Bloomberg News

Yahoo CEO Mayer Revives Debate Over Work-From-Home Merits

February 26, 2013

Yahoo! Inc. (YHOO:US) Chief Executive Officer Marissa Mayer, by ordering staff to report to offices, has reinvigorated debate over the merits of giving employees more flexible working arrangements.

Jackie Reses, Yahoo’s executive vice president of people and development, sent a memo last week asking employees with work-from-home arrangements to make their way to company offices, starting June. Being side by side fosters collaboration and improves work “speed and quality,” she wrote.

The message resonated with academics who say opportunities to work together can bolster morale while sparking creativity. Even so, research suggests that at-home arrangements can make self starters more productive and help managers attract employees who seek flexibility in how they complete tasks.

“Some projects really require people being in the office, having conversations in person,” said Kathleen Christensen, who directs the Working Longer program at the Alfred P. Sloan Foundation. “But if someone has a report that’s due, and they have people dropping by, interrupting them, that can be counter-productive.”

Yahoo increased less than 1 percent to $20.76 at the close in New York. The stock has gained 39 percent in the past year, compared (YHOO:US) with an 9.6 percent advance for the Standard & Poor’s 500 Index.

‘Leap Backward’

At a time when Mayer is under pressure to jump-start growth and create innovative products, the shift may compromise Yahoo’s ability to attract employees seeking the freedom to work outside the office -- a perk offered by many of the company’s competitors, said Jody Thompson, co-founder of workforce consultant CultureRx.

“Mayer has taken a giant leap backward,” Thompson said in an e-mail. “Instead of keeping great talent, she is going to find herself with a workplace full of people who are good at showing up and putting in time.”

Sara Gorman, a spokeswoman for Sunnyvale, California-based Yahoo, declined to comment beyond a prepared statement.

“This isn’t a broad industry view on working from home -- this is what is right for Yahoo!, right now,” she said.

People who work from home tend to have less stress and are more productive, partly because they don’t invest time and money in commuting, said Brad Harrington, executive director of the Boston College Center for Work & Family.

Less Stress

“When employees have family or other personal issues they need to take care of, the feeling is that by being able to work from home you can take care of those in a much shorter period of time than commuting,” Harrington said.

The portion of U.S. workers who performed their job at least one day a week at home increased to 9.5 percent in 2010, from 7 percent in 1997, according to the U.S. Census Bureau.

In a study of call-center employees of a Chinese travel agency, researchers at Stanford University found a 13 percent performance increase for staff who worked from home.

Mayer, who last year became Yahoo’s fifth CEO in four years, worked from her California home in October in the weeks following the birth of her first child.

Reses, in the memo, implied that the policy won’t be applied inflexibly.

“For the rest of us who occasionally have to stay home for the cable guy, please use your best judgment in the spirit of collaboration,” she wrote.

‘Call to Arms’

There’s a chance the shift is aimed at redressing inequities, said Joseph M. Pastore, Jr., professor emeritus in residence at Pace University’s Lubin School of Business.

“There are some who are able to take advantage of teleworking, and there are some who are not,” he said. “Marissa Mayer may be signaling a call to arms where everyone has to come in and be present and also take advantage of the creative energy that’s more likely to come about when people are in a room together.”

Richard Branson, founder of Virgin Group Ltd., said in a blog post yesterday that Mayer’s decision ignores the advancements of mobile and video technology that have helped workers do their jobs whatever the location.

“This seems a backwards step in an age when remote working is easier and more effective than ever,” Branson wrote in the post.

Still, the interaction among colleagues who occupy the same space can’t be duplicated at home, said Anindya Ghose, an associate professor of management sciences at New York University’s Leonard N. Stern School of Business.

Rebuilding Needed

“The conversations we have in the corridor -- that boosts morale and productivity,” he said.

Mayer earned the support of some analysts and investors in January, after reporting the company’s first annual sales increase in four years. Her changes will continue to be supported as long as she keeps delivering results, said Colin Gillis, an analyst at BGC Partners LP.

“She needs to rebuild the culture of this company, and she needs to drive revenue growth,” Gillis said. “The whole notion of ending remote working, and whether it’s right or wrong, it’s her prerogative as CEO, and we’ll see if that helps her with those first two goals.”

Mayer will need to strike the right balance between flexibility and setting high standards for workers, Ghose said.

“Allowing an employee to work from home once a week is likely to boost their morale,” he said. “If they’re honest, there’s no reason it should affect your productivity.”

To contact the reporter on this story: Douglas MacMillan in San Francisco at dmacmillan3@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net


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