Banker's hours.

The phrase is a monument to past inflexibility and the belief that banks would always be the only financial services game in town.

Shaken out of this delusion, banks have lengthened their hours and become more service oriented. Those changes are well documented.

But efforts to become more flexible in deploying staff have received less attention.

Spurred by rising overhead costs and more competition in recruiting top executives, many financial institutions - particularly those in the top 50 - have begun to let select employees split their work time between home and office.

Though so-called telecommuting has obvious benefits for bank employees, financial institutions hope that pliable work arrangements will also improve productivity and customer service.

Telecommuting "is a major wave" in the banking industry, according to William Arnold, a principal at Towers Perrin in Atlanta. "Virtually 100% of banks are involved in it in some form on the systems side, and a lot of institutions are looking at it for other applications."

The practice of allowing systems employees to work at home began more than a decade ago, as a handful of institutions installed personal computers at the homes of support programmers, enabling them to correct problems that might arise during overnight processing.

"That sort of legitimized (telecommuting) for higher skill levels," said Mr. Arnold.

Today, most major institutions have nonsystems employees working from their homes. High-profile employers of telecommuters include BankAmerica Corp., Bankers Trust New York Corp., and Chase Manhattan Corp.

Each of these institutions emphasized that working at home is not right for all employees. The work habits, motivation, job description, and home environment of an employee must all be appropriate for working away from the office.

Consultants echoed the need to evaluate telecommuting candidates on these criteria. "It's a function of the person and the job," said Kathie Lingle, a senior consultant at the Wyatt Co., based in Washington.

In other industries, telecommuting is a way to reduce the overhead associated with leased office space. International Business Machines Corp. and AT&T Corp., two of the most aggressive users of home workers, have moved thousands of employees from their offices, generating millions in savings.

Surprisingly, bank executives say that overhead reductions are not the primary incentive for telecommuting programs. While, in the long term, financial institutions may amass enough telecommuters to close offices, the immediate goal of most work-at-home programs is improving productivity.

According to Ms. Lingle, telecommuters tend to be 8% to 15% more productive than workers in the office - a fact that she finds unsurprising: "As we all know, you can't get anything done in the office."

Managers at Bank of America echoed Ms. Lingles' assertion that telecommuting tends to enhance productivity. They attribute the improvements, in part, to a more relaxed working environment and the elimination of patience-taxing commutes.

"In the short term, I don't think cost savings motivate" telecommuting programs, said Rosemary Mans, vice president of flexibility programs at Bank of America in San Francisco.

Bank of America has more than 1,300 employees working at least one day a week from their homes, and the numbers continue to grow, Ms. Mans said.

In at least one area - credit card collections - the bank is testing having employees work from their homes full time. Other areas ripe for telecommuting include "budgeting and writing or creative work, where employees can let their minds go in a home work environment," said Ms. Mans.

A study from Andersen Consulting supports the notion that flexible work arrangements improve productivity. The study, known as Strategies for High Performance, notes that the best-performing institutions tend to employ a wide variety of work arrangements, from part-time employment to peak-time employment to flexible work arrangements like telecommuting.

By contrast, low-performing institutions tend to be less creative in their employee management, usually using only part-time and temporary staff to supplement full-time employees.

Bankers Trust, like Bank of America, views telecommuting as a way to enhance productivity: " I can't think of a manager who doesn't find it beneficial from a productivity standpoint," said Molly Houghton, a vice president of employee relations at the $76 billion-asset institution.

However, Ms. Houghton said the bank initially started offering telecommuting options as a way to attract and retain high-level executives. Competition for strategic thinkers has become fierce, as non-bank financial companies make a play for the dollars that consumers have traditionally placed in banks, she said.

Bankers Trust has about 150 vice-president-level employees in what they term nontraditional work arrangements, and the number of participants is growing.

Ms. Houghton and others indicated that the range of jobs deemed suitable for work at home is also growing.

"The idea is that most people, from knowledge workers to support staff, can find some things that can be done at home," said Eugene Friedman, a vice president for applied technology at $95 billion-asset Chase Manhattan.

Chase is in the pilot stages of a work-at-home program for its credit card group. The pilot will rely heavily on the installation of a new computer system that will enable images of credit card documents to be accessible to workers at their homes.

Mr. Friedman said the pilot is an effort to begin compliance with the Clean Air Act, which will require businesses to cut back on the number of employees who commute by car. Several other institutions, including Marshall & Ilsley Corp., said this legislation will add significantly to the number of institutions expanding their telecommuting programs.

While the benefits of home workers are apparent, Bank of America's Ms. Mans cautioned that banks should implement telecommuting carefully.

In addition to looking at the potential telecommuter and the job he or she would do, the bank must examine whether the manager is capable of supervising the worker without being in the same location.

In addition, the home office space should be clear of distractions, such as children who need care from the worker.

If these criteria are met and the computer system through which the worker operates is secure, a bank should be able to benefit from telecommuting.

"There is no longer the notion that everyone has to have 165 square feet of office space with their name on it," said Gil Gordon, principal with Gil Gordon Associates in Monmouth Junction, N.J. "All the signs say this is a good thing."

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