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This section was written by Courtney Nash.
Remote Work Takes a Variety of Forms
There is no one-size-fits-all formula for remote work. The forms it takes depend on the size, stage, and philosophy of each organization, and will change as a company grows and matures. Often, remote work is framed in the context of people working from home and not having to commute; however, any company that has multiple offices deals with many of the same challenges (and may more accurately be described as a distributed company, as described below). Once an office expands beyond a single floor, the nature of how people work together inherently changes. Remote work largely exaggerates those changes, and successful remote teams depend on more attention being paid to them.
confusionTerminology about remote work is fraught with debate and inconsistency. Despite the fact that there’s a growing movement behind using the term distributed over remote—notably, viewing team members as remote can have hierarchical implications about what is “central” and what is not—for the purposes of this guide we will use “remote work” throughout to refer to the broad category, and draw distinctions about fully distributed companies or teams when relevant.
It’s also tempting to categorize companies as “remote or not” in a binary fashion, or perhaps as a point along a continuum between those two ends. Andreas Klinger, Head of Remote at AngelList, thinks about remote work as a space within a grid, where one axis is how close people are to the next hub or HQ (if one exists), and the other is how distributed across time zones individual teams or people are.* All other things being equal, a company with remote employees clustered near typical urban hubs within U.S. time zones has a different set of constraints, requirements, and pain points than one with remote employees scattered across the globe.
A few more terms are worth clarifying before we proceed. Remote companies are described in a variety of ways:
A single office company (or co-located company) has a single physical office location where everyone works regularly.
A multi-office company has different offices (not necessarily in the same location), and employees commute to the nearest location regularly. Offices outside the same location are often referred to as satellite offices. This type of company could also feasibly be considered distributed, but is not the same as a fully distributed company.
A hybrid company has at least one physical location where some employees work regularly, and also allows people to work regularly outside that location, typically from home.
A fully remote company (or fully distributed company or all-remote company) does not have a physical office location and all employees, including executives, work remotely. Such a company may not have started out fully remote, but moved to that model at some point.
A remote-first company originated as a fully remote company, having never had an office. This model is increasingly common with early-stage startups.
A remote-friendly company is a hybrid company that allows and supports remote work to a certain extent. The company is open to hiring people remotely but still tends to maintain core working hours and time zone overlap with one or more of its offices.
There’s not much data on whether one form of remote company is more prevalent than any other, but research by Buffer and AngelList suggests that the hybrid model is currently the most common. Their 2020 State of Remote Work report found that about 30% of the people they surveyed were all-remote—that is, they worked for a company where no one goes into an office. The majority case is a hybrid model, where part of the team is full-time remote and the remainder work out of the same office.
This aligns with the information available on AngelList about the remote makeup of companies listed there: companies with “any remote setup allowed” is around 9K, whereas “the team is all-remote” comes in closer to 3K (where the latter is a part of the former).*
Rodolphe Dutel, founder of Remotive, a platform for companies to hire remote workers and for workers to find remote jobs, confirms that around 20-30% of the companies he’s tracking are all-remote. According to their numbers, around one third of all teams that consider themselves remote-friendly are all-remote, and the rest comprise some degree of hybrid remote-friendliness.*
controversyWhile there is a lively and ongoing debate about which type of remote company culture is “best”—all-remote, remote-first, hybrid***—and whether largely distributed teams are more successful, our view is that this misses the point. There are many examples of high- and low-performing companies that have operated in remote-only and hybrid models, within one country, and across the globe. What matters most is that a remote company’s culture and communication practices are intentional, and in line with its stated values.
The ways people work remotely vary as well:
A remote worker is someone who does not commute into an office daily, and instead works from a location of their choosing, typically their home or a co-working space or coffee shop.
A digital nomad is someone (a full-time employee, a contractor, or a freelancer) who does not commute into an office but instead travels intentionally to multiple locations and works from wherever they are at the time.
A freelancer is someone who is not a full-time employee of a company, but is instead contracted to perform work for a specified rate and duration of time. They are typically self-employed, though some work through employment agencies, and most work from whatever location they choose. Some freelancers may go into a company’s office to conduct their work, though not usually on a regular basis. Freelancers are similar to contractors (and for tax and payroll considerations, they are effectively the same), but contractors typically work full time for a set period with a single client for the duration of the contract. Employers do not provide benefits ( healthcare, parental leave, or the like) to freelancers or contractors.
importantIt’s worth noting that many international employees of remote companies are instead contractors due to the complexities of overseas tax and payroll requirements (among other challenges). We cover these in detail in Legal, Tax, and Operational Concerns.
Working from home (or work from home or WFH) is the most common form of remote work. The term WFH can also describe a company policy that allows employees to occasionally avoid commuting into the office and conduct their work from home or wherever they choose. WFH is typically considered to be a benefit or perk, rather than a consistent work arrangement.
Teleworking (or telecommuting) is one of the earliest terms coined to describe the practice of working somewhere other than the main company office.* At the time, this largely referred to working from home, often using phone calls and even faxes to communicate, as this was before the advent and broad spread of e-mail and public internet availability.
Are Remote Companies Less Productive?
Concerns about productivity used to be one of the foremost roadblocks for companies considering supporting remote work. Anecdotally, we’re seeing this decrease somewhat in the list of worries for companies; but for many it’s still not a foregone conclusion that remote work means individuals or teams will be more productive.* Despite that, improved productivity (typically expressed as a lack of interruptions) continues to be one of the main reasons remote employees prefer working outside an office.*
cautionBut despite what a quick Google search will tell you, there’s not a lot of concrete data on whether remote work is really a win-win situation for employees and companies. There’s an endless supply of blog posts telling you that “remote workers are more productive,” but if you dig in, nearly all of them are either:
Reciting results from surveys of remote employees, who are providing anecdotal, self-reported estimates of whether they are more productive when working outside an office.
Referring to one of two academic, objective studies of remote worker productivity.*
On the first point, let’s be clear: there’s nothing inherently wrong with self-reported measures in surveys. The overwhelming directional nature of those results clearly suggests that individual remote workers feel, and likely are, individually more productive. But when it comes to a company’s perspective, there’s a difference between individual productivity and team or organizational productivity. And the latter matters.
Those two academic studies did find that companies were more productive when they started letting people work remotely: A 2013 study on a 16,000-person Chinese travel agency found a 22% increase in productivity when employees could choose to work from home.* But a closer look at the results uncovers a key contributor of that apparent productivity increase: on average, the at-home travel bookers worked more hours overall compared to their in-office colleagues.
…the performance of the home workers went up dramatically, increasing by 13% over the nine months of the experiment. This improvement came mainly from a 9% increase in the number of minutes they worked during their shifts (i.e. the time they were logged in to take calls). This was due to a reduction in breaks and sick-days taken by the home workers. The remaining 4% improvement came from home workers increasing the number of calls per minute worked.*
importantDoing more over the course of more hours isn’t necessarily better productivity: it’s just working more. And in the case of the at-home travel bookers, this happened at the expense of taking breaks or sick days (it’s not reported if people worked through sick days due to being home or not). A true increase in productivity would be doing more in the same amount of time (or even better, in less time)—the study above found this to be the case for only 4% of the reported productivity improvement.
A 2018 study of flexible work arrangements at the U.S. Patent Office found a 3.9% increase in productivity.* While these numbers are promising, they don’t necessarily tell us much about what to expect from companies primarily employing remote knowledge workers who are tackling complex problems. Booking travel and approving patents are both tasks that can largely be done independently and without a lot of collaboration with colleagues. They’re well scoped, with clear, measurable outcomes (for example, number of bookings made per hour or patents processed per day/week/month). This also made them ideal processes for study via more traditional research methods, whereas it might be harder to define “productivity” for a technology company trying to invent a completely new product.
It’s also worth noting that the patent office study found a drop-off in productivity gains for less experienced employees, likely due to not having direct access to more experienced colleagues. This has organizational implications we discuss in Hiring Junior Remote Employees.
importantThe bottom line is: we really don’t know enough about remote team productivity. The commonly cited studies are barely applicable to collaborative work amongst teams of knowledge workers, and everything else is anecdotal. Remote companies that depend on knowledge work haven’t been around long enough to draw productivity comparisons, and it is difficult to measure productivity in knowledge work on the whole. We only know that these teams face challenges in communication, collaboration, and management that could impact productivity if not taken seriously and tackled with intention.
When it comes to productivity, you need double the process for half the team size. So for ten people, a company needs twenty people’s worth of process. You need a significant amount of investment in process and documentation. I suspect there’s about an overall 30% productivity hit for remote companies.Hiten Shah, co-founder and CEO, FYI*
Many companies remain doubtful about a “remote work revolution,” but the benefits of remote teams are hard to deny. From faster, less costly hiring to more satisfied employees and a more diverse workforce, supporting remote employees is reshaping modern corporate structure in many positive ways. But as with much of remote work, there are tradeoffs, and every organization needs to assess whether the benefits outweigh the risks or potential downsides.
Reduced Operational Costs for Companies
Real estate is not cheap—in tech hubs like the Bay Area, New York, and Seattle, the costs of office space and housing are increasingly a major barrier to entry for smaller companies and startups. According to The Square Foot’s office space calculator, a 200-square foot allocation per employee costs as follows per year:
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