The biggest worldwide story over the last month has been the rapid spread of the COVID-19 virus, first identified by health authorities in Wuhan, China. As I’m writing this blog post, the virus has spread to more than 70 countries, more than 90,000 cases have been confirmed, 8,000 of which have been classified as serious.
The Coronavirus has disrupted daily life, rocked the business world, and brought the rapid climb of the global stock market to a sudden halt, turning into market correction territory quicker than at any point in history. It took just 6 days for the S&P 500 to fall 10% from its all-time high on February 20.
As companies act to help control the spread of the virus around the world, corporate emergency plans have forced employees to work remotely. My goal is to discuss how the the scare of a global pandemic is catalysing the eventual acceptance and ubiquity of remote work.
As China’s seaports and airports are at the epicenter of global trade, one of the biggest causes of the economic slowdown has been getting goods in and out of China due to roadblocks, quarantines, and factory closings. “Due to the coronavirus outbreak, cargo volumes at U.S. ports might be down by 20 percent or more on a year-on-year basis compared to 2019,” said Cary Davis, an official with the American Association of Port Authorities.
Companies that have direct business exposure to China and its trade logistics have been the earliest to feel the effects and sound the alarms. Apple warned investors that the supply of iPhones would be affected by the spread of the virus. Apple relies heavily on production of their products in Shenzhen, China, and consumers in China make up about 20 percent of their business in terms of global revenue.
Regardless of their direct or indirect connection to China, companies around the world are taking precautionary measures to cancel any non-essential employee travel, and recommended that employees work from home, whenever possible. According to financial data platform, Sentieo, 77 public company transcripts mentioned “work from home” or “working from home” in February. This is an increase from just four mentions of the same phrase in February 2019. The vast majority of these transcripts also mentioned “Coronavirus”.
It’s hard to find definitive statistics on how many people work remotely. Gallup’s most recent survey in 2016 showed that 43% of employees worked remotely in some capacity; that was up 4 percentage points from 2012. Another survey showed remote workers make up anywhere from about 5 percent (those who typically work from home) to nearly two-thirds (who sometimes work remotely) of the workforce, depending on the measurement. What is absolutely certain is that the trend has been ticking up and a pandemic like COVID-19 has the potential to fast-track the move by making it more universally accepted and prominent. Kate Lister, president of Global Workplace Analytics said, “What these temporary uses tend to do is show companies that a) it can be done, and b) having people already accustomed to working remotely makes the transition much easier.”
Companies that help enable the transition are benefiting as a result. In fact, their share prices are actually rising as investors take notice of the benefits of remote work. Shares in Zoom, the teleconferencing software company, skyrocketed over the past week as more white-collar workers work from home and telecommunicate. Although, anecdotally, some investors mistakenly invested in shares of $ZOOM instead of $ZM, causing shares of the incorrect company to spike nearly 80% in one day.
Companies who have predominantly remote work cultures and whose businesses are not impacted by the spread of a possible global pandemic are not seeing major disruptions to their everyday activities. One company in particular that pioneered the remote work culture and benefited tremendously as a result is the project management company, Basecamp. Basecamp was founded in 1999 with 4 people. They currently have about 50 employees spread out across 32 different cities around the world. They work from home, from coffee shops, from co-working spaces, or anywhere with internet access. The co-founders of the company, Jason Fried and David Heinemeier Hansson wrote a book in 2013 called Remote: Office Not Required and have been vocal proponents of this shift.
Basecamp’s internal handbook and communication guide are publicly accessible for all those who are interested. It discusses what they believe makes them successful and able to run a business remotely that has been cash-flow positive since the very beginning. Basecamp was early to the idea that remote work increases the talent pool, reduces turnover, lessens the real estate footprint, and improves the ability to conduct business across multiple time zones, to name just a few advantages.
Fred Wilson, investor of USV, recently published a blog post detailing his “zoom room”. Wilson said that he converted his office a year and a half ago to only have a couch, a chair, and displays for video conferencing. He describes how meetings now primarily occur through Zoom; therefore eliminating the need for a traditional desk and chair in his office.
As we think about the future of remote work, and whether this latest catalyst will have lasting effects on how business is conducted around the world, one has to wonder which businesses and industries will be able to take long-lasting advantage of such changes. In a survey of 11,000 workers and 6,500 business leaders by Harvard Business School and Boston Consulting Group, the vast majority said that among the new developments most urgently affecting their businesses were employees’ expectations for flexible, autonomous work; better work-life balance; and remote working. (Just 30 percent, though, said their businesses were prepared.)
Technology is a big reason for the change. Nowhere is that more true than today where millions of workers and thousands of companies have already discovered the benefits of working remotely. In companies of all sizes, representing virtually every industry, remote work has seen steady growth year after year. The youngest people entering the workforce today don’t remember a time when people weren’t always reachable, so they don’t see why they would need to sit in an office to work. The average yearly cost to rent office space in Chicago, where I live, is about $7,000 per worker, per year. I’m not even talking about more expensive cities such as New York, San Francisco, or Washington, D.C. With such exorbitant costs, the eventual push towards remote work almost seems inevitable.