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Will Yahoo!'s Telework Ban Actually Do Anything?

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It's no secret that Yahoo! (NASDAQ: YHOO  ) is in the midst of a turnaround under new CEO Marissa Mayer. The company laid off a whopping 14% of its workforce last year under former CEO Scott Thompson. However, the company also recently changed another policy. Starting in June, Yahoo! is banning all telework. So given Yahoo!'s restructuring, what should investors make of this new news?

The memo that started it all
Jackie Reses, Yahoo!'s head of human resources, announced out the telework news to all employees in a Feb. 22 memo. The reasons were rooted in a need for solidarity and quality. There are big things afoot in this office, Reses implies, and the only way to be a part of it is to be here.

On the surface, Yahoo!'s new rule makes sense. By coming in to the office every day, employees may feel more connected to the company's culture. As Reses wrote, "Some of the best decisions and insights come from hallway and cafeteria discussions, meeting new people, and impromptu team meetings" as opposed to in sitting in sweatpants, in front of a computer, with a bag of Cheetos.

Yahoo! is also not the only tech company to poo-poo telecommuting. One of Google's top executives, CFO Patrick Pichette, has said that Google only has a handful of telework jobs, because the in-office experience boosts productivity and brainstorming more than solitary work. However, even though telecommuting isn't Google's preferred work style, they still don't completely ban it as an option.

The flip side?
Despite agreement on teleworking from the biggest names on the net, I can also think of some potential drawbacks to this kind of policy. Former telecommuters will now be forced into a commute, and some may have to uproot their living situations in order to be close to a Yahoo! facility. Additionally, Yahoo!'s offices could become crammed to the gills with people, making it more difficult for employees to feel like their individual efforts are making a difference.

The stock performance
Yahoo's revenue has been steadily dwindling within the past three years, but the company has gotten better at retaining its earnings. In 2009 it brought in $6.4 billion and only held $597 million in net income, but in 2011, the company made less money ($4.9 billion), but kept more of it ($1 billion.  

Following the news of the telework ban, Yahoo!'s stock has dropped from $21.28 to $20.59. Of course, a decrease like this isn't worth sounding emergency sirens over, but it still hints that all may not be as hunky dory as Reses' perky memo would suggest.

At the end of the day, the telework ban won't cripple Yahoo!, but is certainly worth noting. Time will tell if workers respond positively or negatively. In the meantime, Yahoo! continues to forge ahead.

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DocumentId: 2288429, ~/Articles/ArticleHandler.aspx, 9/28/2016 10:01:51 PM

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