In an old-school paradigm where management equals control, the concept of flexible work practices in the workplace might seem counterproductive – like a bone that a manager tosses to an employee every once in a while to keep him satisfied.

In yesterday’s workplace, flexibility for employees was uncharted and scary territory, a potential slippery slope into chaos that was perceived as harmful to a company. But the reality that is dawning on innovative managers is just the opposite. Businesses that wade into the waters of flexible work arrangements benefit not only in employee engagement and retention but also in increased productivity and profitability.

A 2011 study by Mercer found that flexibility is becoming one of the key factors of job selection and longevity, especially for women. In all, 61 percent of the respondents and 71 percent of the women polled said that flexible work arrangements were very important to their motivation and engagement. The same survey also revealed that 59 percent of the respondents worked for an organization that offered them some flexibility.

The British financial services company Nationwide is known for its wide array of employee options, including flexible hours, work from home, a compressed work week, annualized hours and leave policies that enable them to take time off to pursue interests outside of work. A widespread study of Nationwide’s workforce revealed that these relaxed parameters pay dividends for the bottom line as well as employee morale. Among the findings:

• Ninety-three percent of women returning from maternity leave stayed at Nationwide
• The  company has an employee turnover rate of 9.7 percent, compared to the financial-services industry average of 17 percent
• Nationwide saw a 50 percent increase in the number of female part-time workers and a 150 percent increase in the number of term-time workers. (Term-time is a work schedule that is aligned with school holidays, allowing employees to have unpaid leave when their children are on break.)
• Seventy-five percent of Nationwide employees indicated that they were very satisfied with their employer and the flexible options offered at the company.

“Today, many organizations still perceive flexibility as an aberration,” according to an article by Lisa D’Annolfo Levey of Catalyst. “They have cultures that support the old way of working. That old way was designed around factory production shift scheduling. We still think about the ‘typical’ workday and about rewarding people who work overtime. Organizations tend to be biased in thinking that the current way in which work gets done is optimal. The reality is that much activity that goes on in the name of work is far from efficient or effective. Those long hours don't always make sense - for people or for organizations.”

Businesses that are committed to offering true flexibility need to cultivate a culture of trust and communication that accompanies the new patterns of working. More than ever, says Kyra Cavanaugh of Life Meets Work, managers must be master connectors between people, since coworkers now often work in different locations or at different times but still must share a common vision.

 “In a world where business teams are increasingly virtual, managers must foster connections among disparately located employees,” Cavanaugh wrote on the Life Meets Work blog.  “A leader must be able to build relationships.”

Research shows the workplace flexibility doesn’t just yield more productive and more satisfied employees; workers who enjoy a flexible culture are also physically healthier.  A study in the 2011 issue of the Journal of Health and Social Behavior examined more than 600 employees of Best Buy both before and after the company instituted widespread flexible practices.

The research discovered that employees in the flexible environment report better sleep quality, more sleep (an average of 52 extra minutes on work nights), more energy, less stress and less obligation to work when sick.

“We have to stop thinking of our employees as worker bees and understand that they have a direct, monetary impact on our businesses,” said Cavanaugh. “Focusing on culture, making our workplaces more flexible, soliciting diversity of opinion, and letting go of face time are all critical to the survival of your business.”