Questions:

1. Musk's comments suggest that creativity and innovation require that workers be present in the office or factory. But creativity and innovation are also important in many of the tech firms that, following Twitter's lead, have embraced optional working-from-home policies.

Is Musk right, are the tech CEOs right, or are both right because of key differences between Tesla and these tech firms? If you argue that they are both right, carefully explain what key differences between Tesla and the tech firms are relevant to justify their different policies.

2. Manufacturing workers on the shop floor use tools, machinery, and equipment so cannot work from home. In contrast, their managers could feasibly work from home. But Musk argues that those managers must come to work to "set a good example" for the workers on the shop floor.

If you were hired by Tesla as a consultant to undertake an analysis of whether Musk is right that the physical presence of managers is needed to motivate workers, how would you do it?

3. One perspective is that Musk's decision, and Mayer's initial one, were correct in that they reversed unprofitable working-from-home policies. The only difference between them is that Yahoo!'s unprofitable policy that Mayer tried to reverse was voluntarily adopted before she became CEO, whereas Tesla's was forced onto it by the government in response to COVID-19.

If we take this perspective:

a) Why did Yahoo! voluntarily adopt an unprofitable policy in the first place?

b) Why did Mayer allow her employees to pressure her into returning (at last partially) to an unprofitable policy?

4. If Mayer and Musk are right that working-from-home policies are bad for productivity (and therefore bad) then why are tech companies now embracing those policies as profitable?

And if those policies are indeed profitable in tech firms, then why weren't they already in widespread use in that sector before the pandemic?

5. Choose a firm or industry, other than Tesla or a tech firm, in which you would expect a particularly large productivity change (either a loss or an increase) to accompany the adoption of an optional working-from-home policy. Explain why that is the case in that setting.

6. Choose a firm or industry, other than Tesla or a tech firm, in which you would expect adoption of an optional working-from-home policy to induce particularly large labor cost savings due to compensating differentials. Explain why that is the case in that setting.

2 articles: 1) Jed DeVaro in Workspan (November/December 2020), entitled "Strategic Compensation and Talent Management: Connecting in the Midst of COVID-19"; 2) Jonathan Franklin in NPR Business (June 1, 2022), entitled "Elon Musk tells employees to return to the office 40 hours a week - or quit".

Case Discussion 32: Compensation and COVID-19 A global pandemic, COVIDl9, shut down large segments of the world's economy in the early months of 2020. Arguably the biggest workplace change to emerge from the pandemic was an abrupt spike in the number of people working om home rather than at the workplace. In the early days of the pandemic, this reality was usually the result of government mandates. Stayat home orders issued by the government prohibited peeple from working at the oice, other than some \"essential workers\" who were granted exceptions and who sometimes received \"hero pay\" to compensate them for their health risks. Employers were forced to scramble to adjust to this new reality, whereby many if not all of their employees were suddenly working from home. Even after the stay-athome orders were lied, some companies embraced the new workplace arrangement by adopting permanent workingomhome options that allow their employees to choose, on an individual basis, whether to work from home or at the office. For example, in May 2020, Twitter CEO Jack Dorsey adopted such a \"hybrid\" policy. A number of tech rms have since adopted similar policies, including 3M, Reddit, Airbnb, Spotify, and Oracle. Years before pandemic conditions forced them to allow employees to work from home, some companies (e.g., Yahoo!) voluntarily adopted hybrid policies that allowed their workers to choose where to work. When Marissa Mayer became Yahoo! 's new CEO in 2013, she abruptly terminated the company's workingfromhome policy, citing productivity and monitoring concerns. Her reversal of the company's policy unleashed a strong employee backlash that eventually led to her backing down and allowing a considerable amount of working from home. Mayer's productivity-based disdain for working-fromhome policies is not unique among CEOs. In June 2022, Tesla's CEO Elon Musk wrote the following mandate in a company email: \"Anyone who wishes to do remote work must be in the oice for a minimum (and I mean *minimum*) of 40 hours per week or depart Tesla. This is less than we ask of factory workers,\". Like Mayer before him, Musk's reasoning was based on productivity. His email included the following statements: \"There are of course companies that don't require [coming into the ofce to work], but when was the last time they shipped a great new product? It's been a while\" and \"Tesla has and will create and actually manufacture the most exciting and meaningll products of any company on Earth. This will not happen by phoning it in.\" Musk wrote that he wants Tesla's senior leadership to set a good example for workers by being \"more visible\". Drawing on the theory of compensating differentials, a counterargument to Musk's (and Mayer's) productivity and monitoring argument is that some rms can reduce labor costs by adopting working-fromhome policies. If working-om-home is a non-monetary job amenity that employees like, then rms that offer this policy can still hire and retain workers even if they offer lower monetary compensation than (otherwise identical) rms that do not offer this policy. 1. Musk's comments suggest that creativity and innovation require that workers be present in the ofce or factory. But creativity and innovation are also important in many of the tech rms that, following Twitter's lead, have embraced optional working-fromhome policies. Is Musk right, are the tech CEOs right, or are both right because of key differences between Tesla and these tech rms? If you argue that they are both right, carefully explain what key differences between Tesla and the tech rms are relevant to justify their different policies. Jed DeVaro 2022 2. Manufacturing workers on the shop oor use tools, machinery, and equipment so cannot work 'om home. In contrast, their managers could feasibly work from home. But Musk argues that those managers must come to work to \"set a good example\" for the workers on the shop oor. If you were hired by Tesla as a consultant to undertake an analysis of whether Musk is right that the physical presence of managers is needed to motivate workers, how would you do it? 3. One perspective is that Musk's decision, and Mayer's initial one, were correct in that they reversed unprotable workingfromhome policies. The only difference between them is that Yahoo! 's unprotable policy that Mayer tried to reverse was voluntarily adopted before she became CEO, whereas Tesla's was forced onto it by the government in response to COVID19. If we take this perspective: a) Why did Yahoo! voluntarily adopt an unprotable policy in the rst place? b) Why did Mayer allow her employees to pressme her into returning (at last partially) to an unprotable policy? 4. If Mayer and Musk are right that working-fromhome policies are bad for productivity (and therefore bad) then why are tech companies now embracing those policies as protable? And if those policies are indeed protable in tech rms, then why weren't they already in widespread use in that sector before the pandemic? 5. Choose a rm or industry, other than Tesla or a tech rm, in which you would expect a particularly large productivity change (either a loss or an increase) to accompany the adoption of an optional workingomhome policy. Explain why that is the case in that setting. 6. Choose a rm or industry, other than Tesla or a tech rm, in which you would expect adoption of an optional workingomhome policy to induce particularly large labor cost savings due to compensating differentials. Explain why that is the case in that setting. m: This case discussion is based on 2 articles: 1) Jed DeVaro in Workman (November/December 2020), entitled \"Strategic Compensation and Talent Management: Connecting in the Midst of COVID-19\"; 2) Jonathan Franklin in NPR Business (June 1, 2022), entitled \"Elon Musk tells employees to return to the ofce 40 hours a week or quit\". Jed DeVaro 2022