The most important things remote employers get wrong the first time

Looking at the numbers and logistics we can clearly see that a remote job is more desirable to the employees, less costly for the employers, and better for society as a whole. But it's not easier to collaborate remotely.

There are several things that are important to get right, but also easy to screw up if you're not aware of them. And since we're talking about business success and human happiness here, it is important that we act responsibly. After reading this, at least you won't have to make the mistakes we did at some point, and we can avoid some nasty surprises both for employers, and for employees.

First I'd like to clarify a few things so we can separate concepts better. In this article I shall be talking about different types of work relationships that I sometimes name differently in different contexts. These types of relationships differ enormously in different jurisdictions as well, so we need to agree on terminology before we can understand the psychological and logistical effects of the designed relationships. I'll use the term employee/employer in the broadest sense, where the employee does work for the employer, and the employer pays the employee in some form for the work. I'll split the worker commitment into three fundamentally different commitments:

• stable wage (typical for western employment contract, but also the defacto mode of many freelancers),

• freelance work (contrary to stable wage, a freelancer doesn't have a guaranteed monthly income ),

• money for value (the employee is acting as a partner entrepreneur and taking full responsibility for delivering the agreed value for the budget agreed up-front)

I'm intent on splitting the types of relationships into levels based on the risk distribution between partners. Many unfair deals are bred by greed of one of the parties, that tricks them into taking advantage of the lack of understanding of the risks of one of the other parties. For example, let's say I want to agree to buy tomatoes from a farmer.

I could offer to pay up-front for the seeds and the labor, and then harvest whatever the yield is. This is a fair deal if I don't overpay on the inputs, because I take all the risk up-front. We could also agree that I pay for the tomatoes per kilo when they are harvested and selected. I then leave all the risk with the farmer. Because I'm not taking risks, I should pay a good price so that the farmer can maintain a risk buffer for bad years. Both these options are fair. When a buyer has too much power over the supplier, they may force an unfair deal. At the end they could calculate the costs of production of the tomatoes they like, and pay the lowest possible price that the farmer can take. Supermarket chains do this all the time. This isn't fair, because the buyer shifts the risk to the farmer, but doesn't shift the profits along with the risk.

When we work remote, the risk profile of the relationship is shifted in comparison to on-site work. Specifically the risk of being unproductive is moved more out of the control of the employer. When working on-site, especially in the old days of farm or factory work, the risk of unproductivity was for a large part under full control of the employer. On-site a boss can check that someone is manning their station, handling the work, and performing a decent job of it. In remote scenario's this is much harder, and trying to monitor employees also opens a can of privacy worms. Another factor is that creative work is inherently less suitable to be approached from an hourly mindset. The risk of going down the wrong rabbit hole is much more profound than the risk of being less productive. For example, when writing this article, I deleted more words than I have left here. My typing speed has hardly any impact on my productivity (trust me, you wouldn't like my work if I just filled your screen with neural network generated word salad).

In face of a shifted risk, we need to renegotiate the deal on the profit side, so that there is no sensible reason for the employer to feel they need to control the workers.

1. Don't monitor your employee's effort. Monitor their results instead

When we think it through, I'm pretty sure not many people really want to buy time out of someone else's day. We like to reach goals, and then not be distracted from things we really like to do. When someone is spending time with me because they're paid per hour, it actually cuts into my leisure time. If someone wants to collaborate with me to reach a shared goal, we suddenly have a much better time of it.

For example, if I pay my bookkeeper by the hour (which most of us do), they have a perverse incentive to make me spend more time around my books by asking super smart (but possibly useless) questions. If I pay a fixed price for it, they have an incentive to teach me how not to waste their time. This results in short and effective interactions, and more automation. I've consistently found this to work better for almost any type of work.

The other effect of not paying for effort, but for results, is that when a job gets done quickly and efficiently, both the employer/client AND the supplier/worker can have more leisure time. That's a good way to become better friends.

2. Don't exploit remote workers. Make a fair deal, that takes into account the risks you've moved from your company to their business.

Often remote freelancers have to hear that they're more expensive (per hour) than in-house employees. The clients that play this card seem to have forgotten some relevant costs:

• Hiring a top-notch team member in a tech hub can easily rack up well over 10k of recruiting costs.

• All the training and onboarding falls on the hiring company.

  • Lower productivity initially

  • Training costs

  • Distractions on existing team

• Labor laws protect the worker against income loss, even if the company doesn't have work for them, or they get ill.

All this is magnified by the much shorter retention. At Squads our team members stay for more than three years with the same customer usually, while in tech hubs the average retention is less than two years.

Since the remote workers absorb much more of this risk, it is all right to pay them more than the in-house employees.

3. Don't hide the differences in remote and on-site workers.

Smart people understand that different choices lead to different results. When working from home, you'll have to do a bit more work on communication. When working from an office, you'll lose more time in a commute. As long as the upsides and downsides are clear, there will be little envy around them. Making it clear that remote workers have different schedules and risk, and therefore a different deal, helps build trust inside the team.

With these tips, I hope relationships with remote workers will improve. If you feel you need help, feel free to reach out. At Squads we have over 10 years of experience with fully distributed teams working in challenging environments. We're happy to help you succeed!