QUESTION 1 [15 MARKS] Assess the problems in this case using organizational behaviour concepts.

Appendix 1 Banning Flexible Work Options: Yahoo's NewControversial HR Policy by Adapa Srinivasa Rao "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." Yahoo's Note Asking all its Employees to Start Working its Offices, in February 2013 "This seems a backwards step in an age when remote working is easier and more effective than ever... If you provide the right technology to keep in touch, maintain regular communication and get the right balance between remote and office working, people will be motivated to work responsibly, quickly and with high quality." Richard Branson, Founder of the Virgin Group', in February 2013 Internet major Yahoo!, Inc. (Yahoo) found itself losing market share in the early 2000s as competition began to increase. The continuing crisis in the company saw the exit of successive CEOs reportedly due to their non-performance. In July 2012, the Yahoo board appointed a longtime Google, Inc. (Google)' executive, Marissa Mayer (Mayer), as the new CEO of the internet giant. Mayer was given the task of reviving the company's fortunes. Soon after taking over as CEO, Mayer began implementing a slew of measures to put the company back on the growth track. She replaced a number of senior executives at Yahoo with new ones. She also focused on changing the culture at Yahoo. She introduced a new suggestion program called Process, Bureaucracy, and Jams (PB&J) to revitalize the spirit of innovation among Yahoo's employees. Besides, she set up a new framework called the 'four Cs' to evaluate the performance of all the employees at Yahoo. Other initiatives included providing free food and free iPhones to employees at the company's headquarters. Mayer also took some decisions like extending the maternity and paternity leave of the employees. However, Yahoo implemented a new HR policy in February 2013 which stirred up a homets nest. Under the new policy, all employees were required to work from Yahoo's offices. In effect, the new policy prohibited employees from working from home. While some analysts supported the new HR policy saying that it would help in trimming the bloated infrastructure that Yahoo had built up over the years, it attracted criticism from other analysts and executives in other companies. Many analysts said that the new policy was regressive and went against the flexible work practices pioneered and followed by technology companies. Some analysts opined that the new HR policy would prevent Yahoo from attracting talented employees at a time when it was looking to hire more such people. Virgin Group, headquartered in London UK, is a British multinational branded venture capital conglomerate company Google, Inc., headquartered in Mountain View, California, US is a leading internet company in the world "Employees today are demanding better work-life balance, and employers will need to offer such options if they want to attract and retain the best workers," i said Greg Kratz, independent business columnist for Deseret News. But Yahoo defended its policy saying that its new HR policy need not be seen as a general industry trend but just as a new arrangement to suit the needs of the company. Analysts felt that Yahoo's controversial decision had brought to the fore many questions related to flexible working. They said that companies often paid lip service to flexible working while discouraging their employees from availing of these options. Experts said they had often found a marked mismatch between the perceptions of employees and employers with regard to flexible the words of Office Insight, a UK-based leading publication dedicated to the design and management of workplaces: "Is it because a lot of firms feel obliged to echo the received wisdom about flexible working in order to fit into a paradigm and/or attract staff, while believing in practice that it's best to have everybody in an office for much of the time? Or is that organizations and employees have different ideas about what constitutes flexible working in the first place? Or is it simply that managers don't trust staff? Something else or a mixture of all of the above?"iv Working. In BACKGROUND NOTE Yahoo was founded by two PhD. students of Stanford University, Jerry Yang (Yang) and David Filo (Filo), in 1994 in Sunnyvale, California, USA. It was initially started as 'Jerry and David's Guide to the World Wide Web (JDG),' a website which acted as a directory of several other websites. Yang and Filo started the website to cater to the needs of people who wanted to go to a single place and find websites related to diverse areas. Over time, JDG became very popular and became the first choice of people browsing the web to find sites intelligently. It helped people to discover useful, interesting, and entertaining content on the Internet. JDG was later renamed Yahoo in 1994 and was positioned as a customized database intended to serve different users. Yang and Filo developed customized software to help users locate, identify, and edit information available on the internet. Yahoo quickly became very popular among internet users and attracted a lot of media attention. Yahoo was formally incorporated in March 1995 and started implementing a business plan modeled on traditional media companies. Sequoia Capital", a well-known venture capital firm, agreed to fund Yahoo in April 1995, with an initial investment of US$ 2 million." Yahoo generated its revenues mainly through online advertisements, banner ads and ad placement fees, promotions, sponsorships, direct marketing and merchandising. It also generated revenues from monthly hosting fees and commissions on online sales from its merchant partners. These included transaction fees generated from the sale of merchandise on its site. In 1995, Yahoo appointed Timothy A. Koogle (Koogle) as its Yahoo is the abbreviation for Yet another Hierarchical Officious Oracle. + Sequoia Capital, headquartered in Menlo Park, California, US was a Silicon Valley-based venture capital firm founded by Don Valentine in 1972. It had invested in many technology companies like Yahoo!, Google, PayPal, Electronic Arts, YouTube, etc. Banner advertisements appear on web pages within various Yahoo channels. Hypertext links were embeddedin each banner advertisement to give user's instant access to the advertiser's website, to obtain additional information, or to purchase products and services. Promotional sponsorships were typically focused on a particular event, such as sweepstakes. The merchant sponsorship icon advertised products. Users had to click on the icon to complete a transaction. Direct marketing revenues came through e-mail campaigns targeted at Yahoo's registered users who had indicated their willingness to receive such promotions. CEO and strengthened its management team significantly. Koogle was an engineering graduate from Stanford University and had spent nine years in Motorola, Inc. (Motorola) before joining Yahoo. The appointment of Koogle led to the introduction of more innovations in Yahoo. It was the first companyto introduce an online navigational guide on the Internet. It also started offering media content, communication, personalized information, and commerce services on its website. In July 1996, Yahoo launched My Yahoo, a personalized web information service. This allowed users to create their personal profile and access information based on their personal interests. Its new services such as Yahoo Address Book, Yahoo Calendar, Yahoo Briefcase, Yahoo Phone Book, and Yahoo Notepad helped users to manage their personal information. In April 1996, Yahoo raised USS 33.8 million by selling 2.6 million shares through an IPO. The amount raised through the IPO was used to expand its operations significantly By the late 1990s, Yahoo had developed into a leading international web portal. It made a number of strategic acquisitions over a period of time and this helped it to diversify its services and expand its business. It also reported a substantial growth in its revenues between the years 1997 and 2000. More than 85 percent of its revenues came from the sale of banners and sponsorship advertisement while the remaining came from business services and e-commerce transactions. At the end of 2000, Yahoo had been drawing 180 million unique visitors, which made it one of the leading internet brands. By 2006, Yahoo emerged as the world's largest provider of online services. It offered a variety of products and services that enabled customers to communicate with one another, find information, create, share, and access information. But the emergence of other leading internet firms like Google increased the competition for Yahoo in key areas like internet search and email. According to many industry experts, Yahoo had also grown complacent and failed to adapt itself properly to the rapidly changing business environment. Also, Yahoo was heavily dependent on the advertising revenues generated by the dotcoms and the dot-com bust of the early 2000s severely affected its revenues. The online advertising market too underwent many changes in the early 2000s and advertisers started to look beyond banner ads toward a new genre of ads that integrated the internet, television, and radio. But Yahoo failed to understand what kind of advertisements worked for its customers. also said it failed to make any significant changes to its age old business model that would have helped it cater to the needs of a range of customers. It deployed a new set of search technologies in 2004 to compete effectively with Google. However, the introduction of new features to its email service in 2007 to compete with Google's Gmail services did not yield results. It had to lay off a number of its employees in 2008 as it struggled in the market. In February 2008, Microsoft Corporation (Microsoft) made a bid to e a bid to acquire Yahoo for US$ 44.6 billion. The bid was rejected by Yahoo on the grounds that it undervalued the e company substantially. Since 2007, Yahoo showed four CEOs the door as they failed to improve the company's performance. Its share price fell drastically, reflecting the poor performance e of the organization (Refer to Exhibit-I for the graph of Yahoo's share price from January 2006 to January 2013). But none of them could significantly revive Yahoo's fortunes. For the Fiscal Year 2011, Yahoo had revenues of USS 4.98 billion (Refer to Exhibit-II for the key financials of Yahoo from 2007 to 2011). Analysts also Wide Motorola, Inc., headquartered in Schaumburg, Illinois, US was a leading American multinational telecommunications company. Microsoft Corporation, headquartered in Redmond, Washington, US, is a US-based multinational corporationthat develops, manufactures, licenses, and supports a wide range of products and services related to computing through its various product division YAHOO GETS A FIFTH CEO IN FIVE YEARS In May 2012. Yahoo fired its CEO Scott Thomson (Thomson) just four months after his appointment. Scott was fired by Yahoo's board after it was found that he falsified his resum by including a computer science degree which he did not have." Thomson's sudden ouster led to chaos at the company which found itself confronted with one crisis after the other. Yahoo appointed its head for global media business, Ross Levinsohn, as its interim CEO till they found a new CEO. Later, in July 2012. Yahoo's board appointed Mayer as its new CEO on the recommendation of the CEO search committee appointed by it. Mayer was the fifth CEO to head the organization in five years** (Refer to Exhibit-III for the list of Yahoo's CEOs since its inception). A former longtime executive of Google, Mayer had a master's degree in computer science from Stanford University and began her career at Google in 1999. She was the 20th employee of Google and was involved in the development of Google search services and was in charge of its user experience during the first five years at Google. She quickly gained a reputation as an effective leader and was instrumental in the development of some of Google's iconic products like the Google homepage, Gmail, and Google News. At the time of joining Yahoo, Mayer was responsible for Google's mapping, local, and location services. Commenting on the appointment of Mayer as its new CEO, Yahoo board's chairman Fred Amoroso said, "The board was drawn to Mayer's unparalleled track record in technology, design, and product execution. ""Many analysts said that Yahoo wanted to focus on the functionality of its products by appointing Mayer as its new CEO. Industry experts too were excited about the choice of Mayer. Martin Sorrell, the CEO of WPP ple', said, "She comes with a formidable reputation, but we'll see how she analyzes it all.*** Mayer also had a reputation for nurturing talent. During her Google day started training program Associate Manager (APM) for Google's topnotch engineers. The objective of the APM program was to encourage people to grow into leaders and realize their full potential. The APM program was a big success and later inspired many similar programs by other companies in the Silicon Valley. Though Yahoo was one of the most visited portals on the internet with 700 million monthly visitors, it found itself unable to introduce new products in the search, social, and mobile space to increase its revenue base (Refer to Exhibit-IV for the list of services offered by Yahoo). Yahoo did not come up with new appealing products in areas like social networking and also lagged behind in other key growth areas like mobile internet. Its revenues had been stagnating for several years and industry experts began to wonder about the future of the company (Refer to Exhibit-II for the key financials of Yahoo from 2007 to 2011). The Yahoo board began scouting around for somebody who still had confidence in Yahoo's future. They finally zeroed in on Mayer as they thought that she could make Yahoo flourish again. Michael J. Wolf, Yahoo director and in charge of the CEO search, said, "The board wanted someone who believed Yahoo can grow again and who believed they could do it."** ADDRESSING ISSUES RELATED TO ORGANIZATIONAL CULTURE Many analysts and some Yahoo insiders themselves blamed the culture at Yahoo for its problems. According to Paul Graham, co-founder of Viaweb, even in the late 1990s, "The company felt prematurely old. Most technology companies eventually get taken over by suits and middle managers. At Yahoo it felt as if they'd deliberately accelerated this process. They didn't want to be a bunch of 10 User experience involves taking care of how people navigate the Google's sites and maintaining the simplicity of Google's services. " WPP plc, headquartered in London, UK, is a major advertising and public relations company in the world, 2 Viaweb was the first 'software as a service company, which was acquired by Yahoo in 1998, where itbecame Yahoo Store Yahoo hackers. They wanted to be suits. A media company should be run by suits." Unlike some of its competitors like Google, Yahoo couldn't take decisions speedily. It followed a matrix organization structure which, according to its critics, inhibited the speed at which it took decisions regarding new projects and killing unviable ones. Yahoo's large and interlinked structure made it very difficult for it to launch new products and discontinue unviable ones. The constant change of CEOs also resulted in many key projects being dropped in planning or execution stage whenever there was a change at the top. The lack of stability in the top level management led to many senior executives leaving the company. The infighting among the top leadership at Yahoo which saw the ouster of Yahoo's co-founder Jerry Yang in 2012, led to the emergence of a consensus based culture' at Yahoo. Unlike at other internet companies like Google and Facebook. every major new initiative had to pass through a mimber of stages. This ultimately led to delayed decision making at Yahoo. Many new initiatives relating to emerging areas like mobile internet became caught in the bureaucratic tangle and never saw the light of day. Commenting on the company's culture, Rich Rygg, a former manager at said, "This was Yahoo's most fundamental problem. It was always management by persuasion, not management by dictation. *** Many efforts taken in the past to introduce a more free culture which can speed up the decision making process had failed. The initial informal culture prevalent since its founding days was converted to a strict formal culture by its subsequent CEOs like Terry Semel (Semel). Over time, this led to the bureaucratic culture getting firmly rooted at Yahoo, preventing any reversal of its fortunes. As soon as Mayer took over as CEO, she set about the task of reviving the fortunes of Yahoo. One of the key challenges before was to change the culture at Yahoo to make the company competitive again. She replaced some senior executives of Yahoo with new people whom she perceived to be more growth oriented. She appointed a former Google executive Ken Goldman as the new CFO of a Yahoo and Kathy Savitt as the new CMO (Chief Marketing Officer). Another veteran from Google, Henrique De Castro (Castro), was appointed as the new Coo (Chief Operations Officer) of Yahoo. Recognizing the need for harnessing the talent of Yahoo's employees, a new position called executive vice president of people and development was created. Mayer recruited a veteran investment banker named Jackie Reses (Reses) for the post of EVP, people and development. Reses would be responsible for HIR, business development, strategy, and M&A activities at Yahoo. The old HR boss of Yahoo, David Windley (Windley), had been fired immediately after Mayer took charge. Windley's tenure at Yahoo had seen a lot of brain drain and layoffs at Yahoo *** "Many analysts opined that Reses would be a key member in Mayer's core team for restructuring the company by changing its organizational culture. Commenting on the appointment of Reses at Yahoo, Mayer said, "With her energy, insights, and ability to build & transform great teams, I'm thrilled Jackie Reses is joining Yahoo Reses's main task ahead was to recruit more talented people, nurture their skills, and devise better incentive schemes for them. In a statement released after joining Yahoo, Reses said, "As Yahoo! looks develop and define its future: hiring, managing and incentivizing talent will be of key importance." Apart from recruiting new people for the top positions in the company, Mayer also started many new initiatives to change the culture of the organization. Within a month of taking over as CEO, she introduced a new initiative called 'PB&J (Process, Bureaucracy, and Jams). PB&J was essentially the new age version of the old suggestion boxes for employees in offices. The PB&J program was intended to collect feedback and suggestions from Yahoo's employees to rekindle the spirit of 13 A matrix organization structure is an organization structure where employees from different functional disciplines are drawn into a team to facilitate horizontal flow of skills and information Employees in a matrix organization structure report to the respective project or product manager whose authority exists horizontalacross departmental boundaries innovation at the company and boost the flagging morale of its employees. Mayer appointed Patricia Moll Kriese (Moll), a former Google colleague who followed her into Yahoo, as the leader of the PB&J initiative. Employees had to log in to an internal website and post their ideas and suggestions to improve the working conditions at Yahoo. ** Employees would also be able to vote on each other's ideas. The site would later rank the best ideas based on their popularity. The management would then review the ideas and their popularity and implement the finest of the lot. Mayer hoped that the PB&J program would end the gridlock at Yahoo by giving more power to the employees of the organization. In September 2012, Mayer announced the four Cs strategy to nurture talent at Yahoo. The four Cs stood for culture, company goals, compensation, and calibration. *** The performance of all the employees of Yahoo would also be evaluated based on the four Cs' instead of the outdated revenue based compensation system. She also wanted to replace the consensus culture at Yahoo with a more democratic and responsive system in the long-term. Wii Mayer also took some other initiatives, which ranged from providing free food to Yahoo's employees at the company's cafeteria to giving free iPhones, which were aimed at making Yahoo an exciting place to work. xix She came up with a new policy for the benefit of Yahoo's employees who were going to have children. In April 2013, Mayer extended the maternity and paternity leave for Yahoo's employees. As per the new leave policy, new fathers and mothers could avail of eight weeks of paid parental leave. Mothers were entitled to another eight weeks of leave. New parents would also be paid US$ 500 for buying groceries and new clothes for their babies. YAHOO BANS WORK FROM HOME As part of the steps she took to improve the fortunes of Yahoo, Mayer implemented a new HR policy in February 2013. The new policy was communicated to the employees of Yahoo in the form of a memo from the HR department (Refer to Exhibit-V for the memo sent to Yahoo's employees). According to the new HR Policy, employees of Yahoo could no longer work from home; they needed to report to their offices regularly. The new HIR policy also stipulated that people who could not comply with the new policy would have to quit the organization. The new HIR policy stipulated that all remote workers at Yahoo had to start reporting to the office facilities by June 1.1 The announcement sent shock waves across the technology world. Like many other business innovations, American companies had been at the forefront in bringing innovations to the workplace. They had pioneered the concept of work from home for employees and nearly 10 percent of US workers worked from home at least one day every week. ** According to the Families and Work Institute!4, 63% of employers let their team work remotely at least some of the time. Kui Over the years, many technology companies across the world supported the concept of work from home which offered more flexibility to their employees around the world (Refer to Exhibit-V1 for the data table for the Flexible Job Index'). Technology companies fared higher than companies which did not offer flexible working opportunities to their employees. Technology companies had also become the preferred choice for female employees due to the work-life balance they offered. Many employees of Yahoo who had joined the organization looking forward to a flexible work schedule, were left confused and angry. Some of them even said the new policy went against their employment contract with Yahoo. Kara Swisher, co-executive editor at AllThings, said, Many 14 Families and Works Institute headquartered in New York, USA, is a nonprofit organization which works toprovide research for hvang in today's changing workplace, changing family and charging counnunty - Flexi Job Index shows the flexi etoployment opportunities available in top career categories in the past year divided into 4 quarters Al Things D. is a website dedicated to news, analysis, and opinion on technology, internet, and media