Ethical Considerations in Flexible Work Arrangements

Business and Society Review

110:2

213–224

© 2005 Center for Business Ethics at Bentley College. Published by Blackwell Publishing, 350 Main Street, Malden, MA 02148, USA, and 9600 Garsington Road, Oxford OX4 2DQ, UK.

Blackwell Publishing, Ltd.Oxford, UKBASRBusiness and Society Review0045-3609© 2005 Center for Business Ethics at Bentley College??? 20051022Original Article

WILL ROBINSON

BUSINESS AND SOCIETY REVIEW

Ethical Considerations in Flexible Work Arrangements

WILL ROBINSON

T

he combination of new technology and changing social moreshas altered traditional views of collaboration among employees.Partly driven by the growing notion of employee rights, many

of today’s workers are seeking employment opportunities that allowthem to maintain work–life balance while working toward organiza-tional goals. Recognizing these employee motivations, proactivebusinesses have begun offering flexible work arrangements (FWAs).These FWAs range from instances of permanent telecommutingto situations involving mixed schedules, in which employees worksome days in the office and other days at distant locations. The benefitsof FWAs for both the employee and the employer are well documented.

The ethical concerns that arise as FWAs become a more popularoption for businesses have not received as much attention. Whencompanies commit to FWAs, they develop a special kind of psycholog-ical contract with their FWA employees and have an ethical obligationto provide those employees with the support necessary to succeed.In some ways, these obligations mirror those that the company hastoward all of its employees. In other ways, these obligations are unique.

The present paper argues that firms must consider their uniqueethical obligations to employees in designing FWAs, while also focus-ing on the strategic and economic aspects of such arrangements.Simply offering FWAs as an option to employees does not allow a firmto fulfil its obligations under the psychological contract. Instead, truly

Will Robinson is an Associate in Booz Allen Hamilton’s Economics and Business Analysispractice. He has engaged in a successful flexible work arrangement with Booz Allen sinceJanuary 2003. You can reach him at Booz Allen Hamilton and University of Richmond, 45Malvern Avenue, #1, Richmond, VA 23221.

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ethical companies provide ongoing support to these employees andensure that they are integrated into the workplace community.

UTILITARIANISM AS AN FWA DRIVER

From a strategic standpoint, FWAs have grown in popularity becausethey bring tangible benefits to both employees and businesses. Forthe employee, the ability to work from home or pursue another non-traditional work arrangement allows him or her to more efficiently andeffectively manage child and/or elder care responsibilities, pursueeducation or professional certification opportunities, or engage in otherpersonal pursuits. Also, an FWA may give an employee the option ofstaying with an employer rather than leaving the firm when facedwith a conflict between work and personal responsibilities. If anemployee’s spouse were transferred to another city, for example, anFWA would mean that the employee would not necessarily have toleave his or her employer and lose the associated accrued benefits(i.e., seniority, 401K match, etc.). In addition, FWAs provide optionsto employees with disabilities or health problems who may beunable to work full-time or maintain traditional hours in the office.

Employees are not the only beneficiaries of FWAs though. Employerscan accrue benefits as well, which is why FWAs are an attractiveoption to many businesses. FWAs give businesses a competitiveadvantage in attracting staff because they provide employees aneffective way to respond to evolving and diverse needs. During therecruiting process, an FWA can be construed as an additional“benefit,” akin to health and retirement plans, thereby offeringemployers a potential competitive advantage over rival firms inattracting employees.

Moreover, FWAs can contribute to improved employee productiv-ity because they have the potential to reduce stress levels of staffmembers who are trying to find a balance between the pressuresof their work and their personal lives. Furthermore, FWAs canhelp employers reduce the costs associated with employee attri-tion by providing an alternative for employees who might otherwiseleave firms (to move to another city, for example), reducing overallturnover rates and the costs associated with recruiting and hiringnew staff. In summary, FWAs can prove both quantifiably andqualitatively beneficial to employers.

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For all these reasons, employers are increasingly turning toFWAs to provide benefits to their primary stakeholders. Stockhold-ers and managers receive benefits through decreased attrition costsand smooth operations because of improved employee morale,while employees benefit from the freedom to balance their work andtheir personal lives and stay with firms they might otherwise leave.In effect, employers are turning to FWAs because of the utilitariannature of the arrangement, in which both the employer and theemployee benefit from the arrangement.

However, one primary flaw in the principle of utilitarianism isthat it does not always adequately address rights issues. Whilemost FWAs are constructed of utilitarian ideals of generatingbenefits for as many stakeholders as possible, the realities of FWAenvironments can often fall short of expectations. In particular,employees who engage in FWAs generally want to continue toadvance with their employer, continue to take on more responsibil-ity, engage in stimulating work, and be seen by their colleagues asequal contributors on collaborative efforts. Most FWA participantsperceive these feelings as their rights as employees. However, in thereality of some FWAs, such perceived employee rights and utilitarianideals on which FWAs are based can be at odds.

Often, FWA employees do receive the professional and technicalsupport they need to succeed from their employers. Technicalsupport can range from connectivity to updated software and hard-ware, while professional support can range from mentoring andtraining to challenging work assignments. When employees do notreceive adequate support, they often are perceived as less valuableon collaborative efforts by their peers and may not be consideredcandidates for promotion by their superiors. In extreme cases,these employees become frustrated and leave the firm. Whenemployees fail in an FWA capacity because of lack of support, itraises the issue of whether the employer has an ethical responsi-bility to ensure the FWA employee has the same tools for success athis or her disposal as his or her colleagues who work in the office.

FWAs and the Psychological Contract

To determine the ethical responsibilities employers face whenallowing employees to engage in FWAs, it is necessary to examine


the psychological contract established between the company andthe employee. In essence, the psychological contract is an impliedsense of mutual obligation between the employee and his or hercompany. As Denise Rousseau explains, the psychological contractcomprises subjective beliefs regarding an exchange agreementbetween an individual and the employing firm.

1

Tying these beliefstogether are the perceived obligations of both parties. For employees,the psychological contract specifies “the contributions they believethey owe to their employer and the inducements that they believeare owed in return.”

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Perceived employee-owed inducements can take many forms;however, MacNeil has developed a typology that delineates psycho-logical contracts into two types: transactional and relational.

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Transactional contracts involve specific, monetizable exchangesthat usually last for a finite period of time. These psychological con-tracts are usually defined by explicit obligations and responsibili-ties of both the employer and employee. An example of such an FWAarrangement would be the mutual understanding between a firm’smanagement and an employee who is hired by a firm to work solelyon a two-month special assignment, with no potential for additionalfollow-on work. By contrast, relational contracts involve less-specificterms and seek to establish an ongoing relationship. This type ofpsychological contract is denoted by mutually accepted generalterms of employment. An example of such an arrangement would beif a veteran employee of a firm gives birth and decides, for personalreasons, that she would prefer to work from home in the interests ofwork–life balance. The ensuing psychological contract would entailgeneral terms (i.e., number of hours a week she will work, criteriafor advancement, etc.). However, in contrast to transactional con-tracts, under the relational model, the employer and employeewould be under the mutual agreement that the contract wouldcontinue indefinitely and, most likely, evolve with time. Within rela-tional psychological contracts, examples of typical inducementscan include training and development opportunities or long-termcareer growth within the firm.

FWAs, therefore, can be thought of as a type of a relationalpsychological contract between the employer and the employeebecause they usually have some specific terms, but also seek toestablish an open-ended engagement with no definite end date.Within this construct, typically, the employee in an FWA pledges to

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work with the same productivity and passion as his or her colleagueswho work in the office, and believes that the employer has pledgedto provide the employee with the same support, training opportuni-ties, and career growth employees in the office receive. Both partiescan construe the terms and inducements of this relationship as acollection of ethical obligations. As Cohen and Single assert, “firmsare [establishing FWAs] to fulfill an ethical obligation in creatingan appropriate professional environment to their employees.” Onelarge accounting firm created FWAs because, “it was the ethicallyright thing to do to fulfil our obligation to provide [employees] with themaximum opportunity to realize their full potential as professionals.”

4

Rousseau points out that psychological contracts can motivateemployees to perform to the conditions of the agreement becausethey define goals which the employee has publicly accepted, createan employee self-image as a promise keeper, compel the employeeto maintain a commitment to the contract out of fear for potentiallosses other stakeholders would face, and generate social pressureand concern for self-reputation.

5

Therefore, most of the time, psy-chological contracts can be used as self-regulating mechanismsbecause employees engaging in FWAs can be generally expected tofeel compelled to uphold their end of the psychological contract withtheir employer.

However, the creation of FWAs leads to a new set of strategic andethical challenges for companies. As Grimsley notes, “althoughworkers are quickly moving off-site, little attention is being paid tothe issue of how to best manage off-site workers. While some workersquickly take to off-site employment, others, particularly new hires,require additional supervision and assistance from their bossesto remain effective. Many remote workers lack some of the basicequipment that is considered essential to white-collar work today.”

6

Obviously, the business press is beginning to acknowledge thatthere are potential drawbacks to FWAs, particularly in the areas oftechnical support, mentoring, and effective management.

At the same time, the academic press is exploring other potentialdrawbacks to FWAs. One recent study involving 107 managers intwo large East Coast offices of a multinational accounting firmexamined whether “other firm members’ perceptions of an indi-vidual’s professional success and anticipated turnover are affected bywhether the individual takes part in a flexible work arrangement.”The authors suggest, “if individuals who take part in these programs


are not viewed as desirable to be assigned on various engagements,then the firms have an ethical obligation to be more forceful inensuring that meaningful and career advancing assignments aremade. Moreover, if the individuals who take part in these programsare not perceived to be sufficiently likely to achieve advancement,then firms will have to undertake ongoing training and educationthat this perception does not become a self-filling prophecy . . .professional service firms have a moral obligation to provide theresources and to allow employees to succeed.”

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The study found there was a statistically significant correlationbetween FWAs and negative perceptions. In other words, thestudy’s results indicated that participation in an FWA elicitedpessimistic predications by colleagues on FWA participantdesirability for engagements, potential for advancement, and likeli-hood to leave the firm. When firms do not regard FWA employeesas desirable for engagements and perceive them as less likely foradvancement and more likely to leave the firm, FWA workers oftencannot gain the experience necessary to achieve advancement,thus making them less desirable and more likely to leave thefirm. Thus, the situation can result in a self-fulfilling situation inwhich FWA workers fail.

In addition to managing perceptions, effectively managing psy-chological contract expectations throughout the duration of therelational contract can be challenging for employers. In their studyof changing obligations in psychological contracts, Robinson,Kraatz, and Rousseau found that over time, perceived employeeobligations to their companies decreased with the obligations theyattributed to their employers.

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Applying these results to the FWArealm, as employees continue to work in an FWA capacity, theyexpect more challenging assignments, training, and mentoringfrom their employers. These findings support Cohen and Single’sresearch because if employers perceive an FWA employee as lessdesirable for challenging engagements, the employer will not givethe employee challenging roles. In turn, the employee could viewsuch an action as a breach of the employer’s obligations under thepsychological contract and decide to leave the firm, thus concludingthe self-fulfilling prophecy. Therefore, if firms engage in FWAs, theynot only have an ethical obligation to afford their FWA employeeswith the experiences, training, and mentoring necessary to allowthem to succeed just as their colleagues who work in the office, but

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they also must effectively manage mutual expectations of thepsychological contract to ensure agreement in perception and fulfil-ment of mutual obligations.

PERSONAL EXPERIENCE IN A FLEXIBLE WORK ARRANGEMENT

Since January 2003, I have participated in an FWA with myemployer, Booz Allen Hamilton (BAH), an international consultingfirm with 13,000 employees. I first joined BAH in March 2002 andworked in their Falls Church and McLean, Virginia, offices for ninemonths. However, when my wife’s company transferred her to Rich-mond, Virginia, in January 2003, I planned on resigning from BAH,which does not have an office in Richmond. Instead, my supervisorsuggested I try an FWA, whereby I would primarily work from home,but travel to the company’s McLean headquarters as needed forinternal and client meetings.

At the outset of my FWA, I was doubtful that it would result inpositive outcomes either for the firm or me. As BAH is a professionalservices firm, and I work in the financial group (like the accoun-tants featured in Cohen and Single’s research) I feared that myexperience would be akin to the situations described in Cohen andSingle’s study. Part of this fear stemmed from the limited use ofFWAs at Booz Allen. While BAH has a formal FWA policy, allowingsuch arrangements as long as the terms are mutually agreeablebetween the employee and the supervisor, there are only three otherpeople in my immediate work group (of approximately 75 people)who engage in an FWA. I was convinced that my colleagues wouldnot want me to work on their engagements and that I would want toleave the firm because of boredom, lack of potential for advance-ment, lack of interaction with my colleagues, and a host of otherreasons.

However, to my surprise, the FWA has been largely positive. Inmy view, two factors are key to my successful FWA experience:financial and logistical support from the firm and the firm’scommitment to values and the psychological contract.

As part of my FWA arrangement, BAH pays for me to have a high-speed connection in my home, provides me with a laptop computerand a printer/copier/fax/scanner, and pays for any long-distance


work-related calls I have to make from home. Additionally, BAH hasallowed me to keep a permanent desk in the McLean headquarters,so that when I do travel to the office, I have a permanent desk justlike my colleagues who work in the office. This logistical and finan-cial support ensures that I have the connectivity and resourcesnecessary to interact effectively with my colleagues and to success-fully perform the duties of my position whether I am at home or inthe office.

Another factor leading to my success with the FWA is BAH’s com-mitment to its values and its willingness to uphold its end of thepsychological contract. Like many companies, BAH has a publishedlist of core values. One of BAH’s business values is teamwork,which involves “building strong and positive working relationships,maintaining a positive work climate, supporting career mobility, andengendering enthusiasm and excitement for work and for thefuture.” BAH evaluates managers on their ability to uphold thesevalues on their annual assessment. Therefore, because their annualperformance ranking and salary are dependent on their conformityto the values, BAH managers are compelled to create stimulatingand flexible working environments for the staff. Furthermore, atBAH, it is considered detrimental to a manager’s career if a memberof his or her staff leaves the firm because of a work–life balance issue.Therefore, BAH makes strides to uphold its core values by integrat-ing them into each manager’s assessments.

In fact, both managers I have worked for during my FWA haveupheld their end of the psychological contract by providing me withthe training, technology, mentoring, and challenging client assign-ments necessary to ensure that I remain a valued member of thefirm. The relational model under which our psychological contractwas developed contains the rigidity necessary to ensure that mutualexpectations are met through specific annual evaluation criteria,but also retains the flexibility necessary to allow it to evolve assituations dictate.

In addition, I have not found that colleagues have perceived meas less desirable for their engagements. Rather, there have beenseveral instances where colleagues have contacted me directly toask if I would participate in their projects. This phenomenon isindicative of the culture and values of BAH, which clearly do notcast doubts on the effectiveness of FWA employees. By tying valuesto managers’ assessments, BAH has ensured that managers will

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make ethical decisions concerning the careers of FWAs and affordthem equal opportunity to succeed.

CONTRASTING VIEWS

While the BAH’s FWA has been a model program from my perspec-tive, it has not necessarily been as beneficial to other colleagues.Again, the psychological contract is the central reason. The FWAprogram BAH has installed provides employees with the flexibilityand resources necessary to do their jobs. However, the issue of pro-fessional advancement can be a hindrance to FWAs at BAH.

One BAH manager who was very senior in his position engagedin an FWA for approximately two years. He lived out of state andtraveled to the BAH office in McLean as needed for meetings. Ashis annual performance reviews attested, he was progressing in hiscareer at a normal pace and rapidly approaching consideration forsenior management. However, he was assigned to two back-to-backsix-month projects that required his presence on the client site fourdays a week. Clearly, such assignments were outside the scope ofhis FWA. While he did not have to accept these assignments, therewas a clear implication from the management that the likelihood ofhis being promoted would directly correlate with his performanceon the two assigned tasks. Thus, he reluctantly agreed to theassignments in the interests of advancement, even though theywere at odds with his FWA.

In another instance, a BAH manager who worked in the officefour days a week and took off a day a week to care for her two chil-dren was offered a promotion to senior management. However, afterher promotion, she soon found that to successfully perform her jobduties, she needed to be in the office five days a week. The managerultimately decided to take advantage of the career advancementopportunity even though it meant altering her FWA. Although shepreferred her FWA situation because it afforded her the opportunityto attend to personal commitments, she realized that some positionsdo not easily lend themselves to FWAs.

The purpose of illustrating these two examples is not to castjudgment on BAH’s handling of FWAs. As previously stated, theBAH model has proven effective. Rather, the purpose of illustratingthese two examples is to examine the implications of job function


and advancement on FWAs at BAH. In both of these instances, theinfluences impacting the BAH employees’ FWAs changed. However,because their FWA psychological contracts with the firm werecreated outside of the changing influences, the employees had toadjust their FWAs to continue to grow with the firm. The employees’employment with BAH was not in jeopardy in either situation;BAH’s strong core values and corporate culture would not allowsuch an event to occur. BAH would still honor their ethical obliga-tions to give these employees the explicit and implicit supportnecessary to function in their current positions. However, theiradvancement potential was clearly hampered by their FWA.

In a 2003 study, McCloskey and Igbaria found that there isno statistical significance between telecommuting and a negativeimpact on career advancement.

9

However, such conclusions oftendepend on the types of positions that FWA workers occupy. In bothaforementioned cases, the BAH employees were being consideredfor senior management functions in a professional services firm.Such positions require a tremendous amount of face time withclients and colleagues to be successful. The firm expects to achievethe same results out of all senior managers. Therefore, the firmdoes not necessarily have an ethical obligation to provide FWAsenior managers with relaxed job criteria in terms of face time withclients and colleagues as opposed to office-oriented staff.

To accommodate situations where FWA employee demandschange, psychological contracts need to change as well. Furthermore,the roles that employees currently occupy and can conceivablyoccupy in the future, based on their career tracts, dictate thedegrees of success they can enjoy in both FWAs and the firm’sethical obligations to them. While initial psychological contractsmay set certain FWA criteria, the contracts need to evolve with theemployee’s changing roles and tenure to ensure that both theemployee and the employer are meeting their obligations underthe contract. When work conditions and expectations change andsubsequently impact the psychological contract, the firm needs toensure that the employee understands the new set of expectationsby holding a brief meeting in which those expectations are madeexplicit. Additionally, firms should use such meetings to allowemployees to voice potential concerns over the new arrangement.Such a meeting helps to ensure that both the firm and the employeecan identify and resolve potential conflicts and enjoy a successful FWA.

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CONCLUSIONS

There is little doubt that FWAs can provide benefits to both employersand employees. However, for FWAs to succeed, businesses must actethically by affording the same level of treatment and commitmentto its FWA employees as it does to its office employees. Failure todo so creates a self-fulfilling prophecy whereby employees are notengaged on challenging roles, do not gain experience necessary foradvancement, and ultimately are perceived as less valuable to theorganization.

My personal FWA experience has been largely positive, thanks inpart to the core values and assessment methodology at my firm.Because teamwork and flexibility are integrated into the core valuesand managers are annually assessed on their adherence to thefirm’s core values, managers are compelled to act ethically andprovide FWA employees with the support necessary to succeed intheir careers. However, when employees’ roles change, it isimperative that the psychological contracts on which their FWAsare based should be modified as well to accommodate newemployee and firm requirements and to ensure all ethical obliga-tions are met.

Ultimately, the employee’s success in an FWA is largely attri-buted to his or her work ethic and the quality of his or her outputs.However, the ethical considerations of the employee’s firm in termsof support and accommodation for FWA employees have a directimpact on their success. Therefore, if employers allow FWAs, theyhave an ethical obligation to afford their FWA employees the samesupport as their office-bound colleagues.

NOTES

1. Denise M. Rousseau, “Schema, Promise, and Mutuality: The BuildingBlocks of the Psychological Contract,”

Journal of Occupational and Organi-

zational Psychology

74, part 4 (2001): 511–512.2. Sandra L. Robinson, Matthew S. Kraatz, and Denise Rousseau,

“Changing Obligations and the Psychological Contract: A LongitudinalStudy,”

Academy of Management Journal

37, no. 1 (1994): 138.3. I. R. MacNeil, “Relational Contract: What We Do and Do Not Know,”

Wisconsin Law Review

(1985): 483–525.


4. Jeffrey R. Cohen and Louise E. Single, “An Examination of the Per-ceived Impact of Flexible Work Arrangements on Professional Opportunitiesin Public Accounting,”

Journal of Business Ethics

32, part 2 (2001): 217.5. Rousseau, “Schema, Promise, and Mutuality,” p. 522.6. Kirstin Downey Grimsley, “Telecommuting Rewires Traditional Views

of the Workplace,”

The Washington Post

, August 31, 2002, p. E05.7. Cohen and Single, “An Examination of the Perceived Impact of Flexible

Work Arrangements,” p. 319.8. Robinson et al., “Changing Obligations and the Psychological Contract,”

p. 143.9. Donna McCloskey and Magid Igbaria, “Does Out of Sight Mean Out

of Mind? An Empirical Investigation of the Career Advancement Prospectsof Telecommuters,”

Information Resource Management Journal

(April–June2003): 19–34.

Ethical Considerations in Flexible Work Arrangements

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