Although it’s been nearly six months since Covid-19 hit and upended virtually every aspect of life, we’re still in the early days when it comes to long-term business planning. Among the most pressing decisions is how to approach remote work policies and compensation.
Essentially, companies have the freedom – and burden – to think beyond geographic boundaries in regards to hiring, retention, pay rates and office policies.
While many look to major tech corporations like Google and Facebook to set the tone for workplace policy standards, startups also play a key role in shaping industry expectations.
To better understand what the future of tech employment might look like, Greylock conducted an informal survey of 48 portfolio companies to get a sense of how they are approaching the new environment.
As we’ve heard from several founders in our new podcast series Working from Anywhere, remote work is here to stay to some degree, and it will be our new reality for the foreseeable future. In our survey, 42% of companies stated they will remain 100% remote through at least the rest of 2020, while 35% said they will do so only until it’s safe to return to work. About a quarter of those surveyed had not yet decided.
There are a lot of factors to consider. Even those who didn’t initially embrace working from home are finding ample benefits to an all-remote workforce, such as increased productivity and better work-life balance thanks to time saved from no longer having to commute. A distributed workforce also means companies are no longer limited to the local talent pool, or those who are willing to relocate. Half of survey respondents said they are open to hiring new candidates in other locations, while 20% said they would prefer to still source talent close to their headquarters.
Future office plans also factored heavily into how companies are thinking about new compensation models. Facebook drew attention in May when it was learned that employees who relocate to less expensive regions than the company’s Bay Area headquarters could expect a pay cut. But it’s not an uncommon move, even among much smaller companies. Pre-Covid, if someone moved to a lower-cost region, the normal practice was to adjust their salary to reflect their role and level in that location.
That said, it is a delicate question and many survey respondents chose to skip it. Of the 27 companies who responded, more than half said they either plan to adjust salaries down for lower cost of living areas or have already done so. Again, the decision hinges on both the employee and company’s long-term plans. For example, one CEO of a Series B company said they intend to keep Bay Area salaries for now because they want to have the optionality of building a local culture and having people in an office at some point. That also means this CEO will stick to hiring locally, or hiring those who indicate they will relocate to the Bay Area when life becomes more stable and predictable.
Whether companies hire remotely or prefer to keep it local is primarily dependent on their long-term plans. For example, companies that are willing to hire remotely indicated they would make that decision based on the role, the specific location where that person resides (e.g. whether they live in a time zone where they have sufficient overlapping hours for synchronous communication), how difficult the role is to fill, and whether the company ultimately decides to return to the office at a later date. In that regard, many companies have different ideas about how they will use the office — when, and if, they return. Some companies are toying with the idea of office “hubs” in particular regions, providing a local office where people can eventually work from when comfortable if they want to live in the vicinity. They are also sharing lists of preferred locations for remote living in some cases.
No matter the company’s long-term plans, the very process of hiring becomes more complicated in the current environment. Companies need to tighten and improve communication in all situations, and this is especially the case during the interviewing and hiring process. Making hiring decisions and closing people without being able to meet them in person is a big change for many.
Reassuringly, companies surveyed reported a bright spot during all of this tumult: all noted that despite the market conditions, their inbound interest and outbound responses have either increased or stayed the same. As a recent report by The Information found, people are still very eager to work at startups, and many are actively recruiting new employees. While this is not entirely surprising considering there have been notable layoffs, the appetite to join startups is a healthy indicator of the future. Moreover, companies noted that candidates, on average while interviewing with them, are also interviewing with 2-5 other companies.
This is a good reminder during this remote time to tighten up all things related to attracting and closing great talent. It’s still a competitive market, so companies need to move quickly. Founders need to expect candidates to ask more questions about the company’s risk profile, and be prepared with honest answers. Be ready for these hard questions with a practiced pitch that conveys transparency. In turn, hiring managers need to ask hard questions themselves. When competition for talent is so acute, it may be tempting to take a chance on a less-qualified candidate with the hope they will quickly accelerate. This is risky, especially for early stage and lesser-known companies. Be extremely organized and proactive about the recruiting process. Hiring done in haste is more likely to be a poor fit, and often sets the tone for inadequate recruiting and screening down the line, which ultimately leads to a bad brand for the company. Maintain a high bar for excellence –and even consider raising it.
Additionally, companies also need to carefully screen candidates to ensure they are fully aware of what taking the role and working at a startup entails. Be willing to talk a candidate out of the position if you can foresee issues in the future. Retention needs to be top of mind for leaders, especially in earlier stage companies where candidates/employees may have a much lower risk tolerance.
Employee Benefits, Support and Retention
We’ve been impressed with the way companies we partner with are stepping up during this time and taking initiatives to support their employees’ wellness. On top of extra focus on communication and providing more opportunities for collaborative conversations such as weekly town halls, virtual team gatherings and more one-on-one meetings with those in leadership roles, companies have also been quick to provide remote office supplies, counseling, fitness, meditation and an overall culture of understanding that this is a difficult time for everyone. Given that many companies are likely saving money on in-office meals, commute benefits or other perks, they can consider funneling those expenses into wellness benefits.
Even as the status quo of remote teams, shelter-in-place ordinances and business limitations persists, it is important for HR to never get complacent and think of this time as “normal.” Rather, they must maintain the mindset that this is a highly charged time, emotionally and otherwise, and it is more important than ever to connect with employees, especially the highest performers and most critical people to the company. Training and encouraging managers to connect more regularly to support people is of paramount importance. It is great to see the majority of our portfolio companies doing this. As the larger and surging tech companies continue to hire, it will be critical to keep people engaged and supported during this time where risk tolerance may have gone down.