Impact of Work Place Flexibility and Telework on the Performance of Organisations

by Yulia Pinter (Author)

Seminar Paper 2014 22 Pages

Business economics - Business Management, Corporate Governance


Table of Contents

Chart Descriptions

1. Introduction

2. Main definitions of work place flexibility and telework

3. Overview of telework in Germany and the EU

4. Impact of work place flexibility and telework on organisations’ key performing indicators
4.1. Impact on staff turnover and retention
4.2. Impact on absenteeism and health
4.3. Impact on productivity and organisational costs

5. Disadvantages of work flexibility and telework for employees and organisations

6. Conclusion and recommendations

7. List of references

8. Appendix

Chart Descriptions

Chart 1: Percentage of telework employees in Europe (Eurostat, 2013, p.1)

Chart 2: Development of telework within Europe, 2006-2013, % (Eurostat 2013, p.1)

Chart 3: Percentage of employees working from home within certain professions (Brenke, 2014, p. 135)

Chart 4: Positive influence of flexibility on Human Capital Outcomes (Richman, Johnson, Noble, 2011, p. 17)

1. Introduction

I would like to start this paper with a quote from the American president: “[Workplace flexibility] is an issue that affects the well-being of our families and the success of our businesses. It affects the strength of our economy -- whether we’ll create the workplaces and jobs of the future we need to compete in today’s global economy” (Obama, 2010, p.1).

The World at Work report states that “employers in advanced economies could face a shortage of 16 to 18 million college-educated workers in 2020 … many nations can narrow the skill gap raising the labor force participation rate of college-educated women and keeping older high-skill workers [emphasis not in original] in the labor force” (Dobbs et al, 2012).

One of the possible ways to handle this problem is to implement work place flexibility and telework opportunities for these two groups of employees.

Commerzbank is the second largest bank in Germany and Poland with more than 54,000 employees around the globe (Commerzbank, 2014, p.1). Its business is influenced by world labour trends, as well as the business of other organisations. The purpose of this paper is to demonstrate a theoretical basis of flexible work arrangements and telework for Commerzbank. The implementation of work place flexibility should definitely help Commerzbank retain its competitiveness and attractiveness on the international labour market.

The first chapter of this paper defines work place flexibility as flexibility in scheduling of working hours, in amount of hours worked and in the place of work. Teleworkers, for the purpose of quantitative analysis, are defined as employed people in the age range from 15 to 64 years, usually working from home.

Germany is among the countries where telework is not widely spread. Over the last 7 years the number of telework employees decreased in Germany but rose in the rest of Europe. The reasons for this could be unsuitable conditions for telework, the structure of the German economy and corporate culture in German organisations. The majority of German telework employees possess high levels of qualifications and education.

A close look at the economic factors through which work place flexibility and telework can influence the profitability of an organisation proves that:

there is a positive relationship between the opportunity to work from home and retention rates of employees using this practice. Therefore, telework can decrease staff turnover cost and positively affect an organisation’s profitability.

work flexibility has a large impact on the level of staff absenteeism and leads to a decrease in the number of sick days, which positively influence the firm’s business efficiency and can save a significant amount of money.

flexible work arrangements increase staff productivity and decrease organisational costs for a company, which together make a positive impact on a company’s profit.

Finally, some organizational, social and career development disadvantages related to remote work as well as the lack of collaboration and innovation for the telework teams is discussed.

2. Main definitions of work place flexibility and telework

For better understanding the topic of this research paper, I will start this chapter with definitions of work flexibility and telework.

Georgetown University Law Centre divides the concept of work place flexibility into three components:

“1. Flexibility in the scheduling of hours worked, such as alternative work schedules (e.g., flex time and compressed workweeks), and arrangements regarding shift and break schedules;
2. Flexibility in the amount of hours worked, such as part time work and job shares; and
3. Flexibility in the place of work, such as working at home or at a satellite location” (Georgetown University Law Centre, 2010, p.1).

In fact, the third part of the work flexibility definition is a definition of telework, in other words telework is a part of work flexibility. However, there are also some other definitions of telework.

Different sources offer different definitions of telework. One of the most common and most reliable ones is a definition from the European Framework Agreement on Telework.

“Article 2 of the European Framework Agreement on Telework of 2002 defines that:

Telework is a form of organising and/or performing work, using information technology, in the context of an employment contract/ relationship, where work, which could also be performed at the employer’s premises, is carried out away from those premises on a regular basis” (European Foundation for the Improvement of Living and Working Conditions, 2010, p.3).

According to a report “Telework in the European Union”, only nine European countries (Belgium, Finland, France, Germany, Greece, Italy, Norway, Spain and the United Kingdom) use the above mentioned definition, whereas the other EU countries use their own definitions. For instance, in Poland, Slovenia and Slovakia telework is defined as work at home or at any other agreed place, using information technologies. In the Czech Republic and Hungary it refers to employees who do not work in an office, but there is no reference to IT. Although the European definition of telework is quite broad, all the countries are agreed that this term covers only employed workers (European Foundation for the Improvement of Living and Working Conditions, 2010, p.3).

As you can see from the previous paragraph, the definitions of telework and work flexibility are quite broad. In order to perform the quantitative analysis and review the telework market in Germany and the EU, certain data from the European Commission (Eurostat, 2013, p.1) will be used. According to the European Commission, teleworkers are employed people in the age range from 15 to 64 years, working usually from home (Eurostat, 2013, p.1). For the purpose of quantitative analysis, we will use this particular definition of telework.



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Frankfurt School of Finance & Management
Telework work place flexibility performance of organisations


  • Yulia Pinter (Author)



Title: Impact of Work Place Flexibility and Telework on the  Performance of Organisations