Yahoo’s Mayer Shows How Bad Decisions Follow Bad Management

When you’ve worked for an MBA, you learn just how important it is to make decisions in a timely manner. Look at the relevant data, consider the options within the context of your organization, develop a plan of action (with alternate plans, if possible), and go.

That’s what Yahoo CEO Marissa Mayer seemed to do recently when the company announced that it would end arrangements for employees to work from home. There was quick and significant backlash, with many angry employees as well as critics outside the company.

More important than criticism, Mayer’s decision left the company vulnerable in some areas and failed to address a significant management shortcoming that likely has broader ramifications than whether people can be productive at home. According to the memo that Yahoo sent to its employees, communication and collaboration were the reasons for the shift:

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.

According to reports, the change affects not just a few hundred employees who were hired with the knowledge that they would work remotely (and, indeed, may not be near an office), but to all employees, including those that had made arrangements to work from home a day or two a week.

The problems with the decision start with the assumption that collaboration and communication can only happen in close physical proximity. There are studies suggesting that hourly employees can get complacent after a few months of working at home. But then there are studies showing that the flexibility of working at home can improve worker morale, productivity, and health.

However, the nature of work has changed to a degree that makes such studies almost immaterial. In many corporations, people from different geographic regions must collaborate and innovate together. Getting them in the same physical space isn’t practical. Even in Yahoo, what are employees supposed to do if the people they interact with are in different cities, states, or countries? Fly to other offices? Yes, physical proximity can potentially increase the chance of useful interaction, but it wasn’t as though a large portion of Yahoo employees were all at home.

This likely has more to do with poor productivity of at-home workers, say some former Yahoo employees. It could be that Yahoo had many unproductive people. Given the company’s performance over the last few years, though, it is unlikely that a small percentage of workers at home have been the company’s bane.

If people are not productive at home, why was it that their managers didn’t monitor productivity metrics and work for a change of behavior before? Aside from a weakness in oversight that likely also extends to employees in the office, Yahoo is in a highly competitive industry in which getting the best talent is difficult.

By reaffirming an approach to doing business that is decades out of date, Mayer has effectively told people who could have their picks of jobs to look elsewhere. Not only that, but the move has competitors now looking to snag employees from Yahoo. When you’re ready to change a significant policy or strategy in a company, it makes sense to take a step back and ask if you are trying to solve a problem that you actually caused in the first place.

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