Telecommuting or telework as it is also known, is about working at the office from home or other location. Mobile technologies such as cell phones, laptop computers with the requisite software along with communication technologies such as the Internet make this possible. Some organizations let employees telecommute one or two days per week or so, while other organizations expect people to be in the office every day. Yet, some people telework full-time.
There is a lot of information available on the Internet and in hard copy publications on this subject, so I will not attempt to repeat information readily available. Instead, I'll present a brief argument for it for those managers reluctant to try it.
Most professional workers want to be successful at what they do as they are only as good as their last engagement -- whether working as a consultant or as a full-time employee. Many full-time employees work on a variety of projects over a period of time and each project may be considered an "engagement." Success means being selected for another project. Continued success builds a successful career. Productivity is a function of people (their capabilities), the effectiveness and efficiency of the processes being worked, and the technology being used. All things being equal, better technology means better productivity at least to a point. Productivity is not a function of being co-located near the manager nor is it a function of being located in a cubicle. Either the work process or the technology used in the execution of the process may dictate where the work can be done. For example, construction work clearly dictates the location of the work to be performed, but writing lectures, developing software, or similar information based activity may be possible to be done almost anywhere.
Performance can be measured by the quality of the deliverables produced. There are a number of examples wherein people are measured by their deliverables, not by someone watching them. For example, instructors evaluate and grade student deliverables without actually watching them write papers, solve problems, or perform field research. Few of us actually repair our cars; we take them into a shop and leave for the day, we return later and pay for the deliverable without ever watching the mechanic. We entrust our money with financial advisors and evaluate the deliverables without watching them work.
There is no guarantee that watching someone work will result in good performance as I've certainly experienced in business; on the other hand, there is no guarantee that not watching someone work will result in good performance either. The key is to hire good people who want to be successful, be clear about the quality of the deliverable to be produced, and evaluate it according to established criteria. Finally, keep communication channels open -- at the work place, wherever that may be.