“To become the absolute best place to work, communication and collaboration will be important, so we need to be working side-by-side.”

So read a recent worldwide memo sent to all staff at Yahoo announcing a company-wide ban on “remote” working. From June, apart from exceptional circumstances, all Yahoo staff will be expected to be physically in the office. Those that cannot adhere to the new rules should discuss the “next steps” with their management, the memo added fairly unsubtly.

In today’s wired world of low-cost (or even free) voice and video conferencing, instant messaging, email and the like, working from home – or, indeed, anywhere outside the office – would seem to be easier and more effective than ever.

Yahoo’s California offices – expect them to be fully staffedSo why this apparent renunciation of remote working from Yahoo? A move perhaps all the more surprising coming from a firm where electronic communication is the lifeblood of its business.

According to the internal memo from Yahoo’s global HR head Jackie Reses, details of which were widely leaked online, the company views working remotely as undermining collaboration, as well as the speed and quality of work. “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,” the memo continues.

There is a similar argument over the costs and benefits of holding face-to-face business meetings. With a proliferation of electronic communication tools now available and pressure to rein in budgets – particularly for firms with global or regional outreach – the value of holding meetings “in person” is increasingly questioned.

Add to that the many commonly-heard complaints that face-to-face meetings take too much time out of busy schedules; frequently over-run; veer wildly off topic; rarely result in decisions; or are simply mind-numbingly boring, and there is an often powerful argument in favour of e-meetings.

Meetings matter

As an organisational psychologist, I have carried out extensive research into when and why face-to-face meetings matter – all of which offer pointers for individuals and firms looking to be more effective in the way they work.

Some of the best decisions and insights come from hallway and cafeteria discussions, meeting new people, and impromptu team meetings

Memo to all Yahoo staff from HR head Jackie Reses

While electronic communication offers many benefits – especially in terms of low financial cost – it also has drawbacks. Opportunities for distraction are great: other work tasks, checking email, irrelevant side conversations and other diversions – especially when working from home – mean participants are often not as engaged as their colleagues might think (or their supervisors might hope).

More significantly there are several positive features from a psychological perspective of physical co-location that cannot be achieved by electronic forms of communication between dislocated parties.

Firstly, perhaps the most obvious benefit of face-to-face interaction is that it is exactly that: face-to-face. Such encounters allow participants to engage in and observe both verbal and non-verbal behaviour as well as other nuances such as facial expressions, gestures and other dynamics not captured otherwise. These are important in building understanding and collaboration whether within a team or at a meeting of representatives from different teams and different firms.

A flipside of course is that electronic communications bring with them their own social minefield of potential misinterpretation. A short comment written in jest or simply for the sake of brevity can easily be interpreted by the recipient as disapproval or even downright offensive.

Social creatures

TA6 no borderRelated to this is the fact that being physically in the same place serves a primitive human need. As social creatures we require contact with others and isolation from other humans is harmful. Emailing and teleconferences are not as likely to satisfy those needs, notwithstanding the enormous popularity of online social networks such as Facebook. Indeed, the explosion in the use of Facebook suggests that people might be even hungrier for social friends than can be satisfied in their daily “real world” work and personal lives.

An often cited advantage of electronic communication is that it allows participants to operate in non-synchronised time – i.e. they can respond at a time of their choosing and prioritise accordingly. However, this of course can also be detrimental to the speed and quality of decision making.

Face-to-face interaction on the other hand takes place in real time and can result in faster and better decisions being made.

By being physically in the same location, participants in meetings or working as teams are also able to develop what are known as “exchange relationships” with each other. These can include negotiations, favours, promises or understandings which, because of their informal nature, are far less easily achieved by electronic communication. This is emphasised in an approach known by psychologists as “social exchange theory”, which views human relations as an exchange of rewards among individuals.

Transparency and trust

These what we might call spin-offs of face-to-face relationships are also important in building transparency and trust between individuals in ways that other forms of communication are far less conducive. Trust is an essential part of an effective business relationship, and trust is built through repeated personal interaction – either through formal “meetings” or otherwise, such as the ad-hoc “water-cooler chat”.

shake280That is not to say that trust cannot be built through electronic communication, but research suggests that it takes much longer to build.

There is also extensive research that face to face contact enables individuals to develop a clearer understanding of how they fit – or “belong” – to the firm and work as an important part of the corporate “sense-making” process. Most of us, for example, would share the experience of pride at being included in face-to-face meetings with top executives of their organisation.

Working in physical proximity also enables individuals to learn the relative norms of their organisation, its culture and the way things operate by observing how others behave and display emotions.

These are important in bonding a team and a firm together. Information such as the value of time (e.g. showing up on time), who holds the power, what is reinforced and what is punished is all vital knowledge not easily accumulated from a distance.

Unintended consequences

Another benefit of working in physical proximity is the spin-off effect in the form of unintended, but potentially highly beneficial, consequences.

While focus on a specific task is obviously important, side-line conversations that develop among a group of individuals gathered in one place can often be the source of breakthrough innovation.

As the Yahoo memo states: “Some of the best decisions and insights come from hallway and cafeteria discussions, meeting new people, and impromptu team meetings.”

Again, such ad hoc discussions and impromptu meetings are much less likely to emerge in situations where most communication between individuals is electronic, when the tendency is to stay more narrowly focused on specific topics.

Such discussions, for example, can help share information, emotion, and working methods that might not otherwise get exposure, as well as a forum for individuals to obtain and give social support.

There are then a number of compelling psychological benefits for meeting and working in the same physical space which would support Yahoo’s move to push back against remote working.

Indeed, the financial benefits of remote working – particularly in terms of reduced travel costs – may seem enticing. But care should be taken to ensure that these do not incur other, often intangible costs, that undermine a firm’s ability to work efficiently, share ideas, spur creativity and all the other drivers of the knowledge economy.

That is not to say that complementing or substituting electronic communication with face-to-face working cannot enhance communications and help lower overall business costs.

Rather than focus on the black/white, either/or discussion, firms would do best to focus in more depth on which is the optimum combination of both remote and co-located working that best serves their long-term business goals.