Arguably the biggest factor in your decision of whether to let an employee telecommute is the character of the employee themselves. Think about how you would describe the employee to another manager. Would you call him or her dependable, performance-focused, a good communicator? They probably are a good candidate for telecommuting. If you would describe them as “a little bit of a flake” or “I never know what that clown is up to” then you probably don’t want to consider them for telecommuting.
One big factor is their judgment. Are they smart enough, experienced enough, to know when they are in trouble and need to reach out for help? Remember, if they telecommute you won’t be around as much to keep an eye on them and spot the early signs of trouble. You’re going to have to depend on them to let you know.