Human Capital Briefs

Yahoo’s Decision on Teleworkers and the Critics Who Challenged It. Who was right?

November 12, 2013

Earlier this year, newly appointed Yahoo! CEO Melissa Mayer issued an edict banning employees from working from home.  We stopped the presses on the 2nd edition of the book we were writing (The Enthusiastic Employee: How Companies Profit by Giving Workers What They Want¹) so that we could comment on this action within the context of our book’s findings and point of view.  This blog post is excerpted in modified form from the book, which was published in August of 2013.

Ms. Mayer’s announcement banning work from home, or “teleworking,” was, of course, controversial, eliciting a few supportive, but mostly highly negative, reactions in the blogosphere and other media. The most critical comments portrayed the edict as a huge step backward in the management of employees, with particular reference to the better work-life balance that working at home made possible (particularly for women with small children). Many of the critics spoke of their dismay that a female CEO would take this step. Supporters of the action tended to stress that this was an important step in Ms. Mayer’s major task: making Yahoo – universally considered to have become a laggard in a fast-moving industry – a leader again with substantial revenue and profit growth.

We write in The Enthusiastic Employee about the steps management frequently takes when they feel they have to whip an organization into shape. Among the most common – especially by new executives – is to crack down on malingerers. We argue that that was likely one of Ms. Mayer’s major reasons for her action, although that was not the reason the company gave in its announcement, which said:

To become the absolute best place to work, communication and collaboration will be important, so we need to be working side-by-side. That is why it is critical that we are all present in our offices. Some of the best decisions and insights come from hallway and cafeteria discussions, meeting new people, and impromptu team meetings.

The argument for interaction is well supported by research which shows that, in most cases, interaction significantly improves innovativeness and that face-to-face interaction, despite all the improvements in communications technology, remains the gold standard. It’s not that technology can’t be used well for facilitating interaction in more formal, planned settings. It’s that a whole lot of innovativeness is a result of unplanned, accidental encounters and discussions.  Although we might like to think that technology is especially beneficial for people at a distance from each other and might otherwise not communicate, the finding is that people are much less likely to phone or email or IM for a discussion with people they haven’t met face-to-face.

Ms. Mayer, therefore, has a strong case in her argument that, for promoting innovativeness, getting her employees onsite should be of considerable help. How about the case for raising employee morale, that is, making Yahoo “the absolute best place to work”? Here, her position is considerably weaker.  

While some significant morale benefits can be found for onsite work, they are overwhelmed by the tremendous advantage to quite a few people of having the flexibility that at-home work provides. That is an obvious point and undermines the company’s claim that a major objective of the new policy was to raise morale.

Indeed, according to many media reports, Ms. Mayer had concerns about her employees other than their morale. She noticed that Yahoo parking lots and many offices were nearly empty during the work day. People were either not coming into work at all or were leaving early. Approximately 200 employees worked at home full-time, and some of these were suspected of running their own-start-up businesses on the side. Upon reviewing employees’ Virtual Private Network logs, Ms. Mayer concluded that employees were connecting to the office much less frequently than they should be.

In addition to her other reasons for the edict, Ms. Mayer’s actions may therefore reflect a distrust of the work ethic and dedication of some – perhaps many – Yahoo employees and the need, therefore, to bring them to the office where, in addition to promoting the interaction she speaks of, they could be supervised more closely.

Ironically, systematic studies of the performance of teleworkers show quite consistently that they are actually more productive – producing a larger amount – than their counterparts in the office. Although the reverse is true for innovativeness, we can say with certainty that there is no evidence that allowing employees to work from home is a recipe for wholesale shirking. A major reason for the higher productivity at home appears to be that at-home workers work more hours as the boundary between their home lives and work lives blurs, and as their commuting time decreases.

An analysis of 46 pieces of research on teleworking finds that “teleworking had modest but mainly beneficial effects on employees’ job satisfaction, autonomy, stress levels, manager-rated job performance, and (lower) work-family conflict.” Only high-intensity teleworking – where employees work from home for more than 2.5 days a week-- harmed employee relationships with coworkers…²”

On the basis of the evidence, what is the answer for companies wrestling with the issue of teleworking?

Let’s begin by stating a fundamental proposition of our book, The Enthusiastic Employee:  there is little real and inevitable conflict between the goals of the overwhelming majority of workers and those of their employers. It is in the nature of most people to want to work and to do well for their companies.  It is primarily management that, by it practices, dampens or destroys motivation, especially when those practices derive from the assumption that most people don’t want to work – certainly not hard – and have little concern for their companies.

Teleworking in Yahoo will be a problem only to the extent that management makes it a problem. Otherwise, it can be a boon to both the company and its employees.  The company will gain because:

• Teleworking will attract and keep employees for whom the ability to work at home is a major plus; its attractiveness is further enhanced as the company’s overall reputation as a good employer is increased.
• Employee morale will increase, and with it the overall performance that we demonstrate repeatedly in The Enthusiastic Employee comes from higher morale.
• Employees will work more hours, and employee productivity will improve.
• The company will save on real estate and related costs.

What are the downsides? Frankly, we can’t think of any of significance if teleworking is managed properly.

What do we mean by proper management? It is an approach that recognizes the legitimate needs and wants of employees and seeks to satisfy them in a way that not only will not damage the company but will be profitable to it. We have called this a “partnership” approach or culture and we describe it fully in our book. The position that Ms. Mayer has adopted on the teleworking issue is characteristic of another approach which we call “adversarial.”

The policy we recommend is simple and obvious and acts to preserve the advantages of both working at home and in the office. The policy is, essentially, a variant of “flextime.” Under traditional flextime, there is typically a core period when employees are required to be at work – say, 50 percent of the working day – but they can choose which non-core hours they will be at work, as long as the total number of hours adds up to a full working day. The basic flextime concept can be applied to teleworking, where core time refers to days in the week, and flexible days can be worked at home. The approach would therefore provide for both workplace interaction and teleworking for those who want it.

And it would not be laissez-faire – come in whenever you want – because employees would be expected to be at work a core set of specific days of the week, and, in line with the previously-referenced analysis, the core should be greater than 2.5 days a week to maintain the benefits of interaction.

How would our proposal be received by employees? With a great big hooray! (Or, perhaps, a yahoo!)  Keep in mind that employees want their company to succeed. There must be no small number of them who believe that the previous policy – to the extent and in the places where it was laissez-faire – was nutty and they would want it changed. Further, the evidence is that it is just a very small number of employees who would choose to work from home full-time. The great majority want to interact with their colleagues, and they don’t want to be forgotten for promotions and choice assignments when they come up. This is true as well of those who have to commute long distances to work and they consider it a blessing to be able to spend 1-2 days a week at home.

Other than in very small companies, what we are proposing should not be administered in a centralized way but rather handled by individual managers for their teams. There will, of course, be individual exceptions and these should be dealt with on a case-by-case basis. The best rule for managers in these cases is this: use your best judgment. With the proper guidelines, that almost always works.

We speak of “partnership” as the culture where what we propose will operate best because it is congruent with, and reinforces, that culture. There is another respect in which context is extremely important: the extent to which the organization, as a whole, has a clear sense of direction with challenging goals that are translated into clear, challenging, and credible goals for each of its subparts. We don’t know that Yahoo can be described in that way, but, if not, or not in certain parts of the company, the idea of people being required to show up at the office doesn’t make too much sense. If they don’t have much to do at home, is it better to not have much to do in the office and fake it? Changes in practices, such as teleworking, won’t by themselves solve fundamental problems. Teleworking can be a terrific way to serve the company and its employees. But it also has to be seen in the context of the culture of the organization and the overall effectiveness with which the business is being run.

For updated and detailed information about the research on which the book’s conclusions are based, visit us at http://www.sirota.com/enthusiastic-employee. Also, stay tuned for further information about our upcoming March book discussion webcast featuring The Enthusiastic Employee.

 

This blog first appeared on the Sirota website on 10/31/2013.

View our complete listing of Employee Engagement blogs.

 

¹ Sirota, D. and Klein, D. The Enthusiastic Employee Second Edition: How Companies Profit by Giving Workers What They Want. (Upper Saddle River, NJ:  Pearson Education Inc. 2013)

² Gajendran, R., and Harrison, D. A. (2007). “The Good, The Bad, and the Unknown About Telecommuting: Meta-Analysis of Psychological Mediators and Individual Consequences.” Journal of Applied Psychology, Vol. 92, No. 6.