Banning Flexible Work Options: Yahoo's New Controversial HR Policy

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Yahoo Gets a Fifth CEO in Five Years In May 2012, Yahoo fired its CEO Scott Thomson (Thomson) just four months after his appointment. Scott was fired by Yahoo's board after it was found that he had falsified his resumé by including a computer science degree which he did not have. Thomson’s sudden ouster led to chaos at the company which found itself confronted with one crisis after the other. Yahoo appointed its head for global media business, Ross Levinsohn, as its interim CEO till they found a new CEO. Later, in July 2012, Yahoo's board appointed Mayer as its new CEO on the recommendation of the CEO search committee appointed by it. Mayer was the fifth CEO to head the organization in five years...

Many analysts and some Yahoo insiders themselves blamed the culture at Yahoo for its problems. According to Paul Graham, co-founder of Viaweb , even in the late 1990s, “The company felt prematurely old. Most technology companies eventually get taken over by suits and middle managers. At Yahoo it felt as if they’d deliberately accelerated this process. They didn’t want to be a bunch of hackers. They wanted to be suits. A media company should be run by suits.” Unlike some of its competitors like Google, Yahoo couldn’t take decisions speedily. It followed a matrix organization structure which, according to its critics, inhibited the speed at which it took decisions regarding new projects and killing unviable ones. Yahoo’s large and interlinked structure made it very difficult for it to launch new products and discontinue unviable ones. The constant change of CEOs also resulted in many key projects being dropped in planning or execution stage whenever there was a change at the top. The lack of stability in the top level management led to many senior executives leaving the company...

As part of the steps she took to improve the fortunes of Yahoo, Mayer implemented a new HR policy in February 2013. The new policy was communicated to the employees of Yahoo in the form of a memo from the HR department (Refer to Exhibit-V for the memo sent to Yahoo’s employees). According to the new HR Policy, employees of Yahoo could no longer work from home; they needed to report to their offices regularly. The new HR policy also stipulated that people who could not comply with the new policy would have to quit the organization. The new HR policy stipulated that all remote workers at Yahoo had to start reporting to the office facilities by June 1...

However, Yahoo defended its new policy as being necessary for the company. It said that the new policy would only affect 200 of Yahoo's 12,000 employees. Mayer initially refused to comment on the criticism of the new HR policy saying it was an internal matter of the company. But she finally gave her opinion on the new HR policy at a conference for HR specialists held at a hotel in Los Angeles. She started explaining Yahoo's new HR policy saying, "I need to talk about the elephant in the room," and pointed out to an image of a purple image of an elephant on the projection screens of the hotel auditorium. Mayer said, "People are more productive when they’re alone. But they’re more collaborative and innovative when they're together...

Despite all the criticism leveled against the new HR policy, some analysts said that the one of the main reasons behind the policy was to make some unproductive employees leave the organization on their own. Yahoo's per employee productivity was US$ 344,758 while Google's was US$ 931,657. Mayer had been trying to make a lot of Yahoo's unproductive employees leave the organization since she took over as its CEO. Analysts opined that since many of Yahoo's employees (who were not productive enough) would find it difficult to report to the office regularly, the new policy might force them to leave the organization without any formal layoffs being announced...

Exhibit I: Movement of Yahoo's Share Price from January 2006 to January 2013
Exhibit II: Key Financials of Yahoo from 2007 to 2011 (In US$ Thousands)
Exhibit III: CEOs of Yahoo
Exhibit IV: Important Internet Services Offered by Yahoo
Exhibit V: Memo Sent to Yahoo's Employees
Exhibit VI: Data Table for the Flexible Job Index - Top 25 Job Categories

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