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How big can the virtual office scale?

In theory, many businesses—even very large ones—could operate without a physical office. But are they operating optimally? Depends on whom you ask.

As far as Sean Nguyen is concerned, no way, no how will staff at his company, InternetAdvisor, ever see the inside of a four-walled office. As far as Blake Taylor, managing director of Synergy Business Brokers, is concerned, once a company reaches a certain number of employees, a physical office location is needed.

Defining that certain number is highly subjective and depends on variables like the type of business, the size, the location, and growth goals. Long before social distancing became a mandate, remote work was seen as a perk for many workers. Today, thanks to a variety of sophisticated collaboration tools, a physical presence is, at least in many cases, unnecessary.

Still, is there necessarily a point at which a company needs a physical office? Can a virtually born company stay virtual? Like most things, it depends on whom you ask.

 

The integrated employee experience

We reached out to Kristine Dery, a research scientist at the MIT Sloan Center for Information Systems Research (CISR). Dery has interviewed large organizations (greater than 5,000 employees) about the move to remote work as part of her research into employee experience for the CISR. She described her recent work in this area in a late-April webinar.

The organizations Dery spoke to converted their workforces to almost 100 percent virtual. There were problems, but it went much better than they had envisioned. In the longer term, Dery says, "most will be looking at some sort of hybrid workforce with remote working becoming a norm rather than an exception to a colocated workforce."

Dery says in her earlier research, she found that the design of the workspace, physical or virtual, doesn't correlate to hard measures like profit or customer experience. However, if the design of the workspace is part of an integrated employee experience strategy that adapts to the changing nature of work, there is a strong correlation to business value. The ability to lead the company employee experience seems more likely to be a reliable predictor of success than the size of the organization.

Different opinions

We also spoke directly to several companies. "My company is completely remote, and I am of the opinion that there is never a point where a company needs an office," says InternetAdvisor's Nguyen, who is director of the Internet provider search company. "I think we will see quite a few very large companies come to that same conclusion after this pandemic."

In fact, some large companies, including Facebook, Twitter, and Google, are going in the opposite direction. Now that employees have been working remotely for about three months, all have announced that some or most of their staff can either work that way permanently or for a long time to come.

Despite this, Taylor believes numbers play a critical role in determining whether a physical location is necessary. "Managing three or four remote employees is hard enough, but when it comes to numbers in the tens, this task becomes extremely difficult," he says. "A lot of communication needs to happen between teams and departments, and having a physical office where everyone is within shouting distance makes communication much easier."

Obviously, there are industries like travel and food and hospitality that don't lend themselves to working remotely. And you can't manufacture something without someone on site to run a machine. But for others, like professional services or those industries that use knowledge workers, it just may not make sense to keep them in an office, observers say. How effectively this shift to remote work is going remains to be seen. While metrics are generally useful, it's hard to know how to measure the productivity of newly remote workers.

What gets lost

There is definitely a place for remote work, Taylor says, "but I believe once your company reaches a certain number of employees, a physical office location is more practical."

For a time, Synergy used a ratio of one manager for every four employees, "but once we hit around 15 employees, overall communication between teams suffered," Taylor says. "This was around the time we decided to move to a physical office location."

Synergy now has 28 employees, most of whom work in-house. "We started as a completely remote company until we decided the need for a physical office location outweighed the potential costs," he says.

Mansoor Alam, co-founder and CTO of healthcare services provider Memoir Health, agrees. Although the company offers a digital health platform, Alam says some components of its work simply can't be done via telehealth.

"I am generally skeptical of the ability for companies to adopt remote-heavy strategies moving forward," he says. "It may be attractive at first from a cost-savings perspective for management and a convenience perspective for employees, but it is difficult to sustain one of the most essential components of a successful company remotely: culture."

Continuity of communication and personal connection are the first to go in a primarily remote culture, Alam says. "We undervalue the importance of seemingly insignificant encounters in the workplace—whether that is stopping by a co-worker's desk to chat about their weekend or going out for a team lunch. We are social beings—from the moment we start kindergarten, we are surrounded by others for hours every day."

Email, video conferencing, and texting impose different social structures and cultural dynamics on how people communicate, he says. For example, in a video conference, "conversations become more fragmented with the disruption of muting and unmuting yourself, the inability to read body language, and the feeling that we are talking to a screen more so than a person."

The right tools make a difference

While staffing numbers factor into the decision for some, several multilevel marketing companies have become successful with the remote work model with hundreds and hundreds of employees.

Lori Cheramie is a social marketer at Modere, an online brand dedicated to clean living, which has thousands of remote representatives in 27 countries. The company also has a headquarters in Utah that houses corporate employees along with a 227,000-square-foot manufacturing facility.

Cheramie, who has been with Modere for five years, says between CRM, collaboration tools, and social media technologies, she hasn't ever felt she couldn't do her job remotely. She says she's been on Zoom calls with as many as 500 people. Cheramie has also participated in private group chats in Facebook's Live video tool with thousands of people and says as long as there's a facilitator, things run smoothly.

With the right tools, there's no need to be in an office, says Cheramie, who also worked for years in a hybrid remote work/office environment as a manager at AT&T Advertising. "I don't think there's a limit at all" on when a company gets too big to stay virtual, she maintains.

The pandemic has caused people "to realize if their business wasn't virtual in any way, shape, or form, it can be now," Cheramie notes. "It's sharpened everyone's technology skills and also made people think outside the box on how they could add a revenue stream or extend their business opportunity."

Like Synergy's Taylor, Laurie McCabe, co-founder and partner at SMB Group, says that company size is a factor in deciding when you need a physical office, but when pressed on what that is, she says that "there is no magic number."

As companies grow, it becomes harder to manage employees if they are remote, McCabe says. But with many workers now telling their employers they don't want to go back to an office, managers are going to have to figure out how to continue to make it work, she adds.

"What this is teaching everybody is that necessity is the mother of invention, and when you've got to shift gears, it's amazing how quickly these organizations were able to go from having a handful of people working from home to virtually all their office workers at home," McCabe says.

Anytime people are spending time commuting to an office, pounding away on a computer for eight hours, then getting back in their car to go home, managers need to ask themselves if they really need to be in an office, she says.

"I think there's a realization it doesn't make sense and they could be a lot more productive" avoiding the commute, McCabe says. "Maybe they can't bring everyone back to the office. … Part of [the decision] will depend on the culture of the business [and] the mindset of the owner and the employees."

Monitor team dynamics

Having a set of metrics is important in weighing the decision, says Memoir Health's Alam. Morale should be monitored, and taking note of changes to a team's dynamics, such as camaraderie, "should lead the conversation on remote work," he says. "Many companies that have moved to a remote workforce are reporting improvements in employee productivity, but relying on this metric alone misses the importance of employee quality of life. That is one of the strongest predictors of long-term employee productivity and retention."

InternetAdvisor's Nguyen sees it differently. He has a staff of 11 in the U.S. as well as Thailand and Serbia and plans to add a few more workers by the end of the year.

"I think people are more productive being able to live where they want while working when they want," he says. "With no commute, office politics, or any of that other nonsense, I feel that more work is getting done."

Yet, he acknowledges that having office space makes it easier for people to get to know each other really well, and they can collaborate seamlessly at any point in the day. But Nguyen insists that nothing has to be done in person.

"There are online alternatives to almost everything. Right now, we're seeing massive tech companies telling their employees to work from home indefinitely because of the pandemic. There's a reason they can do that,'' he says. "There was never a real reason for any of their workers to come into the office besides it being a social norm. … I'd bet that their processes improve exponentially now."

A mix of options

Alam thinks there should be something of a compromise in the form of "smaller satellite offices … that provide employees the opportunity to live more affordably outside major cities and have reduced commute times, without completely sacrificing the social dynamics critical to company culture."

Many companies already pay for co-working space access, as well as encourage working from home a few days a month, he says. "Those few days provide greater flexibility to do things throughout the day, to do things such as schedule a dentist's appointment or run an errand that otherwise would have required using an entire vacation day."

When asked what size a company should be to consider physical office space, Alam doesn't hesitate.

"To be honest, the number is one," he says. "There is some inherent necessity for social interaction" that cannot be duplicated in a remote environment. "This is why co-working spaces have thrived. It's not just about access to a desk; it's about the events that get put on, the networking receptions. I think it can get pretty lonely being on your own."

Ideation doesn't occur as naturally in a remote model, Alam adds. At a company he co-founded previously, he and his partner were bicoastal. "Even though it was just us and we had a great process for collaboration, it was frustrating at times. You couldn't just walk up to a whiteboard and write down your thoughts."

Making remote work successful at any size

The companies that are most effective at making remote work successful are the ones that have a high level of trust in their staff and good methods to gauge productivity, and that clearly articulate what is expected, says McCabe.

"In a lot of cases, that really does start from the top," she says. In small businesses, the owner's attitude sets the tone. "They either foster that or not." It works when there's confidence in people's ability to self-discipline—and metrics are in place to see that people are getting done what they need to, she says.

Virtual water coolers, events, and hangouts to discuss issues people are having working from home are also key to their mental health, she says.

For many, the pandemic has made the decision for them.

"I strongly believe that the future of work is fully remote for many industries," says Calloway Cook, president of Illuminate Labs, which manufactures herbal supplements. "Even if we scale significantly, I have no plans at all to establish a physical office."

E-commerce allows businesses to operate in a lean, efficient, remote capacity, Cook says—even if his business grows to a $100 million company.

"The great thing about remote positions is that they increase employee satisfaction and cost nothing to the business," Cook says. "Also, given the fact that the COVID-19 pandemic may continue in waves for many years, it would be extremely risky to lease an office space even if infection rates dropped significantly in the U.S."

The virtual office: Lessons for leaders

  • Design metrics for your circumstances and needs to measure the value of work at home vs. office.
  • Give strong consideration to morale and company culture to any shift to remote work.
  • Be certain that your remote work tools can sufficiently scale before you commit to a remote work expansion.

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This article/content was written by the individual writer identified and does not necessarily reflect the view of Hewlett Packard Enterprise Company.