Another Deckchair Shulller
First, one will be collaborating with others around the world and will need to talk with them. For example I have been on conference calls with colleagues in Scotland and South Africa and I am in the US. Obviously, no competent manager is going to authorize travel when 30 - 60 minutes on WebEx gets the job done. Where I was sitting does not matter (office or home office) only that I have access to the right tools.
Second, morale is critical to any organization but especially to one that is struggling. High morale is probably as important if ignored part of any turnaround. The staff has to buy in to what needs to be done. Treating them as children is not going to cut it.
Third, many above have pointed out the inherent flexibility the home workers have. If they need to step out or do an errand they can plus not worrying about traffic means they are more relaxed and can easily work over without a major problem.
Fourth, companies that are too concerned about where one physically is have serious mismanagement problems at the top. They should be concerned about the amount and quality of work being done not where the arse is.