Why Allowing Telecommuting Is (And Isn’t) A Good Idea

In February of 2013, Yahoo CEO Marissa Mayer made headlines across the world – most of them negative – after she decreed that employees at the fledgling tech company could no longer work from home.

Studies show people who work from home are more efficient, have less conflict with colleagues, are happier and they save the company money on overhead costs. So was Mayer’s move an “epic fail”?

Not necessarily. There are a lot of compelling reasons to let employees work from home and it should definitely be offered to all employees, at least on a partial basis.

But there is a real negative, as well: working-from-home can stifle the synergy that comes from having a bunch of smart people in the same place together, which in turn can hurt innovation. And that is reason enough to not allow employees to work from home, at least all the time.

The Pros of Telecommuting

From a business perspective, there are a lot of pros in allowing your workers to telecommute. First and foremost, a “flexible work place” is a great way to both attract and retain top talent.

A recent survey by the Society for Human Resource Management (SHRM) discovered that four out of five employees crave flexibility, which includes the ability to work from home. Other surveys have found that people will work for less – or are less willing to leave for a job that offers more – if they are able to work from home.

Working from home can also make employees more efficient, particularly if they are in more process-driven jobs like call center reps or even accounting. One company, Ctrip, allowed its call-center employees to work from home – a very process-driven job – and found the workers were actually more productive and were happier.

“The productivity increase, we think, was due to having a quieter environment, which makes it easier to process calls,” Nicholas Bloom, a Stamford economics professor who oversaw the Ctrip “experiment”, told the Harvard Business Review. “Offices are actually incredibly distracting places.”

Some other benefits of allowing your workers to work from home: less commuting, which means less pollution; lower overhead costs; and studies show less conflict between employees. Seems like a no-brainer than, right?

Well, to quote Lee Corso, not so fast.

The Cons of Allowing Telecommuting

So why did Mayer ban telecommuting? Here is her reason, in a memo sent out to all Yahoo employees explaining the decision:

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.

That argument holds water. Yes, studies have found that employees, particularly employees in process-driven jobs, are more efficient when working from home. But employees are generally more innovative when they work together.

And innovation is where the big money is. Think of the ROI of being able to process payroll faster versus creating the iPhone, as an example

For evidence, look no further than three of the world’s most innovative and valuable companies, Google, Apple and Facebook, who all encourage their employees to work in the office, as opposed to at home. The reason, according to Google CFO Patrick Pichette:

The surprising question we get is: ‘how many people telecommute at Google?’ And our answer is: ‘As few as possible’ … There is something magical about sharing meals. There is something magical about spending the time together, about noodling on ideas, about asking at the [office] ‘What do you think of this?’ These are [the] magical moments that we think at Google are immensely important in the development of your company, of your own personal development and [of] building much stronger communities.

So What Should You Do?

So should you let your employees work from home or not? Well, with process-driven jobs with clear measurables – such as call center employees – the answer is probably yes, as it leads to happier, more efficient workers and lower overhead.

But how about for everyone else? How about for your standard job, say in marketing, sales or engineering?

The answer is a little of both. Allowing employees to work from home can make them more efficient and allows you to attract top talent. That said, it is also critical to get all that talent together in the same place, to allow for that talent to “synergize” and perfect great ideas.

After all, the ROI on gaining efficiencies is dwarfed by the ROI on more innovation. But it’s hard to get the great talent needed to brainstorm those great ideas without offering a “flexible” working environment.

The ideal solution? Three days in the office, two days at home. Obviously, that can vary greatly depending on the job and the employee, but it’s a good rule-of-thumb to live by.