What Are Fully Distributed Teams? How Do They Work?

What they lack in physical offices, they make up for with talent, diversity and savings. Are distributed teams the way of the future?
Senior Staff Reporter
November 2, 2021
Updated: November 3, 2021
Senior Staff Reporter
November 2, 2021
Updated: November 3, 2021

When Twitter dropped the F-bomb in May of 2020, everyone took notice. The social media giant announced that any of its employees who are able to perform their duties remotely would have the freedom to do so “forever,” even after the pandemic subsides.

The move felt significant not only because of Twitter’s size and prominence, but also because the social media company had been something of a bellwether, as one of the first tech companies to urge employees to work remotely, then, soon after, mandating it in early March. Everyone soon followed and it was easy to wonder: As Dorsey goes, so goes the nation?

In the year-and-a-half since, speculation abounded as to whether the traditional office would survive, fueled by announcements like Twitter’s. If their moves are any indication, don’t start arranging any funerals. The social media company has not only reopened its headquarters, it’s adding at least two office buildings in the San Francisco Bay Area before the end of next year.

What Are Distributed Teams?

Distributed teams are made up of employees who work entirely remotely rather than at a central headquarters. By utilizing tools like cloud environments and organizational software, workers are able to safely access data and accomplish goals.

Indeed, few major companies have announced plans to permanently remain fully distributed after the pandemic. But it’s certainly something that organizations have considered like never before: Do we really need this office at all?

Freedom of movement and freedom from unneccessary costs might be the ultimate agility. And “agile is the new smart,” Stephen Gates, head design evangelist at InVision, a fully distributed company since its founding in 2011, told Built In in 2020.

Not agile, the methodology, but flexibility — and how that can help collaboration.

“We’re a company who happens to be remote, not a remote company,” Gates said. “A lot of what we focus on has always been the best practices around collaboration and trust.”

 

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A photomosaic of selfies taken by employees at GitLab, a fully distributed company. | Image: AndreaMosaic / GitLab

A Brief History of Distributed Teams

Distributed work teams — that is, organizations that have no physical headquarters or main offices and employ workers around the country or globe — aren’t exactly new. Neither are the advantages and challenges they face.

Take Hudson’s Bay Company, one of very few companies to be in continuous operation for more than 350 years. Massachusetts Institute of Technology researchers noted in a 2002 paper HBC’s noteworthy standing as (very) early adopters of the distributed model. They cite the following instructions, issued from the company’s London-based executive committee to a North American manager, in 1679:

“We know it is impossible at this distance to give such orders as shall answer every occurrence and be strictly observed in all points, so that when we have said all, we must leave much to your prudent conduct, having always in your eye the true interest and advantage of the Company, who have chosen and trusted you in the chief command they have to bestow.”

In other words, we’re really far away and couldn’t micro-manage even if we wanted to, so we’re trusting you to get things done.

Distributed companies in the modern sense had a watershed moment in the late 1950s and early 1960s, according to John O’Duinn, author of Distributed Teams: The Art and Practice of Working Together While Physically Apart. CompInc, founded in 1957, and Freelance Programmers, founded in 1962, were fully distributed and remote. (“Hiring requirements included having a working telephone at your house!” O’Duinn wrote.) Perhaps not surprisingly, both were tech outfits. Employees from both companies wrote and snail-mailed in code.

Constant technological advancements, changes in the employer/employee dynamic (specifically the eroded expectation that a worker remains with a single employer) and generational shifts, like the emergence of digital natives, got us to a point where distributed companies seemed like a viable option, O’Duinn wrote.

Today, most of the companies that followed the leads of CompInc and Freelance Programmers, even if unknowingly, are also tech companies. Automattic (which owns WordPress, WooCommerce and Tumblr), GitLab, InVision, Buffer, Zapier and Groove are all currently office-free, with employees scattered across the nation or globe — and were so long before the novel coronavirus. They’re the commercial version of rootless Millennials, and their elders are starting to see their point.

RelatedYour Employee Recognition Efforts Need a Remote Work Revamp

 

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Business leaders are entertaining the idea of office-less existences or something close to it. | Image: Shutterstock

Cutting Costs

O’Duinn’s aforementioned Distributed Teams book, published in 2018, is a product of the BC era (Before COVID) and — with tips about things like camera positioning and lighting for video calls, which we’ve all now intuited — it sometimes reads that way. But the author sounds downright prescient in his skepticism of office costs.

“If you reduced how much money you spent on physical offices, what else could you do with that money and organizational focus?” he asks, anticipating the question that countless CEOs would soon consider.

To be sure, commercial real estate firms last year weren’t as panicked as one might have expected. Dan Dokovic, co-founder of real estate investment firm Bamboo Equity Partners wrote in May of 2020 in Forbes that isolation-weary workers are were starved for (safe) physical interaction, and that while offices may need a design rethink, they shouldn’t fear for their lives. More than a year later, we continue to hear a similar tune.

The commercial real estate market may be playing a factor in that sentiment. According to a mid-year CBRE report, office rents in many downtowns remain depressed due to the availability of builds completed prior to the pandemic and low short-term demand. The national average for office rents is expected to continue falling through the middle of next year, the report states.

But there are some signs pointing to the opposite: Office rents in Silicon Valley are reportedly at a new high, and tech firms are putting a dent in New York City’s high office vacancy rate. But the availability of low-cost office space in many markets might be making it easier for companies to hang onto physical workspaces. How will a pricier real estate market in the future, coupled with companies’ newfound habituation to remote, impact those decisions? That remains to be seen.

But as advocates of distributed work make clear, savings in the past have sometimes pronounced. Dell saved more than $39 million over two years after encouraging remote work, and Aetna saves $78 million annually by urging employees who can work remotely to do so, according to O’Duinn. “This is a competitive advantage over companies that pay for and operate physical offices,” he argues.

RelatedHow to Create a Successful Remote Onboarding Plan

 

The World Is Your Talent Pool

Another advantage, according to advocates of the distributed model? A limitless potential talent pool. An organization arbitrarily limits its people options when it “commits to hiring people only near their set of bricks,” as O’Duinn phrased it on a recent episode of the Exponential Organisations podcast.

That’s indeed how InVision sees it. “On many occasions, we’ve been able to hire the best and brightest because of our remote organization,” Shelby Wolpa, VP of people operations at InVision, told Built In in 2020. The company has employees in more than 20 countries around the world, including in Africa, South America and Eastern Europe.

Coordinating all those time zones can at times be a bit of a challenge, but strictly in terms of talent acquisition, internationalism and the ability to leverage talent in places that might be traditionally considered tech flyover country proved a strategic advantage.

InVision founder Clark Valberg told Inc in 2018 that, when he established the company, he hired engineers in the middle of the United States and Canada, paying good talent more than they were accustomed to, without burdening himself with relocation costs. He eventually concluded: Why bother with an office at all?

“A lot of people who lived in San Francisco or New York moved back home to be closer to their [families] and have been able to take the living that they had with them.”

InVision currently has engineers living and working in cities like Indianapolis, Indiana, and Cheyenne, Wyoming — places “not traditionally thought of as tech centers,” Wolpa said.

Back when the company was founded, in order to compete, “especially as a smaller company and to be able to get talent from bigger companies, we needed an advantage,” Gates told Built In. “A lot of people who lived in San Francisco or New York moved back home to be closer to their [families] and have been able to take the living that they had with them. It really does give you the ability to do something really special.”

Not having to deal with the four-hour daily commute he endured for 14 years prior to joining InVision is nice too. “You can have actual work-life balance,” he said.

To that point, distribution can potentially buttress retention as well as talent attraction. The fully distributed GitLab has some 1,200 employees and maintains a retention rate north of 85 percent, GitLab diversity and inclusion manager Candace Byrdsong Williams told Built In in 2020. And at InVision, an enterprise sales director recently stayed on board after moving to Nashville so his wife could accept her dream job.

That said, flexibility isn’t total. Some departments, like sales or customer support, might not lend themselves to asynchronous communication as well as others, like, say, data teams. And that might tempt recruiters for distributed companies to narrow their search to a specific time zone or zones.

“It can be so tricky looking for someone to join a team when you know that the team is largely based in another time zone,” Keisha Washington, who manages recruiting at social-media-management platform Buffer, told Built In in 2020.

But she tries to push back at that as much as possible. “We’ve had situations where we said, ‘Well, ideally we’d love for this person to be maybe between this and this time zone.’ And then we’ve gone back and said, ‘You know what, that doesn’t feel great. We want to open it back up,’” she said.

“We don’t want to restrict ourselves,” she added.

But is such a huge net ever a drawback? Limitless options can breed paradox-of-choice paralysis, no? Maybe not paralysis, but it definitely means high application rates. “It makes for thousands of applications in our inbox as opposed to maybe some companies that might have a few hundred ... but it’s a great problem to have,” Washington said.

Distributed companies also have to pay special attention to locations due to tax and payroll implications. But Washington said there’s “absolutely not” anyone tapping her shoulder, telling her to avoid candidates from particular locations for financial reasons.

 

buffer product team distributed teams
The product team poses at one of Buffer’s annual all-company meet-ups. | Photo: Julia Jaskólska / Buffer

Aiding Diversity and Inclusion

It’s gradually improving, but tech has long had a diversity problem. African Americans account for less than 8 percent of computer and math jobs, despite making up almost 12 percent of the total workforce, according to a 2018 Brookings study. Hispanics meanwhile represent less than 7 percent of computer and math jobs despite making up nearly 17 percent of the total workforce. Their presence remains “starkly inadequate at the national level” of tech jobs, the report concluded.

Just because a company is distributed doesn’t mean it’s magically conferred excellence in diversity, equity and inclusion. A company can have no office and still lack diversity. But as O’Duinn points out in his book, distributed teams do tend to be more diverse, and more diverse teams tend to avoid hivemind better than homogeneous ones.

That diversity manifests in terms of geography, race and ethnicity, but also gender. As of 2021, women make up more than 32 percent of GitLab’s workforce, 8 percentage points higher than average for the tech industry, and the company is making conscious efforts to grow the number still. (GitLab, which has won diversity accolades, is notably — and laudably — transparent about its identity composition.)

Some workers with disabilities view the no-office set-up as more amenable too. InVision employs workers with health and accessibility considerations “who are able to unlock their talent and expertise because of the flexibility and inclusivity our remote environment provides.”

Of course diversity and inclusion are not one and the same. As Verna Myers famously said, “Diversity is being invited to the party; inclusion is being asked to dance.” That means conscious outreach efforts, which could conceivably be a challenge in a permanently dispersed model.

“Once we source and find these different ways to find people, we make sure they’re going to have a great experience once we bring them on board.”

“We sort of immediately go, ‘Wow, the world is my marketplace,’” in terms of talent attraction, Washington said. “But we also have to keep in mind that, once we source and find these different ways to find people, we make sure they’re going to have a great experience once we bring them on board.”

As a company that “lives in Slack,” Buffer has several identity-centered channels — black teammates, women of color, Asians, Spanish speakers and more — which it built after polling employees about diversity programming.

There’s also an ally channel. “Allyship is a huge key to anyone who’s talking about having a more diverse organization,” said Washington. “You need to think about who’s going to be that support system to sort of help folks navigate internally.” It can’t be just about building a PR-friendly About page, she said.

 

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GitLab employees gathered in New Orleans in 2019 for the annual all-company meet-up. | Photo: GitLab

Making It Work

The distributed team toolkit looks similar to those of most companies that transitioned, if only temporarily, to remote — liberal doses of Slack, Zoom and archivable conversation thread-style platforms, like Threads. Asynchronous, generally speaking, tends to be the go-to position.

Not surprisingly, many of the companies that have embraced distribution also trade in it. InVision’s apps include a virtual collaborative whiteboard and one designed to ease design-developer handoff for remote product and engineering teams.

Gates believes such collaborative tools can go a long way to counteracting the criticism that, without firm roots, a new organization will struggle to establish a company culture. In fact, deadweights like fixed, bulky physical brand bibles slow that process down, rather than supporting it, he said: “Putting out these big monolithic things that didn’t change would often sort of grind a lot of productivity to a halt.”

Tools for Distributed Teams

  • Real-time communication: Slack, Microsoft Teams, Threads
  • Video conferencing: Zoom, Skype, Vowel, Google Meet, Loom
  • Cloud storage: Google Drive, Dropbox, Box, OneDrive, Air
  • Project management: Monday, Asana, Trello, Jira
  • Customer relationship management: Salesforce, HubSpot, ActiveCampaign
  • Design collaboration: Figma, InVision, Mural, Miro
  • Software engineering: GitHub, GitLab, Visual Studio Code
  • Password managers: 1Password, LastPass

But just as important as tools are the expectations set around them. “For us it’s, if I send you an email, the expectation is you’re going to get back to me today. If I send you a Slack or something like that, the expectation is you get back to me when you’re at your desk and if I text you, that’s like the bat signal, red phone — get back to me right now,” Gates said.

“It’s more just sort of making sure that there are clear expectations around how do we communicate and do some of those things,” he added.

But don’t they ever miss the traditional office environment? The in-person camaraderie? The chance-encounter magic of bouncing ideas inside the same room? Like Gates and Washington, Byrdsong Williams is a true believer.

“No I don’t miss it,” she said, noting that, like most fully distributed teams, GitLab has annual all-team meet-ups and regular department meet-ups, at least during normal travel times, to foster connection. “I like a company that kind of offers me pretty much whatever I need to be able to be my whole self both at work and at home,” she said.

RelatedThe Great ‘Remote Work Experiment’ Looks Quite Different for Parents

 

What Are the Downsides of Distributed Teams?

The affection expressed for the distributed setup by employees at firms like InVision and GitLab is no doubt sincere, but it does come with some selection bias: People who chose to work at distributed companies, pre-pandemic, are of course likely to have nice things to say about the setup. But, according to some research, they might be a minority.

A Morning Consult survey, commissioned by the New York Times and conducted in mid-August, found that only 31 percent of respondents preferred permanent fully-remote work. “Among those craving the routines of office life and cubicle chatter: social butterflies, managers, new hires eager to meet colleagues, and people with noisy or crowded homes,” reported the Times.

That group speaks to the critiques often levied at distributed work. Although recent evidence undercuts the long-held belief (especially deeply rooted in tech) that chance encounters foster innovation, that doesn’t mean workers who were pushed out of the office don’t miss those water-cooler moments. They’re especially meaningful for new hires who lack established work relationships, research suggests.

Other research backs up the claim that higher-ups prefer physical offices at a higher rate than individual contributors. A recent Future Forum Pulse survey found that, among respondents currently working from home, nearly three times more executives said they would prefer a full-time office setup, post-pandemic, than non-executives.

It’s easy to wonder if that disconnect may have fueled another pandemic-related trend that could serve as ammunition for skeptics of distributed culture: the rise of employee surveillance. In the early days of the pandemic, companies that sell time-tracking and employee-monitoring software told the Washington Post that sign-ups for service had soared. And 60 percent of large companies reportedly now use employee-tracking tools, a figure that has doubled since the start of the pandemic.

There are other potential shortcomings in the fully distributed model. Home internet service tends to be less reliable. (How many times have you had to turn off video during a teleconference because your signal was choppy?) Also, distributed companies have to grapple with the thorny issue of whether to institute differential pay or adjust salary based on employees’ geographic location. Companies like Facebook and Google are instituting differential pay, but the move, generally speaking, isn’t popular with employees.

Add in anxieties about the collapse of work-life separation and other, more minor losses — like a lack of “secular ceremony” on a departing employee’s last day — and it’s clear that there are counterpoints to consider.

 

Will the Future Be Fully Distributed or Hybrid?

Amid the first leg of the pandemic, many were quick to envision a fully remote future — citing the kinds of talent acquisition and retention boons and cost savings mentioned above. But what’s unfolded has been more nuanced.

The overwhelming majority of companies that have announced changes to workplace policies have not opted for 100 percent distributed; they’ve gone for a best-of-both-worlds blend: optional, hybrid or digital-first. Among the few exceptions to forsake offices and headquarters altogether are Hopin, a virtual events platform, and Basecamp, an online collaboration application. (Make what you will of the fact that both happen to trade in remote-friendly products.)

Amazon, for instance, told employees in October that, for corporate roles, team directors would choose whether their individual teams would be mostly remote, mostly office-based or some combination of both.

In the announcement, Amazon CEO Andy Jassy acknowledged the upsides of both central location and freedom of mobility. “At this stage, we want most of our people close enough to their core team that they can easily travel to the office for a meeting within a day’s notice,” he wrote. “We also know that many people have found the ability to work remotely from a different location for a few weeks at a time inspiring and reenergizing.”

The announcement followed a similar one from Cisco, which said in July that it would transition to a hybrid model, with individual teams determining the degree to which they would be distributed or office-based.

Some companies have also promised a retooling of the conventional office. When Salesforce announced that the majority of its employees would eventually work between one to three days per week in office, it also noted that its workplaces would in time be redesigned into “community hubs,” better suited for team collaboration and customer meetings, rather than head-down individual work. Jaime Nash, vice president of product marketing at Tapad, recently urged a similar approach to office use.

Other notable tech firms that have announced a hybrid or digital-first model in 2021 include Adobe, Uber, DoorDash and Grammarly.

Smaller businesses may find a mixed approach attractive, too. The 25-employee, Denver-based financial outsourcing company CFOshare experienced every variety of work model over the last two years: fully in office, fully remote amid the pandemic and — in the post-vaccine, pre-Delta respite — hybrid.

The company’s founder, LJ Suzuki, ran a comparative analysis of the models. Two key takeaways emerged. First, even with the various savings afforded by distributed work (rent, utilities, janitorial, commuter benefits, snacks, furniture), those considerations were “completely eclipsed” by dramatic productivity gains, he said. The company estimated an increase of $16,000 per employee per year in distributed, versus fully office-based.

But second, those gains weren’t equally distributed. While fully remote, the accounting team, whose work tends to be more solitary, saw gains four times higher than the finance team, whose work tends to require more collaboration. Finance, in fact, performed better in hybrid.

Another wrinkle: Some employees preferred a setup that was less productive overall for their department. One member of the accounting team — the group that thrived overall while working remotely — has been coming into the office every day since it became optional.

For all these reasons, CFOshare is opting for hybrid over the long term. Some of the knottier aspects are still being worked out. Suzuki said he prefers to allow employees to relocate to nearby time zones if they desire, and he isn’t a fan of differential pay, but those policies are still yet to be finalized.

One thing he is certain of, though: The fully office-based model no longer makes sense for his company — which would’ve been almost unfathomable just two years ago. “The numbers, for me, were inspiring to get out of my comfort zone, and learn to embrace something new,” Suzuki said.

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