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Yahoo Says That Killing Working From Home Is Turning Out Perfectly

After receiving tons of heat for taking away workers' remote privileges, Yahoo now says that things are working just as planned: engagement and productivity are up.

When Yahoo CEO Marissa Mayer banned her 12,000 employees from working from home in February, her all-hands-on-deck ultimatum ignited a national debate on the merits of cloudworking that still rages. Silicon Valley’s fair-haired wunderkind was alternately mocked and condemned by the likes of Maureen Dowd and Richard Branson, while pundits declared she’d made "a terrible mistake." Some even wondered whether Mayer was trying to make them quit.

Mayer was finally hounded into addressing the issue in April, acknowledging her critics' contention that "people are more productive when they're alone," and then stressing "but they're more collaborative and innovative when they're together." Eight months later, Yahoo insists Mayer was right. (And earlier this month, HP’s Meg Whitman followed suit.)

Despite predictions of "epic policy failure," in the words of Julie Ford-Tempesta, Yahoo’s senior director of real estate and workplace, "employee engagement is up, product launches have increased significantly, and agile teams are thriving," adding, "The workplace has become a catalyst for energy and buzz." Ford-Tempesta’s comments were included in a paper called The Power of Presence: Being Present In a Virtual World, published last week at the CoreNet Global Summit in Las Vegas, where several thousand real estate execs gathered to debate the future of the office. (Full disclosure: I was an unpaid speaker at the event.)

The author of the report, Steve Hargis has spent the last six months advising Yahoo on an overhaul of its Sunnyvale headquarters in his role as an executive vice president at Jones Lang LaSalle, which handles the company’s outsourced real estate. "Most of the campus is still the old-style cubicles," he says, but several floors have been remade in the image of the 300 to 400 agile programming teams charged with overhauling Yahoo’s aging Web services and dragging them into the mobile era. These are the spaces packed with stand-up desks and scrum boards—not to mention employees. "The difference between the two is so visible it’s become a marketing tool," says Hargis. "People are saying, ‘Wait a minute, I want to be over there."

Using totally different tactics, the office of headset manufacturer Plantronics is designed to actively encourage employees to work at home.

But does this anecdotal evidence constitute success? In the report, Yahoo’s Ford-Tempesta points to the near-doubling of the stock price since the beginning of the year, an assertion which is dubious at best considering how much of that value is tied up in the company’s 24% stake in the soon-to-IPO Alibaba, while its third quarter revenues and profits are both down compared to a year ago.

There is definitely merit to the idea, however, that bringing its agile programming teams together in the same place at the same time can have a small but crucial impact on performance. In his book People Analytics, MIT visiting scientist Ben Waber discusses the role of dependencies for programmers, that teams must coordinate closely to ensure their code meshes well. Citing others’ research as well as his own, Waber argues remote programmers are 8% less likely than co-located groups to communicate about dependencies, which translates to 32% longer code completion times—or death when you’re already as lumbering as Yahoo. "For Yahoo, then, this means their workforce becomes about 3% more effective with the stroke of a pen," Waber wrote, the value of which he pegs at $150 million.

That may not be quite as much as the $17 billion in market cap that the report lays at the feet of killing working from home, but Mayer certainly doesn’t have to say she’s sorry, either.

[Image: Flickr user Tech Crunch 50-200]

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  • acheung2k

    Work from home once in a while is good for the employee morale, and helps the company bottom-line. But there is no dearth of individuals who abuse such policy.

    At some big companies it's the norm, and they throw big bucks at it too.. I know a few people at Cisco, who hardly spent 3-4 days/month in the office, and they go online for a 1-2 hours/day, sending an e-mail or two and make up to 200K in salaries.

    I would refrain from investing my hard earned money in such businesses.

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  • gpdaily30

    Hi, I have been working from my home office for the past 9 years, it's been a great write off and allows me to spend time with the grandbabies. I am currently working with fortune 500 companies and it cost nothing to get set up. I do spend about 4 hours daily only because I choose too you do have to have a computer. You won't become rich but you can make $50 to $100 daily. If anyone would like info on it email me at I'd be happy to send you the link to look it over

  • Mike Ren

    Of course it's become a catalyst for energy and buzz, you have to pretend you have energy or you're fired.

  • Robert Mitchell

    What a hilarious statistic from Weber. They are comparing apples with oranges - fully distributed teams with guys that work at home a day in the week. This must be a sign of desperation. In a nutshell, Yahoo is a basket case. I deleted an email account I had since 1999 the other day and went totally over to gmail. They made a hash of delicious, they made a hash of flickr. Both of these would be gold-dust in the hands of a competent business. That's nothing to do with the shop floor, it was all simply poor strategic decisions. Forcing staff into another day of pointless commutes and meaningless meetings isn't going to improve anything. I shall watch their performance, or lack of it, with interest.

  • Zoran Knezevic

    What works for Yahoo cannot be sign that will work for everybody... we have 25 people in 13 countries running operation in 12 languages. We have to be masters of the cloud.

  • Dee

    Like my mom always said . . . "What is good for the goose is good for the gander." Its easy to claim short term that this has been an effective strategy when the truth is that their are a myriad of other factors which could be attributed to this trend. Mayer has all the luxuries of home within her office (including a state of the art nursery) which millions of working mothers do not have but would surely love. I agree their is value in being present within the work place but I think flexibility for employees can be equally valuable and no one seems to be completing studies on how these efforts by employees have contributed or taken away from the bottom line at Yahoo. Lets have equal information before we draw conclusions.

  • dan

    Wow - really appreciate cloudworking - and that neighborhoods are now global - all really good points - but I can also appreciate that face to face communication is still the best way for a group of people to meet - While I may not agree with banned as a method, I also dont doubt the effectiveness of the collaborative energy created when people are in the same room.

  • Herbert Guerrero

    Of course they are going to say that things are better, what else can they say? This is just another bully company whose executives need to do something to make the news and justify their jobs. What else can they do? a new product? pfft please

  • Alyssa Nolte

    I'd assume this is classic Hawthorne Effect. Productivity and "buzz" as she calls it are up because the employees are aware that they are under the microscope.

    I'm stealing this from Wikipedia because it says it better than I ever could - "The Hawthorne effect (commonly referred to as the observer-expectancy effect) is a form of reactivity whereby subjects improve or modify an aspect of their behavior, which is being experimentally measured, in response to the fact that they know that they are being studied, not in response to any particular experimental manipulation."

    Yahoo employees are obviously aware that they are being studied here. It's working purely because a change occurred, not necessarily the change itself was the accelerating factor.

  • Robert Mitchell

    Excellent comparison. I had a CEO that would only be happy if there was a 'buzz' in the development office. Lots of communication going on and the 'big-hitters' all discussing issues.

    I guess he never really figured out that good code gets written by good developers that 'get the chance to concentrate on what they're doing!'.

  • se123

    They fail to state that if everyone was offered to work from home again they'd jump on it in a heartbeat

  • Phil Simon

    Are things better? Maybe. Even probably. But the notion that things are perfect is laughable. The PR storm is hardly a benefit of the move.

  • TheSauceZA

    revenue is down...profit is down...sorry ... no signs that this (banning work from home) helped any turnaround at Yahoo

  • OmarSultan

    The thing that has never made any sense to me about this approach is the assumption that the best folks needed to solve a given problem or build a new service are all within commuting distance of Sunnyvale (or wherever a company's HQ happens to be). In a global economy, that really seems like retro thinking. Between a company that can source talent globally and one that can source talent from a handful of ZIP codes, my money is on the long-term success of the former.

  • Chalie00

    But the greater question is, whether or not the innovative culture is sustainable. When people are given the time and space to think and work alone they are typically more receptive and eager to work with individuals to help develop their own ideas as well as the ideas of others. If they executive leaders of Yahoo do not capitalize on that innovation and create a collaborative leadership culture, it may kill innovation. The short of it is if they don't use the ideas of the people, the people will stop sharing them.

  • Tempertee

    I had similar thoughts. The real problem is going to be sustaining that creative mindset that encourages growth and innovation.

  • knowlengr

    One need not be a butt in an office building seat to be "agile," "productive" and all things virtuous and profitable. Productivity is not determined primarily by location. Taking aim at something that may no have impact at all but which bucks an obvious technological trend -- the virtual workplace --- has the look and feel of a figleaf for an unenlightened manager. As for Waber's "study," I'd have to see the data. Studies of developer effectiveness are notoriously difficult due to lack of developer-independent metrics.