If you want to have a successful career, you need to understand how employers take advantage of employees to save money.
Ever 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.
How Employers Take Advantage Of Employees To Save Money
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.
The difficulty of laying employees off is one of the main reasons why negotiating a nice severance package is possible!
The Clarity Of Writing
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!
Other Ways Employers Take Advantage Of Employees
* 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.
Know Your Employee Rights
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.
Start Your Own Business Instead
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Brand yourself online, connect with like-minded people, find new consulting gigs, and potentially make a good amount of income online one day by selling your product or recommending other great products.
Not a day goes by where I'm not thankful for starting Financial Samurai in 2009. I have maximum freedom now thanks to working on my side-hustle while working for 2.5 years. You never know where your journey will take you!