Remote Work: Is it here to stay?

Much has happened since my last blog post covering the Future of Work in February 2020. The term “Future of Work” was meant to give a forward-looking view of the future. In my previous blog post, I outlined what some of these changes might look like and how companies can best transition. While there was no timeline attached to this, this development was certainly not expected to take place within a short amount of time, along with the medical, social and economic challenges of a global pandemic.

With the current pandemic underway, most companies now have an economic incentive (and moral imperative) to put processes in place that enable a smooth transition to remote operations. This is not only limited to trailblazing technology companies. Even companies that have previously been slower in adopting innovative approaches now seem eager to fast-track internal processes and digitise their way out of this crisis.

In a two-part series of posts on Remote Work I will address the two central questions that we’ve been asking ourselves when thinking about the recent changes:

1) Is the current remote work wave just a fad, or is it here to stay, and based on the answer to that question…

2) What are some of the hypotheses on how this might change our way of how we view the concept of work, and what opportunities might emerge in the process?

In order to answer the first question, I collected various large scale studies that asked participants before and during the pandemic about current and expected future remote work behaviour. We then asked our btov portfolio companies similar questions to better understand changes implemented on a company level. Some of the answers were quite interesting and quite frankly surprised us.

Some data: The pandemic accelerated already existing trends

Overall, our working assumption going into this was that the pandemic has accelerated many trends we were already seeing within the Future of Work sector prior to the pandemic, including an increase in remote work adoption. Let’s look at some data to see whether or not this assumption does in fact hold true.

As of 2018, already 56% of companies from various industries either allowed partial work from home or were fully remote. This number has increased to 88% during the pandemic in 2021 (based on a survey of 800 HR executives), which comes as no surprise. A similar survey by Gartner shows that about 74% of companies plan to shift some of their employees to remote work permanently. This data is an example of the lasting effect that the pandemic has had on the way companies adjust their stance on flexible work policies.

An alternative statistic reveals that more than 50% of knowledge workers worldwide are expected to work flexibly for at least 3 days a week post-COVID-19. Calculating a back-of-the-envelope bottom up market size for about 500m knowledge workers yields a market size of USD 60bn p.a. (calculated at USD 10/ month per user).

Now while we need to treat forward-looking data with caution, my view on this is that we quite certainly have seen an acceleration during the past 12 months, and we likely will see a decrease in the growth rate post-COVID-19; however, the general direction of the trend will almost certainly continue.

What the btov portfolio says

Now that we’ve taken a birds-eye view of the available data, let’s take a closer look at how btov portfolio companies have responded to the pandemic.

Back in November 2020, when the second lockdown was in full force, we conducted a survey with 32 of our portfolio companies. The first question we asked was how companies worked prior to the pandemic, what changed as a result of it and what the expectations are for the future. While this is by no means a statistically significant sample, it gives a glimpse into the pain points that arose due to the current situation and what policies were adopted as a result.

The responses were in line with other surveys and support the assumption that the majority of employees are expected to work flexibly even after the pandemic. While 62% of employees were working from an office before COVID-19, only 14% are planning to do so after the pandemic.

In the next step, we went one step further by asking our portfolio companies how this new shift has impacted their way of working. We measured the change across three categories, including productivity, communication & collaboration and culture. The results are summarised below.

Some results surprised us, some were in line with our expectations. For instance, 57% of companies stated that their productivity levels were not impacted by remote work, and even 28% responded that remote work has improved their productivity. One interpretation of the responses might be that employees work longer hours, as the lines between work and leisure time are getting blurred. On the other hand, it’s also possible that employees are more productive due to fewer distractions at work.

Furthermore, we also asked companies how overall communication and collaboration has changed. 43% responded that their communication and collaboration changed for the worse, while 43% recorded no significant change. Similarly, 38% of companies stated that their culture changed for the worse when shifting to a remote setup, while 33% did not notice any change. However, 71% of companies implemented preventive measures nonetheless to avoid cultural erosion.

In the last set of questions, we asked our portfolio founders what the perceived challenges and benefits of the new way of working are. Below is a summary of the top 4 challenges, which include collaboration & communication, loneliness, distractions and difficulties with unplugging after work. On the other side of the coin, the main benefits of working remotely, are time saved from a long commute and the ability to structure a flexible work schedule.

As a result of the challenges, companies implemented various processes and tools to counteract the negative effects. 71% of companies stated that their usage of video tools increased significantly, which comes as no surprise. A summary of the tools with increased usage can be found in the graphic below.

Lastly, the process measures that were implemented included an increased usage in informal, more personal interaction formats (e.g. virtual coffee chats, gym sessions, lunch meetings) and a higher frequency of meetings in smaller groups.

Moreover, leadership communication increased, with a special emphasis on cultural principles and new team missions to increase ownership. Furthermore, detailed career paths for certain roles were implemented in order to increase visibility, which also includes the use of OKRs and better feedback.

Conclusion

As our foray into remote work has shown, the pandemic has accelerated many of the trends that we had already anticipated. Software companies supporting that transition have seen the equivalent of multiple years of growth in just 2020. I believe that the remote work trend will represent the next secular shift within the Future of Work. While that trend is still nascent, markets are growing rapidly. The software companies that will address the arising pain points will emerge as the winners.

The next post of this series will explore in which areas opportunities will arise, and what types of companies one should watch out for.

Also, I am always happy to start a conversation, receive feedback and learn from entrepreneurs that are building companies in the Remote Work space! Reach out here on Medium or email me at bd@btov.vc.