A New Equilibrium For Remote Work

The promise of telecommuting is (at least) as old as the Internet itself. Anyone who has struggled with a grinding commute, scheduling personal appointments during the work week, or managing care for relatives when arrangements fall through (so, pretty much everyone) can appreciate the potential benefits. Yet, the revolution has not arrived. Even in highly flexible work environments such as modern Silicon Valley tech companies, remote work remains largely a perk to be used sparingly or a marginal accommodation for some personnel. A few firms have embraced remote teams as a deliberate staffing strategy, but they remain very much the exception that proves the rule.

What explains the failure of the remote revolution? Is there just something “different”, intangible about face to face interaction? No.

It’s The Culture, Stupid.

Like many phenomena, it is not that the technology doesn’t exist but that the culture of work **hasn’t caught up. In fact, in the modern tech workplace, between messaging (email, slack) and project collaboration tools (GHE, Asana, Quip), most work is already done remotely in the sense that individuals contribute their work independently to remotely hosted web services while collaborating asynchronously. Synchronous communication is readily available via videoconferencing (Zoom, WebEx). However, the vast majority of work is still done physically proximate to one another. Why? I propose that this is a rationale response of employees to the fact that the processes for managing, evaluating and advancing the careers of remote employees have not developed in parallel to the technological tools that enable such work. The result is that, by and large, remote workers, even when excellent individual contributors, are systematically excluded from promotion and career acceleration.

Remote work, in other words, has faced a chicken and egg problem. Properly managing remote staff requires different protocols than in-person teams, but when remote staff remain (at best) a material minority of the work force, few firms are willing or able to invest in developing, implementing and maintaining dual HR processes. The careers of remote workers typically stall because they don’t fit within the processes that implicitly assume regular face-to-face interaction.

Solve for the Equilibrium

The COVID-19 crisis has prompted many tech firms to take urgent and radical measures to avoid contagion within their workforce. For the first time, many firms are operating on a mandatory work remote basis and are expected to remain in this posture for at least several weeks. Infectious disease specialists are warning that this first wave of contagion could be followed by another round next fall, and periodic waves thereafter until an effective vaccine is developed, so it is possible that mandatory WFH regimes will become much more frequent. Firms will therefore either adapt to this new reality, or fail.

This new equilibrium, in which a majority remote workforce is a necessity, rather than a deliberate decision, will push firms that survive to invest in the parallel structure for remote staff, which will in turn accelerate the demand from employees to work remotely (given all of the other lifestyle benefits). As a result, for both resiliency and retainment purposes, we are likely at the beginning of a long term trend in which increasingly significant minorities, and then majorities, of staff for many tech companies are fully or mostly remote.

I do not have predictions about which firms specifically will or will not manage this transition effectively, but I do predict that the tech workforce will be structured very differently by the end of this decade as a result of those transition efforts, with many other sectors following closely behind.

Second- and Third-Order Effects

What economic and cultural impacts should we effect from this reorganization of the tech workforce?

• A slowing, and potential reversal, of the decades-long trend of concentration of the most productive firms in coastal cities.

The affordability crisis in cities is well known. Although by no means exclusively linked to the concentration of highly productive technology firms, cities have simultaneously become ever more important for individual economic opportunity and increasingly inaccessible for most people. Tech workers have, to this point, rationally tolerated the rising cost of living as a tax on their earnings to ensure access to career advancement at the most sought after firms. Most people, however, don’t have that choice. As the returns to physical proximity fall, continuing to pay that tax becomes irrational, so we should expect an exodus of tech workers from those cities, and it could be swift.

But, fortunately, there are potentially significant direct benefits to such an exodus:

• Lower income citizens are more likely to be able to live close to urban centres, where economic opportunity is likely to remain superior to their current locations, easing the systematic exclusion from opportunity that has becoming an increasing drag on societal mobility.
• Non-coastal communities experiencing an influx of highly educated, productive and affluent technology workers should expect higher local growth rates and beneficial effects from the dispersion of social and financial capital. The rise of Denver and Austin are good, and well known, examples. What cities are next?

While this development will hurt current urban landlords and property owners, few will shed tears for groups who have reaped the benefits of a three+ decade bull market in urban rents and property prices. Downward pressure on commercial rents in hot tech markets is also likely.

• A reorientation of the types of problems that tech employees and founders identify and work on.

As the lifestyles and locales of tech employees change, what under-appreciated problems will they identify and what new services will developed in response? This dispersion of tech attention and effort is an old idea, pursued by Andrew Yang prior to his presidential run (and others), but the scale of worker dispersal anticipated here ought to produce a different scale of result.

• Peak business travel is behind us.

Business travel often sounds glamorous, but the reality is more frequently stressful for individuals and their families. If employees — and their employers — adapt to the new reality by finding ways to execute work that does not require time-intensive and expensive travel, we should not expect a return to the status quo. The range of services built up to serve the frequent business traveler, from hotels, to on-demand services, to airline loyalty programs, will all struggle.

• Culture

Cultural impact beyond the workplace is harder to assess, but worth considering. How will individual behaviour of parents change when they have several fewer hours of commuting per day? There is some deeply troubling data from China indicating a surge in domestic violence and divorce during the mandatory quarantine period following the COVID-19 outbreak, but this is an unusually stressful and unexpected arrangement, so I would not generalize conclusions from that environment. Yet, we should expect some unexpected challenges to arise from newly remote couples spending significantly more hours a day together than currently (both positive and negative). Relatedly, a surge in home schooling might be observed, as highly educated parents allocate their extra hours to more directly steering the education of their children (so that they too may join the tech elite and work remotely!).

Conversely, work environments serve as an important friendship and romantic partner formation environment for young and single personnel. Tech has disproportionately young and single workforce demographics, so what types of spaces, cultures and environments might group up and develop to address the socialization needs in the absence of in-person work environments?

Opportunities

The realignment of the work force will create many opportunities for new tools and services. This is a very initial list of ideas:

• Walkable, self-contained urban-like environments in the suburbs as a home destination for newly mobile employees. Cul-de-sac is doing really interesting work here and I expect significant activity in this space (and their emphasis on “remote-first” meetings is notable).
• Healthy, affordable daily meal delivery (a definite #firstworldproblem for the coddled tech workforce, but an acute one)
• Local social networks for remote employees of different firms
• Virtual social engagements for employees of the same firm (Fortnite, but for work)
• Virtual coaching, mentoring and training tools
• Management tools for tracking, assessing and monitoring remote employees
• Individual tools for tracking time allocation and imposing discipline on yourself
• Forums for collecting employee feedback and assessing sentiment that may be harder to assess without regular in-person touchpoints
• Hardware kits for home offices: desks, chairs, monitors, lights, etc.