Cost and Benefit Analysis of Work at Home at Putnam
Cost and Benefit Analysis of work@home One of the primary advantages of the work@home program is that it creates a cost advantage. Having employees work at home as opposed to in-facility is significantly less costly. According to Table A in the case, annual recurring costs for each individual working in-facility is around $10,650. That is over twice the recurring cost of the average work@home employee with an ISDN connection and over 20 times the annual recurring cost of a work@home employee with a cable modem connection. Given the large quantity work@home employees at Putnam, this program provides a method of greatly reducing recurring costs in the short and long term. Additionally, the e-learning program costs less than half of what the traditional training process costs. It even better prepares employees for the job because the quality of the training is higher and individuals can complete the training at their own pace. Moreover, work@home employees feel that Putnam has made a sizeable investment in them, and feeling is supported by high productivity rates and decreased turnover. The turnover rate among work@home employees is around 8% which is significantly lower than the Putnam average of 30%. By training employees for less and retaining them for longer, Putnam decreases both recruiting and training costs by a significant margin. Furthermore, the work@home program allows Putnam to expand their business into new areas without having to invest in additional real estate. And because the majority of these work@home employees are from rural areas where the cost of living is lower than locations near Putnam’s office facilities, Putnam can get away with paying work@home employees less than their in-facility counterparts. All these factors contribute to the low cost advantage that the work@home program creates. Because Putnam only allows high productivity workers the option of working at home, the work@home program can provide an incentive for