Virtual Performance Management: Lessons from Yahoo's Telecommuting Ban

The cyber revolt against Marissa Mayer’s telecommuting ban has been fast and furious. “Aren’t flexible working relationships, flip flops and free lunch the mainstay perks of tech companies?!” netizens shouted. While Yahoo bucking the work from home trend has largely been voted a fail across the web – even Richard Branson weighed in on his blog – this action brings to the forefront some absolutely huge employee performance management issues that must be addressed by leaders managing a virtual workforce.

Management Gone Too Far?

Although many branded the move as retro (not in a good way), Mayer likely believed that this decision was essential for moving Yahoo’s culture forward and is being employed as only one
of many reinvention strategies. While we are certainly not privy to all of the internal justifications, a Yahoo source informed All Things D (the original recipient of the leaked HR memo) that in certain cases the arrangements were allowing for lackluster performance and a focus on side projects at the expense of real work. Further, the official HR note blames working from home for sub par “speed and quality”, while insisting that physical presence in the office will enhance “communication and collaboration”, and “decisions and insights”.

These are certainly very realistic performance expectations for any organization. The problem is that this is a bandage solution and is unlikely to address the root of what is likely a leadership issue.  I have some questions:

• Has Yahoo HR conducted research (as the Google People Analytics team does with PiLab) showing that telecommuting is a driver of the factors mentioned in the HR communication?
• Is there evidence that office staff are more productive than telecommuters?
• Have they drilled down into the data for specific business units, departments or managers where the issues are occurring to reinforce key leadership and managerial competencies that drive high performance and engagement?
• Have senior managers been held accountable for their virtual team’s execution of strategic objectives linked to the Yahoo reinvention? 

My colleagues and I have worked with many management teams with challenging cultural issues, and in the midst of large scale organizational change efforts. Establishing and communicating specific standards of performance and holding managers and teams accountable can effectively change the direction of an organization -- sometimes overnight. It is our recommendation that Yahoo employees be evaluated on a comprehensive set of competency-based behavioral standards including, for example,

• displaying a sense of urgency in accomplishing tasks;
• maintaining regular and open lines of communication;
• making effective team-based decisions; and
• providing insights that challenge the status quo and push the organization forward.

As highlighted in a recent Harvard Business Review blog post by Keith Ferrazzi, we must avoid managing by observation – the early in, last to leave employee may not necessarily be the most productive or even a high performer . Instead, HR needs to provide senior leadership with tools for measuring both the “what” and “how” of performance. When these metrics are utilized the “where” factor is not important – after all, one virtual employee may sacrifice quality to avoid missing yoga, while another is scheduling conference calls with Australia at 10 p.m. to close deals. The most effective way to measure performance is always about both goal accomplishment and the behavioral competencies one utilizes in their work. Both are readily measured when done correctly, even during “virtual observation”.

Does Innovation Only Happen Live?

Which brings us to the argument that real creativity and innovation involve the live, physical exchange of off-the-cuff ideas and viewpoints offered by a plethora of talented employees from various disciplines. Yahoo got this partially right as a justification, as there is empirical truth to this. While research into more traditional “brainstorming” has proved this particular retro practice defunct, newer research has shown the necessity of constructive critiques from varying perspectives, particularly on-the-fly to create ideas of value (see this article by Jonah Lehrer in the New Yorker). However, simply forcing people together in a cubicle farm may or may not create this kind of innovation. After all, many breakthrough ideas happen through the solo process known as mind wandering (see this recent NPR post by Sarah Zielinski). For example, the aha! Moment in the shower or staring at a blue wall. Instead Yahoo’s leaders must ask how they can promote and support this type of interaction and work collaboratively with managers to design work environments that generate this creative spark. Managers should be left with the discretion to accomplish this however works best for their particular business area and team. In some cases, that may mean everyone in the same room, while in others an environment that allows for focused work with a spontaneous Skype or miscellaneous Yammer thrown in, and an occasional team dinner may be just as (or more) effective.

Goodbye Yahoo, Hello Google

Unfortunately, this very public leadership misstep is likely to cause some talent issues at Yahoo. Why? Because across the board bans designed to enforce productivity will be unlikely to engage employees who were already disengaged, while key talent who are actually excited about working to turn around this tech firm may feel wrongly accused. Unfortunately, Yahoo may need to prepare for a mass exodus of high performers to other tech companies with more modern flex time policies and performance evaluation systems.

While Mayer’s leadership style may reek of 1960’s McGregor’s Theory X (that people will do the least amount of work possible and are irresponsible without close supervision), it is ultimately HR’s responsibility to provide the C-Suite with the right data to make solid people decisions. While this is clearly happening in the case of Google’s People Analytics, Yahoo’s team may not be offering this kind of powerful data.

The important thing to remember is that blanket draconian policies are what can give HR such a bad reputation. When we can provide data that demonstrates a strong correlation between optimal performance and business results, we are truly offering the human resources of our namesake. While Mayer pursues a new kind of leadership for Yahoo, HR must support her with proven performance management methodologies and workforce analytics that faciltiate strategic people decision-making.

Please share your thoughts and comments with me!

Interesting in learning more? Check out this whitepaper written by my colleagues and I.