(FORTUNE Magazine) – LAST FALL, WHEN Paul Dickerson started working from home, the neighbors in his Pittsburgh suburb avoided him. "They thought I was unemployed, and they didn't know what to say," he recalls. Now that his friends are used to his work-at-home schedule, he sometimes has the opposite problem: People figure he's free to watch a ball game. "You really have to set boundaries," says Dickerson, an account manager for a Chicago-based consulting firm. He's part of a fast-growing crowd. Consider: In 2003, 4.4 million Americans did all or most of their work from home, according to a trade group called the International Telework Association & Council. By the end of 2004 that number had jumped 84%, to 8.1 million. Sure, ditching the daily struggle with traffic and being able to pick your kids up from school sounds great, but how do you stay connected to goings-on at the office? And if you're a boss of telecommuters, how do you manage people you rarely lay eyes on?

A few essentials for working at home: Make sure you have a space that's dedicated to work only, ideally with a door you can close. Setting up shop on the dining room table is just asking for interruptions. If you're too far away from the mother ship for your company's techies to get to you easily, line up first-rate local tech support, even if you have to pay for it yourself. (The expense may be tax-deductible.) As often as possible, speak with colleagues on the phone rather than relying solely on e-mail and instant messaging, handy as those are. "With e-mail, you get no 'social cues'--tone of voice, meaningful pauses, and so on," warns Joseph Cothrel, a consultant based in Ann Arbor who advises companies on using technology to build virtual teams. "These can convey crucial information." And to ensure that you have some work-related human contact on a regular basis, get active in trade associations in your hometown.

What if you're called on to manage remote employees? "You can save yourself a lot of headaches by selecting the right people in the first place," says Christina Parr, who has overseen a virtual team of 50 people for hotel chain La Quinta Corp. for the past ten years. "You want highly motivated people. Ours are hyperconscientious about being accountable and reachable." Then make sure that the people above you are onboard. Says J. Scott Calhoun, who manages remote techies for Mississippi State University: "We're the first team here to try this, and I've had to do a lot of explaining--'So-and-So may be writing code at 11 on Saturday night, so it's really okay that he's never in the office.'" If your budget permits, throw an offsite getaway once a year to give colleagues who don't usually see one another a chance to hang out together and bond. In between, hold frequent team meetings online. Discourage jokes like "Oh, you work at home? I'll bet you're still in your jammies!" Says Parr: "For this to work long term, you have to stomp out the notion among in-office staffers that remote workers aren't really working."

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