CEM Insights

2014 Issue 2

Telecommuting Practices in Pension Administration: Current and Future Trends  Reasons to introduce a telecommuting program and for what positions

 Managing security, productivity and coaching  Three case studies on existing pension administrators’ telecommuting programs  Telecommuting Policy template example Welcome to CEM Insights Welcome to the second issue of CEM Insights with a focus on best practice research in pension administration. Look for three

more issues in 2015 on a range of topics relevant to pension administrators.

Current and Future Trends In this issue, we look at telecommuting practices by analysing the 41 responses from a short survey we sent to 75 pension administrators. Our key findings are: • There is a strong trend to implement a telecommuting program with 60% either having or considering a program within 5 years. There will be more and more telecommuting positions – throughout all levels of the organization – to improve recruitment and retention and meet legislative mandates. • ‘Ad hoc’ or informal, non-documented telecommuting practices can expose both employee and employer to unnecessary risks. • Telecommuting policies generally don’t apply to special, unique HR situations (e.g., recovering from a medical condition, accommodating a disability, etc.) • IT security solutions and equipment now Snapshot of 41 Responses make telecommuting more accessible and

viable. No program • To ensure telecommuters stay ‘in the now; considering within 5 years; loop’, most must attend regular on-site 24% meetings in person. In some circumstances, telecommuters may call No program; not Have program considering into meetings. now; 37% within 5 years; • Anecdotal evidence suggests that systems 37% Discontinued have seen increases in productivity and program; employee engagement and decreases in considering re- implementation; absenteeism since rolling out a 2% telecommuting program. • In general, major concerns about telecommuting before implementation were reduced after implementation.

Telecommuting Positions

Currently, the majority of telecommuting positions are in mass Telecommuting Definition communications and IT positions and not in transaction processing. “Other” For the purposes of this best practice telecommuting positions include HR, legal counsel, member education, research, we will define telecommuting investment management and executive staff. as follows:

Administration activities eligible for telecommuting A telecommuter will…  Often work 1-2 days from an alternate work location. Mass communication 75%  Perform regular work responsibilities Information technology 64% or approved special projects away Other* 46% from the office. Transaction processing 33%  Work the same amount of hours in a Call center / member calls 8% day as is expected in the office.  Comply with a defined, well-thought % of systems that indicate that the activity if eligible for telecommuting out written policy requiring supervisor approval. *Employer communications, investment, legal, management, specialists, policy development, etc.  Use available technology to provide a Reasons for Introducing a Telecommuting Program seamless workflow and to uphold security. As shown below, many of the top incentives for introducing a Telecommuting is not… telecommuting program focus on the employee experience. Karen Chavez, For employees working remotely HR Director at Oregon PERS, echoed this sentiment: “We are a union shop o who never come into the office. so we do tend to be employee-centric and have been pretty flexible at Used for ‘ad hoc’ or infrequent meeting work/life balance. Although we currently do not have a o special requests. telecommuting policy, implementing one would not only support business continuity, but be a way to help our culture, leading to more happiness – and happiness leads to higher productivity.”

Reasons why systems introduced or are considering a telecommuting program

Employee satisfaction Work/ life balance Top 3 reasons Operational continuity in the event of a disaster Retaining key employees Employee demand Considering (10 systems) Improved productivity Needed a policy to deal with special circumstances Introduced (15 systems) Reduced absenteeism Location/ logistics issues Recruiting incentive Environmental consideration Industry leadership Cost savings Policy of controlling agency Collective bargaining demand 0 1 2 3 4 5 Most important (1) to Not important (5)

2 Security

For 80% of pension administrators that are considering implementing a telecommuting policy, lack of security/ handling confidential information is a major concern, not surprising given computer privacy issues. However, systems with telecommuting programs reported that although security was a major concern prior to implementation, it did not seem to be an issue once the program was in place. For 36% of systems with telecommuting programs, security is not a concern at all with the current telecommuting program. Working closely with IT to clearly define security measures may further reduce apprehension.

Telecommuter training is a powerful tool for maintaining security. Bart Seure, Client Manager at PGGM explained that PGGM has a compulsory company awareness program for all employees, with topic-specific modules. They have found that the security component of their telecommuting module provided telecommuters with necessary skills, eliminating PGGM’s concerns regarding security prior to implementation.

Of the 15 pension systems that allow remote login, 12 systems use a Virtual Private Network (VPN). Security measures include password rotation and/or security tokens. Only 47% of systems with telecommuting programs require a ‘paperless’ office. A similar percentage requires paper files in locked and secure offices/filing cabinets. Two pension systems require a dongle stick, which is a USB stick used to verify credentials and/or supply a password.

Security requirements typically consist of either company or employee-owned computers with appropriate security software/hardware. The type and extent of access depends on the tasks that must be completed by the telecommuter.

Case Study 1: PGGM [The Netherlands] Overview PGGM offers both telecommuting or flexwork in a hotelling*-style configured office layout. Introduced in 2010, employees that enroll into the telecommuting program must work at least 1 fixed day a week at home. Although there are many reasons why people enroll in the telecommuting program, it appears the primary reason is to avoid long commutes. Only 3-4% of PGGM’s employees telecommute. Most employees do flexwork, working from home on flexible days in an informal, ad-hoc basis which is fully supported by the IT group.

Features  All employees, except call center employees, are eligible for telecommuting pending supervisor approval and a signed contract.  Telecommuting training is one of the core modules of the company’s awareness program.  Telecommuters receive a home office furniture allowance, including a catalogue of approved furniture and configurations.  There are no pre-defined workspaces at the office. “When we designed our new building a few years ago, we introduced the concept of flex work. No one has a personal desk – you work wherever you need to work at work stations,” said Bart Seure, Client Manager. Each employee stores belongings in a locker at the end of the day.  Productivity metrics are the same. “We measure at-home productivity the same way we measure in-office productivity. We don’t see a difference. Telecommuters are more satisfied and still as productive,” added Bart Seure.

*Hotelling-style model: An office model that encourages short-term, unassigned seating. Office spaces may be reserved as needed versus a more traditional defined office space.

3 Managing and Coaching Telecommuters

Because most telecommuters only work at home typically one to two days per week, hands-on supervision is done in the office. For 10 out of the 15 pension administrators with a telecommuting program, managing and coaching staff is done through telephone calls. Compliance with the telecommuting policy for the alternate work location is rarely audited.

All but one pension system stated that telecommuters must be available during specific hours. However, there could be benefits to providing schedule flexibility for telecommuters. “The current core hours will probably change in the future where as long as employees put in a full day, it doesn’t matter when they start,” said Tony Falconi of OMERS. “As the client services telecommuting program is in the process of coming online, they’re looking to tie that in to extended hours of operation.”

Case Study 2: Virginia Retirement System (VRS) [USA] Overview In 2006, Virginia’s then Governor called for 20% of eligible state workers to telecommute by 2010. In response, the telecommuting program at Virginia Retirement System was introduced in 2008 after a 6-month pilot, and has continued to evolve over the years. There are currently 75 telecommuters in the Pension Operations group including IT, transaction processing, communication and call center; most participants are in IT.

Overall, the Virginia Retirement System has a staff participation rate of 66% with 208 formal telecommuters. All employees are eligible. According to Wendy Battle, Human Resources Administrator, “We find that historically those that do not telecommute are administrative assistants, positions that don’t lend themselves to telecommuting, and those employees who choose not to telecommute. Supervisors are eligible to telecommute, if they are interested.” The majority of telecommuters typically work offsite 1 to 2 days a week so managing and coaching generally occurs in the office setting.

Features  An e-learning module on telecommuting is now used. “Because the response to telecommuting has been so great, the e-learning provides employees the ability to take the training at their convenience,” said Wendy Battle.  Training includes content for supervisors to ensure they are tracking performance metrics. “Initially the supervisors were not enthusiastic about telecommuting but as the program rolled out slowly, the supervisors became more comfortable and saw the positive results,” added Wendy Battle.  Telecommuters can work approved specific days or on special projects. It is particularly beneficial for larger projects where more work can get done at home away from distractions.  Because of the program benefits, new employees can start telecommuting immediately; there is currently no one-year waiting period requirement. However, in some departments, employees can only start telecommuting once certain productivity thresholds are met.  Telecommuting can be completed anywhere there is a secure data connection available (VPN, rotating passwords, security token, etc.). Initially work was limited to designated alternate work locations, but the introduction of technology solutions has broadened the scope. Call center workers use a ‘soft’ phone with headset; all telecommuters use company-provided laptops.  Although a large percentage of the Virginia Retirement System workforce participates in the telecommuting program, they are currently not looking at adopting a hotelling-style model.

4 Team Communication

Prior to policy implementation, 36% of pension administrators with telecommuting policies responded that they had major concerns with the potential impact of team structure, employee engagement and team communication as a result of telecommuting. However, these concerns seemed to be reduced after implementation; only 14% of systems surveyed stated that they still had major concerns in these areas.

Further, as the majority of telecommuters spend more time in the office than at alternate work locations, 86% of pension administrators with a telecommuting program had little to no concern with the potentially negative impacts to team structure resulting from the program. Anecdotally, pension systems with telecommuting programs have noticed an increase in employee morale through employee satisfaction surveys and direct feedback.

Thanks to technology, pension systems can offer a variety of ways for telecommuters to stay aligned with their teams. Although most of the 15 pension administrators require telecommuters to attend regular on-site meetings in person, 9 systems allow virtual participation.

Case Study 3: Ontario Municipal Employees Retirement System (OMERS) [Canada] Overview In fall 2011, OMERS introduced a pilot phase for telecommuting or “Working from Home” (WFH) with full implementation in 2012. Currently over 60 people working in the transactional processing and analysis/ support team, or 43% of the pension operations group, participate in telecommuting. A pilot for the client services team is underway.

Initial concerns about necessary telecommuting skills and IT were unfounded after implementation. “We found that many of the technology tools, such as instant messaging, Cisco ‘soft’ phones, etc., were not complex, so what we originally thought would be a steep learning curve, really wasn’t one,” said Tony Falcioni, Director of Pension Operations.

Features  New technology incorporating call recording via modem may allow the client services team to participate in the WFH program.  Telecommuters were initially limited to one set day a week, but this recently has expanded to two set days a week and may potentially expand to a full hotelling-style model.  Permanent staff can apply for and participate in the WFH program, pending supervisor approval and budget.  Work can be done anywhere on company-provided laptops – provided the required IT security protocol is followed (VPN, rotating passwords, etc.). The same system used in the office is used at home.  If needed, company-provided laptops can be connected to employee-owned monitors or TVs to improve productivity.

5 Eligibility and Productivity

Of the pension administrators with telecommuting policies surveyed, 50 % responded that prior to policy implementation they had major concerns with their ability to identify employees with the necessary skills for telecommuting, as well as identifying positions that work for telecommuting. However, these concerns showed improvement after implementation, with 21% of systems surveyed stating that they still had major concerns in both these areas.

In general, only select employees who use computers for most tasks or have minimal direct interaction with members can participate in telecommuting. Telecommuters must spend more days at the office than at home based on regular pre-defined schedules (i.e., one to two days a week).

Productivity remains a major concern for 36% of administrators with telecommuting programs. Only 9 of the 15 pension administrators with such programs currently measure offsite performance. This is not a surprise given that most telecommuters work mainly in the office (3-4 days) and must attend on-site meetings in person to stay ‘in the loop’.

However, having consistent performance metrics that are applied to all employees can give telecommuters a better reference for what is expected of them while working away from the office. “Productivity measures are based on the department. The call center has technology that can take and record calls remotely – just like in the office,” said Pam Elam, Finance and Business Performance Analyst for the Virginia Retirement System (VRS). “For those employees not on the phone, the supervisor has set goals and work that must be accomplished. If that work isn’t accomplished, we would know by the lack of productivity.”

Additionally, “having the productivity metrics in place helps eliminate a lot of the apprehension that we see from upper management,” according to Tony Falconi, Director of Pension Operations at the Ontario Municipal Employees Retirement System (OMERS).

Management and telecommuters at VRS and OMERS have seen improvements in productivity through performance metrics. OMERS has also noticed lower absenteeism with employees participating in their telecommuting program. “People who might normally be away for 3-4 days due to illness are now saying that although they may not be well enough to come into the office, they can still work from home.”

Home Office Requirements

Generally there are few requirements when setting up a typical telecommuting office. Over 54% of pension administrators surveyed with a telecommuting policy require a dedicated office space in the home free from distractions with an internet connection of a specified speed and quality. Home offices rarely require sound proofing, locked doors, locked file cabinets, shredders, local printers or dedicated phone lines or landlines. Now that there are suitable IT data security solutions, 6 of the 15 employers allow telecommuters to work ‘virtually’ (e.g., in a library or coffee shop).

The Virginia Retirement System has had success with incorporating their call center employees into their telecommuting program. “Telecommuters have phones that are connected to their Cisco agency phones [through modems] so that when a call comes in to the employee’s desk, it rings through to their phone at home, creating a seamless experience for the client,” said Wendy Battle, Human Resources Administrator. With the Cisco ‘soft phone’ technology, all the features available at the office call center follow the telecommuters, regardless of work location.

6 Key Considerations

A pension administration system interested in implementing a telecommuting program should consider the following: • Incorporate the same productivity metrics regardless of where the work is performed. Prior to implementation, consider having these metrics in place and well understood. This can alleviate concerns from management and provide one measure for the success of the program. • Adopt a comprehensive learning course that clearly outlines the telecommuter’s roles, responsibilities, procedures, etc. As well, incorporate supervisor training on monitoring telecommuting productivity and management to ensure program success. • Engage IT to develop clear procedures for security requirements. Ensure that telecommuters understand the importance of keeping confidential data secure while working out of the office, and that they are trained on policies and procedures to maintain security integrity. • Technology is available to provide a seamless member experience for call center staff. Ask your agency phone provider for solutions that are right for your system. • While in the pilot stage, maintain open communication with managers and telecommuters to immediately identify areas of weakness, but be aware that you may have to overcome apprehension and resistance from management until positive results are seen.

Telecommuting Policy Template Example (See separate attachment)

CEM has reviewed a number of telecommuting policies in pension administration and prepared a template that incorporates several telecommuting policy best practices. However, recognize that it will need to be adapted to your organization and country.

For additional information or a copy of previous issues of CEM Insights, contact: Jan Hartford @ 416-369-0317 or [email protected] CEM Head Office 372 Bay Street, Suite 1000 Toronto, Ontario, Canada M5H 2W9

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