Remote Work: An Unpopular Opinion
The Future of Work is Hubs
‘Sit at your desk until 5pm’ jobs are an artifact of the industrial age, but remote ‘never see your colleagues outside of a computer screen’ jobs won’t exist in the next 5–10 years.
We will evolve to work differently, but the future of work is not remote as we understand it today, namely, fully distributed companies with no physical office space or human to human interaction for employees.
Today, the majority of companies support two “types” of work; traditional in-office and remote-only. We’ve swung the pendulum too far in terms of “remote-only” work. We’ve taken the easiest path; no physical office and everyone working at home from their laptops. This is a simplistic binary response to the traditional office. These ideas on how to work should evolve to improve the camaraderie and mental health of individual employees and to support the productivity and operational needs of a company.
The future of work will be a hub and spoke model, a model that more easily allows businesses to be globally distributed while concentrating teams in zones (via spokes) which act as a home base for employees to interact. This model, which can be used at large scale and also in smaller scale startups, will allow teams to choose how and when they want to work, encouraging self-motivation, trust, intuition, freedom and creative output.
A hub and spoke network model can be seen in many use cases to improve operational efficiency.
- Airlines: A hub is a central airport that flights are routed through. Spokes are the routes that planes take out of the hub airport.
- Healthcare: Hubs offer a full array of services, complemented by smaller establishments which offer more limited services via spokes. These smaller establishments then rout patients needing more intensive treatment to the hubs.
- Cloud Network Architecture: A hub is a virtual network that acts as a central location for managing external connectivity and hosting services used by multiple workloads. Spokes are virtual networks that host workloads and connect to the central hub. Traffic passing in or out of the spoke networks is routed through the hub network where it can be inspected, and managed by central IT rules or processes.
- Cosmos Network- Blockchain Architecture: Cosmos’ blockchain architecture is a hub and spoke model where the first hub was launched in March 2019. The Cosmos Hub acts as a central hub of the hub-and-spoke model, while other blockchains function as ‘zones’ that are all connected via Inter-Blockchain Communication (IBC) protocol.
Limitations of Remote-Only
Before the Industrial Revolution, working from home was the norm, people didn’t congregate on a daily basis at a physical location. Post Industrial Revolution, machines and large scale production required people to be physically present in factories. The idea of physical presence continued post WW2 as the economy surged, corporate headquarters grew, and public transit made it possible for people to get to physical offices every day. These trends continued until early the early 2000’s when better internet access, search engines and the creation of video communication with Skype and GoToMeeting made remote work possible. The vision of remote started to become increasingly attractive to companies citing the savings on high office real estate costs and flexibility provided to employees.
However, there are a number of limitations and issues with remote-only work as we know it today. Some of these include:
- Human connection: Humans are biologically social creatures; we are born with the need for love and social connections. Our bodies take in exorbitantly more information than our brains; the body and its senses process ~11 million bits per second while the brain processes ~50 bits of information per second. Being around colleagues in person gives us access to a wider stream of subconscious information and non-verbal communication. In the long term, interacting only with our computer screens robs us of the critical interactions and information gathering needed any strong and resilient team to thrive.
- Fear-Cycle- Anxiety provoking: While remote-only culture promotes independence, it may induce more anxiety in people to live up to expectations. This is perpetuated further by removing the opportunity to experience body language, non-verbal communication, serendipitous chats, and a sense of comfort from those you work with. Let’s move away from the fear-based culture of the Industrial Age of doing what you’re told when you’re told, having to show up at the office every day at 9am and staying until 5pm. This paradigm carries with it the hierarchical fear; if you don’t do what you are supposed to do, you may end up fired, without income to pay your bills and support your family. Remoteness adds more blind spots into accountability and understanding how your colleagues are thinking and acting. The social cues humans require to develop trust and security have been eliminated in a remote-only environment.
- Unproductive: The downside of remote work and isolation are often brushed off. Instead, opponents claim; you can strike up a chat with colleagues in Slack video call with people any time you want. These actions often take more time and energy than simply asking someone a question live. Response lags, delays, set up issues, the process of writing, reading, sorting through 50+ Slack messages, all take a mental toll. We can’t rely on tools to fix the problem of limited interaction. It’s often far more productive to be in the same room with people and solve problems with a quick question rather than wait for 6 hours for another time zone to wake up. Remote work can lead to massive lags and delays for output.
- Operationally Challenging : Beyond the social challenges of remote work, there are operational challenges for companies hiring remote-only that are often not discussed. It’s a full-time job staying on top of the employment laws and tax registrations required to hire people in different cities, states, and countries all over the world. Often times it requires establishing a new entity or subsidiary. This is time-consuming, and operationally challenging. The alternative is using a very costly Global Employment Outsourcing organization, which is not always a feasible option for smaller startups.
How the Hub & Spoke Model Evolves from These Two Primitive Structures
Neither traditional in-person office work or remote-only work systems will exist in the long run. These structures do not encourage free-thinking, trust or self-motivation. In a time where more jobs can be automated and human intuition is our strongest asset, these traits will be more important than ever.
Key Principles of a Hub & Spoke Model
- Remote First, NOT Remote Only: This means encouraging trust in employees to work wherever they feel empowered to do their best work. Just because an office exists, doesn’t mean people are required to work in it, but it is there when they want it.
- Geo-Radius: Try to concentrate hiring in locations within a 1 hour radius (or commuting distance) of a hub/zone so being together in person is feasible.
- In-Person Time: Encourage in-office time together at least 1x per week. Have lunches/dinners together on those days.
- Flex Office: Have a co-working space/flexible office and assume on a given day 30–50% of people will be in the office. It may be tight on days everyone is there, but that’s okay, co-working spaces with flex desks are helpful as they provide extra floating room.
Some of the Potential Risks and Challenges
While there are many benefits to this model. there are obvious risks and challenges that may arise such as:
- Location exceptions: Companies may set a policy that employees must be within a 1 hour distance (commutable) to a hub or zone location. What if someone is 2 hour away? What if they are in a different European country but promise to fly in every 2 weeks? The exceptions will inevitably start to leak and it will be difficult to maintain a hard line.
- Dependency on Hub: The downside of the hub and spoke model is that there can be a dependency on the hub which can limit the productivity and cultural identity of the zone locations.
How this Model Can Work
A hub and spoke model can optimize operational efficiency for companies, while optimizing state of mind and work environment for employees.
For an American company looking to implement a hub and spoke model, it may look something like this: a hub in San Francisco and zones in Toronto and Berlin.
The operating structure might be set up like this;
- Incorporate a company in the US.
- Incorporate a company in Canada that is a wholly owned subsidiary of the US parent company. Capitalize the company 1.5:1 debt to equity to meet the Canadian capitalization rules. So, for every $1 in equity allocated you allocate $1.50 in an arm’s length loan to the Canadian subsidiary. Set up service agreements between the entities for hiring and operations.
- Incorporate a company in Germany that is a wholly owned subsidiary of the US parent company. Capitalize the company with equity, then set up service agreements between the entities for hiring and operations.
This way, you can have a globally distributed company while concentrating teams in hubs and zones — the hub and each zone represents a home base where people have a place to go and interact. A physical place where people can feel welcome, a place that acts as the heartbeat or control room of your local team.
Note: This should not be considered tax or legal advice, consult experts with respect to entity formation, tax regulations and transfer pricing rules.
Here are some of the benefits I’ve seen from working with a team that has implemented a form of a hub and spoke model.
- Improves and encourages trust: The model relies on a system of trust and self-motivation for employees to know how and when they want to work. When they want interaction, and when they want to work alone.
- Improves accountability and productivity: This model allows people to work together in person but also allows people to work alone and digest after collaborative in-person time.
- Improves operational efficiency for companies: It is nearly impossible for small companies to scale and stay compliant with all employment and tax laws while they hire fully remote. Companies, especially startups, don’t have the time, effort, expertise or cash flow to set up new entities in every country employees work or have the money to pay a global employment organization (GEO) between 20–90% on the dollar in employee salaries to hire people and run international payroll. By hiring in hubs and zones, it creates a compliant and valid entity in each country, allowing companies to have a global spread while concentrating in a few major areas around the world, leading to overall improvement in operational and cost efficiency.
The nature of how we work will evolve past ‘remote-only’, and the hub and spoke model for building businesses will be one of those evolutions.
First, however, we need tools to support this model. It’s challenging to operate businesses correctly and compliantly using 10 different piecemeal tools (a combo of quickbooks, spreadsheets, email PDFs, expensify, payroll and hiring platforms and the list goes on). We need methods and tools for entrepreneurs and startups to run a global company with localized teams. Let’s allow smaller companies to follow the model and not limit it to the large corporations who have the time and money to do so. This model allows companies big and small to work locally but still have a global connectedness and presence.
The hub and spoke model is a corporate structure which allows teams and talent to be locally centralized while still connected to their larger global network. Teams within the team could be concentrated in one jurisdictional area, so that maximum collaboration can occur rather than experiencing lags across time zones. This model will make running a global business operationally easier, while also fostering trust and cohesion within the groups.
The future of work will be a spectrum between the traditional in-office environment and the remote-only screen culture. A hub and spoke model makes work both global at scale, while encouraging independence, trust and connectivity within local work tribes. The future of work means optimizing efficiency for companies and state of mind for employees, a win-win for all.
Have opinions on how we will work differently in the future? Please share you ideas and comments!