Call it what you want – distributed organization, remote work, outsourcing – these overlapping terms have been go-to buzzwords in business parlance for a while, almost as de rigueur as diversity and transparency. Globally, one in every three people are now working remotely to some extent. No wonder, when you consider the much-vaunted benefits of a distributed business model: lower overheads and wages, higher productivity, better quality of life, wider access to talent, and of course, the promotion of diversity and innovation.
That may seem great, but before we get too excited about lounging in our jammies while Dan from HR delivers his 11th presentation on company leave policy via Zoom, there are a few caveats.
The digital nature of platforms makes them ideally suited to a distributed business model. However, its successful implementation is not a one-size-fits-all affair. Some digital-first companies, like Buffer, Zapier, and Github, have built thriving fully-distributed businesses. WordPress is another good example of a decentralized community with shared goals. Conversely, online retail giant, Amazon, is spending $5 billion on its controversial HQ2 office with space for 50,000 workers. The fact that your business is digital, doesn’t seem to dictate that your workforce should be too.
It’s not only digital startups that are buying into the promises of higher productivity and happier employees. Many traditional companies, especially in the professional services sector, are experimenting with decentralized models. Unfortunately, some of these companies are either woefully ill-equipped to run a distributed organization or are trying to sugarcoat labour arbitrage.
Originally arbitrage meant cross-border trade in goods – the buy low, sell high principle. This was followed by offshoring factory work to low-wage countries. Now, Globalization 4.0, driven by the proliferation of digital technologies, is introducing a new form of arbitrage in the services sector. As a result, professional workers in developed economies are increasingly being subjected to the vagaries of the gig economy, which has diluted many hard-won workers’ rights.
It is therefore important to distinguish between a true distributed organization, which binds together remote professionals, working towards common goals within a harmonious culture, and a simplistic outsourcing exercise with a one-dimensional (and sometimes exploitative) purpose. Hopefully, the Zeitgeist is changing. A quick Google Trends exercise shows that interest in outsourcing has waned dramatically over the past 15 years while remote work has risen in popularity.
How did we get here?
Large multinationals have actually been running distributed formats for ages. The Dutch and British East India Companies were early forerunners of these mega corporations with workers and offices spread across the globe. Ironically, the British East India company also helped to create the antithesis of distributed organizations, one of the first gargantuan centralised offices. It was an early forerunner of the labour concentration that was so characteristic of the First Industrial Revolution, due to the latter’s need for factory fodder.
Despite its ubiquity, office culture has only been around for about 300 years. For most of humankind’s existence work was conducted from home. This allowed families and communities to build strong bonds and support networks. The advent of centralised offices disrupted this natural state of affairs, as workers were generally reduced to units of production, with scant regard for their quality of life.
The internet and new methodologies like Agile and Lean have created an opportunity to break free from the constraints of the centralised office model. Ambitious young companies can now use a distributed model to compete with established players and disrupt entire markets. That is, if they are able to negotiate the following hurdles.
7 critical factors for remote work success
The rise of the distributed machines
Skynet is live. The proliferation of SaaS solutions for very aspect of running a business has been a game changer.Cloud software for CRM, project management, communication, and video conferencing has made collaboration between remote teams much easier, while AI and machine learning applications have removed the need for many entry level positions.
However, knowing which tools to use at each stage of your company’s evolution can be tricky. Many young startups have rued the day that they signed up for the full (and quite expensive) Salesforce package, belatedly discovering that they only required 10% of its functionality. Runway up in flames.
Digital tools are great, but if you don’t have the right culture and organizational structure in place, they will not be wielded effectively. Startups that build a distributed model into their DNA from inception tend to be more effective at leveraging innovation, increasing productivity and raising employee satisfaction. Doing that is easier said than done though.
Your organization needs highly-focused leaders who can implement a clear structure and develop processes that nurture trust in common goals across multiple channels. That said, transparency is key to building trust. Leaders should communicate strategies, opportunities, and challenges in a clear and consistent fashion. Nothing kills trust like not knowing what is going on in the company that you are working for.
Get rid of hierarchies. The more layers you add to your distributed organization, the higher the likelihood of communication breakdown. That’s why a lean approach works so well with a remote team.
Communication skills have never been more important
The fact that you are using cutting-edge digital tools and working in real time with team members situated thousands of miles away, does not mean that proven business principles don’t still apply.
Omni-channel communication is not just for your clients. Your team should know when and how to use a specific communication channel. Make sure your onboarding process is up to scratch in this regard. Screencast videos are a great way to get this done.
Be clear and concise in all communication. A lack of physical cues and different semantic interpretations can cause misunderstandings and frustrations that would not usually occur in an office. Follow up on all interactions to make sure everyone is on the same page.
Recruit the right people
Not everyone is cut out for remote work. Candidates may have the right qualifications and relevant work experience, but if they are not self-disciplined, self-motivated, and nimble around remote technologies you’re in for a challenge.
Recent studies have shown that many remote workers feel disengaged and isolated, which does not bode well for their commitment to the job at hand. This also ties back to communication and leadership – if you are not putting the right structures in places and coaching your people, you should not be surprised that they feel adrift and unvalued.
A good way to test a candidate’s suitability is to include a small remote project, based on their particular field of expertise, in the recruitment process. If you get the desired results within the stipulated time frame, you probably have a keeper. Just make sure the test project requires interaction with other members of your team.
The laws of the land and fair practice still apply
If you want your employees to buy into your company goals, you need to make sure that they feel valued as real partners. That means giving them the same rights as a traditional on-site worker. Trying to circumvent leave and other benefits to cut costs in the short term, means sacrificing loyalty and team stability in the long term.
This does not mean that you can’t negotiate a quid-pro-quo if you are a cash-strapped startup. As long as the terms are transparent. For example, if you can’t afford to pay market-related salaries, then offer delayed satisfaction in the form of share options. It’s a great way to create buy-in.
Choose the right mix
As a distributed organization, you need to know when to fill a position with a permanent employee and when to outsource the job to an independent contractor. The rule of thumb is usually that if it’s not a core function, outsource it.
Except for outsourcing non-core functions, there are other permutations that can define your distributed organization. For example, do you employ team members on a contract or permanent basis? That will usually depend on the nature of the role and how financially secure your business is.
Sometimes a hybrid approach may be the most suitable, especially if there is a clear need and opportunity for stronger or more regular social cohesion. It can take the form of quarterly focus days or conferences. Another option is to use hot seating if your team lives in the same area. The rise of co-working spaces and platforms like WeWork have made this option much easier to implement.
Do it for the right reasons
Many companies abuse the distributed model purely to the advantage of their bottom line and shareholders. This means remote workers are often subjected to the insecurities of the gig economy.
A distributed approach suits a results-driven organization that does not need to nanny its people. It does not suit a bureaucratic culture that relies on dogmatic processes and multi-layered hierarchies.
If you don’t trust your people to work remotely, you probably don’t know how to recruit properly. A well-functioning distributed organization allows your employees to get on with what they do best, instead of chaining them to an outdated work environment.
As CEO of Eventerprise, I have led the creation of our global hub-and-spoke model since the company’s inception. Never a trivial task, the job was made easier by the fact that I had previous experience of running a globally dispersed subsidiary for a major international airline. I can therefore attest to the immense value that a well-run distributed business offers to all your organization’s stakeholders.