the teleworker but their families also report enhanced quality of life: 81% of AT&T teleworkers reported their family members viewed the arrangements as positive, while only 3% reported negative feelings from other members of their households and 16% reported neutral opinions.

In evaluating telework advantages, "balancing work and family life" and "improved productivity" were most frequently cited as major advantages.

Six major advantages were cited by a majority of teleworkers:
84% Better balancing work and family life
80% Improved productivity
78% Showing the company cares about people
77% Helping the company keep and attract the best people
71% Gives employees more personal time by reducing their commuting time and
70% Making employees feel trusted

Environmentally speaking, the most cited benefits of telework done from home are the energy saved and concomitant reductions in carbon dioxide emissions, hydrocarbons and in NOx emissions. Since one gallon of gasoline produces 19 lbs. of carbon dioxide (CO2), the 5.1 million gallons of gas our employee teleworkers didn't use in 2000 (by avoiding 110 million miles of driving by teleworking) equate to almost 50,000 tons of CO2. Similar benefits result from reductions in NOx and hydrocarbons. Importantly, given the demographics of employment for AT&T and similar firms, these benefits tend to occur in or near major urban areas where air quality is an issue, so reduced emissions feed directly into better air quality - and less traffic congestion - for everyone. Obviously, these are estimates based on reasonable assumptions, but they provide an idea of the magnitude of reductions in emissions which teleworking might support if engaged in on a global scale.

Most environmental assessments of telework, however, focus only on the direct effects, and fail to include the considerable indirect effects. Teleworking is thus not just an emissions reduction technology, but an energy efficiency technology as well, contributing to more efficient traffic patterns generally: less traffic congestion makes everyone more efficient.

Moreover, to the extent telework reduces demands for additional infrastructure, it also leads to less material use in construction, and less land use impact.

These results are difficult to quantify, but flow directly from the major characteristic of telework: because it lowers traffic congestion at peak periods, and infrastructure is designed based on such peaks, increased telework translates directly into decreased demand for infrastructure.

AT&T's Program - Making Location Independent of Work

AT&T has had experience with almost every type of teleworking arrangement. Our policy is generic and does not divide or structure telework based on location. In fact, the whole point of the telework policy is to make location - home, airport, telecenters, wherever - independent of work. This allows alternate work arrangement decisions to be made locally. For example, some of our sales organizations have implemented hoteling arrangements, where space is checked in and out as needed, freeing up real estate and allowing consolidation. I would not doubt that some of our 35,000 or so teleworkers are using telecenters, but the home seems to be the most prevalent location for telework, by far.

But that's only our experience. In different organizational cultures, with different technology infrastructures, telecenters might find wide usage. One of the interesting facets to telework governance is that the employee gains decision making power over location (unless telework is mandated, which we do not recommend). The implication is that telecenters will probably rise and fall based on their ability to meet the needs of individuals, rather than purchasing managers. There will always be a need for socialization, and for face-to-face communication, and telecenters might be able to supply an environment for these interactions. Telecenters would also be a natural location for technical PC and software support.

Policies to Enable Telework

Members of the subcommittee, Congress can play a key role in accelerating the deployment of Telework by considering certain legislative initiatives including but not limited to legislation recently introduced by Rep. Frank Wolf of Virginia. H.R. 1012 would "allow a credit against income tax for expenses paid or incurred under a teleworking arrangement for furnishings and electronic information equipment which are used to enable an individual to Telework."

Additional consideration should be given to enhancing the proposed legislation to double the tax credit of each employee covered under the Americans with Disabilities Act of 1990 ("ADA") and for each employee of a small business. Building on Rep. Wolf's initiative, we would suggest giving an employer an annual Telework tax credit of $500 for each employee who teleworks on a full-time basis, and a prorated amount for each employee who teleworks on a part-time basis. For each employee who is covered under the ADA, the maximum annual employer Telework credit would increase to $1,000.

According to numerous surveys, the primary obstacle that has prevented broad participation in Telework arrangements is the lack of remote employee access to broadband technologies. To overcome this barrier, we would suggest additional legislation that would offer companies tax incentives to invest in Broadband telecommunications equipment. With legislation that would allow a taxpayer to expense the cost of qualified broadband telecommunication equipment, the supply side of the equation would match the demand side being created by the telework tax credits.

I would also like to direct your attention to legislation passed during the 106th Congress which will promote Telework:

Telecommuting and Air Quality Act (HR2556, S1521): Rep Frank Wolf & Sen. Rick Santorum bills that created a study of the feasibility of providing employers with tradable pollution tax credits for reducing exhaust emissions from cars by reducing Vehicle Miles Traveled (VMT) through the use of telework programs. Follow-up Legislation has passed Congress to move from the study phase to carrying out a 2-year program to implement such programs in 5 US cities - see HR4425/Public Law 106-246, Sec.2603. Pilot program cities are Washington, D.C., Philadelphia, Denver, Los Angeles and Houston.

DOT Appropriations Bill (HR4475, S2720 - Law # 106-346): Rep. Frank
Wolf & Sen. Richard Shelby's Bills direct, under Sec. 359, that each executive agency establish a policy in which eligible employees may participate in telecommuting to the maximum extent possible without diminished employee performance. It requires the Director of the Office of Personnel Management (OPM) to provide that such requirements are applied to 25 percent of the Federal workforce, and to an additional 25 percent of such workforce each year thereafter.

Federal legislation introduced which should be reconsidered during the 107th Congress includes:

Digital divide Access to Technology Act of 2000 (HR4274): Rep. Jerry Weller's Bill to amend the IRS Code to provide that computers provided to employees for personal use are a nontaxable fringe benefit. This will prevent employees from having to pay tax on the computer packages that their employers have provided to them to increase their computer literacy/skills.

Small Business Telecommuting Act (HR3500): Rep. Mark Udall's Bill to direct the SBA, from up to 5 of its Regional Offices to conduct a pilot program "...to raise awareness about telecommuting among small business employers and to encourage such employers to offer telecommuting options to employees."

Rural Telework Act of 2000 (S2447): Sen. Paul Wellstone's Bill to provide assistance to individuals in rural communities to establish National centers for Distance Working, to support the use of teleworking in information technology fields.

Digital Empowerment Act (HR3897, S2229): Sen. Barbara Mikulski & Rep. Silvestre Reyes' Bill to establish a program for Community Technology
Centers (CTCs) which would authorize computer centers in & around public housing allowing for a tax deduction for corporate donations of computer technology & equipment for educational purposes.

Additionally, Congress may want to turn to the states and localities to review innovative programs like the Metro Washington, D.C. program that provides telework consultants to corporations engaging in Telework initiatives. The San Francisco Bay Area & Metro Washington, DC Council of Governments have "1-in-5-in-5" target programs.

Conclusion

Mr. Chairman and members of the subcommittee, I thank you for the opportunity to share the AT&T story on telecommuting and offer our company's resources to work with the committee in developing programs that will allow more segments of the nation's workforce to realize the benefits of an important tool of the New Economy.