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Remote work is here to stay. The coronavirus crisis is making companies and employees increasingly more comfortable about working from home or out of the office.
For many startups, remote work is already part of the normal course of business, and for some, it is the primary working environment. In its simplest form, an organization may place different teams across separate geographies. At the extreme, an organization may choose to build its organization entirely remotely and not even have formal or central locations.
Here are four main reasons why remote work will become more prevalent:
1. Diverse talent pool: Perhaps the central advantage of remote teams is the flexibility to tap the best talent regardless of location. Some regions have particular centers of excellence. Building in such a distributed manner allows organizations to leverage these best-in-class ecosystems.
Remote companies have a greater percentage of female leaders.
For instance, while there is a shortage of machine learning programmers in the San Francisco Bay Area, Toronto and Montreal are becoming hubs. Building remote teams also increases diversity. According to research by Remote.co, an industry association, remote companies have a greater percentage of female leaders: some 28% of remote companies have female founders, presidents, or CEOs (compared with the 5.2% of S&P 500 SPX, +1.15% companies that have female CEOs). The study attributes this to a few factors, including greater work flexibility, the ability to balance multiple responsibilities, and decreasing bias (working remotely obfuscates preconceived notions of what a leader looks like).
2. Managing labor cost:Lower labor costs can profoundly impact a startup’s viability. Early-stage venture rounds are geared to helping founders find a fit between product and market. This often involves learning and pivoting. The largest cost for startups at this stage is salaries to support technology development. For a similar round size, lower salaries mean innovators have many more months to experiment, increasing the probability of successfully finding a sustainable business model.
This advantage only compounds as the company scales. And while salaries directly affect the bottom line, many companies with distributed models point to less data-driven benefits such as saved time commuting and better work-life balance, which leads to happier and more productive employees.
3. Global strength: Startups that build distributed teams also train to operate effectively across geographies. This forces companies to build and manage communication across geographies, to trust distant colleagues with more autonomy, and to foster a shared culture across the organization. Expanding internationally requires exactly the same skill set. For many startups outside Silicon Valley, in an increasingly global and crowded innovation market, targeting many markets from the get-go is not just a strategic advantage, it is necessary for survival. Those with the internal organization are best positioned to succeed.
4. More integration: The tech sector is challenging the notion that in-office connectivity is irreplaceable. Jasper Malcolmson, for example, built his company Skylight in a distributed way from the start. Skylight has no official headquarters or offices of any kind. As Jasper sees it, “By being distributed, we’re actually even more connected.”
In his home, Malcolmson’s desk has two screens, a high-resolution microphone and high-fidelity speakers. These come standard for all employees. He can see an array of live feeds of his colleagues at work. Whenever he wants to make a conference call, ask a question, or just say hello, he double-clicks on a colleague’s face to open a live microphone link. “Open offices decreased barriers to in-office communication. In many ways, through technology, we’ve lowered them even further,” Malcolmson reflected.
Being distributed alerts companies rapidly to challenges — like a breakdown in communication or lack of collaboration — and forces them to react and adapt quickly. And a distributed structure doesn’t necessarily mean disavowing in-person connectivity. On the contrary, distributed firms structure in-person interaction. This includes regular retreats, weekly live videoconferences, and an integrated digital communication platform that emphasizes live interactions.
Companies expect workers to develop the skills and self-discipline required to work remotely.
Challenges and obstacles
There are difficulties with building distributed teams. Hiring has to be handled differently to ensure that the talent pool is not overwhelmingly large and that those coming into the organization are comfortable working remotely. More and more, though, companies expect workers to develop the skills and self-discipline required to work remotely, sometimes for large stretches at a time. Companies, too, are expected to do more to incentivize remote work if it is going to be a part of their organization. Some companies that are geographically distributed expect employees in different regions to work different hours to improve communication, but in return, the company supports working from anywhere.
The shift to remote work will only accelerate as companies and employees start to see the benefits of and become better adapted to this model. While coronavirus is certainly affecting work patterns in the near term, the real value for Zoom Video Communications ZM, +2.17% and other remote-conferencing services lies in the long-term trend towards distributed teams already being showcased by some of the more innovative global startups.
Alex Lazarow is a venture capitalist with Cathay Innovation and was previously with Omidyar Network. He is the author of Out-Innovate: How Global Entrepreneurs from Delhi to Detroit Are Rewriting the Rules of Silicon Valley (Harvard Business Review Press).
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