The McBride debacle was a galvanizing moment. To lose a 130-store deal — the largest auto dealer in the country — because SparkLight Digital couldn’t launch stores fast enough was damning and unacceptable. The moment McBride’s cancellation was final, you called an emergency half-day “post-mortem” meeting with the entire executive group.
With everyone assembled, you opened with a simple question.
“How the hell did this happen?”
Gesticulation, sound, and fury followed. Bill was beside himself. He felt placed in a no-win situation despite his earlier warnings about overpromising the launch pace given the reality of only four launch managers. Victor was livid to lose such a huge deal just because Bill couldn’t execute the store launches. Both Bill and Victor were angry at Sally because it was her labyrinthine hiring process that fell so far short of hiring objectives. Sally pleaded innocent blaming the slow pace of launch group hiring on San Francisco’s blistering hot recruiting market.
When the finger pointing and complaints finally died down, everyone agreed on just one thing: SparkLight Digital was woefully unprepared for success. The SparkAction CRM market opportunity might be tremendous, but it was meaningless if supply could not keep pace with demand. And everyone understood that failing to deliver on promises to customers as significant as McBride put the entire company brand at grave risk.
Sally spoke for everyone when she stood up and said, “Hey guys. If we can’t fix this, DealerGasket will steal market leadership from us. How will that feel? Let’s fix this problem once and for all.”
She continued. The primary culprit was hiring and training, most notably in the customer success group but, really, everywhere. It was a growing problem ever since the move to downtown San Francisco. You had more space, but couldn’t fill desks fast enough. The engineering team was three positions short. Customer support had four open requisitions. The inside sales group was down four as well. Despite a significant recruiting effort, the pace of hires wasn’t keeping up — in no small part because of San Francisco’s hot startup scene.
Sally volunteered to create and lead a project team to attack the problem. “The only way we can keep our hiring standards high while increasing the pace of hiring is to find places where talent demand and supply are more in balance,” she said. “San Francisco is no longer that place.”
She asked for five weeks and four team members to bring recommendations back to the executive group. Everyone agreed and offered to help.
In her first meeting with the new project team, Sally was flanked around the table by one person each from sales, engineering, customer success, and customer support. By the end, it was unanimous. SparkLight Digital required more remote offices.
The plan took shape. It consisted of expanding the engineering office in Bengaluru, India and opening an office in Kansas City for customer success, tier two customer support, and inside sales. For engineering, Bengaluru was a market with high engineer density and relatively low labor costs. From now on, only the top architects would work in San Francisco. All other engineers would be Bengaluru-based. Kansas City was a market filled with relatively low-cost, high-quality talent, especially in the areas of customer success, customer support, and inside sales. The three groups planned there could scale steadily as the company grew. While a small number of customer success folks and inside salespeople would remain at headquarters, the planned called for expansion efforts exclusively in Kansas City.
The project team’s presentation to the executive group was comprehensive. Sally and her team covered every detail. The lease was ready to sign on a new space in Kansas City. Bengaluru could handle expansion. Recruiting in Kansas City for customer success and customer support people could begin immediately. Joe agreed to work from Bengaluru for three months, to strengthen the links between Bengaluru and headquarters. Strong peer relationships are essential, and Joe felt that Rajiv, the Bengaluru engineering manager, and his expanding staff needed to be on a first-name basis with their VP Engineering. Bill agreed to spend three months working from Kansas City for the same reason.
Sally would lead the project through its six-month implementation phase. She planned to shuttle frequently between Kansas City, Bengaluru, and San Francisco during this time. She wanted to transplant the SparkLight Digital culture successfully. She also took responsibility to ensure that all workflow group members — no matter where located — developed trust-based relationships with their cross-functional and cross-region counterparts.
At the end of Sally’s presentation, she sat down. You stood up and asked each exec group member to comment on the plan. While support was universal, every executive emphasized to Sally how critical her role was to “stitch everything together.” Everyone endorsed her plan to travel back and forth between headquarters and the two remote offices to support culture and workflow connections.
Driving home that night, Sally felt a surge of adrenaline. She realized with excitement that this was a game-changing career moment. Over the next six months, she would grow headcount by a third. She would need to create two offices from scratch, and successfully transplant the SparkLight Digital culture into each of them. She would need to onboard, train, and embed each new employee in a cross-functional, cross-region workflow group. As head of HR, she felt a unique responsibility to pull it all off with aplomb. The functional VPs shared responsibility, but this was her plan — and the company’s culture was hers to protect and nurture.
Her heart swelled with conviction. She can do this. She will do this.
At that moment, a drunk driver ran a red light. Sally’s driver’s side door collapsed like aluminum, hit broadside at fifty miles an hour.
. . .
At the beginning of a company, founding teams and initial employees usually work side-by-side. This makes sense. Everything is in flux: product/market fit is not yet confirmed, workflows are undefined and unstable, and the business model isn’t performing profitably. Employees’ roles evolve rapidly as their gifts and gaps come into focus. All of these factors favor being together in one office to ensure continuous collaboration.
However, as a company scales, there are more reasons to disperse workers beyond the confines of headquarters. For example, the regional sales executive for the Northwest can’t get to customers easily if situated in San Francisco. The engineering group will be 40% smaller, and harder to recruit, if you must hire in San Francisco instead of Ukraine or India. High-quality talent is inaccessible to you if you don’t support work-from-home arrangements. The culture is attractive if a weekly work-from-home day for headquarters staff is an option. And headquarters office space is larger — and costlier — if you require everyone in your company to work there.
The following priorities drive worker dispersal:
- Market connectedness (i.e., regional sales offices)
- Access to cost-advantaged talent (i.e., offshore engineering, customer success teams in lower-cost-of-living cities)
- Access to high-quality talent (i.e., offshore engineering, employees who value work-from-home flexibility)
- 24-hour development (i.e., India vs. San Francisco)
- Efficient use of office space (a benefit of remote office and work-from-home policies)
According to a February 2017 Gallup survey, 43% of US workers spend some time working remotely, and the number of remote workers and percentage of remote time are increasing.¹
As to office space utilization, the opportunity to increase efficiency is enormous. The old paradigm is to sign a lease for 10,000 square feet of space for five years, even though you only need 2,000 square feet now. The new paradigm is to commit more conservatively at headquarters and leverage remote capabilities to better utilize the space you have. Remote placement of workers, whether in smaller office spaces or via work-from-home arrangements, promotes sustainability while saving money.
It’s not enough to merely disperse workers. You need to solve for four key imperatives:
- Distraction-free individual workspaces
- Healthy culture
Let’s go through each.
You can’t build a remote office (e.g., the customer success team in Kansas City, the field sales office in New York, or the engineering group in Bangalore) and expect instant high-quality collaboration with headquarters. Collaboration requires trust. Trust emerges from a shared understanding of goals, motives, personalities, and interpersonal styles. And despite the many advances in collaboration tools and technology, this deep level of trust is not possible unless co-workers first get to know each other in person.
Workflow group members make a steady stream of decisions that impact output quality and efficiency. What happens when you don’t invest in trust-building between headquarters and remote? If workflow decisions are not fully understood or if there is unresolved misalignment, the workflows break down. For example, the NY account executive won’t be clear enough about launch expectations with the Minneapolis-based launch group, or about billing requirements with the San Francisco-based billing group — resulting in an unhappy customer. Product and engineering groups will prioritize resources and make technical architecture decisions that are misunderstood or miscommunicated, causing development breakdowns, technical debt, and wasted time.
So when you decide to open a remote office, you must commit substantial time for remote and headquarters-based co-workers to be together so they can get to know each other. The amount of together time depends on the required degree of collaboration.
For field sales executives, a quarterly three-day meeting at headquarters may be sufficient. Sales executives primarily focus outward to the market with limited workflow connectivity. For customer success employees, workflows are mostly self-contained except for customer support escalations, sales expansion, or contract escalations. For customer success, a program that flies each employee to headquarters for a week once a year may suffice to ensure adequate connectivity.
Product and engineering groups require more face time because significant collaboration and full alignment are crucial. Let’s assume the engineering group is in Bengaluru, India, and the product group is in San Francisco. Product development workflows are highly integrated. These two groups must be entirely “joined at the hip” to avoid compromising the quality and pace of software development.
Here’s the recipe. Every year, bring the two groups physically together for at least four weeks. This allows relationships to form. Then twice a year, bring teams together for a week. If the five-person Bengaluru team spends January in San Francisco, and then in June the San Francisco team spends a week in Bengaluru, and then in October the Bengaluru team flies back to San Francisco for a week, you’re much more like to have a high-functioning, collaborative team.
A “three assemblies per year” discipline provides critical opportunities for co-workers to get to know each other, align on direction and execution methods, dine together, and build trust. The yield is increased collaboration and more efficient, high-quality development.
When you choose to disperse workers, the communications burden increases. You can’t depend on the water cooler anymore. As discussed in Chapter 15: On Communications Architecture, you need to ensure that communication flows friction-free from top to bottom, bottom to top, inside-out, outside-in, and across functions. With remote employees, this takes extra effort.
It starts with the right technology. For chat, tools such as Slack and Yammer help. Video conferencing continues to improve. Cisco Spark, Zoom, and HighFive are three companies creating connected rooms that bring together remote employees in virtual meetings. The best of these solutions allow document collaboration, virtual whiteboards and chat, along with crystal clear, low-latency voice communications. Transmission quality significantly affects the user experience of virtual connections, so be uncompromising in your standards.
But technology is not enough. Robust communication between headquarters and remote locations depends on strong intentionality. “Out of sight, out of mind” is a natural pattern to slip into in the rush of daily events. To counteract this, leaders need to think inclusively, and demonstrate a consistent emphasis on remote involvement with their attitudes and actions.
A company blog, daily company-wide email, or newsletter can help keep everyone connected. Leaders should regularly visit remote offices, and when they do, spend time not just with management, but also with the individual contributors who work there. And when remote or work-at-home workers come to headquarters, leaders should make a concerted effort to sit down with them, have lunch together, interact, and listen. When choosing members for project teams, leaders must include both headquarters and remote employees. In workflow groups that involve workers in multiple locations, leaders should confirm with members that communication quality is high. In all hands meetings, assign remote office employees agenda topics to present. In employee surveys, watch the trends in perceived communications quality as reported by remote employees. These actions will help you continuously improve the quality of communications between remote employees and headquarters employees.
Distraction-free individual workspaces
As important as it is to collaborate, it’s also important to get back down to work. Interruptions are a constant challenge in an open office environment. For engineers, daily scrums are the primary collaboration vehicle — and are usually just 15 minutes in length. The rest of the day is for coding. Nothing kills engineer productivity more than office noise and frequent interruptions.
The same is true in other roles. Especially in open office workspaces, socializing time can quickly crowd out real work. Collaboration requires pockets of time where co-workers are physically together, plus technology-enabled remote collaboration. But distraction-free individual work needs solitude. In the headquarters office environment, solitude can be enhanced through thoughtful floor design (with the right office furniture and wall separators), and by consistently reinforced cultural norms. It can also be advanced via a work-from-home policy. There is increasing evidence that the latter approach is highly effective.
CoSo Cloud’s 2015 Remote Worker Survey indicates that 77% of remote workers report greater productivity while working off-site.² One-third of these workers report accomplishing more in less time, and 24% achieve more in the same amount of time. Nearly one in four are willing to work more extended hours than they would on site, and 52% are less likely to take time off when working remotely — even when sick.
Further, one-third of remote workers report financial savings due to lower travel and meal costs — averaging over $5000 a year. Half report a higher likelihood of staying with the company. Personal satisfaction and quality of life improve for many: 45% of remote workers get more sleep, 35% are getting more physical exercise, 42% eat healthier, and 53% report less stress. And more than half spend more time with their significant others, leading to increased job satisfaction.
The work from home option is not a binary choice. Yes, it may make sense for some workers to work from home full-time. But it’s also possible for the work-from-home option to be partial. An increasing number of tech companies are allocating one or two days a week as work-from-home days for all headquarters workers.
In the best companies, culture is portable.
FiveStars is a high-flying tech company that offers a distinctive loyalty program for local businesses. At FiveStars, culture is king.³ Leaders, managers, and individual contributors pay much attention to cultivating the four company values of Shared Humility, Authentic Relationships, Warrior Spirit, and Joy Every Day. So when the company decided to build a remote office in Denver, Colorado, CEO Victor Ho, and co-founder Matt Doka were concerned about how to transplant the vibrant FiveStars culture. In the end, Doka signed up to move to Denver for six months, opening the office and hiring the first cohort of employees himself.
For remote employees — whether they work from home or in a remote office — the culture of the company is especially important. Remote employees sign-on when top management demonstrates an ongoing desire to cultivate a consistent company culture through words and deeds.
Of course, remote offices should and do have subcultures. The ten-person Bengaluru office will develop cultural customs and norms that may not be shared by the field sales office in New York or headquarters in San Francisco. Each office will have unique cultural attributes. But the best run distributed companies nurture core company values everywhere.
. . .
Sally survived the crash. But her injuries were severe. She was in a coma for a week, and when she recovered consciousness it was immediately clear the recovery road would be long and hard. You visited her in the hospital. As she looked at you through a fog of painkillers and tears, you encouraged her to take time to heal and reassured her that her job would be there for her.
Little did you realize then that she would not return to work for nine months. At the office, you were forced to come up with a new plan to move forward with the remote offices and to manage the HR function in Sally’s absence.
A recently retired HR executive agreed to work three days a week to cover for Sally, keeping the wheels on the bus in HR. Joe continued with his original plan, spending three months in Bengaluru. He bonded with the new engineering director and engineering team. And for his wife and him, the time spent in Bengaluru was a once-in-a-lifetime experience. As with Joe, Bill spent three months in Kansas City. Under Joe and Bill’s leadership, hiring moved quickly in both remote offices. Soon there were nine new engineers in Bengaluru. And in Kansas City, thirteen customer success managers, four tier-two customer support managers, and twenty new inside sales reps were soon reporting to three newly-hired managers.
As life went on at SparkLight Digital, Sally’s recovery proved painfully slow. For the first seven months, she endured back surgery after back surgery. She dealt with chronic pain. When she finally returned to work nine months after the accident, she was not the same. Significant physical symptoms remained — she walked with a limp and experienced unrelenting pain. You encouraged her to take more time off, but she would have none of it — she wanted to be back in the flow.
In fact, she implored you to let her resume leadership of the remote office project. She wanted to travel to the remote offices to confirm the existence of a strong culture and deep connectedness among all offices. But you had serious doubts.
You weren’t only concerned with her physical health. Since her return, something was different with Sally. At times in meetings, she seemed elated, even euphoric. But then in a heartbeat, she would switch to moodiness — or even drowsiness. In one exec group meeting, in the midst of a significant debate, she nodded off. Everyone went silent — no one knew how to react. Finally, Bill shook her awake.
At first, you figured that with time she’d snap out of it. But as months went by and these symptoms intensified, you decided you had no choice but to talk with her.
“Sally, I’m concerned about your health. It’s over a year since your accident. But I see behaviors in you that I’ve never seen before, and it’s having an impact on those around you. You’ve been moody and anxious. You’re all wired up at one moment, then in the next, you nod off to sleep. There are times when you seem confused. Then suddenly you’ll get angry for no apparent reason. I’ve even wondered — ”
Sally jumped out of her chair, face red and shaking all over. “What more do you want from me? I’m trying my best, can’t you see that? Don’t push me. Don’t push me!”
With that, she grabbed a book off the table beside her and hurled it past your head into the cabinet behind. A vase shattered. You sat in stunned silence.
A look of horror crossed her face. Her hand went to her mouth; tears welled in her eyes. She turned suddenly and fled out the door.
A week later, Sally sent you a short text message. She had entered herself into a rehab facility. She was addicted to painkillers — opiates. She needed help.
It’s now eight months later. Last week you welcomed Sally back to SparkLight Digital. She currently occupies the recently created position of director of employee success, reporting to your new VP Human Resources, Tina Harbaugh. Sally’s new role exists to nurture the health of the company’s culture and to support employee development — both at headquarters and in the remote offices. She’s also in charge of the work-from-home programs.
Sally took to her new role with excitement and energy. But it’s her wisdom and grace that touch you. She’s so much more at peace: more present and available to others. In no time at all, her calendar fills with phone and in-person meetings. Of course, many from the San Francisco office seek her out. But even employees in Bengaluru and Kansas City want time with Sally. Her unique mix of business sense, cultural vigilance, pragmatism, and compassion makes her a valued mentor to many.
This makes you happy.
. . .
Next up: Chapter 19, “On Horizontal vs. Vertical”
You may also enjoy previous chapters of People Design here.
And if these insights matter to you, please visit CEOQuest.com to see how we help tech founders and CEOs of startups and growth-stage companies achieve $10m+ exit valuation.
. . .
- Niraj Chokshi, “Out of the Office: More People Are Working Remotely, Survey Finds,” nytimes.com, February 15, 2017, https://www.nytimes.com/2017/02/15/us/remote-workers-work-from-home.html.
- CoSo, “CoSo Cloud Survey Shows Working Remotely Benefits Employers and Employees,” cosocloud.com (press release), February 17, 2015, https://www.cosocloud.com/press-release/connectsolutions-survey-shows-working-remotely-benefits-employers-and-employees.
- Victor Ho, interview by Tom Mohr, “Key Steps to Create A Transcendent Culture by CEO of FiveStars,” CEO Quest, youtube.com, February 4, 2015,https://www.youtube.com/watch?v=tOehlILjTQ0.