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OM in the News: Out of the Office, But Still on the Job

December 22, 2012

aetnaWork and home in the U.S. once were at the same place—the farm or the shop. The notion of working away from home emerged at the start of the 19th century, when New England mills hired young women and, later, immigrants, to tend machines and the mills put them up in dorms. Expanding offices hired clerks, who moved to cities and lived in boardinghouses. But The Wall Street Journal (Dec.20,2102) writes that work has now moved from office to employee homes in a relentless drive by America’s big service-sector companies to cut costs, as well the effect that the spread of cheap, reliable and fast communications, particularly the Internet, has on the economy.

The Journal cites Aetna, Inc. as the nation’s leader in home work. Worried about losing talent when it closed some offices in 1996, Aetna decided to let employees work from home. Ten years later, only 9% of the insurers’ employees worked from home full-time. Around 2005, though, the insurer began to see working from home as more than a favor to employees. Today, nearly half of Aetna’s 35,000 U.S. employees work from home. And we aren’t talking about checking email after dinner or working from home on Fridays. These employees stay home every day: no desk, no cubicle, no computer in an office somewhere. Aetna staff are required to have a quiet place—no barking dogs or crying kids. The company pays for office furniture, a locked file cabinet and a shredder, plus computer gear and telephone and Internet service.

For the company, this is a money-saver. Aetna’s real-estate costs are 15% -25% lower than they would otherwise be—annual savings of about $80 million. Working at home has reduced Aetna’s total office space by 2.7 million square feet. (Overall, about 9.4 million Americans work from home).

Discussion questions:

1. From an operations perspective, what are the advantages and disadvantages of home workers?

2. What types of firms can benefit from home workers? What kind cannot?

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