Remote Work: From Temporary Shift to Strategic Advantage
Welcome! As business leaders adjust to the new reality, they are embracing remote work for a variety of reasons, as you’re about to find out. And along the way, as they get comfortable working with distributed teams, they also have started to build their own virtual talent benches filled with highly skilled independent professionals, giving them flexibility and the ability to think more strategically and move forward during these times. My name is Tim Sanders. I’m the Vice President of Customer Insight at Upwork, and I’ll be your host for today’s webinar. I’m joined by Eric Gregg, CEO and founder of ClearlyRated, and Adam Ozimek, the Chief Economist at Upwork.
We’ll be discussing the recently released Future Workforce Pulse Report on how companies are adapting company sentiments towards remote work. I’m really excited for this conversation. Eric, Adam, welcome! Thank you, Tim. Appreciate it. Glad to be here.
And let’s start by just diving into the data a little, right? Great, Eric. Give us a read-out! So, let’s start with really the number one key headline that I think we have here, which is that, by the research that we have and the projections, we see approximately 36 million Americans working remotely by 2025. That’s an 87 percent increase from pre-pandemic levels. And what we’re really seeing there is that the projections we’ve been making about remote work and the trends that have been happening have both accelerated and also pulled those projections forward by about five years. Even without COVID-19, we were seeing more and more remote work every year that we’ve done this study.
But what we’re really seeing now is that that adoption took a leap forward that is not likely to get back. When we asked teams what percentage of their actual team was working remotely pre-COVID and then when COVID hit and then now, we saw that, while there have been some that have gone back, what we’ve really seen is the majority still have a significant portion of their team working remotely. And what really gets exciting and interesting for those of us that follow this space is just the impact that those projections have as they go forward into the future. So, what else did we really learn when we talked to hiring managers about what they were experiencing and the remote aspects of their teams? Well, the big thing is that about 68 percent said that remote work was actually going more smoothly now than when their company first made the shift at the start of the pandemic, and that makes sense. We’re actually getting close now to a full year of time to really understand how this impacts our workforce and what we can actually be doing to improve the engagement of teams that are largely distributed outside of the physical constraints of the four walls. About three out of four hiring managers reported having at least one person on their teams working remotely.
So, most of them had to deal with this within at least some level, even if they’re maybe not as fully remote as they were right when the pandemic hit. We’ve also learned a lot there too, because when we see this, not only is it going better now than it was, but for the vast majority of people, it’s going better than they actually thought that it would. So, a lot of the fears that we had going into this about what remote work was going to mean and how it was going to impact our teams have really proven to be unfounded.
And in fact, not only have the fears largely not materialized, a lot of benefits that maybe we didn’t think were there have actually shown up in the data and in the reporting as a part of that. So, what have been the most common benefits that people have reported in terms of working remotely? It’s not terribly surprising, Tim. 70 percent of hiring managers cite a reduction on nonessential meetings, and I think probably that’s been the silver lining for a lot of people in 2020, is, ‘Gosh, I don’t have to sit through a lot of meetings that maybe aren’t critical to my job.’ But then we also see some things that, again, are actually a manifestation of other trends that we’ve been following really for a decade, which is that that advanced flexibility goes a long way to really engaging that workforce. And then, of course, getting rid of those commutes.
I think that that’s just, you know, time in the bank that would have been spent doing something nonproductive that goes towards now the work relationship there as a part of it. The productivity has actually long been a concern with remote work, and what we’re seeing here is that it’s, you know, generally a false one. And the data is really proving out now that we have a lot of people engaged in remote work that the productivity gains far outweigh the potential for productivity loss. We actually also know that, from past studies, that, you know, that productivity really hinges on how you do remote work. So, the technologies that you implement, the processes that you implement, matter a lot.
And then even just how the core culture embraces some people working remotely and maybe some people in the office matters a great deal as well. So, we have to take what we’re learning now and the benefits that we’re finding there and put them to good work, because we are stretched really, really thin. Across the board, 58 percent of hiring managers said that they feel stretched to capacity, 61 percent of teams lack people or skills to complete all their work, and about half of teams have had delays and cancelations of projects because they just don’t have the available talent to pull this through. And this is another area that was existing and was simmering below the surface pre-COVID and has really jumped to the forefront as we’re all trying to do more with less, we’re all trying to make sure that we continue to push forward our jobs and our businesses as a part of that. And so, its’ a real opportunity for people to leverage this. And what we saw here is that, you know, the way that a lot of people are doing this, and you lead into this a little bit at the start, is that they’re looking at additional flexible talent.
We’ve been studying this for now closer to two decades than one, which ages me a little bit. But what we have seen across the board as we’ve looked at recessions is, coming out of every recession, workforces and hiring managers put an additional emphasis on flexibility. And we expect that that will hold coming out of this as well. So, it was really no surprise that, when we looked at the utilization of freelance talent, the percentage of people utilizing freelance talent is on the rise. And when they look at what their expectations are over the next six months, it goes up dramatically. 39 percent say that they intend to increase their utilization compared to just 10 percent that expect to decrease their utilization of freelance talent.
So, we understand that flexibility as an organization is really valuable too. Now, I know a big part of what I want to get to is hearing your guys’ reactions to some of this data, so I’ll just leave you with this last data point before we start our conversation, which is that we were able to actually find that a 10 percent increase in the share of workers that will be fully remote in the long-term is actually associated with an increase in the likelihood of hiring freelancers. A significant increase. And it makes sense, then, right? Because when we look at this, what we’re actually saying is that we’re decoupling the work from the location. And as we were forced to do that in 2020 and now into 2021 as it pertains to remote work, the next logical thing is to say, ‘Okay, if they don’t have to be in the same physical location, then that means that my talent pool can truly be infinite, and I can look for the best people to solve my specific problem as opposed to trying to learn on the fly with the people that we have involved there.’ And we see that have long-ranging impacts in terms of helping the people that you do have employed full-time upskill themselves to stay relevant within their jobs and to continue to push forward, and we also see it as a great opportunity for people to really have the talent that they need when they need that.
So, that’s really a look at this. I know you like to geek out on the data almost as much… probably not as much, but almost as much… as Adam and I do. But I would love, you know, to see, you know, as you’ve looked at this, you know, what you’re seeing. Are you seeing, you know, more of a remote work accelerated? You know, the acceptance of that hybrid flexible team? Is that becoming more accepted, I guess, in the people that you’re talking to, Tim? Yes. And, as you know, Eric, every week I do deep dive interviews
with somewhere between say six and ten of our enterprise customers. I’ve been asking them this exact question. I think there’s a couple of keywords here. Keyword number one: distributed.
So, here’s the first thing I started to hear as early as spring of last year. Certainly, by the summer. A lot of leaders realized that the best talent in the world doesn’t live in the zip codes where they have headquarters or branch offices. They begin to understand that, as they worked remote and got comfortable, you know, leading from a distance, so to speak, they also begin to change their thought patterns about where they get their talent, be that talent full-time or flexible. And I’m hearing a lot more acceptance of this global workforce. The talent is out there and not confined to our office locations.
And that was like the first thing I started to hear. And then the next thing I started to hear was that flexibility had many benefits and it was resonating with so many different leaders across companies. Initially, the value of the flexibility was all about getting specialists so that our team members could focus on their work and think more strategically. We started to hear that from a lot of clients. Then as we started to get towards the end of 2020, I started to hear more discussion about variable cost structure. To your point, Eric, as you get more comfortable working remote, which means you’re more comfortable working with others from a distance, you also begin to question the idea that you have to have everyone working for you on a fixed cost basis.
In other words, one of the values a lot of people were seeing towards the end of the year about flexible workforces is that it also puts a variable cost structure in place for talent, much like we’ve seen in computing, and obviously more recently, in real estate. And to quote one of my favorite authors, Prof. Scott Galloway, in his brand-new book “The Coronavirus Opportunity”, he says variable cost structures are the gangster move in 2021. And the reason why is because we’re operating in a very uncertain environment and agility isn’t just a concept.
It first and foremost emanates from the profit and law statement. So, we’re seeing a huge uptick at Upwork of enterprise acceptance, many of them having initiatives to increase the amount of people they have working in what we might call a talent cloud. So, the trends are all pointing up.
And let me kind of put a couple of questions back to you, kind of in light of that. Eric, as you read his research, what are some of the remote work assumptions that have been challenged since COVID-19 forced most of the knowledge workers to work from home? Yeah, this has been the most rapid round of myth-busting we’ve ever had in remote work. Because again, what we saw in, you know, multiple years of doing this study with Upwork is that there were just really outdated views of what remote workers were actually delivering, and there were a lot of fears. And what was interesting is that those fears were a little bit age dependent.
And so, you know, what was saw was, first of all, if you were younger, you tended to be more comfortable hiring freelancers and working with freelancers. Across the board, however you judged them in terms of the talent quality, in terms of the impact that they could have on your business, you believed more in freelancers as a strategic part of your workforce the younger you were as a hiring manager. The other thing that we saw on this is that we just had really some outdated myths, right? That they weren’t going to be as productive, that they weren’t going to be as focused, that the productivity would drop off. And we’ve seen just the opposite of that. And it’s been this forced experiment where then people have to go and revisit what they’re looking at.
And I’ll just give you a single story example, in that we track what’s called story points with all of our software developers at the firm. And as soon as we went remote, we were accomplishing enough more story points that it was the equivalent of hiring an additional software developer. And this is a small team of six that’s now getting the productivity of seven. And not just an average software developer, like a really highly-functioning software developer. And so, we had to really think, ‘Okay, well, wait, let’s challenge some of these things going to be a problem and actually look and see, you know, kind of where those go and the positives that those have there as well.’
So, I think it was a really interesting aspect of it to kind of look at that component of it and that side of it. And, you know, I think that that’s kind of been my take on it, Tim, I guess. A quick follow-up… Actually, two quick follow-ups. You mentioned that the younger you are, the more likely you are to be comfortable with remote.
I get that. I’ve also been thinking that another psychographic might be the industry that you work in. So, here’s an example: You read a lot about tech titans saying, ‘We were remote first.’ They were saying it as early as March, right? Yep.
But they’ve been working with globally distributed teams, either outsourced contractors, partners, say, from India to Israel to Ukraine, for decades, right? So, they’ve been kind of in that distributed environment mix for a while and they remain very upbeat on the flipside. You hear people like Jamie Diamond, other people in financial services the exact opposite saying, you know, you lose a lot. But I keep thinking about their work environment of like the trading pit, the branch offices, and the fact that they haven’t had that practical experience. So, this is a very, you know, fish out of water experience. Did your research also indicate that it could also be segmented somewhat by industry in terms of a native remote work acceptance? Yeah, there definitely was differences by industry. And actually, I would love to hear Adam’s take on this as well - because I know he’s looked specifically into the industries. - Me too.
But what we have seen from our view is exactly what you’re saying. However, I will say the bigger piece of it is, if it’s not a major barrier, if it’s true knowledge work in front of a computer, what we’ve seen is that there is pretty quick adoption. And you know, even though they maybe don’t have the same experience as the large technology companies or the same infrastructure, once they were able to get there pretty quickly, it was pretty easy to see how they would move forward in that model, or some form of a hybrid model there. But I’d love to hear, Adam, your thoughts on this too. - Me too! - What have you found as you’ve delved into this question? Yeah. It’s a great question.
I think you certainly see particular industries that have been most comfortable with remote. Like Tim suggested, the tech companies have adapted to this really quickly. And, you know, everyone has had to adapt in the short run, but the tech companies have really been some of the first to say, ‘Alright, this is permanent, this is how we work now.’
You’re also seeing some of that in finance, like Tim said. And so, those are the companies where I think you see the fastest and most enthusiastic permanent embrace, but it’s really important to recognize that the most remotable jobs are in professional services, and a lot of industries contain professional services within them now. Even industries that you wouldn’t typically think of as being remotable do have a lot of remote work because they are also in the services industry now. For example, you know, manufacturing is not an industry that you think of as being highly remotable because you picture the workers on the shop floor. But today, a lot of manufacturing companies are actually engaged in a wide variety of services industries as well.
They do RDN, they do design, they do marketing, communications… And so, even these sort of like you know, industries that you wouldn’t think of as having much scope for remotability, they do. So the BLS data, for example, says that in December, 20 percent of workers in manufacturing were remote. So, that, you know, realty reflects the expanse of service industry type stuff there. So you can certainly identify industries which are most comfortable, but a lot of companies that are doing things across the spectrum have parts of their company, and sometimes significant parts, that can be done remote. - But, you know, I think… - You know, I’ve seen this. Yeah, I’ve seen this; so many companies like AMD computer chips, for example.
They say they’re in the design and marketing business now and all of the making of stuff is kind of out there. It seems to be a very lean approach to manufacturing. I think you’re spot-on here. I’m sorry to interrupt. Keep going. Well, I was actually going to ask you a question, Tim. The companies that do want to take this approach, they do want to adapt a hybrid talent model, you know, to address the challenges that managers are facing.
What steps should they take? I mean, you’ve talked with so many companies that have gone down this path, you’ve helped them go down this path. What are the steps that they need to take to do that successfully? There’s a couple of ways to do it. I mean, the whole idea is that this, like any other innovation, is something that you need to gain trust for, and as you gain trust for it, you kind of require the organization to embrace it and it becomes part of your mental muscle. I mentioned cloud computing earlier, it’s kind of the same journey.
You know, the learning journey that you go on around change management. But let me give you a short-term/long-term answer around this. In the very short-term, you can canvas across your strategic programs and high-profile projects to take a look at all of the skills gaps, think of them as resource gaps, that can immediately be filled by independent professionals. And what you’re gonna do is be building use cases inside your company where all of a sudden, a project that was running behind, a program that wasn’t launching as it should, accelerated very quickly. The other thing that’s gonna happen when you do that is, you’re gonna look up and see that you’ve had a tremendous cost savings because the internet economics of like an Upwork work marketplace operate at a fraction of the swivel chair economics of real-world agencies and staffing companies. So start, executives, by taking a look around your organization at programs and high-profile projects that aren’t getting there fast enough.
And more often than not, you’re gonna find it’s because you lack the people that have specialized skills to do all the stitching to get those things to market. Here’s the other thing. A longer-term approach works like this: you need to change the way you think about the work. So like when you’re launching a program, for example, across the company, the first thing you need to do once you define the goal of the program is to break that program down into work deliverables. Once you break them down into work deliverables, at that point you should make the idea of external talent, like an Upwork freelancer, a first response.
‘Can we Upwork it?’ That’s what a lot of enterprise customers have learned to ask themselves once they’ve identified a work deliverable. The earlier you ask this question, the likelier you are to run on time for the entire program. What we are seeing is that the sequencing is changing.
Where you’re beginning to consider flexible talent at the earliest stage of these programs and clients, it starts to become the cadence of how you do the work, and that’s where it really takes off and scales in organizations that I’ve been studying that use our work marketplace strategically. Adam, I want to come back to you. So I want to follow up with you and have a question for you. So, what is the impact of those remote work trends on hiring and how the companies are developing and building teams? Like, what are you seeing in the research? That’s a great question, Tim, and I really think that that’s sort of the second phase of the remote work adaption to the pandemic. Phase one was, you know, letting your existing workers go remote and figuring out whether that’s gonna be permanent, you know, and how often they need to come to the office.
But, you know, the next phase is gonna be al about hiring. And I think what companies are gonna find is that, you know, the full remote approach offers a lot of benefits in hiring that they don’t get from the partial remote approach. What I mean by that is, if you allow workers to be partially remote and you hire workers who will be partially remote, effectively what you do is you extend your labor market by an hour or two.
Because you still need people who can come into the office once a week or a couple times a month, and that means people who can live further away, but you’re still talking about people who live, you know, two, three hours away. So, you’re drawing from a wider labor market. That’s nice. It’s helpful for hiring, but it’s not a gamechanger for hiring. What’s a gamechanger is when you go fully remote, and that means you can hire people wherever they are without geographic constraints.
So, now your labor market becomes… depending on the nature of your work, it becomes your time zone, or it becomes the whole country, or the whole continent, or the whole world. And so, I think that’s what we’re gonna start to hear more about, is… You know, from where we’re sitting now where there’s not as much hiring going on because people are still dealing with their pandemic crunch, I think people are sort of focused on the short-term tradeoff between partial and fully remote. But once hiring really starts ramping up again, and it should be soon, we’re going to see, I think, more discussions of those benefits of fully remote, and how it really does change the way that hiring works in a very, very fundamental way. Yeah. I think you’re right on that one.
And I think the other benefit, and we’ve seen it internally at Upwork because, you know, we drink our own champagne, our engineering group is a 24/7 shop because it’s global. When you think about the future, the idea that a firm would only be operating eight to ten hours a day will feel noncompetitive, because what we’re seeing is, these organizations, as they embrace not only remote and then they embrace external talent networks and they embrace a global workforce, they also get to enjoy a lot more productivity, especially in a confined, you know, 24-hour day. So, I totally see those things happening too. Eric, let’s bring you back in the conversation.
Do you anticipate companies will revert back to going into the office every day and fighting traffic once the vaccine is into place and well-distributed? I think we’ll see some of that, Tim. I don’t think we’ll see it… I don’t think we will ever look back and say that was a moment in time and it went back to normal. I think there’s no question. And the way that I think about it is, I think about every other major step forward that we’ve taken as a society.
You know, just even thinking about the smartphone, right? How many people do you know that went from a flip phone to a smartphone and then said, ‘Gosh, you know what? Having all of this information available, having all this available is too much for me. I’m going back to the flip phone.’ Right? We just don’t tend to do that, and it starts to actually become now a loss aversion, right? So, as we’re going back and people have gotten used to constructing their lives around work… And by the way, for the organization, there are a ton of benefits to having that more blended work and life balance, especially as we have continued to ask our people to be more available during times when maybe they wouldn’t be available. Getting that flexibility back is a really reasonable ask. And so, I don’t think we’ll see people going back that way for a number of reasons. Number one: it’s actually working better than a lot of people thought it would.
You mentioned this earlier, the economics, once you decide that you can do this even partially, are dramatic, right? You know, from office space to the amenities to all of the things that we support at a traditional office environment. But then, the other aspect of this is, you’re just not gonna get top talent. Top knowledge workers… and I talked a little bit about the differences by generation.
You know, Gen Y is the largest generation in the workforce today. You know, Gen Y and younger makes up almost half the workforce; in ten years, it will make up two thirds of the workforce. And I’ll tell you for free: those folks aren’t going back.
And it’s, you know, a huge part of it. When they look at potential jobs, they’re looking at compensation, they’re looking at career growth, and they’re looking at flexibility. And remote is the ultimate in flexibility there. So, if you’re looking at this and you’re trying to determine the cost impact of this, you also have to take into account how much more you’re gonna have to pay people to get the same caliber of talent if you’re gonna require them to come to the office every day as a part of that. Eric, I’ll give you a little anecdote to tell you how true this is, your point that they’ll never go back.
I was doing research for a book on the idea of environmental lighting, like the idea of sky lighting in the office environment. And we were talking to companies who were rated very high in Net Fortune 100 Best Companies to Work for List, like Sax Institute. But one of the case studies I loved was Herman Miller. Herman Miller, you know, desk chair and etcetera.
And they had sky lighting throughout their facilities, and they had it so much a part of their fabric, they would move teams around that weren’t under sky lighting, so they never were in a dark environment more than 90 days at a time. Anyway, they had a group of them leave the company because a competitor had offered them more money. 90 percent of them returned in less than six months because, ‘They just couldn’t work in the dark.’ And that’s a small thing, just to tell you. If you thought working in the dark was bad, go fight traffic in the Silicon Valley driving two hours both ways so that you can afford where you live and get to work at the office you’re required to go to.
I couldn’t agree with you more. Keep going. Well, so I think it’s such a fascinating piece. It’s probably the question I get asked the most. And Id actually love to hear, you know, Adam’s take on this as well. Do you think we’re going back? I mean, am I crazy? No, I think that there’s no way that the share of the labor force that’s remote is going back to the way that it was before, for the reasons, you know, Tim listed, and you listed, and others. You know, the commuting is a really interesting example.
You know, we did some research and found that, you know… and this is up through September. The average person had saved like $2,000 because of lower commutes. And, you know, that’s a lot of money. And it’s not just for them, actually.
That includes cost for the environment and for the economy as a whole. So, you know, it’s a really big cost. And I also think people tend to… they tend to get used to it when they’re doing it, but then when you stop commuting and you don’t have to anymore and you get that life back, you realize, wow, I can’t believe I did that for so long. You know, that was my experience going for an over-hour commute to being fully remote. So, I think that’s part of it.
The other thing is, some companies will find that, because of management types, management personalities, you know, executives, that remote work doesn’t work for them. And that’s not the end of the discussion, though. Because what happens next is, you know, you have to have employee retention. And what you might find is, you don’t think remote work works for you, but your employees get offers to go other places that are allowing them to go remote, and so your hand is forced. And if your employees don’t force your hand, your competitors might. And if competitors find that they can not only make remote work but they’re thriving remote and they’re thriving with hybrid teams and flexible talent and they’re making that work, then their costs are going down, they’re more nimble, they’re more profitable, and they’re beating you and taking your customers away And so, businesses can’t simply make this decision on the basis of whether they want to, whether they feel like they’re managing it well in the short-run, and leave it there.
They need to look at competitive pressures and they need to look at labor pressures as well. And I think that a lot of them are gonna find that, you know, they’ve got to figure out how to make it work. Adam, I want to ask you a follow-up, and I want to hear from both of you. But I want to tell everybody watching, put your questions in the Q&A. We’re about to go to the Q&A here in a second so that we can interact directly with you. Just on this subject, I’ve been discussing with Deloitte, Stanford Center of Work, a variety of other people in the industry, all these hybrid models.
The preponderance of what I hear is one hybrid model is what they call an opt-in. Opt-in says, ‘Hey, I think it works better for me to go to the office. I’m opting and I feel safe.’ This may not have an impact on the employer’s liability; we’ll see how this works out in the future.
But they call that opt-in. And then there’s another hybrid model called design in. And that’s where workplace or corporate designers try to figure out which employee populations should be in the office for either collaboration… maybe they’re more junior, they need supervision… My question for both of you is, are these the only two hybrid models you’ve heard of? Is there another one more likely that you’ve heard of? I’ll take the first stab at that. I think that those are the most likely. And I’ll just add a data point to that which is that, you know, it wasn’t long ago when we were all talking about how this was such an employee’s market, right? This was a talent market. And it, in a lot of industries, still is.
I suspect it’s going to go back to that very, very quickly. And so, we do need to take into account the voice of the job candidates here as we look at any of these hybrid models. And we’ve done two or three different studies that come up with almost the exact same thing, which is to say about 8 percent of people want to be remote at least some of the time, but only 20 percent of people want to be remote all of the time. And so, we have kind of this natural sort of standardized distribution here where a few people want to be in the office most of the time.
Interestingly enough, they’re mostly white and they’re mostly male. And we have 20 percent of the people that want to be remote all the time. Interestingly enough, they over-index to women and people of color. And then you have this entire swath in the middle that want some variation of that, typically in the range of kind of a 6/40, 50/50 kind of distribution. And it does work different for different people.
You see people who, for a variety of reasons, don’t thrive at home and want to have the ability to go to a physical space. But then you see really more so the people that want to be, you know, there some of the time when it’s important but not there when they’re actually doing the majority of their work. And so, I do think there’s gonna be not one, not two hybrid models, I think there’s gonna be a kind of infinite number. And you just have to start with talking to your existing talent pool and trying to get an understanding of that, and then talking to your leaders and getting an understanding of what they think. What are the advantages that you’re afraid you’d lose when you weren’t in person, and can we really build that around that remotely to really bring equity to that remote working opportunity. That’s kind of been the perspective that we’ve seen and the research we’ve seen.
Adam, what are your thoughts on that? Yeah, I would say that there’s what’s sort of available now, what do we see now, and you know, what’s going to happen in the future. And what I’m really interested to see both in terms of technology and also organizational structure is, what are the companies that are starting up going to do? And what are the new forms that they’re gonna come up with? And are the new ways of working that they’re gonna come up with? And there’s just a huge difference between, you know, taking a company that learned how to work remote versus one that is remote first from the beginning as a start-up as you grow and as you scale. And especially because we know flexible talent is so important to start-ups so that they can scale quickly, so that they can move into new areas and do new things and be really dynamic like that [inaudible]. So I think it’s an area to keep an eye on. You know, what are new firms doing? What are the brand new start-ups doing? And that’s sort of like the firm view of it. I do want to ask a little bit about sort of the wider social view of things because, you know, remote work, it affects businesses, it affects people, but it also has like a wider effect on society.
And, you know, 2020 was a year of great social unrest and we saw additional emphasis on diversity, equity, and inclusion. Eric, I’d be curious, how do you think remote work trends impact diversity, equity, and inclusion efforts? Yeah, it’s amazing that the two conversations that I’ve been having the most as it pertains to what workers want and what workers need from an employer pertain around social equity in the workforce and pertain around remote work. And the beautiful thing is that the two actually intertwine significantly.
I can’t tell you how many of, you know, my peers, often times white males, who I tell them, I say, ‘Look, if you want to make really lasting immediate progress that’s gonna have a short-term and a long-term impact for your diversity, equity, and inclusion goals around the company, start by increasing the flexibility and [inaudible] the flexibility, and specifically the remote components of what you’re offering your team.’ Because again, and I mentioned it, you know, the only people that really that really want to be in the office… And of course, that’s a broad generalization, but statistically speaking, the people that want to only be in the office and not do anything remote tend to be older, they tend to be white, and they tend to be male. And the other way to look at that is to say that they’re stewing that way a little bit because they have the safety nets to where they’re not necessarily the primary person that is picking the kids up from school, that needs the flexibility to deal with an aging mother or father, or other aspects, right, that just happen in life as a part of that. So the best thing that we can do for gender equity is to really create the flexibility that, you know, our entirely wonderfully capable working moms and young women need in their life as a part of that. And that’s a huge step forward as it pertains to creating true equity and diversity in the workforce there as well. And put the crystal ball on… and I know, Tim, we’ve got to go to questions here pretty soon, but I think of things… what’s happening now and what’s happening a year or maybe a couple years from now with the research… Adam, I feel like you kind of think… Okay, what does this mean five, ten years from now? You know, what do you think? What are those long-term social implications that we can expect from this? Yeah, that’s a great question.
And I really think we need to think about remote work like this: it’s not just a single big splash, but it’s a splash with a lot of ripples. And it’s gonna touch a lot of different aspects of our economy and our society. I think one of the most important ripple effects in the long run is going to be an equalizing of opportunity across the US by geography. And what I mean by that is, the somewhat reversal of what we’d seen in previous decades, which is that opportunity was disproportionally clustered in a handful of superstar cities and that meant if you wanted to have that, you know, top-paying job at a law firm or a tech company or whatever other professional service, you really found those opportunities in San Francisco, New York City, Washington DC… And the rest of the country, a lot of different places, you know, if you wanted those, jobs, you had to leave.
And I think that remote work is the first change we’ve seen in a long time that has the potential to lean against this. And I know that, you know, some people are always gonna want to live in those big cities, but not everyone does, and now you can sort of make your ‘where do you live’ decision as separate from where do you want to work. And i do think that that is going to spread opportunity, and it’s also going to allow people, especially high skilled people, to stay in the communities they that were born and raised in across this country, and communities that have been for a while facing out-migration as the highest skilled people left those places for the big cities.
I see that as being a really important equalizer and a really important force for, you know, geographic equality. So that’s, you know, just one of the many… I mean, obviously we could talk for hours and hours about all the ways that remote work is gonna ripple through society in the next five or ten years. But I think that’s a really important one to focus on.
Yeah, it is. That’s a really good point, Adam. Let’s go ahead and go to the Q&A. And the first question comes from Christina Mason.
She says, ‘You mentioned that it’s important to have the right work, processes, equipment, and technology to support working remotely. What are some of the cutting-edge ones that you recommend?’ Eric, what do you think? So, I’ll start. And I think it’s not gonna be necessarily a… Cutting-edge made me pause a little bit. Maybe that’s why both Adam and I paused on that question. But it’s really, you know, the communication tools, the project management tools, that we would see.
Whether it’s, you know, Microsoft Teams or Zoom or other aspects there. It’s, you know, Slack, or again, Teams as a part of that. But those aspects are, I think, key. But one of the things that you said earlier really struck me. And actually, as I answer this, I’m also gonna ask of Adam what your thoughts are on this.
But it seems like, in part, really what we’re saying is that to be successful with a remote work environment, you just have to manage your work well, right? It falls apart when people are not on top of the jobs. Tim, you had said something about, you know, understanding and compartmentalizing the aspects of the work, and I guess I would love both of your perspectives on that because that seems to be as important as the technology investments as well. I’d love to get your perception. Well, I’ll just say that, you know, it’s about project management, right? So, project management… a lot of times when you conceive of a project, you have a vision for the project, you typically try to do a timeline for the project, then you go out and try to start executing either with your internal resources… you beg, borrow, and steal, and then at some point you ask yourself, ‘Do I have the resources for this in-house?’ I’m just saying that that project management DNA kind of shifts now to… and one of our clients calls it taskification. But they kind of take a project and, from the minute they see a vision, that’s the point in when breaking down into components comes into play, and then asking the hard questions. Is that talent in the room or should we immediately look at external networks because we can get them up and going in two or three days.
I think it really is about the DNA of program and project management. And in some cases, we’re seeing a reimagining of role. So certain roles don’t always have to be filled by a full-time hire. That is another ripple we’re seeing here in the way that talent is transforming, and not just in human resources, but amongst hiring managers everywhere.
We have a question here from Jessica Taylor I’d love to answer, and then quickly well move onto the other one, but it’s a question I get. She asks, ‘How do you see the impact of price change from employee to independent contractor, as many contractors are priced much higher for hourly rates than employees?’ Good question, Jessica. It’s an optical illusion. That’s my answer. There’s a couple of reasons why. First of all, the cost is not all in.
When you think about a full-time team member, there’s so much more beyond what you pay them in salary. But here’s the bigger reason… I really dig into the data, taking a look at enterprises who use Upworkers… that’s what we call our independent professionals; that use an Upworker to fill a role that they would have hired a full-time team member for. And you go back after three or six months and you’ll look at how many hours a week is that contractor having to work in filling the role, the answer is not 40. The answer ranges from around 12 to 18.
The point of it all is that sometimes when we hire someone full-time, we don’t have 40 hours of work for them to do. We realistically, based on their specialty, have 12 to 18 hours of work for them to do, and then they float around to a bunch of other Zoom meetings in the other 22 hours, and there may be some collaborative benefit, but what largely we see is that the efficiency… And it gets back to what I was talking about earlier. The efficiency of flexible talent is, you’re building a variable cost structure, and much like you do now in tech, you’re paying for consumption. And that’s where the economics really kick in. That’s where the magic happens.
But that’s a very good question. Mark Gibson… Turning back to the two of you. He says, ‘My DC-based government client has a distributed team before COVID, had some callback during previous administration, continues to work productively remote now. This initially a labor-cost consideration, now it’s a preferred arrangement. Do you see any trends in US government distributed work both for contractors and government service employees?’ Really good question.
Adam, I want to put that to you first, and Eric, jump in if you have an answer there. Sure. So, at a very high level, federal government workers are more remote right now than overall workforce. So, you’re seeing sort of the same pattern where you had a really high level early during the pandemic and it’s come down a bit, but they still remain extremely elevated. So, you know, government workers tend to be… you know, a lot of them are in professional services as well and their jobs are more remoatable than average.
As a result, they have been more remote. The other thing is that, you know, there have been experimental studies with the US Patent Office where they did an experiment with [inaudible] remote work and they found huge savings and higher productivity. So, letting people go remote made those workers more productive and it also saved the government tens and millions of dollars in lower office space square footage. Especially because a lot of that square footage is in Washington DC, one of the most expensive metro areas in the country. So, I do think that there is a huge amount of scope for more remote work in the federal government.
We’re seeing some of it already in the data and we’ll see more of it going forward. Good. Good. We have a question from Hector Amtrack. He asks, ‘How will companies position themselves to recover from the tremendous lack of innovation and creativeness, as working remotely doesn’t foster these two elements, to gain a competitive advantage?’ He says, ‘I see a shift in peoples’ operating styles and work ethics as they’re constantly breaking the agency rule as well as constantly breaking the conflict in interest rule.’ Thank you for that question, Hector.
Adam, I want to go to you. Is this an outlier? Is this something you’re actually seeing across the data? And what is the answer? Do we really feel less innovation in these remote-first teams, like Facebook these days, or Automatic or Base Camp, and the list goes on and on? Zapier, etcetera. There’s a couple of different ways to look at this. You know, innovation is about collaboration, but it’s also about heads down time. And one of the things that we found in remote work is that it’s much easier to avoid unnecessary distractions and unnecessary meetings.
And I know a lot of people are worried about their own productivity because they say, you know, ‘If we go remote, how am I gonna pop into someone’s office and ask them a quick question?’ But you’ve got to look at that from the other side of things. When you’re remote, it means someone’s not gonna pop into your office uninvited and ask you questions. And so I do think that, you know, you’ve got to look at the process of innovation holistically.
And yes, you know, you can’t sit physically in the same room with a whiteboard, but you can share a digital whiteboard. And also, you get that better alone time, that better concentration time. And I would also just look at, you know, a great example of where cutting-edge work is done and cross-country collaboration happens all the time, is academia. And, you know, it’s very very common to see professors from MIT writing papers with professions from Stanford, working across the country. And you really have seen a depth of distance there, to a large extent.
And so, you know, if that kind of cutting-edge work can be done remotely that’s highly collaborative, highly intellectual, then I think it demonstrates that you know, being separate does not necessarily reduce your collaborative powers. It does not necessarily reduce innovation. So…yeah, I want to add something to this because, previous to joining Upwork, as you know, Adam, I studied innovation.
I wrote books about collaboration. I think a lot about it. And that was one of the early fears when we started to work remote. People said, ‘Oh my gosh!’ Innovation comes from collaboration, right? Genius is a team sport; there is no lone genius, right? So, it’s really about teams. But here’s the trend I’m seeing, and this might be advice for everybody watching worried about this.
The rise of a synchronous collaboration is what you should note. We assumed you had to be in the office to be productive; that assumption has been shattered. We also assumed you needed to collaborate in real time.
I was having a discussion with fellow author Dan Pink about this. He said it’s one of the great myths we need to bust in 2021. When we collaborate at the same time, the junior people in the room, the introverts in the room, they’re absolutely dissuaded from offering up their opinions.
As a matter of fact, we call them the conversational hogs usually dominate that. What we’re seeing now is amore a synchronous collaboration that is a better theater for everyone to contribute what they know and share what they think. So my advice to you is, if you feel like there’s less creativity, don’t try to replicate the in-office, ‘everybody in the room to brainstorm’ environment. Instead, take advantage of collaborative tools like a Google Docs or a shared COIN, and let people not just work from anywhere but innovate at any time. I want to move next… I know we’re running out of time here a little bit. Benjamin [inaudible] questioned, ‘What do you think about folks’ concern about hybrid models in which some regions are fully remote and others have the possibility of returning to the office? Leading to remote workers left out of conversations, meetings, and hot discussions, potentially leading to a lack of opportunity of advancement.’
This is a really good question. Eric, Adam, who wants to go first here? I’ll take this one first. I think this is a great question, and it’s one of the things… We were partially remote going into this and we’ll remain partially remote, but a much bigger portion remote coming out of it.
And so, we were a little bit ahead learning this, but we’ve had to really sort of take a look at some of the best practices there. And what we’re seeing is that you have to create an equity situation for the people that are not in the room. And that can be as simple as, hey, if everybody’s not in the room, then we’re all on Zoom or Teams and we all have our video on there, right? So, we try to create the same experience as possible. And you can’t just tack on the remote worker portion of it, right? You can’t take five people out to the bar for happy hour and bring somebody on a… you know, on a laptop. And in the same way, you can’t have four people in the room talking, as people would do, in three-dimensional form in the same physical space and also expect that one person who’s kind of trying to peek into that room to have that same experience. So, what we have found and what we continue to learn and kind of push on is that you just have to really be cognizant of it, and you have to make sure that you’re being really focused on the experiences of those in the room and those out of the room.
And once you start to put that lens on it and put a couple of good hygiene practices in place, you’ll find that it just starts to feel like everybody is together on that piece. And in fact, what we found is that sometimes we would end up watching the response of somebody on the Zoom screen as opposed to them actually being physically in the same space as us, even pre-COVID. So, it doesn’t take long to actually shift that to where you’re really engaging with everybody in the room or not. Let me add something here. So, there’s a brand new book called “Leading From Anywhere”. Brand new book.
David Burkus wrote it, I love it. He says he’s found in his research there should be a rule that if you have a hybrid environment… okay, so, there’s five people in a conference room and seven people on Zoom… the most effective way to run that meeting is for the five people to leave that conference room, go back to their desk, and all 12 people have a Zoom call with a level playing field. I love that. I’m gonna live by that. Adam, I think I cut you off, though. You had another idea on this solving the innovation problem for remote.
I want to make sure you have a chance to express that, because I think it’s a very important topic that we want to make sure and land on. Yeah, thanks, Tim. It sort of ties back to the other question we got about what technologies work best right now, and what’s sort of the leading edge there.
And I really want to emphasize that, when we think about the future of remote work, the future of collaboration and innovation together, we have to understand that technology is not done. Right? We don’t just have what’s available now and what the best tools are now, but we have what’s gonna be coming. And we know that this huge rush of people into remote work is already generating more innovation. So, if you look at patents filed that mention remote work or telecommuting or remote collaboration, the number of patents in this area have surged since the onset of the pandemic, and you can see some cool new technology ideas coming out about how we do video conferences, how we interact...
So, my expectation is that, in a couple years, it’s actually gonna be even smoother and easier to collaborate and work together. And, you know, just at Upwork, for example, we can see that happening every single day in the way that we innovate on the platform, the way that we make it a better place to find independent professionals. Like, constantly, consistently, there’s always really cool new stuff coming down the pipe that just makes it work better, and I think that we’re gonna see that in, you know, a variety of technologies. And we’re gonna look back at the remote work that we do now as being actually, you know, fairly rudimentary compared to, you know, five, ten years down the road, the way we collaborate.
Adam, I want to come back to you with another question here. Colin, University of Delaware, he asks a question I think is kind of a follow onto something you talk about. He says he’s interested in the effect of remote work on cities and real estate. You’ve talked a little bit about how it’s gonna liberate us to live in the city where we want, but he’s looking from the other direction. He says many cities have attempted to revitalize their downtown with premiere office space. I’ve seen that recently.
For example, Dayton, Ohio pops out to me. You know, if remote work expands as the data suggests, how much of an impact does this have on cities, Adam? I think that depends a lot on which cities you’re talking about. So, lower cost cities, I think are gonna benefit from this. Because now that people don’t have to make a labor market and location decision at the same time… so, a lot of people who were wanting to live in, you know, somewhere else, like say a Dayton, for the lower cost of living, but they found themselves having to move to San Francisco and New York or DC for the jobs, now they’re gonna be able to live where they want, and I think lower cost places are gonna benefit from this and higher cost places are gonna lose some demand. So, there’s no one answer to how cities are gonna benefit. The most important places are gonna be places with good amenities, low cost of living, and the labor market there is gonna be less important than it used to be in determining well they do.
Great. Well, thanks, man. We’ve got one more question I’m gonna ask. Katie asks, ‘In the research, hiring managers reported higher productivity as a key benefit of remote work, so why are so many still struggling to keep pace?’ Eric, you have an idea on this? Yeah. I mean, the research suggests
that while they have higher productivity, the amount that’s being asked of them is going up as well. And we’re seeing, you know, a higher portion of people or a significant portion of people that are working, you know, upwards of 45, 50, 55 hours a week. And where we see on that is, we have companies that I think have a fair bit of trepidation on making full-time hires, yet they see the opportunity directly in front of them and they see that they need to be able to take action on that. And so, what they’re doing disproportionally is asking their teams to go that extra mile, to take on more work and to be able to deliver more of that. And I think that this is one of those places where that opportunity exists, and you brought it up, and the way that I think about is this fractional component of it, right? I don’t need somebody that is a demand gen specialist; I need somebody who’s realty good at demand gen, you know, for ten hours a week or 12 hours a week or 15 hours a week.
And so, I think the ability to not have to… as a hiring manager, to not have to stair step up to an entire FTD-equivalent headcount is an overlooked benefit of looking outside of your walls and bringing in somebody as a freelancer or an independent contractor. Yeah, yep yep. They haven’t transformed that talent model. We’re coming right up on the top of the hour, so I’m just… Adam, I was actually gonna come back to you and ask just a lightning round question, and that’s Dungeons & Dragons or World of Worldcraft? Neither. - I didn’t think so. - Different kind of nerd, not that kind of nerd. Different kind of nerd. Hey, I just want to thank both of you.
Eric, I want to thank you for your participation in today’s broadcast. I also want to thank you for your partnership. Adam, I want to thank you not only for being here today and answering questions, but for the incredible work you’re doing as chief economist at Upwork, revealing such game-changing insights on the regular.
To both of you, thank you so much. To everybody watching, thank you for coming. - Stay tuned! There will be more. Thank you. - Thanks. Thanks, Tim. Thanks, everyone. Thanks, Tim.