Looking back on a year of COVID-19 we can’t help but search for positives from the experience. In the world of business professionals, many celebrate the realization that much of our work can be done from home. All we need is a computer, Internet, zoom, and a room without crying children. Productivity improves and costs cut as we no longer commute or fly out to client meetings. Heck we don’t even have to take the time to get fully dressed in the morning!
Companies are now taking this further by embracing remote hiring for the first time. Job posts increasingly allow a remote option. Recruiters we speak with say that they are finding more highly-qualified applicants faster when they are remote friendly. This can be great for candidates, too, as they have a much broader selection of job opportunities rather than the same group of firms in their home towns.
I’m a big believer in free and open markets. Increased competition for talent will force companies to either rapidly improve their employee experience or quickly fade away. Remote work can accelerate this positive macro-effect.
But I fear remote work has a dark side that will weaken companies, especially if they chase the easy benefits while missing the longer-term costs. This post is meant to help company leaders consider the pros and cons, and maybe prevent losses in our local communities as well.
A Story of Offshoring
My biggest worry about remote hiring is that it will become a trend that company leaders follow because “everyone else is doing it.” Believe it or not, that happens a lot in the business world. Leaders don’t want to look like they are behind the times, and investors often pressure them to follow the pack. And all it takes is one company leader to see the chance for some quick cost savings and a promotion. This happened often with the drive to offshore professional work a few decades ago.
I saw this up close and personal at our digital marketing agency. One day the IT leadership of our biggest client announced that it would be pulling development work on its branded websites away from digital agencies like us and give it to a massive company in India. To them it was a no brainer: We charged $150/hour for development time while this company charged $25/hour.
I still vividly remember sitting in a strategy meeting with my fellow partners thinking through how this would impact our business. Guess what? It didn’t…
That’s because the our client needed us to work closely with this development company and do significant work to help its people understand what was needed. This took many hours by our team—at $150/hour. As a result, we lost zero revenue due to this client’s shift. They didn’t bother to measure the total financial impact.
Meanwhile, the service quality suffered significantly. In order to get the $25/hour price, our client had to accept a 5-day turnaround on any request. The IT department never mentioned this to the brand marketers who were its internal customers, though. Before, we could make a small change by leaning over the cube wall to ask a developer for 5 minutes of effort. After, we had to inform frustrated clients that we no longer could touch their code and it would be next week before any change could be made.
Remote work isn’t outsourcing, of course, but this shows how “easy wins” can have unknown costs.
The Risks of Remote
In both of my companies we had amazing remote hires, a few big misses, and everything in between. There are some situations where remote is a must, such as when you have an enterprise sales team that needs to be in the city or region where they call on clients. Another must to me is when a high-performance local hire decides to move to a different city for family reasons. It’s smart to see if you can make it work, and you should budget a lot of money for travel to see each other regularly. But there are definite downsides:
Leadership struggles - A few times I have brought on C-level executives that are remote, and it has never worked out. I believe your executive team must be aligned at all times, and this is incredibly difficult when part of your team is sitting in-person while the others are zooming in once a week. There’s a process in which you influence and mold each other that is just too hard without the space between meetings.
Fewer relationships - Most of us enjoy human interaction through work, but remote gives you a mere fraction of this. Yeah, we’ve sucked it up on the past year, but even introverts are eager to see someone else IRL. Workplaces are where many people form life-long friendships and some even find spouses. Friendships happen best in person—at lunches, happy hours and just hanging on the office couch. And these relationships build trust that makes work more efficient.
Less loyalty - Remote hiring makes it easier for employees to apply, interview and onboard from the comfort of their homes. But easy to hire means easy to quit and be hired by someone, somewhere else. There’s no loss of face with co-workers in the local community and little hit to one’s reputation by bailing.
Of course your organization might work differently. My experience is based on building high-growth businesses in which employees are given high ownership and accountability. If you have a low-change, command-and-control model, maybe remote work will work better for you.
I also fear a negative impact on our communities when companies stop working to make their local talent markets better. For example, I already see companies using remote hires to hit their diversity goals, at the expense of investment in local organizations that are working to train and place diverse talent. And hiring local brings people together in a town or city that otherwise might not interact, leading to new understanding and community engagement.
Look and Listen as we Return to Normalcy
Last week I was catching up with a friend that is a CEO at a large company in town. He remarked that his company had hired several remote people over the past year. And now they are quitting at a rapid rate. It’s a good reminder that our COVID-19 experiment is still a work-in-progress. Let’s see what happens when vaccinations give people a choice to be together again.
My friend and I talked about how much we miss working in-person with our teams. We miss seeing the energy of our people as they laugh together in the common areas. We miss the chance encounters in the hallways, and the chance to pull a team together for an impromptu beer across the street.
The financial output of business is great, but the farther I go in life the more I realize that’s just a by-product of being part of a team that loves working together.