Can a gift-exchange model explain a potential link between flexible working and organisational performance?
In the UK, the benefits of flexible working, for both employees and employers, have been widely advocated. Is there a link between flexible working practices and firm performance?
Data suggests there has been an increase in the offering of flexible working options to employees in Britain, and that similar schemes have been introduced across Europe. A systematic review of the academic research showed that a clear link between flexible working arrangements and organisational performance is yet to be established. In fact, a large empirical study of firms in the UK, France, Germany and the USA concluded that there was no direct link between flexible working practices and firm performance.
This study investigates the links between flexible working, organisational commitment and performance-related outcomes (labour productivity, product or service quality, absenteeism and labour turnover). The focus is on working arrangements that allow employees to exercise their preferences with regards to when and where they work. Employee and workplace data from the Workplace Employment Survey of 2004, which is a representative sample of British workplaces with five or more employees, is used. Both the provision of a flexible working arrangement and the perception of access are analysed. Results suggest a range of impacts. Employees' perceptions of being able to work flexitime, from home or compressed weeks are positively associated with workforce commitment, but only the latter is positively related to labour productivity and quality. This link with quality is mediated by workforce commitment, as expected in a gift-exchange context. Allowing employees flexibility of working hours and a compressed week may lead to higher product or service quality, but may not increase commitment. Overall, a policy of allowing work from home appears to be the most attractive arrangement for the employer, as it is positively associated with workforce commitment and may have positive effects on organisational performance.
This research was first presented at the Economic Modelling Network in 2010 and is currently being developed for a journal release. The full paper can be accessed via the link below.