Remote-First Companies
Remote-first organizations are on the rise, as they promise great benefits: Best talent available from all geographies, an attractive package for digital nomads, lower cost and a virus-proof work environment.
But remote organizations also bring their own challenges. Read in this blog post on the most common problems remote-first organizations have and how to fix them:
- Pay and Perks
- Low Team Cohesion
- Insufficient Communication
- No Systems or Poor Adoption
- No Strategy Alignment and Proactivity.
Enjoy the read!
Pay and Perks
THE PROBLEM
There are different reasons why you start your company as a remote-first organization. Maybe you yourself don’t want to be tied to one specific space. Maybe you can’t find the talent you need in the geographical area you’re in. And maybe it is to utilize global arbitrage.
No matter the reason, you will most likely work with team members from different areas of the world. And therefore, they will most likely also have different expectations of what a decent salary is.
The question is this: How do you find the balance between not overpaying based on geographic areas on the one hand but paying fairly across functional profiles.
This problem specifically becomes apparent once you start hiring the same position in different geographies. How do you determine what a graphic designer’s salary in the UK should be compared to a graphic designer in India?
If you pay both graphic designers the same, you lose the cost advantages of hiring in different geographies. However, if you pay them according to their home countries’ average salary levels, you will create envy and unjust treatment in your organization.
The underlying principle here is the equity principle, which suggests that employees who do the same tasks expect to earn the same money.
POSSIBLE SOLUTION #1: FULL USE OF THE ARBITRAGE EFFECTS
If your business is cost-sensitive, you might decide to make full use of the arbitrage effects where talent in certain areas of the world comes cheaper than in others.
This will be a temporary solution only. As your organization grows, people will talk to each other and once they find out that they earn different amounts for the same tasks, cultural and motivational problems are inevitable.
A potential solution to still benefit from the arbitrage effects but avoid the above conflicts could be #2.
POSSIBLE SOLUTION #2: DEVELOP A MODULAR SALARY MODEL
Consider developing a compensation system that defines salary components depending on different variables. To fix your problem with different geographies, obviously, geography should be one of these variables.
Here’s how it could work
- Define a base salary for different job profiles
- Define relative or absolute additions for the level of seniority or management responsibility
- Add a cost of living allowance, again either relative or absolute
This way, you can account for different pay levels in different geographies without being shady about it. You might even, as some companies have done before, transparent about these building blocks and let your team know what they are.
But even if you use a structure like this on your own, it will make defining salaries for new team members much easier and consistent.
POSSIBLE SOLUTION #3: EQUAL WORK, EQUAL PAY
There are mature remote-first organizations that gravitate towards an equal pay approach. This means that, regardless of location, a person holding a role is paid the same worldwide.
A famous example of this is Automattic, the company that develops WordPress.
This approach has a few advantages: You will open up your search for the best talent to literally all locations as the cost is not a factor anymore.
Also, the equity principle is satisfied as people holding the same function are paid the same. With this, it is a very sustainable model.
However, there’s a critical question to answer here: What is your actual salary level for a specific role. If it is too high, it will weaken your profitability. If it is too low, you might not be able to acquire great talent in pricier corners of the world.
PERKS, BENEFITS AND FORMALITIES
It will make a difference whether you hire your team as freelancers or employ them full-time. Commitment, dedication and loyalty will be higher when you hire people properly. Scaling up, the legal risks are usually smaller when hiring people.
As you probably don’t want to set up subsidiaries in all countries your team sits in, consider using an employer of record to hire the people for you. This way, you get all the benefits like peace of mind and strong cohesion without the headaches and cost involved with setting up local entities.
Low Team Cohesion
THE PROBLEM
Many remote-first organizations start as more or less loose networks of freelancers. Team members still have side-gigs or even see working for your company as a side-gig.
Collaboration with other team members only occurs as far as it supports one’s own target achievement. There’s not yet a sense of joint achievements and a shared mission.
As your organization grows, this individualistic mindset can easily become your culture.
This lack of team cohesion is the underlying problem of some of the following problems further down. But generally speaking, a low team cohesion decreases employee engagement and overall company performance.
Your underlying question here is: How do you form a team out of your remote employees?
THE SOLUTION
The solution to creating more team cohesion is not one single measure but a whole bundle of measures. For a detailed list of what you can do, check out our blog post about remote team-building.
The most important things are:
#1 Be Transparent
If you want your company to be more than a group of workers, you have to lead by example. This means you need to share more information than you might think.
Your team needs to have a clear understanding of where the company is at, the challenges and strategic goals, and what’s happening in different parts of the company.
If you want your people to form a team, they first need to have a clear understanding of who the other team members are and what they’re doing.
#2 Be Intentional About Connections
A big problem for remote-first organizations is that exchange rarely happens randomly and without a professional subject matter that leads the conversation.
While this is necessary, it’s not sufficient to form a team. It would be best to have these random little exchanges with people you don’t work with directly (think: water-cooler talk).
Your remote organization will not produce these meetings incidentally, so you have to be intentional about them. Support people to do work shadowing and to learn how other departments operate. Organize team lunches, after hours, random chit-chat calls.
#3 Foster Private Communication
Next to the general connection with new people, it’s also important how the team members interact that already know each other. If every interaction is only about a professional subject matter, you will have difficulty forming a team out of people.
Instead, try even to support private, informal communication. Start meetings with some private chit-chat. Try to understand who your team members are outside of their work etc. Also, allow and encourage private use of your chat service like slack.
#4 Set Team Goals and Challenges
Most importantly, your team needs joint challenges to master to become a team. There’s nothing that creates stronger bonds than achieving something difficult or going through adversity together.
For this reason, set goals not for individuals but always for teams. This will enable a great level of collaboration, and the joint successes will create trust and cohesion.
Insufficient Communication
THE PROBLEM
For many of our clients, insufficient communication is the most obvious problem. The information doesn’t flow effectively, not reaching all relevant players.
Even if it does, the choice of medium is not ideal, so that a large part of the information is not transferred in full or can’t be deciphered completely. Many remote organizations communicate about their day-to-day topics solely via chat.
This insufficient communication leads to defective outcomes, slow execution and redundant work. In short, you miss out on a lot of potentials.
THE SOLUTION
Again, there’s a variety of things you can do to improve communication flow through your organization.
#1 Meeting Structure
The low-hanging fruit for many remote-first organizations is implementing a proper meeting structure. The goal of the meeting structure is to provide channels for all central types of communication.
Consider daily huddles that allow to align the team for the day and remove roadblocks. Weekly team meetings are great for continuous improvement or breaking down strategic goals into actionable items.
1-on-1 meetings are often the most under-estimated meeting type. The goal is to give each of your direct reports a room to discuss the topics with you that are important to them. The experience of most of our clients is that this is highly valuable as it brings up topics that management wouldn’t know about otherwise.
Use strategy workshops to develop your mid-and long-term strategy. Use townhalls or all-hands meetings to communicate this strategy.
#2 An Effective Hierarchy
Next to meetings, your hierarchical structures can be the highway on which your messages travel. An effectively set up hierarchy with just the right level of delegation and span of control, as well as the right people, will ensure that your messages reach everybody.
#3 Over-Communicate
Business often moves fast, so things need to be done quickly. There is a risk to develop a clean-my-desk mentality where you send things out to the team just to get them off your plate.
Then, when things don’t work, you refer to the slack message or email that you’ve sent.
In reality, messages need to be repeated repeatedly until people a) have heard them and b) have internalized them. So just when you think you’ve said it often enough – repeat it.
#4 Cross-functional meetings
As you run your operations, you will find specific communication channels that you need to establish beyond your organizational structure.
Think about your customer support team that has valuable insights for your program management. Think about your purchasing team that should have a close connection to finance and logistics.
For all these communication needs that are not satisfied by your org structure, establish separate regular meetings to connect the relevant players.
#5 Informal communication
Similar to the point above about team cohesion, ensure that your organization has the means and support to establish healthy informal communication: private slack messages or other digital workplace tools that allow for instant, friction-free messaging.
The speed and accuracy of well-established informal communication can exceed the communication tools you have.
No Systems or Poor Adoption
THE PROBLEM
All companies that grow to a certain size face the challenge of systematizing the way they operate. What’s special for remote-first organizations is that the need for this es even bigger than in companies with a physical location.
Because communication is more difficult and exposure to “right” behaviour is limited, a well-defined process or system is often the only source to learn how to execute a process.
Additionally, the understanding of why systematizing the business is necessary is harder to establish in remote organizations. Difficult communication and an insufficient understanding of the company’s strategy are the main reasons from our perspective.
But even if there is comprehensive systematization in place, there’s no guarantee that the remote workers actually adopt the tools, processes, and systems provided.
THE SOLUTION
#1 Communicate the Necessities
If you want your team to support and engage in creating systems (a combined definition of people, tools and processes), they first need to understand why this is important. In some cases, writing standard operating procedures might cause negative feelings in your team members (fear of being replaced or chained to narrow task descriptions).
Explain why your company needs SOPs and Systems. The main reasons are consistent quality as you grow, having a basis for improvement efforts and making onboarding of new team members easier.
#2 Involve the team
Ensure you involve your team when you set up systems and standards; otherwise, there’s a high risk of the “not-invented-here” syndrome occurring. Your team might reject following certain guidelines because they were not the ones that created them.
When you bring on outside help like technical writers or an operations consultant, ensure that they involve your team closely in the SOP creation.
If you want to read more about creating standard operating procedures, check out our blog post about the topic.
#3 Assign responsibilities
Assign responsibility for systems and standards. There can be a person in each team that drives the creation and adoption of standards or systems.
Some of our clients have also established Remote Operations Managers, whose task is to ensure that tools and processes are well documented and adopted.
#4 Establish a Continuous Improvement Process and Mindset
If you want to make sure that systems and standards are being used, you have to keep them on top of the desk and prevent them from collecting dust.
A great way to do this is to establish a continuous improvement process: Your team identifies process flaws or defects, you prioritize the tasks and assign them to your team to fix them.
The beauty of this process (that is worth implementing on its own) is that your team can document the changes and fixes they come up with directly in your systems or standards documentation.
Additionally, if you use software to document your standards and systems and this software has functionalities you can use for transactional tasks, make sure you utilize this. If you manage that your team has to use the software that you use to document for their day-to-day, then also the likelihood increases that they use that software to look things up.
#5 Manage Change and Create Habits
When implementing systems, consider this a change project that needs to be managed proactively. The Heath Brothers have developed a nice framework for this in their great book Switch.
- Ensure you give cognitive direction so your team knows exactly what you want from them (to use or follow a certain system).
- Add some emotion to the matter, as knowing alone doesn’t change things. Once you can create emotions about the change, things get moving.
- Make the desired behaviour easy and rewarding, and the wrong behaviour very hard. Train your team thoroughly on new standards, delete or alter old file structures, archive old process descriptions. The best way would be to build a new system that is easy and intuitive to follow. Example: Consider using workflow software instead of just writing down how a process works.
The key is to be aware that change is a process and will take time and energy. Your task doesn’t end with creating a system but with your team adopting it.
No Strategy Alignment and Proactivity
THE PROBLEM
Closely connected to team coherence and communication problems, a lack of strategic alignment is widespread in remote-first organizations.
Where communication is insufficient, the remote team often doesn’t even know what the current strategy is. And even if they know, a lack of team cohesion makes it more unlikely that you really get people behind your strategic goals.
So if your team doesn’t know or doesn’t care about the strategic direction you are moving in, they will just complete the tasks handed to them.
In an environment like this, it is unlikely that your team members are proactive about their field of work beyond normal operations.
THE SOLUTION
#1 All the solutions to fix insufficient communication and team cohesion
To achieve strategy alignment, your first task is to communicate your strategy clearly and to everybody. Only if they know where the company is going will they be able to support that journey.
#2 Use Strategy Execution Tools to Break Down Strategy for your Teams
Your team most likely can’t execute your strategy on a CEO/founder level. Therefore, it’s important to translate strategic goals into actionable work items for your teams. Strategy Execution tools like Objectives and Key Results or Roadmaps will guide that process and deliver clarity on how everybody in your company can contribute to your strategic goals.
#3 Incentivize your team
If #1 is not enough, use performance management tools like individual or team-based rewards to give your team an incentive to work towards a common goal. Check out our blog post about reward systems here.
#4 Establish a Culture of Trust and Experimentation
Lastly, if you want your team to execute your strategy proactively, they must know that it is okay to do so. This includes how your organization deals with mistakes and how much autonomy people have.
Only if they feel that they won’t be sanctioned for trying out new things or taking reasonable risks will you see this behaviour.
If There’s Only One Takeaway, Let It Be This
Out of all the above, improving communication flow is the most fundamental and foundational task you can work on. If you get that right for your remote-first organization, many of the other problems described above will become easier to fix or even vanish on their own.
I wish you all the best for your remote-first business!
Best regards
Benjamin