Since Marissa Mayer became chief executive of Yahoo, she has been working hard to get the Internet pioneer off its deathbed and make it an innovator once again.
She started with free food and new smartphones for every employee, borrowing from the playbook of Google, her employer until last year. Now, though, Yahoo has made a surprise move: abolishing its work-at-home policy and ordering everyone to work in the office.
A memo explaining the policy change, from the company's human resources department, says face-to-face interaction among employees fosters a more collaborative culture — a hallmark of Google's approach to its business.
In trying to get back on track, Yahoo is taking on one of the country's biggest workplace issues: whether the ability to work from home, and other flexible arrangements, leads to greater productivity or inhibits innovation and collaboration. Across the country, companies like Aetna, Booz Allen Hamilton and Zappos.com are confronting these trade-offs as they compete to attract and retain the best employees.
Bank of America, for example, which had a popular program for working remotely, decided late last year to require employees in certain roles to come back to the office.
Employees, especially younger ones, expect to be able to work remotely, analysts say. And overall the trend is toward greater workplace flexibility.
Still, said John Challenger, chief executive of Challenger Gray & Christmas, an outplacement and executive coaching firm, “A lot of companies are afraid to let their workers work from home some of the time or all of the time because they're afraid they'll lose control.”
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Studies show that people who work at home are significantly more productive but less innovative, said John Sullivan, a professor of management at San Francisco State University who runs a human resource advisory firm.
“If you want innovation, then you need interaction,” he said. “If you want productivity, then you want people working from home.”
Reflecting these tensions, Yahoo's policy change has unleashed criticism from advocates for workplace flexibility who say it is a retrograde approach, particularly for those who care for young children or aging parents outside of work. Their dismay is heightened by the fact that they hoped Mayer, who became CEO at 37 while pregnant with her first child, would make the business world more hospitable for working parents.
“The irony is that she has broken the glass ceiling, but seems unwilling for other women to lead a balanced life in which they care for their families and still concentrate on developing their skills and career,” said Ruth Rosen, a professor emerita of women's history at the University of California.
But not only women take advantage of workplace flexibility policies. According to the Bureau of Labor Statistics, nearly as many men telecommute.
The company's memo, written by Jackie Reses, director of human resources at Yahoo, said: “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.”
In part, the memo looks like an effort to bring a Google spirit to Yahoo, said Colin Gillis, an analyst at BGC Partners.
“Marissa's trying to increase the energy and output and change the culture of the company,” he said. “She brings all the Google lessons to the table, and Google is very focused on having your life revolve around their campus so you can spend a significantly larger chunk of time at work.”
Still, Google, as well as Facebook, does allow people to work remotely on a case-by-case basis. But both companies also strongly stress in-person collaboration.
Standard Silicon Valley perks like cafeterias with free food, shuttle buses, gyms, ice cream parlors and dry cleaners not only make employees' lives easier but also keep them on campus during the day and promote contact with other employees. Nearly all tech companies have desks packed tightly together without walls and communal work areas with sofas and beanbags.
Tim Bajarin of Creative Strategies Inc., a Silicon Valley tech research firm, said having employees in one place can be important for Internet companies.
“In talking with engineers I know, especially those who are programmers and in many strategic leadership positions, being together with people of like mind has major advantages,” he said.
“I suspect that Marissa feels that during this important time of turning Yahoo around and getting it back to its former glory, that the team dynamics is critical to this process,” he added.
Some companies outside the tech industry are also re-evaluating flexible work arrangements. Certain industries that deal with sensitive client information, like health care and finance, have more restrictions on working remotely.
Yet more companies embrace flexibility. At Aetna, 47 percent of workers telecommute, up from 9 percent in 2005. The company provides secure Internet and phone connections, locked file cabinets and shredders. During that period, the policy has saved the company $78 million in real estate costs, said Susan Millerick, an Aetna spokeswoman.
At Booz Allen, employees can work at home or sign up to work at a desk in another branch, called “hoteling.” The policy has been vital to employee retention, said Christopher Carlson, a Booz Allen senior associate in human resources. He works from his home in Florida, where he moved to care for his aging parents.
“It allows me to integrate my work and life and be successful at both,” Carlson said. “And I spend less money on gas.”
This report includes material from MarketWatch.