Terminal, a company that builds world-class remote engineering teams for high growth tech companies, today announced their inaugural Remote Leadership Report which reveals that, despite early success, the vast majority of engineering-driven companies are not equipped for a long-term shift to remote work.
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The research, commissioned by Terminal and conducted by Method Research, explores how company HR and engineering leaders have navigated the rapid and forced shift to a remote workforce due to COVID-19 and their outlook in managing a remote workforce over the long-term.
In exploring HR and engineering leaders’ strategic plans and decisions around building remote processes and culture, the study revealed that 95% of HR and engineer leaders believe that they successfully navigated the transition to a remote workforce through COVID. However, the data also shows that leaders’ actions contradict their perception: Most have invested little to no time or resources in building a remote work process, structure and culture long-term.
- More than two-thirds of HR and engineering leaders say they don’t have a long-term plan
- 45% of leaders without a long-term remote work strategy say their culture is okay for now, but not optimized for the long term.
- Even among the few who do have a long-term plan, 61% of remote-work plans are less than a year old and 40% have been developed solely in response to COVID-19
- The majority of leaders admit they spent more time planning the holiday party than planning for a remote work future (53%).
“The remote work movement is here to stay,” said Clay Kellogg, CEO of Terminal. “Top tech talent can now work from anywhere, which means a company’s talent strategy is inherently intertwined with their remote strategy. Yet, just 27% of engineering and HR leaders say they have a strong and thriving remote culture today, and many lack the expertise to create one. Now is the time for companies to invest in a comprehensive remote work strategy that encompasses culture and infrastructure, so they can attract and retain engineering leadership to fuel sustained innovation through the COVID-19 era and beyond.”
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The inflection point: COVID-19 accelerated the remote work revolution
COVID-19 removed the last barriers to remote work adoption. After the widespread pandemic-induced transition to remote work, 81% of leaders say they are now more confident their company could effectively manage remote work. This sentiment was also reflected in both their personal preferences as well as their anticipation to increasingly move to a permanent remote workforce.
- Almost two-thirds leaders surveyed said they prefer to work remotely if they were given the long-term option
- Half of leaders (50%) anticipate increasing the proportion of their employees permanently working remote in the coming two years.
- One in 4 (25%) say the number of employees permanently working remotely will double during this time.
Recognizing remote shortcomings
While many leaders are embracing a shift to remote work for the long-term, they may be overestimating just how easy this transition will be. Two-thirds of HR and engineering leaders (61%) admit turnover is low right now due to an economic recession and employees having limited career options with COVID-19, not necessarily because they have a strong remote culture. Moreover, even companies with a long-term remote strategy significantly prioritized company outcomes over employee well-being — a sensible approach given short-term economic pressures but a short-sighted view for long-term value creation.
- When asked what was addressed in their remote work plan, employee productivity was ranked as the chief concern (63%) while revising company benefits (29%) addressing employee loneliness (32%) and employee burnout (21%), were at the bottom.
- Only 33% reported that their existing plan addresses remote onboarding.
- Not everything translates online, with most companies admitting that Zoom happy hours don’t count as company culture (59%).
Small companies at risk in the talent wars
Terminal’s study found that rising startup leaders fared better than public companies in the early transition to remote work, with 52% of leaders at rising startups saying the move to remote was “very successful” compared to only 35% at public companies. However, the research also revealed that rising startups are also more susceptible to competition from big tech when it comes to hiring–and they’ve invested far less in planning compared to mid-sized and large tech companies.
- Nearly two in three (63%) rising startups say that big tech going remote will make it harder to find and keep great talent, compared with 44% at mid-stage, 37% at late-stage, and 43% of public company leaders
- Four in 10 (39%) of companies with 100 employees or fewer don’t have a plan vs. 24% of midsize and 26% of large companies.
- Leaders at rising startups report experiencing the most difficulty (19%) out of any category of business size in managing remote teams and processes from home.
Surprisingly, salaries stay the same
Despite a long tradition of paying workers differently depending on prevailing local wages and cost of living, leaders signaled a new willingness to offer uniform salaries unrelated to where employees live. However, these results also showed that many companies lack a remote-work compensation plan.
- 41% of leaders plan to pay all employees the same for the role no matter where they’re located.
- 39% of companies with 100 or fewer employees don’t have a plan vs. 24% of midsize and 26% of 501+ employee companies.
- Companies with a compensation strategy are more likely to embrace uniform pay. Half of leaders with a permanent remote work strategy say they’ll pay all employees the same for the role no matter where they’re located.
Remote Leadership Report Methodology
Terminal conducted this research using an online survey prepared by Method Research and distributed by Dynata among n=400 HR and engineering leaders. The sample was sourced partly from Terminal’s database of contacts and partly from Dynata panels. Respondents were required to be currently employed with a title of director level or above with decision making influence over strategic plans and decisions for their department in an organization employing engineers or developers. Data was collected from July 10 – 23, 2020.
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