Back in 2008 when the economy was in major meltdown, we started to see a big shift in how companies structure employment. Instead of hiring full-time employees, companies have leaned more and more towards hiring contractors instead. This practice can really make a company’s finances look appealing. Hiring contractors makes it easier for companies to keep their payroll budgets nimble and have more liquidity. This is especially important for start-ups seeking contributions from investors. This has been a big benefit to remote workers because they are typically not afraid of short-term contracts.
Remote work and digital nomadism has been growing rapidly in the last five years or so. There are now many successful companies that have a fully distributed workforce, including InVision, Aha! and Zapier, where I used to work. It hasn’t always been easy for companies to get comfortable hiring workers who are not in the office. But if you hire good people who deliver great results, you don’t necessarily need to see them in person every day. This has been my experience, and I think the growth of remote work speaks for itself.
So, what does the future hold for remote workers and digital nomads? Here are my predictions:
Companies won’t pay to rent in Palo Alto
And the same is true for New York. Or Seattle. Or in London. It’s very expensive to set up an office in any of the world’s major cities. And the bigger your company, the more square footage you need. Not to mention that the high cost of living in these cities means job candidates have higher salary expectations. That is unless you have a remote workforce.
More and more companies are starting to realize the benefits and cost-savings of not having a physical office. Startups in Silicon Valley often have the mentality that they will hire a few people and get a small office space. Then, as they grow and have to scale their workforce they realize, “Shit, the rent is so high and hiring people in San Francisco is expensive.”
Looking at a company with 100-200 employees, they will save millions on office space, utilities, desks, water coolers, and other costs. Many remote companies provide employees with a laptop, equipment budget and coworking space subsidy. And they still save tons of money. At a growing company, millions of dollars can be put to use in much better ways. You can hire more people to work for you, or you can use that money to organize fun company events or retreats. At Zapier, they would use the money they saved on office space to fly their hundreds of employees to the U.S. or Canada for team-building retreats. Which is great for morale and team cohesion.
Location-independent is good for business
People who are hired in San Francisco live there and expect a salary commensurate with the area. Because of this issue, a lot of new companies are starting to have a headquarters in San Francisco because that’s where the investors are, but using the remote work strategy and embracing a global digital nomad workforce. Overall it is much cheaper and more flexible. Quality workers can deliver the same quality of work whether they are in the office or not.
Also, if you are committed to one location you are essentially stuck to a 50-mile radius for your hiring. And, stuck with the salary expectations of that radius. For example, the cost of hiring someone who is based in San Francisco would be enough to pay two people’s salaries in other parts of the country. (For example, Austin, Texas where the cost of living is considerably lower than SF.) I don’t think that’s exploitation, it’s just how it works.
Once companies realize you can get the same amount of work done for less money, your bottom line looks much better for investors. Plus, the nature of being remote requires you to have radically transparent communication and a culture of defaulting to action. It’s just a better way of running a company because you cannot have any kind of slack anywhere. You need to be very efficient and have a well-documented structure. Having remote employees is good for business.
More hiring and more firing
When running a remote company, you need to be open to a more aggressive way of hiring and firing. The stakes are high. You cannot have a wrong hire and, if you do you need to make a change. People tend to consider this a bad thing, but I think that companies need to invest up-front to get a more solid workforce.
Trust is definitely one of the biggest obstacles for some companies when hiring remote workers. How do you trust someone 5,000 miles away and you don’t even see them face to face? I understand that concern, and there is a lot of trial and error to solve that.
The Old Guard will retire
Probably the biggest factor blocking remote work is that people are slow to change. Many big companies have executives and C-levels who are just used to people working in the office, and they don’t want to make a change. The former CEO of Yahoo Marissa Mayer thought she was being innovative when she told the company’s large remote workforce that they had to come back to the office. Yahoo was already a dwindling company before she came in, and then it all went to shit. A lot of people just quit.
This type of thinking just won’t last forever. And sometimes, all it takes is one or two consultants coming in (via Appear.In) to show a company remote collaboration is possible. Often, when I work with my clients, I am one of only a few people who are remote out of a whole team. When I start working with them, I bring the culture of remote transparency. It makes the team closer and more informed. And it makes the business better.
Conventional offices aren’t going anywhere
Not everyone can do remote, and not everyone can do an office job. Neither person is a bad worker, it’s just that different people need different stimuli in their work environment. Some people need absolute quiet, some people need to interact with others throughout the day. It’s more of a culture fit. Businesses will just have to decide what kind of culture they want. And I think there will always be people and companies who want to be together in an office space, even if it costs more.
My final prediction is that younger generations will be even more inclined towards freedom than Millennials have been. Being able to travel often, and work from anywhere is truly a game-changer. To meet the desire of workers, I predict work opportunities will naturally shift toward being more remote and more friendly for digital nomads.
Do you work remotely? What are your predictions for the future of remote companies? Tell me what you think in the comments.