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Leadership & Organisations

Working From Home: The End of an Era?

Alvin Lee, Web Editor |

Marissa Mayer’s controversial decision to bring Yahoo! employees back to the office could yet prove to be the right one.

Over a million more Americans worked from home in 2010 than in 2005, according to the U.S. Census Bureau: 5.82 million versus 4.79 million, or  4.3 percent of the total workforce, compared to 3.6 percent in 2005. In Boulder, Colorado, the city with the highest percentage of people working from home, more than one in ten (11.3 percent) work remotely.

In Sunnyvale, California, the 2010 figures are 5.1 percent, up from 4 percent back in 2005. Why is Sunnyvale important? Because this is where Yahoo! has its headquarters, and it was a change in policy by the new CEO, Marissa Mayer, that has put the work-at-home issue front and centre for many companies. Simply put, Ms Mayer – who herself became a mother for the first time earlier this year, and may have been thought to favour work-at-home-policies -  quashed the option altogether.  There had been reported allegations that Yahoo! employees abused the system; media coverage portrayed the move as a step backwards. INSEAD Affiliate Professor of Organisational Behaviour, Erin Meyer, disagrees.

“I believe the move by Marissa Mayer was a smart one,” says Meyer. “She saw that productivity per individual at Google was higher than productivity per individual at Yahoo!. Google generates US$931,657 in revenue per employee, 170 percent higher than Yahoo’s US$344,758 per employee. If Mayer’s goal is to increase that productivity level, bringing people into the same office space is one quick and inexpensive way to accomplish that goal.”

The human touch

Amidst all the brouhaha about Yahoo!’s new policy, it would be appropriate to re-examine the leaked memo that not only sparked off the big debate but also its purported objectives.

“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. Speed and quality are often sacrificed when we work from home. We need to be one Yahoo!, and that starts with physically being together."  - Jackie Reses, Yahoo head of HR.

Meyer, who directs the Managing Global Virtual Teams programme at INSEAD, explains that these objectives are more easily met with face-to-face communication.

“Because we are human beings, when we collaborate, we rely heavily on what I call mutual adjustment. Mutual adjustment means that you notice how others are working around you, they notice how you are working, and through hundreds of subtle cues you adjust to one another, and the collaboration happens. When people are geographically dispersed, they don’t have the same high level of cues in order to mutually adjust which makes collaboration more difficult.”

Meyer adds, “It’s a myth that virtual teamwork costs less than face-to-face collaboration. There is this idea that because it requires less electricity, less desk space, and less rent to collaborate virtually, it’s therefore less expensive.  But it takes a lot more time to organise and monitor effective virtual teamwork.  When we are working together but working apart it requires a much greater effort to assure the communication has passed as expected.   Misunderstandings are more likely and that leads to higher costs. 

Teamwork is not just about communication it is also about cooperation.  Cooperation requires trust between team members.  Meyer elaborates, “It is difficult for humans to trust people that they don’t frequently see face to face.   If I can’t look in your eyes and see your facial expressions or get to know you beyond your voice on the phone it is harder for me to judge if you are trustworthy. A high level of trust between team members is one of the most important factors to efficient collaboration.  If the team leader does not invest significant time and energy in finding ways to build trust amongst team members who rarely see one another, trust is likely to remain low.  Therefore managing geographically dispersed teams effectively is significantly more expensive than managing collocated teams.   I imagine that Mayer understood this when making the decision to bring her employees back to the same office space.”

Is there a need to work remotely?

Nancy Wee is a mother of two, and a part-time graphics designer who works from home. “I sometimes prefer to be in the office if the project is complicated and requires more input from the client. But [when I work from home], I can quickly finish the tasks and then I can do other things. If I am stuck in the office, I cannot do my own thing even if I am done with the work. I have to wait for the proper hours to be over.”

Wee is self-employed, but is open to working full-time in the office, cites examples of why working from home can sometimes be more productive from the company’s standpoint, “I think the key thing is the manager has to be very clear on the agenda. Some clients asked me to go onsite and they just talk and talk. If they just email me the job specs, I can easily do the job.”

That ties in with a 2010 INSEAD Knowledge article written by Professor Meyer, which explains that “virtual teams need a manager who provides clearly-defined direction and removes all ambiguity from the process.” “In the last decade, a large number of companies in the U.S. have put in place home office structures without training their team leads on how to manage these dispersed teams differently.  With the excitement of newer communication mediums such as Skype and WebEx many companies have built the work-from-home movement on the premise that we can just as easily collaborate over a virtual medium as we can face to face.  But that is not the case. No matter how sophisticated the communication tool it does not replicate the effectiveness of face to face collaboration.”

Home run?

Wee’s experience may be a strike against Yahoo! boss Mayer’s much-discussed policy, but one might say it reflects an employee’s working preference rather than any clear strategic advantage or disadvantage for the company. But according to Professor Meyer, there are other instances where not having everyone under one roof is not only a necessity, but also an advantage.

“Suppose you put in place a project team where people from different regions collaborate to develop a product that responds successfully to a variety of local markets,” says Meyer. “In this case you need people who are IN those markets and regions to work as one team.  So in that case, team members will need to be geographically distributed and there is a clear, positive reason they need to be in different places.   In that case, the benefit of the geographic distribution likely outweighs the disadvantages.  However, Yahoo! does not seem to be in one of these situations.”

Yahoo! releases its Q1 report on April 16. It will be too early to gauge the effectiveness of Mayer’s policy, but all eyes will be on Yahoo!’s balance sheet – including Yahoo! employees who decided to quit and watch the action. From home, of course.

 

Erin Meyer is Affiliate Professor of Organisational Behaviour at INSEAD. She directs the Managing Global Virtual Teams and Management Skills for International Business programmes, part of INSEAD's portfolio of executive education programmes.

Follow us on twitter @INSEADKnowledge or Facebook https://www.facebook.com/Knowledge.insead.

Comments
Mukesh,

I agree with Erin Meyer's observation. I have also posted by thoughts on this topic

Mukesh
rmukeshgupta@yahoo.com

MOHITOSH CHANDA ,

This is a nice idea has admitted by Ms Mayer of Google, if any
scope is there can we work from india as home based job.

thanking you

MOHITOSH CHANDA
chandamohitosh@gmail.com

IvanKo,

Now there are dozens of articles supporting Yahoo's decision. Close to none of the articles discussing a matter of self-discipline, a more likely cause for moving employees back to the office.

At the same time the move reveals managerial weakness - instead of motivating/engaging employees more and helping them to plan more efficiently the managers would like to have reports within arm reach.

Discussing non-verbal communication and caffeteria/cooler chats we can prohibit using emails/IM in the office for paper and hand-writing can deliver more ideas through hand-writing's style or paper gives more freedom for expression (you can draw pictures!).

What new nonsense would we have from another CEO of just another failing company?

IvanKo
IvanKo@ivanko.2011D

Prasanna,

Google generates US$931,657 in revenue per employee, 170 percent higher than Yahoo’s US$344,758 per employee. If Mayer’s goal is to increase that productivity level, bringing people into the same office space is one quick and inexpensive way to accomplish that goal.

--- If the above statement is true, I see a gap in utilization levels.. Please note that Google also has work from home policies and a lot of folks work from home when needed. Now the question is how are they able to achieve that number with WFH benefit..

Prasanna
prassu.r@gmail.com

Melco,

When a company is unable to attract the right employees for the the task at hand, it might be because they lack a vision employees can share. Committed, motivated and self-disciplined employees can work where ever and when ever. But a weak corporate culture, failing business strategy and lack of leadership need to have contact in an office.


Melco
tm8274@gmail.com

Tom,

The study you quote, Alvin, includes people who are self-employed. Census does a poor job of make the distinction.

You quote Professor Meyer as saying, "...managing geographically dispersed teams effectively is significantly more expensive than managing collocated teams." If she means office-bound teams, that may be true because of communication overhead. But teams who work remotely but at home, using available collaboration tools such as Go-To-Meeting, I suspect do so at considerably less cost when real estate and associated costs are subtracted from the equation.


Tom
tom@teleworkresearchnetwork.com

Aparna,

There is a clear advantage in working from home and from office and it depends entirely on self discipline. If one has the right infrastructure at home, then productivity will be much higher than work place and at the same time there are those thrive on face time work and the need to be physically present in a particular environment. However, it is true that many misuse the work-from-home facility.

In this case Marissa has before her a few challenges and perhaps some others that may not be made public. It is also true that we tend to misjudge leaders when they take sudden or harsh decisions. I'm sure she has thought this through and I would agree with her decision to bring employees back to work at least for the moment.

She may want to view for herself whether this model leads to improvement in productivity. She can always reverse the same or bring in some flexibility as things improve.

Aparna
kimayagar2@yahoo.com

Mickg24,

What this article does not mention is that Ms Mayer told everyone they had to come back to the office, but then abused her position in having a creche built onto her office for her own child. One rule for those at the top, one rule for everyone else?

This is a monumental step backwards. There is no need for a large percentage of people working in IT and other industries to be in the office 90% of the time anyway. What was apparently lacking at Yahoo was competent management - there are plenty of tools out there to manage staff remotely.

Mickg24
mickg24@hotmail.com

Thomas,

This back-lash is surely an interesting one but considering that it has been around for a while not a surprising one. It might simply be a sign of maturity. If the curve goes up, it will come down. Its not a hard trend, but a soft one. Besides the value of in-person interaction and efficient work-at-home practices (including technology use) the factors that also need to be considered are :

1. Work at home enables access to rare talent (ie. working mothers)

2. Work/life-balance issues. Increasing work pressures everywhere burn-out people. Work at home compensates at least some of those pressures but also introduces new ones (always reachability).

3. Globalisation. Working in global teams increases the need for at least partial 24h and week-end availability. Work-at-home is simply a necessity.

4. Balance of home vs. work work. Whether you work at home or not is not a binary decision but a question of balance that needs to be governed by rules that define when it is permissible and when not.

5. Work load intensity. If the company demands increased availability and hence stretches the performance expectation beyond the typical 40 work week that people are paid for (no matter what the contract says, employees are employees, not entrepreneurs or slaves) it is only fair if some flexibility exists regarding work intensity.

6. Measuring and paying for results vs. attendance. Paying for attendance is still the most common modus operandi as it is the easiest thing to measure. The failure of performance management systems show that (objectively) measuring results is far more difficult than thought. It might be necessary to shift remuneration more to a "pay for results" scheme.

I am sure there is more but these are my current thoughts and I hope you find them useful.

Thomas
thomas.martin@forward-intelligence.com

Robert Dean,

I agree with Dr. Meyer to a point. It is all about communication. Rapport is the mechanism by which communications flow freely and accurately. And, trust is the requirement for establishing and maintaining rapport. Everything we communicate (consciously and unconsciously) is scrutinized, analyzed and evaluated. So, every time we communicate consciously we are taking a risk. The level of trust we have in others determines how much risk-taking we allow in our communications. As Dr. Meyer has pointed out, most of the tactics used to build rapport (and trust) are based on face-to-face contact. But, those same face-to-face encounters can just as easily destroy trust, inhibit risk-taking. As an organizational behaviorist who has viewed and recorded 40 years of actions in many kinds of work environments, leaders/managers, and the cultures they build and sustain can, and often do, impose controls and barriers and actions that destroy trust. Occassionally, working virtually can actually encourage risk taking and lower inhibitions. By not seeing (or hearing) the physical reaction of those receiving communication messages, communicators may feel more immune to the subtle negative reactions that would otherwise inhibit the sharing of information. Frankly, it's all about culture, and whether people's ideas and information are encouraged by the people whose actions, views and beliefs might be influenced by the communication. So, Ms. Mayer's decision at Yahoo could prove beneficial to the organization. But, only if she works diligently to shape a culture that encourages the free flow of communication. In my opinion, she should have focused most immediately on building a culture of communication before requiring people to move into a work environment that may do more to inhibit communication than to promote it. What is suspicious to me is the possibility that her decision was made in haste. The decision to end work at home came so quickly after she assumed her new leadership role, I suspect that she may not have gathered the requisite information about Yahoo's culture to ensure that such a dramatic organizational transformation will work.

Rob

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