The 'one bad apple' thing never cut it for me. If you are bad apple's manager, you have measurable metrics on her performance, and you act based on that, no more no less. This has no bearing on any of the other apples.
And what exactly do you think objective metrics for developers should be? LoC? Defects? As soon as a measure becomes a target, it ceases to be a useful measure.
If one person in a group takes unfair advantage of flexibility by e.g. only going to the office half as much as the rest, it sure will have an effect on the "other apples".
Why would she need to go to the office? Work is something you do, not a place your'e at. If you, as a manager do not have any way of measuring how the people you are managing, then you have no reason to be there.
