Yahoo Eliminating Telecommuting: Misuse of Executive Power

    Marissa Mayer, Yahoo’s CEO, has been doing a lot of things right in her effort to turn around Yahoo. However, it was only a matter of time before she made a big mistake. CEOs are no more perfect than anyone else, and she is inexperienced in the role. Eliminating telecommuting was just such a mistake and it could significantly hamper her ability to complete Yahoo’s turnaround.

    Here’s why.

    I learned about mentoring while at IBM. It puts its top executive candidates through a massive amount of mentoring and focused training on how to be a top executive. I was honored to be part of that program, and my experiences there lead me to believe Marissa Mayer made a critical mistake when choosing to discontinue telecommuting.

    For the damage it will do, I’ll actually go back to my graduate and undergraduate work, much of which was in Manpower Management, back when HR was more of a science and less of compliance organization. Professors like Maslow, Firo, and Hertzberg taught that a move like Mayer made could cripple productivity and do far more damage than good.

    Finally, and more recently, I watched Intel make this same mistake over a decade ago. Andy Grove often points to it as one of the firms’ biggest mistakes (not the biggest, though).


    One of the problems facing most new CEOs is that they were never mentored into the role. A CEO job is very different from any other job you are likely to hold. This is because things that worked great when you were an executive and advancing, like self-promotion and pushing the envelope, can backfire when you have the top job. We saw that happen with Carly Fiorina at HP, which is why, even though she demonstrated a talent in line with Steve Jobs, she got fired from that job. In fact, Jobs himself was fired from Apple, which allowed him to season as a CEO before successfully running that company years later.

    One of the lessons one of my mentors taught me comes to mind when looking at Mayer’s decision. At the time, I was working as an internal problem solver at IBM and was struggling with a bureaucracy that fought any change with a passion. I asked several executives, who could see the problems as clearly as I did, why they just didn’t order a fix.

    While one of the answers pointed to the problems in IBM at the time (an unwillingness to make waves and put his pension at risk), the other was to the point. His reason was that you have to allow managers to manage. If you micromanage everything, you’ll not only burn yourself out, you’ll slow down decisions significantly and you may actually do more damage than good. At the CEO level, you just don’t have a sharp enough view into the unique problems that exist at the bottom of the organization. If you focus on them, the problems you should be dealing with at the top, or more succinctly, the job you were hired to do, won’t get done.

    The decisions surrounding where an employee works are not CEO decisions, they are first-line management decisions. When a CEO starts making decisions for first-line managers, she will likely do more damage than good.

    Science of Manpower Management

    Specifically, when dealing with entitlements, the research into employee behavior suggests what things work for motivation and what things don’t. Whether you are talking Maslow’s Hierarchy of Needs or, in this case, closer to Hertzberg’s delineation, you find that an entitlement, when eliminated, can have dramatic consequences.

    This can break down into a number of areas, ranging from a feeling of equity (people likely joined Yahoo at least partially because the firm had a more open telecommuting policy and now feel betrayed) to fairness (removing an entitlement often causes employees to feel they are being punished for something they didn’t do). The end result is that, according to the research, removing an entitlement has a bigger negative impact on productivity than putting it in place had a positive impact.

    So, assuming the research still holds, by making this decision, Yahoo productivity should drop significantly.

    Intel Lesson

    This was proven when, over a decade ago, Intel implemented its “Back to Basics” program. Intel was getting beat at the time by AMD and its financials were trending in the wrong direction. Intel executive management decided that one of the big reasons behind this was that too many Intel employees were taking advantage and they made a draconian decision.

    All employees were logged in when they arrived in the morning and logged out at night. They were expected to work on campus for the full eight hours they were supposed to be there, and the result of this policy was almost catastrophic.

    What was learned was that employees who were screwing around came into work and became more of a distraction. Employees who were working evenings and weekends stopped and started working the prescribed eight hours per day instead. Not only didn’t productivity increase, it cratered, because the overachievers who had been driving the company stopped overachieving like they hit a wall, many of them choosing to leave the company and work for competitors.

    The policy was reversed and the lesson hard-learned.

    Wrapping Up: Abuse of Power

    You can’t run a big company without delegating. Managers have to be allowed to manage. If there is a good reason for an employee to telecommute, the decision should be made by the manager. Telecommuting should be a privilege and never an entitlement, however, and employees that misuse the privilege should lose it or their jobs. Through this decision, Yahoo productivity should drop, the firm will have a harder time acquiring and retaining key employees, and if Yahoo follows what historically happens next, this policy, or Mayer herself, will be reversed within 24 months.

    While this is Mayer’s first major mistake, it is one that can be reversed. But until it is, and particularly while the CEO is micromanaging first-line managers, Yahoo will be an employer to avoid.

    This is an abuse of CEO power and CEOs who abuse their power often find their career as CEO to be unusually short and, unfortunately, problematic.

    Rob Enderle
    Rob Enderle
    As President and Principal Analyst of the Enderle Group, Rob provides regional and global companies with guidance in how to create credible dialogue with the market, target customer needs, create new business opportunities, anticipate technology changes, select vendors and products, and practice zero dollar marketing. For over 20 years Rob has worked for and with companies like Microsoft, HP, IBM, Dell, Toshiba, Gateway, Sony, USAA, Texas Instruments, AMD, Intel, Credit Suisse First Boston, ROLM, and Siemens.

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