Virtual companies! Are they a horse of a different color or a suit of clothes cut from a different bolt of cloth?
I am finding that many are smaller SaaS companies and have many elements found in High Performing Organizations. These companies seem to be hidden from view because they are not huge, nor are they among the Fortune 100 companies, or talked about everyday in the mainstream publications.
Each of the companies I looked at share the common elements of being small to mid size, have been mostly or completely virtually distributed from their inception and are less than 15 years old:
- HubStaff produces software that helps people manage remote work with time tracking and screenshots. Their software also integrates with over 30 project management and payroll solutions.
- FlexJobs is an online service for professionals seeking telecommuting, flexible schedule, part-time, and freelance jobs.
- Automattic is the open source creators of WordPress and much much more.
- Buffer is an app used to share information to multiple social media channels, gather analytical data, and organize your social media content marketing.
- Fire Engine Red is an innovative marketing, technology, and data solution for the education market.
- HelpScout offers customer support software that keeps teams organized and customers very happy.
One might argue that a small company is much easier to manage and thus more likely to have the characteristics of an HPO. That is a ridiculous assumption to make, especially since the death rate of small start ups in the first year is above 80 percent. Secondly managing remotely is one of the biggest challenges faced by most mature companies these days. What makes the above list of companies and others like them candidates for possibly belonging to the HPO club? We need to compare their qualities and culture to the research-validated factors provided by the HPO Center. The HPO Center analysis gives five major factors shared by all High Performance Organizations. How do these remote companies compare?
HPO Factor #1: Quality Management
Hubstaff, FlexJob, and Fire Engine Red all talk openly about how they manage their distributed teams, what works now, what didn’t work and why. . Hubstaff uses one tool to manage the multiple projects constantly worked on, and their own tool to manage the different teams. David Nevogt, CEO, advocates giving a tremendous effort to organizing information, plans, and projects upfront, then presenting this information with a clear understanding of the end result needed and the timeline for accomplishing these results. He then steps back and lets his team members work and collaborate as needed to get the job done. He spends time on a regular basis to talk with his team, mentor them, check on progress, and answer questions. They do not micromanage their team members. His key is careful planning and accurate precise information up front. Hubstaff also considers each member a partner.
Help Scout on-boards each new member with a week of customer service. One of the values of Help Scout is the first thing written in the job description, “We trust you.” Management trusts employees up front rather than withholding trust until the employees have “earned” it
HPO Factor #2: High Quality Employees
These companies understand the critical importance of finding the right employee for the right seat on the bus. Automattic says: We look for people that are self-starters/have a high degree of independence, value continuous learning, and are receptive to feedback. If during the trial process a candidate needs a lot of ‘hand holding’ and waits for specific instructions before moving forward on work, they probably won’t be a good fit.”
Virtual companies must be very careful and selective for their hiring process. Fire Engine Red found many of their team members through employee referrals. They focus on hiring the best person for the job and paying for performance. Their leadership team has an equal number of women and men.
Most of the companies studied also pay well and they expect to get what they pay for. Buffer posted an article about the formula they use to calculate salary. The formula was conceived by a team of employees that also included the CEO and leadership team. One of the values that drove the formula creation is “We believe that everyone should be able to live a good life—and we don’t want to exploit people living in places where wages are generally lower. We’re not an outsourcing company. Therefore, we decided to create a significant lift in salaries for those that live in places that are generally much lower paid compared to the average.”
There is a very important qualification to the good wages. David Nevogt, of Hubstaff, wrote about the top four qualities needed to be a good remote employee. The most important was accountability, “that the employee cares about the result and does what they say they are going to do.” In these distributed companies it is very hard to look busy without producing results. It is also hard to take credit for others’ work. That is because these companies have put processes and systems in place for personal accountability.
Often these companies have a trial period or trial project to see if the employee is happy doing virtual work, is self-motivated, and goal driven.
HPO Factor #3: Open and Action Oriented Management
Help Scout says this best: “Remote teams require more organization, better communication, and a high level of proactive transparency from you.”
Some remote companies have annual get-togethers somewhere in the world. Other companies do other things to bring the company culture home to everyone. Fire Engine Red gave everyone a day off to REDuce their bills. The company gave out a tip sheet and had coaches standing by to give further advice. At the end of the day they collectively saved more than $25,000.
Success in virtual companies depends on great communication skills with the same information being shared with everyone. Transparency is key, so is everything that leads to building trust. These qualities must be in place from the beginning.
Each of the above companies also have extensive blogs, webinars, and tweetchats to share information and inform their target audience about how to handle every type of remote issue imaginable. They publish their financial data, share failures, have exceptional strategic relationships with each other, and give shout outs and support to each other.
HPO Factor #4 Long Term Orientation:
As previously stated these companies are less than 15 years old. That is not surprising, because the needs for their products have emerged in recent years. These companies have been developed because their founders were frustrated, discovered a black hole or a problem, and found a way to solve it. They also have many values in common. HelpScout says: “Our goal is to help millions of people around the world through our products. While growth is important, team and values are paramount. We’re always striving to do impactful work we’re proud of in lieu of chasing overnight success.”
In researching this article I have found several commonalities:
- Their CEO’s are the founders.
- They work very successfully with distributed teams
- They give, are transparent, and pay very good wages.
- They are dedicated to great customer service and employee service.
- Their success with processes and systems can be scaled for larger companies.
- They all belong to the 23% of entrepreneurs who are still standing after 4 years and are moving forward. They have also not been bought out by one of the bigger companies who like to buy young high tech companies. They are committed to what they are doing.
HPO Factor #5 Continuous Improvement and Renewal
Hubstaff lists “Creativity” as one of its values. “We think differently and provide unique solutions. We are innovators. We create.”
Buffer lists ten values that have direct correlation with innovation, creating new ideas, and new ways of approaching a problem.
FireEngine Red’s tag line is “Innovate with us.” Then they explain, –We’ve gone all-in on innovation. Shelly Spiegel, our CEO & Chief Creative Officer, began transforming Fire Engine RED in the spring of 2012. By then, we’d earned a reputation for unparalleled client care; Shelly wanted us to be known for innovation as well.”
FlexJobs continuously collects data on the trends of remote work and then offers job seekers a safe, easy, and efficient way to find professional and legitimate flexible job listings. Sara Sutton Fell, founder of FlexJobs also provides Remote.co “a resource for the life cycle of companies who see remote work as a true opportunity, from hiring to training to managing distributed teams. We are focused on providing expert insight, best practices, and valuable support for organizations exploring or already embracing a remote team as a significant portion of their workforce.“
Help Scout CEO Nick Francis explains, “Every founder has dreams for his or her company. My goal is for Help Scout to make a long-term impact on businesses around the world. I have no desire to be a serial entrepreneur or do something else. Success for me is to sustain this business for a very long time, which has forged an unorthodox path for the company…Does long-term thinking mean that we grow more slowly? Absolutely. Does it also mean we have a greater chance to make a long-term impact on businesses around the world? Yes, if we stay focused on the right things.”
Many different companies claim to be High Performing these days. It is almost a tag line for some. Without clear data it is hard to make assumptions turn into facts so it is really impossible to tell if these self-proclaimed HPO’s are truly high performing or not. One might assume that if you are on the Fortune Global 100 list that would count, but I know several companies that receive bail out money and have notorious employee relations and are still on that coveted list. David Hanna has researched how easy it is to fall off the list. “In fact, 55 of the Top 100 fell off the list during the 2000s. And 55 companies also fell of the list in the decade of 1990-99.”
The only real way to determine HPO status is with the collection of careful and consistent data. Whether you are a large multinational company or a small distributed company, the same five factors must be present. The SaaS companies discussed here do not yet have such analytics, but from what I have learned about them, they are moving in the right direction. They each have an impressive commitment to their company and to all stakeholders. And, according to what their blogs report out, the customers and employees feel the same.