You're a CEO and you want to save money. So you choose to take away a long-time perk that employees enjoy. You've run the numbers, and believe it should net out positive for you.
Then you make the change, and employee morale nosedives. Stock prices tumble, and you find yourself taking flak in the press.
Lesson learned the hard way. Those of us who make our living turning around failing businesses know the drill only too well: There is a financial cost when taking away perks that employees view as symbolic of the unique benefit of working for your company.
As Yahoo! CEO Marissa Mayer continues to get roundly criticized in pretty much every corner over her edict to eliminate the option of working from home, she is now learning, indeed the hard way, that a company doesn't just "net out positive" over forcing employees to work side by side instead of alone from their homes. There is a separate cost which Ms. Mayer didn't calculate: The cost of a hit on employee morale.
The employee morale cost is a separate cost. It's one that won't make the P&L/Income statement at the end of the year. Instead, it will be buried in labor costs (increased because of employee turnover), reduced revenue (slower sales due to less-competent and trained employees replacing those who left the company over the policy change), increased variable costs (it will take more labor dollars to produce their widget, again because replacement employees are just not quite as efficient as the trained and tenured ones are).
Ms. Mayer, in all likelihood, calculated revenue increases, and even REDUCED variable expenses, from the efficiencies of having employees working side by side.
But that darned morale cost ... she just never thought it would be even close to that high.
The problem is human nature: We tend to be symbolic creatures, and view even little perks as signs of a benevolent BIG employer. We all want to view our employer like we would a protective, powerful mother. And when those small, but powerfully symbolic, perks are eliminated, it's worse than having that mother figure die. The mother figure has actually betrayed you.
Thus, morale dives, and company profitability is threatened.
Forgive the personal anecdote, but it fits. In a turnaround of a large print media organization many years ago, I took over the company after a predecessor had made just such a step. All he did was eliminate the $15 Thanksgiving turkey to each employee every year. The company financials just didn't justify it, and we could certainly save the money.
A very tiny financial change to employees. But when I interviewed each of them shortly after arrival as publisher, they each had a LOT to say about that $15 turkey. The company had lost its allure as a protective haven, and had instead become the predator.
So now, Yahoo! CEO Marissa Mayer will have to face that same challenge. And even if she reverses course, and reinstates the work-from-home perk, her challenge of restoring Yahoo! as a protective place to work will never stop.
This is a cautious reminder to each of us: Every change we make in our behavior has a financial cost. And rarely do we compute them completely.
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