When electronics retailer Best Buy announced in 2005 that it was adopting something called a “results-only work environment,” a program that takes the concept of work-life balance to the extreme by letting employees decide when and where they want to work, they were lauded as a company blazing a trail into the workplace of the future.
Under ROWE, as the program has come to be known, a corporate philosophy that equated success at work with long hours at the office would be scrapped in favour of a more flexible workplace. But, unlike similar policies such as telecommuting—which substituted a nine-to-five day at the office with a nine-to-five day working from home, or flextime, which lets employees control when they start their days but not how many hours they must work—ROWE was all about giving workers complete autonomy. Employees would be accountable for achieving measurable results. How, when and where they did that was their business. If they succeeded, they would likely be promoted. If they failed to meet expectations, they would be fired.
Human resource experts gushed over the program. A 2006 Businessweek cover story praised Best Buy for “smashing the clock,” and described a workplace where senior managers conducted conference calls while hunting in the woods or following the Dave Matthews Band on a cross-country tour. The program was so popular, Best Buy developed it into a consulting unit that was eventually spun off into its own business.
So it came as a particularly harsh blow to advocates of work-life balance when Best Buy CEO Hubert Joly scrapped the company’s ROWE policy earlier this year, calling it “fundamentally flawed from a leadership standpoint.”
Less than a year into his job, in which he was tasked with turning around a company considered on the brink of bankruptcy, Joly said Best Buy’s program had given employees too much independence. “This program was based on the premise that the right leadership style is always delegation,” he wrote in an op-ed in the Minneapolis Star Tribune near Best Buy’s headquarters. “A leader has to pick the right style of leadership for each employee, and it is not one-size-fits-all, as the ROWE program would have suggested.”
Joly is not alone in declaring flexible work policies a corporate failure. In March, Yahoo announced it was cancelling its liberal work-from-home program, with new CEO Marissa Mayer saying employees are “more collaborative and innovative when they’re together.” Last month, Wall Street Journal-owned tech blog AllThingsD published a leaked memo from Hewlett-Packard, headed by CEO Meg Whitman, that said the computer giant was scrapping its telecommuting policy because it needed “all hands on deck” to turn around a company that had been rapidly losing market share. The news sparked a fierce backlash among work-life balance advocates who saw the changes as sexist and anti-family. The most pointed criticism was reserved for the female CEOs, particularly Mayer, who became CEO at Yahoo while pregnant. Virgin Group founder Sir Richard Branson took to Twitter to declare Mayer’s telework ban “a backward step in an age when remote working is easier and more effective than ever.”
Programs like ROWE were meant to dramatically overhaul a corporate workplace that has remained largely unchanged since the 1950s. The Internet made it possible to stay connected to work without needing to go into the office, freeing employees to work from anywhere, while saving companies the overhead costs of maintaining a large physical workspace. But, despite the program’s obvious theoretical benefits, in practice, companies have often found it difficult to transition to a flexible, or even virtual, environment.
“We can’t look at these policies as being an entitlement, or a right, that we have,” says York University professor of human resource management Souha Ezzedeen. “They’re not always appropriate. Does it suit your business? Do you have the culture for it? Do you have management systems in place to support it? If not, you might want to take that very gradually.”
Last December, after the U.S. federal Office of Personnel Management said it was ending its ROWE pilot project, a leaked internal audit detailed how some employees had used the program to slack off, while others complained that they had trouble getting feedback from their managers. Best Buy’s employees grumbled that ROWE had become deeply divisive inside the company and had created a two-tiered system, in which corporate employees had total freedom over their schedules, while store-level employees still had to adhere to a strict schedule. Mayer’s supporters pointed out that some Yahoo telework employees weren’t responding to emails, while others had used flextime to moonlight in other jobs.
In one of the few studies that has examined flextime’s effect on company profits, last year, researchers from the University of Toronto’s Rotman School of Management and China’s Renmin University studied the 35 per cent of Canadian firms with flextime policies. They found flextime helped boost the profits of firms whose corporate strategies were based on investing in employees. But it actually harmed profits among those firms that were focused on cutting costs, mainly because trust, which underpins the flextime philosophy, tends to break down when employees think they might lose their jobs. “It really creates a climate in which employees don’t see their future with the company, and they don’t feel well-treated,” says study co-author Sanford DeVoe. “Those are the cases where employees are going to start to abuse the system and, ultimately, that can get reflected in a lack of profitability.”
Nor has flextime proven to be the solution to the work-life-balance dilemma that is often cited as the main reason why so few women make it into the executive suite. A study by researchers from the universities of Texas, Harvard and Yale published in June found that flextime requests were most likely to be granted to senior male employees who were using the time to take professional development courses. Men who wanted a flexible schedule to take care of children, and women who wanted flextime for any reason, were least likely to have their requests approved. In a study published this year that tracked Best Buy’s ROWE program, researchers at the University of Minnesota found that, while it had helped reduce employee turnover, women who took part still spent 10 hours more on child care per week than their male flextime colleagues.
And in tough economic times, when companies are desperate to find new areas for growth, getting everyone together in the same place is seen as one of the best ways to spur innovation. Even as they build the very online tools that are promising to make the office obsolete, Silicon Valley tech firms, such as Facebook, Twitter and Google, are famous for offering generous perks—in-office yoga classes, catered meals and concierge services that will run errands for employees—to keep their own workers at the office for as long as possible. “There is something magical about spending time together, about noodling on ideas,” Google CFO Patrick Pichette told an Australian conference this year. “These are magical moments that we think at Google are immensely important in the development of your company.”
Defenders of programs like ROWE say the problem isn’t that companies have given their employees too much freedom, but that they’ve failed to fully embrace the concept, which requires a radical shift in corporate culture to succeed. “We get calls all the time saying, ‘Oh we’re going ROWE tomorrow, we’re going to let our people go home early,’ ” says Jody Thompson, who co-founded CultureRX, the consultancy spun out of Best Buy’s human resources department. “ROWE is not flextime. Holding people accountable means the consequences are: no results, no job. With flextime it’s: no results, everybody back into the office. That’s ludicrous.”
Proponents of office face time tend to focus on the innovative ideas that come from teamwork and collective brainstorming, while ignoring the productivity benefits that come from letting employees work in the quiet of their homes or outside of normal office hours, says Joan Williams, director of the Center for WorkLife Law at the University of California. “Coming up with the idea is a crucial part of the process,” she says. “But putting the idea into effect, through hours and hours of lonely labour, is an equally important part of why Facebook and Google and the rest of them have been successful.”
Even so, today’s sluggish economic recovery and high unemployment levels mean companies are under less pressure to keep employees happy, and under more pressure to boost profits. For many companies, that means showing they can get all their employees on board with corporate strategy—which often means getting them all back into the office.
“I can understand why an organization would want to bring everybody close in, to pull all the ranks together. But I don’t think it’s necessarily going to serve them well,” says Thompson. “People are going to become disengaged. They’re going to get a lot of turnover. People aren’t going to tolerate it and they’re just going to leave. So it’s going to backfire.”
Maybe so. But as long as CEOs believe they need to put in long hours at the office to make their companies successful, their employees can expect to be there, too.