Does remote work slow company growth?

Updated On: October 24, 2019
No

On this episode of Tradeoffs we talk about remote work. If you don’t already know, Hiten has founded several successful remote companies (FYI and Product Habits) and is a strong proponent of the model. I’m still a bit skeptical. But the way Hiten talks about how he builds a remote team did a lot to alleviate my doubts.

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Going remote requires a shift in how teams traditionally interact. Communication needs to be more purposeful and transparent. Any conversation you have must be rigorously documented for future reference. Socializing as a remote company can also be challenging, creating a potential for isolation and loneliness. Combine that with the lack of boundaries, and it’s easy to run into issues with employee burnout and confusion.

The Tradeoffs

  • Communication, social interaction, and setting boundaries become much more difficult in a distributed workforce. The mechanisms that make these actions easier when working in an office don’t exist for remote teams.
  • Going remote acts as a forcing function for documentation. Your product teams will need to be more diligent in how they talk through and record the development of new products.
  • Working effectively on a remote team requires discipline from every employee, but especially from leadership. If leadership can’t do remote well, the whole company will fail.

Remote culture can lead to issues with employee engagement

Fans of the remote company model tout the benefits of gaining access to a larger pool of talent but rarely talk about the negative impacts of increasing the geographical distribution of their team. Problems can’t be resolved face-to-face at remote companies, so misunderstandings and distrust are more common. Company leaders have to make sure they’re fostering an environment that minimizes these issues.

“If company executives aren’t good at remote work, then the company shouldn’t be remote.” Hiten Shah, Co-founder of FYI

This is something that Hiten feels really passionately about, and I agree. When I founded ProfitWell, I don’t think the company would have been able to survive if we were remote because I myself didn’t trust the model. Acknowledge your own bias toward the remote model before you move forward with the implementation.

As a first-time founder, a lot of my bias came down to logistics. When employees aren’t sharing an office with their peers, it can be difficult to build trust as a team. You don’t see people doing their work, and the tools we have available right now—Slack, Trello, Airtable, etc. don’t resolve this problem enough for me. This is why, even though ProfitWell has offices co-located in Boston, Argentina, and Salt Lake City, we have only one remote employee.

If you do choose to go remote, syncing across time zones can help boost employee engagement. Upon opening our new Salt Lake City and Argentina offices, for example, our team really had to consider how everyone’s schedule was different. The Utah location starts its day two hours after our Boston headquarters, and Argentina begins working slightly before the East Coast. We use Google Calendar to keep these differences in mind when creating meetings and deadlines.

Scheduling feedback

Feedback about scheduling from FYI’s The Remote Work Report by FYI.

Working across disparate time zones, however, can complicate personal interactions and team building. It’s significantly more difficult for teams to form strong relationships with their peers when there are less opportunities in the day to meet.

This complicated interpersonal communication is why I didn’t found a remote company. Hiten recognizes the potential for these issues as well but says they’re easily fixed by creating a set of rules for how communication happens across and between teams. It all comes down to how transparent the communication actually is.

When your team is distributed, it forces direct communication

The biggest tradeoff of remote work is that it makes communication harder. You can’t just hop over to a co-worker’s desk to chat; every time you reach out, it has to be purposeful. The most important information must always come first. Transparency is also critical. Each member of the team needs to communicate what they’re working on as well as what they’re struggling with at all times.

These communication issues are something Hiten found when researching remote culture earlier this year.

Communication feedback

Communication feedback from FYI’s The Remote Work Report.

Hiten’s solution for the communication problem was to create a channel in Slack for daily updates from every member of the team. This space allows everyone to share what they worked on the day before, as well as what they plan to accomplish presently. With this channel, it’s easier for Hiten and his team to hold each other accountable for their work.

Sign up at Product Tradeoffs today, and we’ll ship over a slide deck that walks through this process.

Hiten believes that this active communication leads to better product development as well.

“Product is a lot of documentation, a lot of research, a lot of spec-ing, a lot of deliberate decision making, a lot of discussion that can fall through the cracks if you don’t write them down. The extreme advantage of remote product development is that you’re forced to document everything or nothing gets done.” Hiten Shah, Co-founder of FYI.

That’s a pretty powerful statement and goes a long way toward changing my mind. To build a great product, you not only need to understand the use case and buyer personas. You also need good document management to ensure this information is easy to reference by anyone on the team. Building out your team is much easier when new employees can quickly get caught up on the history of your product.

So now we should ask, at what stage of growth should your company consider the remote model?

Deciding on the right time to go remote

Historically, the remote model has worked well for young startups, but we’re seeing more and more large companies successfully running distributed workforces.

We spoke to just under 2,000 companies, both remote and co-located, to learn more about how quickly they grew. Across three revenue bands and all different kinds of ARPU, the data was clear—remote companies grow slower than co-located ones.

  • $1M to 10M - remote companies grow 30% slower
  • $10 to 75M - remove companies grow 10% slower
  • +$75M - levels out

Basically, the smaller the company, the slower its growth. You’re trading the speed of growth for more flexibility, a larger talent pool, and, when you’re not careful, more difficult communication.

But the growth trajectory isn’t the only thing to consider. There are also a lot of employee retention and happiness gains for remote companies. FYI put together The Remote Work Report with Miro to take a look at this. It spoke with 486 remote workers about their challenges as well as their preferences. And you know what they found?

96% of remote workers would recommend working remotely to a friend.

That’s a significant percentage of people even when you consider that they identified the four most common challenges as: team communication, social connection, organic interaction, and setting boundaries. Read through the article, and it’s easy to see that people love working for remote companies.

So here’s another big tradeoff. You may experience slower company growth using the remote model, but overall your employees will most likely be happier. That kind of employee satisfaction translates to a greater passion for their work. If you think about it, this increased engagement on remote teams helps offset a lot of the tradeoffs we’ve talked about today. It makes you wonder how this model will evolve in the coming years.

Is the future of work remote?

Looking at both the positive and negative aspects of the remote model, it’s easy to see why lots of companies have adopted it. Companies with 500+ employees like Automattic, InVision, and GitLab are thriving examples. And with more and more technologies and tools being created to support remote workforces, distributed companies might just be the future of all work.

Tweet or post on LInkedIn to us know what tradeoffs you’ve seen as a result of going remote or the perceived issues that stop you from moving forward with it! 

Tags: tradeoffs

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