The Smarter Startup

Is “Remote-First” the Future of Work for Startups?


Surveys show new levels of productivity and employee happiness attributed to working from home and remote-first work policies.

Many companies find themselves in return-to-work limbo, trying to determine what expectations to set for employees who have been working from home for more than a year. Making these decisions is time-sensitive, especially for those who decided to pause their 2020 hiring and now find themselves hiring for their 2020 plans in addition to their 2021 schedules. To exasperate matters, even more, companies are experiencing unexpected turnover, predicted to be close to 30% by the end of 2021 according to Tech Republic. This change is attributed to Pandemic burnout, a collective reassessment about priorities and what matters most, a labor shortage, and more companies calling workers back into the office. Given employees have experienced the flexibility of working from home, and surveys showing new levels of productivity attributed to working from home, is it worth it for a company to enforce strict reporting to office policies? Is it even realistic given the paradigm shift in working?

Given employees have experienced the flexibility of working from home, and surveys showing new levels of productivity attributed to working from home, is it worth it for a company to enforce strict reporting to office policies? Is it even realistic given the paradigm shift in working?

Few companies claim to have a solution for this unexpected workforce change, yet many companies have started to build plans designed to retain their current talent, support their mid-layer management which is bearing the brunt of so many COVID/ post-COVID hardships, and attract new people to their organization. The cornerstones of these plans center on providing employees work from home flexibility, supporting small connections between work colleagues, and supporting a remote-first work culture no matter the number of remote workers at their company.

Defining Remote-First

Remote-First is a business operations strategy, often described as “A team or company utilizing processes and tools designed to communicate and operate seamlessly across time zones.” When a company identifies as a “Remote-First” work culture, it acknowledges that it has deliberately adapted its work culture to be inclusive to all workers. A company does not need remote workers to qualify as a Remote-First company as long as:

  • Employees are empowered to work wherever they are most productive.
  • Asynchronous communication is pervasive.
  • Process and tools support all time zones.
  • Communication is posted on public channels.
  • Decision-making is transparent and inclusive.
  • Career advancement is not biased, especially towards the office worker.

Unyielding Demands for Talent

Industries like technology continue to advance at rapid rates, and the demand for talent, especially with niche expertise, is outpacing the supply of talent. Korn Ferry recently published a study indicating that by 2030, the talent shortage could result in $8.5 trillion in unrealized revenue. The disparity of supply and demand is forcing companies to rethink how they can attract the most qualified individuals to keep up with their growth plans while retaining their team of top performers. Offering people the flexibility to work from home is one of the best ways to solve several challenges employers face.

Offering people the flexibility to work from home is one of the best ways to solve several challenges employers face.

According to a survey published in November 2018 by Indeed, 47% of employees polled stated that a remote-work policy is important to them when looking for a new job. 40% said they would consider a pay cut for a job that allows them to work from anywhere. In 2016, TinyPulse conducted a survey of over 500 remote employees and found that they were happier, felt more valued, and were overwhelmingly more productive than their on-premise peers, resulting in lower turnover. In an April 2021 McKinsey survey of 100 executives across industries and geographies, it reported that nine out of ten organizations will be combining remote and on-site working because productivity and customer satisfaction have increased during the Pandemic, fear about work-from-home among managers and executives has declined, cost-saving opportunities in work-from-home have increased, and employees want the flexibility.

Better Tools to Work Remotely

The percentage of Americans in the gig economy was 34% in 2016 and was expected to grow to 43% by 2020 before COVID. Better performing, less expensive, and often free enterprise-grade communication tools enabled the gig workforce to surge pre-Pandemic. Since COVID, most software solutions have added new features to support distributed teams. Several of these new features leverage AI to capture user-engagement and sentiment, which can be particularly helpful to mid-management as they test out new work processes and tools to manage their teams and projects.

Office Rental Rates Still High

Cost of operations is another compelling reason why many companies of all sizes are embracing a remote-first distributed workforce model. Some of the largest technology companies are based in big cities like San Francisco, New York City, Seattle, London, Tokyo, and Munich that also have some of the highest corporate real estate costs in the world. In the top 25 tech cities, as defined by Cushman & Wakefield’s Tech Cities 2.0 report, the cost-per-square-foot for office space had risen 59% between 2000 and 2018, and from an average of $199 per square foot to $316. This exorbitant rise in cost challenged companies like Dell and Aetna to look for alternative solutions. According to Global Talent Trends Report 2019, Pre-Pandemic, Dell’s flexible program has saved an average of $12 million annually since 2014 due to reduced office space requirements. 47% of Aetna’s employees use flexible workspaces, saving Aetna 2.7 million square feet of office space and about $78 million annually.

All markets experienced vacancy rate increases for office space in 2020 but with markedly different changes. The Denver and New York office market vacancy rates, for example, were more extensive than for most other cities. Denver’s vacancies increased by 30.89 percent from the first quarter of 2020 to the fourth quarter (from 12.3 percent to 16.1 percent), while New York saw the largest jump (36.78 percent, from 8.7 percent to 11.9 percent). Despite vacancies, data indicates that the asking rent rate did not change significantly during the Pandemic. With such a high level of uncertainty, it’s possible that real estate firms and investors were not convinced they needed to adjust asking prices. Another possibility is that tenants received longer periods of free rent in exchange for not adjusting rent prices downward. According to Commercial Edge’s National Industrial Report, the verdict is still out on office space rental rates but in the meantime, U.S. industrial warehouse space continues to increase 4.4% year-over-year.

Statistics Validate Remote-First Strategy

As distributed teams continue to increase in popularity by companies of all sizes, statistics continue to report higher levels of communication, productivity, and employee loyalty at companies because remote-first practices emphasize communication, goal setting, measuring performance, and celebrating the employee.

…remote-first practices emphasize communication, goal setting, measuring performance, and celebrating the employee.

Studies and statistics demonstrating the benefits of distributed teams and remote workers started circulating in 2017 when a wave of new startups including Automattic, InVision, and Zapier began publicizing incentives to delocate and sharing the benefits their all remote worker force businesses and employees were experiencing. Broadening their talent pools helped combat shortages of talent and eliminating office rent helped reduce operating overhead costs. These Remote-First pioneers also broke ground, open sourcing their holistic approach to creating a remote-work employee-friendly culture that their employees continue to rave about.

Automattic and InVision have since hit the 1,000+ employee mark worldwide and are demonstrating the model’s scalability and sustainability. The use of remote-first, partially-distributed teams has been growing equally in big corporations like Dell, Aetna, Salesforce, Cisco, Adobe, and Rackspace, even before COVID. Stanford’s two-year study “Why Working from Home Is a ‘Future-Looking Technology’” published in 2017 showed astonishing productivity boosts when employees were given the flexibility to work from home before COVID. An Ipsos survey for the World Economic Forum published July 2021 found that 12,500 employed people in 29 countries wanted flexible working to become the norm and 64% said they were more productive with a flexible work schedule.

If your team is working on its return to work policies or experiencing communication or operating challenges as a result of remote working, you are not alone. Burkland’s Strategic People Ops team helps companies build sustainable, agile work infrastructure designed to improve communication at all levels within the organization, empower people in the roles, clarify goals and desired outcomes, and build a culture to support a Work 2.0 environment. Contact us today if you would like to explore how our team may help.