How Employers Take Advantage Of Employees To Save Money

Employer taking advantage of employeesEver since hobnobbing with Marissa Mayer at her penthouse party, I could tell she was destined to do bigger things than just be an early Google employee. Since taking the reins at Yahoo!, the stock price has soared. She even had a baby soon after joining and took a Superwoman short two week maternity leave. Clearly, Marissa wants to set an example for her thousands of employees.

In an increasing effort to extract the most out of her troops, Marissa is ending Yahoo’s long standing work-from-home policy. Employees have a choice of complying or leaving by June, 2013. Her thesis is simply that employees in the office are more productive than employees at home. With an estimated revenue per employee of only $344,000 at Yahoo vs. $931,000 revenue per employee at Google, Yahoo has some catching up to do.

Letter from Yahoo HR Head to employees:


Over the past few months, we have introduced a number of great benefits and tools to make us more productive, efficient and fun. With the introduction of initiatives like FYI, Goals and PB&J, we want everyone to participate in our culture and contribute to the positive momentum. From Sunnyvale to Santa Monica, Bangalore to Beijing – I think we can all feel the energy and buzz in our offices.

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.

Beginning in June, we’re asking all employees with work-from-home arrangements to work in Yahoo! offices. If this impacts you, your management has already been in touch with next steps. And, for the rest of us who occasionally have to stay home for the cable guy, please use your best judgment in the spirit of collaboration. Being a Yahoo isn’t just about your day-to-day job, it is about the interactions and experiences that are only possible in our offices.

Thanks to all of you, we’ve already made remarkable progress as a company – and the best is yet to come.


I’ve got a unique perspective on this because: 1) I’ve met Marissa, 2) I was a manager, 3) I write from home, and 4) I wrote a book empowering employees to know their rights and not be taken advantage of by corporate. Some might view this new Yahoo policy as harsh, but I view it as a brilliant way to get underperforming employees to quit without severance.


Firing people is hard. It’s one of the least enjoyable things I’ve ever had to do, even if the subordinate was an extreme underperformer. HR and I would always try to drop polite hints in the beginning to inform the subordinate s/he was underperforming in hopes that s/he would get the message and improve. If polite hints weren’t effective, we’d then tell the underperformer directly to stop being late, to start collaborating more with colleagues, and to consistently meet or exceed expectations. If still nothing changes, we have to go through careful documentation to initiate firing procedures.

Writing from home has enabled me to improve my productivity by over 30% given there are no distractions. But come 11am after three hours of “work,” guess what? I’ve got nothing else to do and slack off. Sure, I’ll check my e-mails here and there, but after my writing is done, I no longer want to do write more because I’m retired. I meet up with friends for lunch and usually play tennis or golf for the rest of the day. Sometimes I’ll take a nice 30 minute to 1 hour nap after lunch. No matter how much work-from-home folks say they get just as much done, the fact of the matter is they could be doing even more.

I’m pretty sure Yahoo is hoping some of their employees will quit due to the new policy. These employees are likely more senior, harder to manage, and more expensive than the average employee as well. Let’s say the average work-from-home employee tenure is ten years and the average total income package is $200,000. By my calculations, every employee who quits voluntarily likely saves the firm $100,000 – $150,000 in severance. Nice work Marissa!


* Overpromise, underdeliver. The classic management line is to promise a promotion or a raise right after a disappointing year end review. Let’s say the performance review is in January. The manager can promise the world to the employee to motivate him to work to the extreme all year. When promotion or bonus time comes around end of year, the manager can just blame the lack of promotion or raise on exogenous variables such as the economy, weak company-wide performance, or the necessity of your division to subsidize another division. The employee can then quit in disgust, thereby saving the company a lot of money and getting the most out of the employee their final year.

* Use management consultants. Have you ever wondered what a management consultant from McKinsey, Bain, and BCG do? Well one of their main responsibilities is to figure out how to cut costs and increase revenue. In other words, management hires strategic consultants to be their scapegoats when they fire a bunch of people. Morale will clearly be low, but at least management can blame McKinsey for the slashing of 1,000 people instead of themselves. I’m telling you, firing people is not a fun task.

* Create stretch goals. Let’s say you’ve built up a top 3 business that has been growing on par with the industry growth rate of 10% a year for the past five years. For some reason, your manager isn’t particularly fond of you. Perhaps you threaten him with your performance. As a result, the manager puts in a new yearly budget of 25% growth. 25% might be easy for a business that is outside the top 5 given they are starting from a small base. However, for a business that’s already at the top, growing faster than the market is brutally difficult. The manager has set unrealistic goals so that when you fail, they can find a reason to let you go.

* Cherry pick weaknesses. It’s practically impossible to be great at everything you do in the workplace. Even the best salesman probably doesn’t do well with at least 10% of his clients. Come bonus time, a savvy manager will simply cherry pick the accounts you do not do well in as a reason to not pay or not promote you. If things get really political, the manager can cherry pick all 10% as reasons to lay you off.

* Make you work double. Plenty of organizations (besides the government of course) laid off hundreds of thousands of workers during the economic crisis. Even as things improved over the past five years, staffing levels are significantly lower. As a result, many employees are now doing more work for less pay. It’s understandable that firms are gunshy in spending more money hiring after just letting so many people go. As an employee, you’re trapped because expectations have been reset higher. Complain and get demotivated, underpaid, or fired and like it.


Is there really any wonder why over 2 million Americans quit their jobs last year? Should we really be surprised that so many surveys show the majority of employees are not happy with their jobs? With as competitive a global market place as we have now, businesses are more cutthroat than ever. It’s nice to think that your manager is completely looking after you. Don’t be so naive. Your manager is feeling just as much heat as you are to perform.

Laying people off is a costly procedure due to severance laws, unemployment compensation, reputational risk, and legal ramifications. It is so much better for an employer to have an employee voluntarily quit. If you are an employee looking to quit, start an open dialogue with HR or your manager to make the process as easy as possible for all parties.

Note: If you really want the freedom to make extra money, try driving for Uber. I’ve driven over 200 hours part-time and am averaging $36/hour. Not bad if you ask me!

Learn How To Negotiate A Severance Package
Updated for 2016 and beyond

Sam started Financial Samurai in 2009 during the depths of the financial crisis as a way to make sense of chaos. After 13 years working on Wall Street, Sam decided to retire in 2012 to utilize everything he learned in business school to focus on online entrepreneurship. Sam focuses on helping readers build more income in real estate, investing, entrepreneurship, and alternative investments in order to achieve financial independence sooner, rather than later.

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  1. Mike Hunt says

    Interesting- one would think that any of the work from homer’s need to get out and buy your book…

    The employment picture is going to stay pretty ugly for some time to come, and with that comes exploitation.


    • says

      It is nice to imagine that if all 2 million people folks who quit last year in America bought my book, that would be a nice $98 million dollar windfall. You know what? The 2 million folks would probably generate over $10 billion in severance benefits at a conservative $5,000 per person.

      • Mike Hunt says

        And that would generate $2 Billion in income taxes which would cover the deficit just under 1 day. It’s a win-win-win!


  2. says

    Nice post, Sam. I think we all know that the most money to be saved in a business is usually on labor. That said, we are all humans here (right?), so the worst thing an employer can do is look at employees as units of production. The best bosses do that behind the scenes (in a way), but during day-to-day operations treat all with dignity and respect.

    • says

      Respect and dignity is becoming a lost cause in a volatile economy with tremendous global competition. Imagine coming into work the same as you always have been doing for 10 years, called up to HR, and sent on your way without even being allowed to pack your stuff.

  3. Money Beagle says

    In the case of Yahoo, it’ll be interesting to see if the expected increase in productivity will be greater than the offsetting costs that the company will have to bear to house those employees. Office space, electricity, water, office supplies, those costs all add up and you have to wonder at what point that policy change actually pays for itself.

    • says

      I’m sure they’ve thought this through and run some models. All that stuff you mention is relatively fixed cost. I’m sure there is a lot of capacity given Yahoo did go through a lot of firings already.

  4. says

    It’ll be interesting to see how this pans out. I wonder if there are people working far away from Yahoo headquarters? They’d have to quit, right? Or move?

    • says

      Yep, quit or move, saving Yahoo from having to layoff and pay severance. Employees who work from home are generally more senior and tougher to manage. New management wants to get these folks out.

  5. says

    The only thing that has ever got my blood boiling in the office is to see individuals who constantly outperform others yet get paid less than their peers. I believe bonuses should be offered to those who outperform if not a salary raise.

    Have you seen the Showtime series “House of Lies” they’re management consultants and I’m curious as to how true their tales really are.

    • JayCeezy says

      Brick, “House of Lies” was originally a fantastic book by comedy-writer turned MBA, Martin Kihn. One of the finest business books I have ever read, because it comes from a place of ironic detachment. There are several incidents, described therein, which happened to me, too. My own worklife has been one of consulting, though at a much lower level of glamour and compensation. I love the series, and fantasy that big bucks, random sex with crazy hotties, corporate-funded recreational drinking, and flawlessly written repartee might happen at any moment.

      Back to the book, it opens with a quote from Greek philospher and pioneer of what we now consider Western Civilization…

      “What is hard? To know oneself. What is simple? To advise another.”

      Only the truth is funny.:-)

  6. SwearJar says

    It will be interesting to see what happens to Yahoo over the next few years. I can’t believe how much (mostly negative) press this work from home thing is getting all over the web. For a services company, their image in the right demographic is critical. This move doesn’t seem to be going over very well with technology consumers. I’m sure my mom will continue to use Yahoo search and mail (and receive their advertising) as long as it’s available. I terminated my yahoo mail accounts yesterday.

  7. Sam Vimes says

    This is not entirely fair. At a large (public) business, staffing cuts can be impersonal, driven solely by short term considerations, and destructive to the individual. After 20+ yrs in HR, I have been involved with ZERO performance related terms that did not involve warnings, early and sometimes often, that things were amiss. And always in writing. It is rarely as arbitrary as the termed employee will claim, but we can’t talk about that publicly. Want to know what really makes me burn? 3 to 5% 401k matches. Compare that to the cost of the old DB plans and it feels like robbery. Yes they were unsustainable (and still are, watch for increasing municipal bankruptcies), but the transition away from DB’s altered the prevailing employment pact dramatically. And in no way favorable to employees.

    • says

      Sam, good to hear a HR pro’s perspective.

      I can see how one would feel screwed if they were receiving a DB plan, or saw colleagues get defined benefits only to have to transition to an uninspiring 401k match policy. However, the vast majority of us have never experienced a DB, hence, we don’t know what we are missing.

    • says

      My 401(k) match is 2%. Thankfully we have pretty cheap index funds, so it’s not a bad plan overall, but the match is pretty much a joke. I spend more on groceries in a month than I get in a 401(k) matching each month.

  8. says

    Simply by being an employee you likely aren’t getting full value for your contributions. If the company turns a profit they are making money off of your work either directly or indirectly. The only certain way to capture that profit it to have your own business.

    • says

      Well, by default, a company will only have a company if the employee is deemed to create more value than his or her cost. At ~$340,000 revenue per employee at Yahoo, the income limit is theoretically therefore around $340K/year. Google is close to $1 mil per employee. That is a huge gap.

  9. says

    I’ve always been a fan of Yahoo so I hope Marissa continues to turn things around for the better. I’d love to be able to work from home but I totally agree that being in the office is way more productive and efficient. Whenever my boss says he’s “working from home” he never ends up answering my emails or being available.

    I certainly agree that companies have a tendency to over promise, under deliver and make people work more than they should have. They also try to delay promotions to save money and try to get you to stick around and wait for the next round. That can really back fire though!

    • says

      Haha, I can see that. Maybe he’s working on his tan while at home?

      After several hours of work, I’m done and no longer want to do anything. It’s a fun lie to perpetuate in order for folks to slack off at home! Too bad Marissa caught on.

      • Matt says

        I mostly work from home. And we HAVE to be on the company messenger between 9 to 5. If we are not on the computer for lunch or whatever, we have to indicate accordingly. Our outlook calendars are open for everyone to see our meetings. I have teams in Texas, europe and India and have meetings early in the morning, in the afternoon and in the night. I feel that I am working 24X7 for this little perk of being able to work from home. I think it depends on the personality of an individual… I am definitely more productive working from home and I work lot harder because I have this perk… So I do not complain about 11 pm meetings with India team or the 4 am meeting with some customer in Europe. If you are a slacker you will find ways to slack off at work… I know people that take 2 hour lunch breaks at work and never open their laptops after 5 pm.
        I also disagree with you that yahoo will be able to get rid of the slackers… Infact, the slackers might show up for work and continue to suck while being physically present in the office. But your super stars who are working extra hard for this little incentive will be disappointed and leave. And super stars will not have any issues finding another job in the valley. There are plenty of companies that will gladly hire a talented person….

        • says

          The one big thing is the morale BOOST for the large majority of workers who do not get to work from home. This is a bigger kicker here.

          You may say you are being productive, but trust me when I say your colleagues who have to work from the office resent your freedom. Working from home is a Career Limiting Move. But that’s fine if you seek more life balance.

  10. says

    I’m still relatively early in my career and I’m already numb to all the BS excuses companies will give for treating their employees like crap.

    I can see the corporations point of view on the work from home issue though. I find that people working out of their home office (at least in my company) are routinely harder to get a hold of which slows down the entire process of whatever task is at hand.

    I remember discussing this with my father years ago when changes like this were happening with his company. For a while they made a great push to have everyone work from home, and then within the past 10 years or so have reversed course.

    He noted a reason for the change was a supposed deteriorating corporate culture. He claimed that any new employees that were brought on and thrown into home offices never developed any loyalty or felt like they were a “part” of anything. They logged on each day, did their work and logged off. Take from that what you will, just reading this made me remember that conversation.

  11. Mike says

    I think it’s important to prepare than gradually become an “underperformer” if you seem to want to have an exit from a company-and maybe try to get a severance package as well. This might not seem like the best way to do it-but it’s worked for me when that time came to be let go.

  12. says

    A cultural change like this will shake things up a bit. Unfortunately, the wrong ones quit! It is usually the most efficient or productive quit because they have options. The others stay because they do not have choices. I think the change in culture is needed to reach her goals for Yahoo. I also think she is going about it very well.

    • says

      Yes, usually the “stars” quit, the worst get fired, and the mediocre stay b/c they have nowhere to go.

      As a new CEO, I can see why you want all these anonymous work from home folks to get in the office. There is so much slack. Great to work from home and pretend you are working while you’re really working on something else!

  13. JayCeezy says

    Sam, quite timely for both the Yahoo! news, and for me personally. I have been working from home for the past seven years, and I want to “get laid” off! I have not ‘retired on the job’, but I am ready to leave and do not want to leave anything on the table. As someone who has been in the workforce for several decades, my compensation and future opportunities for promotion have topped out. I’m no longer working for the future; the future is here, now.

    All the things you note above are true, from my experience. I do as much work as I would in an office, but don’t have to endure the nonsense, random interruptions, pointless busywork and rework, posing bosses and co-workers serving their own agenda at the expense of my time, effort and patience, clients who don’t know what they want but know what they have isn’t working, etc. And, I could do more.

    One thing I do see from other commenters, and many bloggers themselves, is the perspective and concern for superior performers. In my experience, there aren’t too many of those. And the ‘Bell Curve’ distribution seems to hold pretty well for both ‘x’ and ‘y’ axes. There is a real surplus of sinecures, and self-styled ‘chiefs’ that want as many ‘braves’ reporting to them as possible. As I visit client sites, and my own company’s regional offices, up and down the state of CA, I see a lot of placeholders and deadwood. A lot. And very few of these people would concede that they are easily disposable. I read a great observation recently about the threatened consequences of the ‘sequester’…”(l)ines at the airport will supposedly be 3 hours long because 10% of TSA will be furloughed. Since 70% of them just stand around, that means only 60% will be left to stand around!” Only the truth is funny. Anyway, great read and a great post!

    @krantcents, your observation that “the wrong ones quit” has often proven true in my experience. The sinecures don’t have job options, personal networks to help them, or skills worth paying for at their current compensation. The excellent performers are known outside their company, have networks that can help them find a fit, and skills that add more value than the cost of compensation.

    • says

      Well, I’m sure every HR person in America is now thinking about ways to squeeze more from employees and rethink their work from home policy now. Hence, you can strategically insist on staying at home even if the culture is changing to improve your chances of a lay off!

  14. says

    Good post Sam! As someone that runs a business I can understand the desire/need to trim the fat for the lack of a better term. As someone who left their employer to start their own business, I see it as more of the same from a big firm. I also understand that it can be difficult to let someone go and dealing with that entire process, because a place of work should not be & is not a daycare.

    However, many firms today have become quite adept at looking out solely for themselves. True, they do need to make a nice profit…but at what expense? The firm I was at was sitting on billions in just cash and gave hefty raises to the higher ups when the high performers were lucky to get a 1.5% raise because they tell us times are tough.

    Being someone that has worked from home in the past and one that runs their own business from home I can attest to how much more efficient I am at home. True, you miss out on the collaboration, but you also miss out on all the meetings and stuff that are an absolute waste of time. At the end of the day, I think we’re going to continue to see more people either working from home or starting their own business because many of these things and improve their own lives.

    Anyway, sorry for the rant…I am actually in the middle of writing a post on whether or not companies care about their employees anymore so it’s more on my mind right now. :)

    • says

      With the going away of pensions, and the increase in job hobbers, and the volatility of the markets, it’s safe to say employers care less about employees now than decades ago.

      We are in a different world. We must adapt or get run over. I just to just say goodbye.

  15. says

    This is a double edge sword because if the employees who leave are actually helping the company achieve that 300K per employee revenue then yahoo will lose in the long run, but if they are not providing that amount then it is yahoo’s gain. Unless they hire a replacement for much less and train them quickly to be productive.

    • says

      It’s the dice Yahoo management has decided to roll. You can bet they’ve already run various scenario analysis. Announce a blanket statement, then allow leniency for those they want to keep

  16. Darwin's Money says

    This is going to work wonders for Yahoo; plenty of dead weight will leave quickly. I read today about how many of them do next to nothing and work on their own startups instead of for Yahoo. Who knows, truth is probably somewhere in between. But it does stink that she changed the rules for people who took the job under the premise they could work remotely. It’s not the 90s internet boom anymore where employees make the rules!

  17. E. Rekshun says

    “Plenty of organizations (besides the government of course) laid off hundreds of thousands of workers during the economic crisis. ”

    US state and local government employment shrank by several hundred thousand over the Great Recession; some of those job losses were layoffs. My local government shrank by 10% during that period; though no one was laid off. Some nearby city and county governments laid of dozens of employees, mandated furloughs, and eliminated positions. My employer froze wages from 2008 – 2013. The State of FL froze wages for about the same period. My local government reduced vacation leave and health benefits. The State of FL reduced retirement benefits and mandated reductions to cite retirement plans.

    • Fmawl says

      NYT, 02/26/13 – “Federal, state and local governments now employ 500,000 fewer workers than they did on the eve of the recession in 2007…”

      • JayCeezy says

        The “500,000 less” number comes from cherry-picking this data here, which can also be interpreted as “327,000 more” than in 2003. btw, this is a WH Administration talking point, you don’t really think the NYT writer understands the issue or numbers fed to him, do you?:-) And with a total of 22 million employed at Fed, State, County, City, etc. levels of government, 500,000 retire every eight months.

        A blip, no reason to get dramatic. The “hundreds of thousands” sounds huge, until seen in a greater context of how many people are in the work force, and how many are actually employed by some level of government. Meanwhile, the labor participation rate is 63.6% today, compared to 66% in 2007.

        I don’t intend to diminish anyone who loses a job. Behind every number is a real person with a real story.

        One death is a tragedy. One million is a statistic. – Josef Stalin

  18. says

    My company is pretty big into work at home. Which I understand given the insane commutes that almost everyone has. But as an employee who never works from home, it’s a bit annoying. I’m never sure if someone is traveling, or working from home, or on vacation. Everyone has different work from home days and they often change randomly.

    As a new employee who’s learning the ropes and the lingo for the first time, it’s really awkward to have to try to ask every question in an email. And then wait around hoping that email gets read and replied to.

    • says

      That’s the thing. Employees who don’t get to work from home get annoyed by such special treatment, which brings down morale and productivity. Let’s treat everybody the same and give same options depending on level.

      • says

        I could work from home if I wanted. But I live very close to work and prefer to be in the office. There are less distractions and it’s easier to interact with people if I need assistance or advice. I’m just the type of person who is way more productive in my office than at my kitchen table.

        I will say that I love being work from home on days with bad whether, if I have an afternoon business flight to catch, and for the occasional early morning and later evening meetings.

  19. says

    All the more reason for me to get my ducks in a row prior to leaving military service so I don’t have to endure these sorts of indignities to dedicated employees.

    I’m all about firing non-performers, but using these sorts of tricks to fire good employees is atrocious. Not to mention a lack of dedication to seasoned folks. Perhaps we’re all supposed to burn the candle at both ends until we’re 75 these days.


      • says

        As much as I love blogging and my current career, I find myself often wanting to create something physical– to start a business that proves that Americans can manufacture or create something that is competitive with the rest of the world in a work environment that treats people with dignity. Perhaps I’m delusional, but I often return to this thought.

  20. says

    I worked before with my previous corrupt manager. He is taking money from our project budget and he is not working at all just smoking. The worst thing that I decided to quit at that time, when he single out and pointed me as my own mistakes. The truth is that it was his own as the project-in-charge. He doesn’t know anything technically and he is not respecting me and keep shouting at me.

  21. says

    That edict on no more working from home was curious to me, given the business they are in. I mean, that would seem to be the type of environment that would be positive toward embracing working remotely yet still being fully engaged. Much can be leveraged this way. That being said, I never thought about it from your angle – which is quite an interesting observation.

    The craziest thing I have been a part of was earlier in my career, when a group of us were assured of a bonus for our hard work and contributions during a busy time. The bonus discussion came during the busy time period, and was probably motivating for a number of people. Well, guess what? We never got the bonus. Nothing! Lessons were learned right there, that even though I keep my word professionally, it sure doesn’t mean others always will.

  22. says

    What always rubbed me the wrong way about my first job was that smokers got all kinds of breaks to smoke, but I had to continue working because I don’t smoke. But that job taught me a lot about the nature of work and workplaces, so on the whole I came out ahead.

  23. says

    Great post Sam. You offered an analysis of the Yahoo situation that I had not heard or considered. If your analysis of the situation is correct that was a smart (and coldhearted) move by Yahoo’s CEO. I am just starting my career and figuring out that companies really will make whatever decision is in their best interest. Thanks for the insight, I will definitely watch for some of these things in the future.

  24. Janna says

    Interesting that she institutes this policy right after building a nursery for herself right next to her office. Way to boost morale, Marissa! I hope this new policy bites her in the ass.

  25. Ex AT&T says

    AT&T used a much more sinister method to get rid of many employees, by leveraging its relationship with one of its subsidiary companies and one of its vendors.

    **Hand out pink slip notices to employees informing them that their job at AT&T is being eliminated in 60 days. The pink slips provide a choice:

    1) Find another job within AT&T (internal postings), apply to that job and obtain that job before 60 days elapse. If the employee cannot secure another job within AT&T within 60 days, that employee is effectively laid off.

    2) Accept a position with an AT&T vendor (Accenture), or an AT&T subsidiary (Amdocs) with the following stipulations: Once the employee accepts a position with Accenture or Amdocs, if the employee is laid off within 1 year AT&T will will honor that employees AT&T-accrued benefits (pension, etc); BUT if the employee is laid off AFTER a 1 year period of employment with the new employer, AT&T will NOT honor that employees AT&T-accrued benefits.

    As far as option #1, AT&T had very few (sometimes none) open internal positions, corralling most of the laid off employees to option #2 as effectively as a Temple Grandin designed abattoir leads cattle to slaughter.

    So most employees were forced to take option #2; and were summarily laid off exactly 1 year + 1 day into their employment at Accenture or Amdocs. The adoption of such a guileful method allowed AT&T to:

    a) Avoid having to report mass layoffs to the State of California (if an employer lays off more than 50 people, it must report that to the state of California).

    b) Cheat many employees from their accrued retirement benefits.

    Of course, the media would not touch this story with tongs (some of us contacted the media, but they were not interested in such a story.

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