Will Yahoo!'s Work-from-Home Ban Backfire?

What is Mayer thinking? Photograph by Andrew Harrer/Bloomberg

Not long after her arrival at Yahoo!, new Chief Executive Officer Marissa Mayer started handing out carrots to her new employees, including new smartphones, free food, and other Google-style amenities. Now she has brought out the stick—namely a directive that employees are no longer allowed to work from home, something that is expected to affect as many as 500 Yahoo staffers. Mayer’s move has supporters, who argue that she is trying to repair Yahoo’s culture. In doing so, however, she could be sending the wrong message for a company that is trying to spur innovation after a decade of spinning its wheels.

In the internal memo published by All Things Digital, Yahoo’s head of human resources said the company wants to improve its working environment; in order to do so, Yahoo needs people to work in the same physical location. According to the memo, “speed and quality are often sacrificed when we work from home,” so working at home will longer be supported; in other words, find a way to work at the office—or quit: “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… We need to be one Yahoo!, and that starts with physically being together.”

Although most of the responses from tech-industry insiders have been resoundingly negative, the Yahoo plan has supporters: Some say the company has fallen so far behind its competitors after years of inaction and bad strategy that Mayer needs to bring together the scattered remnants of its corporate culture; one of the best ways to do this is through physical proximity. In other words, the company’s “insights from hallway discussions” argument has some truth to it.

According to some ex-Yahoo staffers, many of those who currently have work-at-home arrangements are disgruntled employees who provide little value, so forcing them to work in an office is either a) a way of getting them to drop this attitude, or b) an easy way to get them to quit, saving the company some money. Either way, the argument goes, Yahoo as a whole winds up benefiting financially. But at what cost to the company’s reputation?

Yahoo has also taken fire from critics who see the move as an attack on employees who can’t afford to work in an office, including single mothers and others who require more flexible work arrangements. They argue that the company should theoretically be more accommodating because Mayer herself is a new mother—albeit one with a built-in nursery in her office, according to some reports.

The debate as to whether employees are more productive in the office or at home has been going on for at least a decade, if not longer, and it will continue. In addition to missing out on impromptu hallway conversations and other social benefits of working alongside other people—clearly useful, as I and many other remote workers will admit—employees who work at home invariably goof off and get less done, say some managers (although, as our GigaOM Pro analyst Stowe Boyd argues, this often says more about those managers than about their staff).

Companies such as Automattic, the for-profit arm of the WordPress community (see disclosure below), say their workplaces are more efficient and friendlier without a corporate office to speak of. Distributed teams like those behind Wikipedia and Linux have been able to accomplish incredible things outside a traditional office environment. Surveys repeatedly show that companies with flexible working arrangements are more efficient than those without them.

Most technology companies (including GigaOM) support remote working because it provides a lot more freedom for employees and because giving staff the opportunity to live virtually anywhere and to work wherever they wish vastly broadens the available talent pool. Isn’t that what Yahoo theoretically wants to do, or should want to do? If people are pushing down the company’s doors, demanding to be hired, it’s a well-kept secret.

I think David Heinemeier-Hansson of 37signals put his finger on the problem in a recent post about Mayer’s decision. He said Yahoo’s move is “an admission that Yahoo management doesn’t have a clue as to who’s actually productive and who’s not.” He goes on to argue that, for a company that is so desperately in need of talented employees who are willing to go the extra mile to rescue the former Web giant, the decree abolishing remote working isn’t going to help, but will rather do the opposite: “Are you going to be filled with go-getter spirit and leap to the opportunity to make Yahoo more than just ‘your day-to-day job?’ Of course not. Yahoo already isn’t at the top of any ‘most desirable places to work’ list. A decade of neglect and mounting bureaucracy has ensured that. Further limiting the talent pool Yahoo has to draw from… is the last thing the company needs.”

The danger for Yahoo is that a decision driven by what are theoretically positive motives—to get employees to feel more like a team, to encourage innovation through serendipitous encounters, and to drive off low-performing staff—could wind up sending the wrong message: that it is a bureaucratic, centrally-controlled organization with no interest in being flexible when it comes to the living arrangements of its employees.

Disclosure: Automattic, the maker of WordPress.com, is backed by True Ventures, a venture capital firm that is an investor in the parent company of this blog, Giga Omni Media. Om Malik, founder of Giga Omni Media, is also a venture partner at True.

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