Wow, let me be the first to chime in. I have teams spread all over the globe and their effectiveness is not related to their place of work - whether remote, local, home or in an office.
It depends on each individual and their managers. Ideally of course having everyone at work face-face is preferred but I don't see working from home being a detriment to productivity.
For many engineers, the design process requires nothing more than a computer loaded with the proper design software. Arguably design can be done anywhere.
But debug, with real hardware, which may require specialized expensive equipment? For all sorts of Real Good Reasons, that should be done in the office.
Having said that -- sometimes design gets done best in close collaboration. The guy in the next cube may have a problem and he can just wander over to the other engineers and ask a question. Or folks can discuss issues in the break room. That's a lot easier than firing up a Skype session and hoping someone answers.
Don't forget that Yahoo! is an internet company whose primary business is selling advertising. They're not designing and shipping hardware to customers.
There certainly are portions of an engineer's job that benefit from personal collaboration and there are some projects that, by the nature of the project, effectively require it. But there are plenty times when the engineer's job entails simply being head-down and buried in a computer monitor.
If tele conferencing software and instant messaging are used effectively, much of the collaboration can easily take place remotely.
I do think that if telecommuting is being abused, it is more of a management and motivation issue. The team needs to be managed and motivated regardless of where it is and how dispersed it is.
Yes, there would be retaliation. My employer expects me to work in blocks of time less than 8 hours. I need to be able to view simulations that take more than 16 hours to complete and if I did not work from home the cadence would drop to a two day cycle. Having employees available 16 hours a day and only clocking 8 hours is a huge benefit to all parties involved. Office talk is way over rated.
Arbitrary decisions, made by people who find themselves in a position of power, is infuriating to me. It doesn't matter if they generate some catchy slogan to justify their decision.
I have worked from an office almost exclusively for my entire career. However, the engineers I collaborate with daily are all over the US, and often beyond the US. So this notion that "the team" has to be collected in one geographical location sounds way outdated. Most of the time by far, I am not in the same room or office as those I'm working with.
Sure, there are times when it would be more convenient to stroll in the office next door and have a chat. But overall, a whole lot more work gets accomplished when team members aren't tied to a physical co-location and a strict schedule. So you accept the compromise because you see the overarching benefits.
I love working from home, and like Rick, I strongly feel that this arrangement is good for both me and my employer (which is the same as Rick's). While we work on the same team, our individual contributions are solo projects. But I imagine it's very different depending on the type of work. The suitability of different types of engineering jobs to working at home is probably varied.
Of course, where you need to use some specific technical equipment is very hard to work from home.
But when I'm stuck at some problem, I need to work in my own house, where I feel comfortable.
Unfortunately, some employers have never done any technical work and don't understand the stress level an engineer can reach from time to time.
Just an example: last week I had to finish an embedded system which deadline was about to be surpassed. I had spent all weekend working at home and on monday I phoned my office and tried to explain the situation: the work was almost done, the stress was too high and by moving to the office the project was surely going to be delayed. But the boss didn't understand the problem...
Dylan & Rick: I would say give employees both options! Make 1 to 3 days a week mandatory at office if group discussions with colleagues improves innovation (as Yahoo's CEO claims). I can vouch for those who work at home (honestly!) end up working more hours!
There are times when working from home is very much dependent on the type of work you do. For instance, as an applications engineer, I could work on product specifications, layout circuit boards, or write application notes in the comfort of my home and avoid the hour plus commute.
I work at a remote site for a global company and we have team meetings with other remote sites in Asia and Europe. These usually happen before 8am or after 5pm several days a week. Many times I will call into the meeting from home, especially if it's early in the morning.
However, there are times when I have to be in the office. Evaluating a new hardware design or a customer issue requires access to equipment and other tools. Since I don't have a temperature chamber or $300K worth of specialized test equipment in my garage, the only option is to work in the office. Also, having someone else around when troubleshooting can be helpful.
A couple people here have dismissed the value of office talk. I find that having other engineer's around to brainstorm or help solve a problem is invaluable. I've never met an engineer who didn't benefit from having peers around to bounce ideas off of.