Last week the business and society twitterverse, and its older equivalent – the press – went into overdrive when Marissa Mayer’s announcement that Yahoo! was doing away with telecommuting and insisting that employees come into the office and work cheek to cheek, or cubicle to cubicle, with their co-workers.
The reactions to the announcement have been fairly typical in their extremes. On the one hand are articles with pictures of “workers at home” beavering away (and suspiciously well dressed at what are way too clean and tidy desks) and expressing outrage as to how such a decision ignores all the value created by giving people the freedom to work at home or in the neighborhood coffee shop. Invariably these articles include criticisms of the move by other CEOs, like Richard Branson, who consider them out of line with modern workforce practices. The usual evidence touted by HR types, that firms that embrace workplace flexibility have higher satisfaction ratings and lower turnover, is invariably part of the discussion. (See, for example, Jessica Guynn, “Mayer Feels Heat Over Telecommuting Ban”, Sydney Morning Herald, 27 February 2013.)
On the other hand are a smaller number of articles saying that this is really no big deal or is even a beneficial move. Typically these articles point on the importance of face-to-face contact and the serendipitous nature of innovative collaboration. Many point out that few telecommuters working in major corporations spend the majority of their time in the home offices, as most of the individuals supposedly being more efficient at home are contractors to companies rather than full employed with a single company. (See, for example, Margie Warrell, “Back into the Office! 3 Reasons Marissa Mayer Has Made A Smart Move”, Forbes, 27 February 2013.)
What few of these articles discuss is whether there is any real value for a company in having fully employed managers and staff operating in isolation for the majority of their working time. Of course, there are situations where working away from the office is necessary and efficient. There are distractions to be ignored when concentrated time is necessary to complete a project or task and being away from the office increases the costs to others from distracting you. However, the whole point of having individuals working together implies that there are compensating benefits to co-location. So what is the evidence?
First, it turns out that to get the benefit of working effectively with others you need to be quite close to them. For example, studies in laboratories and technology companies show that the probability of interaction drops to virtually zero at a distance of about 30 meters. In essence what this says is that if you are on the other side of a building floor or on another floor, the likelihood that you will interact someone in those locations is nil on any given day. Hence, one conclusion is that if I, as an employee, am unlikely to interact with these people why can I just not interact with them from home?
The answer is that organizations know this and structure interactions to counter this effect. As strange as it may seem, open plan offices and all those distractions telecommuters complain about are actually meant to counter this tyranny of organizational distance problem. While we might argue that email, video chats and other technologies also work to reduce this effect, they do not do so in anywhere near as effective a means. Hence, while it sounds “modern” to argue for workplace flexibility, the reality is that successful modern corporations are not just exploiters of knowledge but explorers and creators of knowledge. Such creation activities cannot and does not arise from individuals operating independently at a distance.
Second, telecommuting is little more than semi-outsourcing and hence the best value from removing employees from the corporate prison will arise with those individuals who are least effective or least necessary to increase the value of those around them. In other words, telecommuters may be very efficient at what they do – indeed, maybe more efficient than a cubicle bound drone. But what telecommuters are not good at doing is making OTHER people more efficient or innovative. Indeed, this is the logic behind outsourcing. If I can remove a “module” from my value chain of activities and contract it to someone who specializes in the tasks that make up that module and then do this in a market based transaction then it certainly makes sense to do so. I just plug the “output”of the outsourced module into my value chain and move on. Outsourcing also is enhanced when there is a clear measurable output and all I am concerned about is making sure that the output meets the quality, time and price specifications.
However, what I want to keep in-house are the synergistic interactions amongst employees that cannot be transacted in the market. Some of these relate to corporate culture and innovation but the underlying driver is that a group working together in proximity makes the parts better at doing the things that matter to the corporation in a way that cannot be achieved by aggregating up independent actors. Unfortunately, these effects are less predictable and harder to manage and, hence, the outputs cannot really be measured easily. This is why it is why managing the “inputs” are so important.
These points together highlight why being in proximity to your co-workers matters, particularly in knowledge intensive activities. The burden of proof of the value of an employee in this world is not that you are more efficient, but that your proximity to others makes them more efficient.
I close this by relating a recent interaction that I had with someone at an Australian university a few months ago when I visited to give a presentation. I noticed how few people were in their offices during second day of my visit. I said this to one of the senior administrators, to which their reaction was that most people find it easier to work at home. My reaction was why would you want to work at an institution where you believe that interacting with your colleagues was so negative to what you wanted to achieve that you actively avoided them?
View a video on this with ABC Business Lateline.
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