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If software companies are poised to dominate the economy, then remote teams are poised to dominate its workforce. Although old-school businesses and executives tend to conflate distributed teams with traditional outsourcing strategies, remote work has evolved into a standard used by more than half of companies globally today—including familiar names like Github, Automattic, Invision and Buffer.
Moreover, the data is starting to show that when it comes to engagement, retention, and productivity at the employee level, remote advocates aren’t wrong. A 2018 report from Owl Labs revealed that remote-friendly companies had 25% less turnover than their traditionally structured counterparts, while a recent study from Stanford professor Nicholas Bloom showed that remote workers took shorter breaks, got more done and needed less time off.
Although the empirical benefits of remote work for individuals and small teams are clearer than ever, the question of scaling distributed teams still intimidates entrepreneurs. Building a company is hard on its own—but managing an entire org chart spread across different cities, states, or countries seems to adds a daunting layer of extra responsibilities to the mix.
But when viewed in a different way, the opposite is true: building an effective remote team can actually position businesses to address the challenges of growth. In the post below, we’ll identify five key challenges of scale, and show how remote team can help companies surmount these challenges to produce rapid and durable growth.
One of the most crucial components of growing any team is being proactive about company culture. Similar to brand, culture takes root in an organization from its earliest days, making it hard to change once growth has occurred. Culture sets expectations for performance, determines your team’s values, and ultimately affects how employees interact with customers, leaders and each other.
The MIT professor Edgar Schein defines organizational culture as a pyramid with three layers: underlying assumptions, espoused beliefs and values, and artifacts—the tangible manifestations of assumptions and values.
In non-remote organizations, the danger is culture that accrues by default in physical spaces and casual interactions. But without physical interactions or spaces to serve as a cultural vehicle, remote organizations have no choice but to proactively and explicitly define their culture through writing, training and clear traditions (remote shout-outs, team travel). In the long run, this is a good thing—paying attention to culture is how teams maintain quality and a sense of purpose as they grow.
One of the greatest dangers of scale is breakdown in communication between the parts of an organization. Channels of communication that might have developed organically start buckling as org charts get more complex. Information doesn’t get where it needs to be, and collaboration suffers.
Given the challenge of establishing informal channels of communication in a remote context—no water cooler chats, or beers after work—remote teams have to focus on communication from the start. To manage the exchange of information, distributed teams require more process than usual, including frequent updates and specific tools for conversation.
Remote teams that succeed develop a robust infrastructure for communicating and operating asynchronously. Chat tools like Slack and Basecamp serve as an effective substitute for meetings, a strategy employed by majority-remote companies like Github. By designating tools and wikis as a source for updates, teams can replicate in-person interaction and help build their culture in the process. Beyond their use of valuable tools, remote teams develop cultures of clear writing and communication that pay dividends down the line.
Hiring is a classic challenge of scale. Maintaining a superlative bar for team members while grappling with an extreme need for headcount can challenge even high-profile companies. Since resourceful spending is critical for smaller teams, additional employees can be at odds with your budget, raising the stakes of each hire.
Choosing to hire remotely is one of the most effective ways of acquiring quality employees without compromising on budget. While coastal cities may be magnets for talent, searching beyond these high-profile areas creates a geographic arbitrage opportunity enabling remote businesses to win local competition for scarce talent.
As a company scales, paying for office space, equipment, furniture and benefits for new employees can rapidly increase fixed costs. Infrastructure is a source of significant financial strain on growing businesses that may still be working towards unit profitability.
One of the most obvious advantages of distributed teams is a reduction in headquarters infrastructure and overhead per employee. This is balanced somewhat by the need to pay for extra communication tools, and company off-sites / retreats, but a Stanford study showed a savings of over $2,000 per head for teams that permit remote work.
For leaders worried about lack of personal interaction, a hybrid model can offer the best of both worlds as you scale. In a hybrid model, leadership and customer-facing roles work in person, and engineering and design roles operate remotely. This allows key functional hires to stay close to customers while leadership can be close to networks and capital.
Savings in a hybrid model are lower than those offered by fully distributed teams. Fortunately, the rise of alternative options like co-working spaces gives companies greater choice in designing workspaces that efficiently accommodate variable on-premise headcount.With flexible office plans and affordable office furniture, leaders can adapt to changing needs without the commitment of a full-square headquarters.
Many executives, especially first-time founders and leaders, have trouble getting out of the weeds and delegating to their team as a company grows. Scaling yourself as a leader and manager is probably the most critical challenge that arrives with hypergrowth.
Distributed teams force leaders to adopt valuable habits around hiring, performance and people management. For example, despite its benefits, remote work is not suitable for everyone. In most cases, the best remote employees are self-starters who ruthlessly prioritize, allowing them to succeed without extra guidance.
Since managers have limited visibility into an employee's process, remote teams tend to judge performance by outcomes. By tracking outcomes, leaders build trust with contributors, enabling them to further expand capabilities within their function.
Remote Work Can Help Companies Scale
When combined with strong leadership, a remote structure can actually improve the likelihood of scaling sustainably and effectively. As tools and best practices improve, the downsides of remote work will continue to diminish, letting companies fully enjoy a competitive advantage through cultural diversity, increased personal productivity and satisfaction, and freedom of work.