What does SCRUm says about having PO in the DSM?

It sounds like you've discussed the rules of engagement with this new PO.

Has the PO been given a chance to prove that they will conduct themselves as they have said? 

Also, can the team find any positives that could come from having the PO available ? 

The Scrum Guide says that the "Daily Scrum is a 15-minute time-boxed event for the Development Team", that it is "an internal meeting for the Development Team" and that "the structure of the meeting is set by the Development Team". The Scrum Master is responsible for ensuring that the Development Team has the Daily Scrum and teaches the Development Team how to be effective within the 15 minute timebox. The Guide also says that "if others are present, the Scrum Master ensures that they do not disrupt the meeting". It does not say how the Scrum Master does this - if the Scrum Master is present, it may be done in different ways than if the Scrum Master is not present.

Since one role of the Scrum Master with respect to the Daily Scrum is to ensure that people outside the Development Team do not disrupt the event, then it seems like having the Product Owner or other members of the organization present, at least as observers, is considered and allowed.

With the Development Team being responsible for the structure of the meeting, they may also find it useful for the Product Owner to participate in some way. This would be at their discretion.

Personally, I would leave it up to the Development Team. However, I would also encourage experimenting with it in different forms, from a silent Product Owner to ways to incorporate the Product Owner into the event itself. I've had great success with the Product Owner listening in on the things that the team has been working on. With the Product Owner present, the team can identify questions that they have for the Product Owner regarding the work being done in the Sprint - I wouldn't expect those questions to be answered in the Daily Scrum in order to keep the event within the timebox, but the Product Owner becomes aware of them and can make sure some time is set aside to answer them. I find the end a good opportunity to give the Product Owner a brief moment to make sure the team is aware of their availability and give some insight into upcoming things for refinement or key stakeholder feedback.

+1 for @Thomas Owens' reply.  

For almost every one of the Scrum Teams I have participated in the Product Owner attended the Daily Scrum.  Their participation level varied.

Some of the teams would include the Product Owner as an equal participant where they would give a quick run down on any new information discovered or any impediments that could preventing them from preparing new stories for the Development Team.  Yes, the Daily Scrum is for the Development Team to plan but it is also up to the Development Team to decide on the format of the event.

Other teams would have the Product Owner observe and listen.  It gave the Product Owner some insights into what the Development Team was discovering as they worked on the Sprint Backlog.  This helped when impediments were encountered or to get ahead of potential risks to the Sprint Goal.  There were usually discussions after the event as a result of the discussions that occurred during the event.

There is a red flag that popped up for me in your post. 

this is going to be a huge change for my team. We all are WFH currently. There is a certain way we have been doing our DSMs and all and my team thinks now if we wont meet a timeline, we will be judged. 

To me this indicates that the trust between the Development Team and Product Owner is damaged.  It also indicates a tendency to plan out long term deadlines instead of planning short duration increments of work.  There is also an issue with the Development Team's transparency of information with the Product Owner.  As a Scrum Master that is what I would be focusing all of my attention.  By helping to heal this issue, the matter of the Product Owner's attendance at the Daily Scrum will take care of itself. 

@Rhea Pillai, Pretty much everything that @Thomas Owens said and particularly emphasizing the need to experiment and see what happens if the PO attends the Daily Scrum as a silent observer. Consider how trust can be built among the Scrum Team members.

I would ask "what is the worry about having the PO listen in?" Wouldn't it be a good way of providing transparency to the PO on the progress within the Sprint? As we all know, things change literally daily; wouldn't it be great to have the PO readily available, and on the call, to answer any questions about priority? As long as the PO is not distracting and taking away but instead is contributing to the success of the team and the event; I really don't see the point of closing the door to a vital member of the Scrum Team. 

the new PO wants to come in the DSM. He says scrum says i can silently be there but cant participate.

The team and PO have 23 hours and 45 minutes in which they can find time to collaborate. The Daily Scrum is 15 minutes out of a busy day for the team to stand aside and refocus their efforts on meeting the Sprint Goal.

Why would the PO even want to attend the Development Team's Daily Scrum? What is the motivation here?

+1 on @Steve Matthew's reply. Sounds like you have a significant trust issue between Dev Team members and PO and that's exactly what I'd mention as a key condition for Scrum to be successful. 

This is great stuff for a retrospective: What do they fear? How much of that is based on speculation/assumptions? What 'mistakes' did the PO make in the past? How can everyone contribute to a better trust relationship? ...

The team and PO have 23 hours and 45 minutes in which they can find time to collaborate. The Daily Scrum is 15 minutes out of a busy day for the team to stand aside and refocus their efforts on meeting the Sprint Goal.

Why would the PO even want to attend the Development Team's Daily Scrum? What is the motivation here?

In reality, I don't know a single team that actually works 24 hours so let's bring that down to a more realistic level. 90% of Scrum Teams work on an 8 hour day so the Scrum Team has 7 hours and 45 minutes to collaborate as a whole. 

So why would the PO want to attend a Dev Team's Daily Scrum? Wouldn't it be good to see what the team is working on? Hear from the horse's mouth about blockers, questions, or issues that are present? I'm all for ensuring the purpose of the Daily Scrum is honored and will prevent anyone from joining that would hinder that. Even still, if you are lucky enough to have a PO that would respect the Daily Scrum and wants to be involved with the team, what is the harm in them taking 15 minutes of their day to listen in? By completely blocking the PO, that's really not supporting transparency and trust, instead it creates a division within the team. That's not healthy. 

As long as the Dev Team is able to utilize the 15 minutes of the Daily Scrum to achieve the intended purpose, why would it matter if the PO is in the room or on the call?

Ok.

i can push back PO, but won’t be if scrum says that he can be a part. He has no motive as such, he has other counter parts in his own team, who attends their respective scrum. Hence his manager wants him to attend since all the other POs also attend. 

if scrum says he can be a part, I then have to invite him. What he can contribute or not would have been a talking point, if this HD a been request from his side. 

i can push back PO

Why though? Wouldn't it be better to have a conversation with the Dev team to see how they feel before just making a decision to block just because the last PO didn't do it this way? It's one thing to protect the team, it's another to make a decision on their behalf based on an assumption. 

what is the harm in them taking 15 minutes of their day to listen in?

That's exactly what a Scrum Master ought to find out. Something's up. What might it indicate, for example, about the quality of collaboration outside of those 15 minutes?

The Daily Scrum is 15 minutes out of a busy day for the Development Team to stand aside and refocus. That's it, just 15 minutes for that team alone. They may have no other opportunity to do so.

If that's too much to ask, my advice is to find out why. So if someone else -- a Product Owner or indeed anyone outside of that team -- feels a need to be there, my advice is to query their motivation, and to critically assess the collaborative picture behind it.

That's exactly what a Scrum Master ought to find out. Something's up. What might it indicate, for example, about the quality of collaboration outside of those 15 minutes?

@Ian Mitchell, I think you make a fair point and Scrum does say that it is an internal meeting for the Development Team. However, it does not say that others can't be present, just that they shouldn't disrupt the event.

I also see how the presence of someone outside the Dev Team may cause them to behave differently but that is assuming that there may be a dysfunction already. In such a case, again you are right, the Scrum Master ought to investigate the reason. However, if the Scrum Team exhibits that cohesiveness / team spirit and if there is a very high level of trust and camaraderie amongst all 3 roles, then is there still a reason why the attendance of the PO might be a bad idea? Just curious and in the spirit of learning.

I have spoken to the dev team and they said they will have a challenge since the meeting has been happening within a certain group from the last 2 years. Now changing the way they discuss things on DSM (especially when we all are WFH, will be a challenge). 

Also, they said if PO thinks those 15 mins will help him identify the blocker and fix it, then they won't entertain him throughout the day (our PO spends large amount of his time n our side of the floor, resolving his queries,etc). Hence I am emphasizing a lot more on what does scrum says about this. The team clearly has raised challenges that what will a PO get in those 15 mins that he has not been getting till date. If this is only because other POs does it in their own teams, that does not make a valid justification.

Also, they said if PO thinks those 15 mins will help him identify the blocker and fix it, then they won't entertain him throughout the day (our PO spends large amount of his time n our side of the floor, resolving his queries,etc).

@Rhea Pillai, Reading this paragraph, I feel you are not mentioning some details. It feels the team is apprehensive about this PO. It seems they are either annoyed or don't trust the PO. What's the problem if the PO is spending too much time with the Dev Team? Is it that the PO is doing something that is annoying them?

What the PO gets or doesn't get in 15 mins is probably irrelevant. Why does the Dev Team not want this PO there?

However, if the Scrum Team exhibits that cohesiveness / team spirit and if there is a very high level of trust and camaraderie amongst all 3 roles, then is there still a reason why the attendance of the PO might be a bad idea? 

Yes, it still might be. The better the trust and camaraderie etc, the less likely it could seem that there's a systemic underlying problem. Nevertheless, it doesn't stop the situation from being a bad agile smell.

In practice, neither I (nor any team member) is likely to raise objections if the PO of a mature Scrum Team occasionally attends a Daily Scrum. If I saw it becoming a habit though, I'd want to find out why. The same goes for my own attendance.

In practice, neither I (nor any team member) is likely to raise objections if the PO of a mature Scrum Team occasionally attends a Daily Scrum. If I saw it becoming a habit though, I'd want to find out why. The same goes for my own attendance.

@Ian Mitchell, Interesting perspective. It is really making me think but I guess I can see how it may prevent some issues from surfacing. How would you raise the subject with the PO if their attendance seems to be more frequent? If you are the SM and you frequently attend, who would try to find out why?

Lastly, if we enable the DT to create that exclusivity for that 15 minutes, might it have an impact like a them vs us mentality as opposed to being 1 scrum team? I hope I'm articulating that right.

Now changing the way they discuss things on DSM (especially when we all are WFH, will be a challenge). 

Why would the team change the way they discuss things because the PO is on a call? What is the fear there? What is the root cause for the huge lack of trust? If this is a new PO for the team, let's NOT make the habit of putting someone new in the same box as a former person. Check the baggage at the door, let the new person on the team learn how to work with the team and vice versa. If you say "well the last PO was demanding and commanding when they came to the Daily Scrum so we don't want the new PO to join because of that" all you're doing is applying baggage on someone completely and totally different to a new person. That is not fair. That is not honoring the Scrum Value of Respect.

Secondly, all due respect to everyone, I really have a hard time with the notions being posed here that it's worrisome to have a Scrum Team member join an event. The Daily Scrum's purpose is for the Dev Team, sure, but I would challenge someone to explain why it is a bad thing if you have the Scrum Master and PO join as long as they respect the event and the intended purpose. 

The more you have walls setup to block scrum team members, the larger gap you allow to grow, the harder it is to build trust, and the harder it is to actually grow as a team. Remember, Scrum doesn't solve your problems, it exposes them. I would say if you block scrum team members, that's a problem that should be resolved. Using the Scrum Guide's verbiage of "the Daily Scrum is an internal meeting for the Development Team" as a way to block the SM and/or PO from attending is in effect using it as a crutch and reason to AVOID resolving a major and dangerous problem.