“If you’re not familiar with the idea of ‘distributed teams’ yet, you will be soon,” says Michael Hershfield bluntly. The vice president of product and commercialization at WeWork points out that distributed teams—composed of employees who work remotely, rather than at a centralized, physical headquarters—are on the rise, especially among small- and medium-sized businesses, between 11 to 999 employees.
The move to partially and fully distributed teams is driven by the growing competition to attract and retain the best talent, the increasing number of workers entering the gig economy, the need to find new cost savings and work efficiencies, and the drive to find the work-life balance afforded by telecommuting. Already almost a quarter of the U.S. workforce is telecommuting occasionally or permanently, according to Global Workplace Analytics.
Not surprisingly, innovative technology firms are leading the way in globally distributed teams. For example, Automattic, responsible for developing WordPress and other products, has a 400-person team distributed across 40 countries. “This has been amazing for the company in that we can attract and retain the best talent without them having to be in New York or San Francisco or one of the traditional tech centers,” says CEO Matt Mullenweg.
Here are six reasons that distributed teams are the future of work.
1. Attract the Best Talent at the Best Price
Currently there’s a real talent crunch, especially in sectors like technology and financial services. By opening up the job pool to talent worldwide you can get the skilled workers you need right now.
This kind of hiring has other benefits. If your company is located in an expensive urban center like San Francisco, then having an employee working in a place with a lower cost of living can translate into cost savings. Also, a globally distributed team provides the kind of diversity you need to compete successfully in a global economy.
2. Improve Employee Retention Rates
Attracting the best talent is the first part of the solution. Keeping them in the job is the other. Increasingly work-life balance is becoming important to workers. So being able to work from home and avoiding the daily commute can play a big part in keeping valuable staff happy and in place.
A research study on remote work co-authored last year by TINYpulse and Owl Labs reveals that “companies that support remote work have a 25 percent higher retention rate than companies that don’t,” and “even among employees who don’t work remotely today, 65 percent of them would like to work remotely at least once a month in the future.” So the desire to work remotely is strong and growing.
3. Boost Productivity
With distractions like water-cooler gossip and the grind of the daily commute in the traditional workplace, it’s not surprising that it’s hard to for employers to achieve maximum productivity. Without the distractions of a conventional office setting, employees can set their own schedules and only commute as fart the home office to achieve greater productivity.
The State of Work Productivity Report reveals that 65 percent of full-time employees think a remote work schedule would increase productivity. And this is supported by many team managers who have seen an overall increase in productivity from their remote employees.
4. Cut Costs with Distributed Teams
The most obvious saving with distributed teams is office space. According to PGi, the average real estate savings with full-time teleworkers is $10,000 per employee a year.
Or take the case of insurance giant Aetna: 14,500 of its 35,000 employees do not have a desk and 2,000 work from home. These flexible working arrangements has allowed the company to shed 2.7 million square feet of office space. At $29 a square foot, this means the company saves about $78 million per year (once you include utilities, housekeeping, mail service and document shredding).
5. Reach Different Demographics
The appeal of working in a distributed team cuts across demographics. As more baby boomers are hitting retirement, many are finding themselves without adequate savings and need to continue working in other job, or else they just want to continue working but with more flexible arrangements. Working from home provides an opportunity to continue to work under more convenient circumstances.
At the other end of the spectrum, millennials are also demanding more flexible work schedules, to achieve better work-life balance. And the majority believe that these arrangements will make them more productive, as measured by their output as opposed to the number of hours spent in the office.
A Spark article contends: “Because they are tethered to technology, millennials naturally gravitate toward remote employment situations. They often want to work from home and have flexible hours to balance their lifestyles . . .”
6. Better Enable Companies to Scale Up
Another important benefit of distributed teams is that it makes it easy for businesses to use freelance help, instead of full-time employees, for some roles. This ability becomes particularly important when companies try to scale up, but risk having new profits eaten up by hefty new expenses, such as unnecessary full-time wages.
If your company doesn’t need a full-time graphic designer or accountant, then hire skilled freelance help. And by letting the freelancers work remotely, you have happier workers and the money savings of overheads and full-time salaries.
Distributed teams can be a win-win solution both for business owners and workers.