If you’ve ever worked from home, you know it can be a nice change of pace.
Simple time tracking that syncs with payroll.
No noisy open-plan office. No co-workers with questions. And hey, working from bed seems fun. (Don’t worry, we won’t tell anyone.)
But is it something you could do every day?
Well, more businesses are saying “yes.” Not only do they let their crew work from home, but at some companies the entire team is remote. Design startup InVision, software group GitLab, and social media management company Buffer all manage remote workforces.
Sound tough? Sure, but consider the benefits. These companies save hundreds of thousands of dollars on office space. That’s money they can use to hire more people or expand in other areas.
So… is this something you should do?
Chance Gurr is the chief operations officer at YNAB, which makes budgeting software. The company’s 79 or so employees are mostly all remote—and Gurr says it was one of the best decisions the company ever made.
It must be: YNAB was named by Fortune as the second best small workplace in America.
“For us, not being restricted geographically is an enormous advantage. We’re able to cast a wide net in terms of our candidate pool,” says Gurr. “We’ll put out a posting for a job and in two weeks have three, four, or five hundred applicants. The vast majority of those are real, genuine, and have written a thoughtful cover letter.”
But how can you hire a remote team? How can you get them to work together? And what about all the tax, HR, or payroll implications?
It’s not as hard as you may think!
How to recruit a remote team
The usual objection to a remote crew is all about productivity. How do you know they’re getting the work done?
For Gurr, that question is a complete distraction. Instead, he says, you need to build a set of core values and then hire according to those. If you do it well, the productivity question should never be a question at all.
“It’s important that our core values are defined and they’re a recognition of what we are, and not something we aspire to be. It’s important we have those values and the team really buys in.”
This plays out in practical ways at YNAB. When employees interview potential new hires, they are asked to think critically about whether the candidate matches company values, like:
- Are they humbly confident?
- Are they genuine?
- Are they pursuing their craft?
YNAB even uses those values in their job ad titles. They’ll say, “We need a humbly confident part-time support rep.”
But the real test comes in the questioning.
Gurr says YNAB is incessant in questioning its interviewees… to the point where they can spend 25 minutes talking about one anecdote!
“We may think that a candidate isn’t as humble as we think they should be, so we’ll ask them about when they made a mistake at work,” he says. “You get to the point where the candidate just can’t take it anymore!”
Gurr says after 20 minutes, you really begin to see how a candidate may have embellished a little. It seems excessive, but this method really gets to the bottom of whether a candidate is telling the truth.
Don’t ditch the cover letter!
Because remote working relies so much on trust and transparency, Gurr says businesses should rely on cover letters rather than just a resume or CV.
YNAB specifically asks candidates to “sell us” on why they should join.
“We always ask people to be real, and in the screening process we screen the cover letter primarily, and CV secondarily,“ Gurr explains.
How does remote working… work?
This is the big stumbling block for many business owners. They might want a remote workforce, but they just can’t get over the idea that people might slack off.
Gurr says you need to change your thinking.
In fact, YNAB tells its staff they don’t have to communicate with anyone for hours at a time. Explicitly stating that gives employees permission to simply get their work done.
“We set expectations that if someone messages you, you are not obligated to respond right then,” he says.
So how does the business make sure things get done?
Easy. Each employee is given deliverables and deadlines, and they’re judged against that. If an employee is consistently not performing, it’s easy to tell because they don’t hand in any work.
Regular check-ins and meetings help keep people accountable. Take the support rep job for instance—the ad explicitly states that applicants will have weekly meetings to discuss their metrics. Performance is built in from the start.
“We are much more concerned with the actual work they deliver than how long they are at their computer,” Gurr says. “And if that isn’t matching expectations, we address it and can part ways as friends.”
“I just don’t think there is anything that I can do to force someone to be more productive,” he says.
How can you create culture in a remote team?
“I can’t overemphasize the importance of figuring out your culture, defining it. Our mantra here is culture over craft,” says Gurr. “We’ve turned down some incredibly talented individuals because they didn’t have the values.”
YNAB’s unique job ads reveal a lot about the culture:
- They introduce who you’ll work with by name in the job ad to help humanize the team.
- Employees are explicitly told to take vacation.
- Team members fill out a “bucket list” of 50 questions. This includes what they want for their birthday or Christmas—but no gift cards! “Super boring,” the job ad calls them.
- Information about the bonus plan, which every employee has access to.
This might seem like a lot. But creating a culture in a physical office is hard enough… Creating a remote culture requires extra effort from the business to help each employee buy in to the vision.
Tips for keeping a remote team connected
- Organize regular in-person meetings once or twice a year so everyone can meet. YNAB organizes an annual vacation for everyone—last year was Costa Rica!
- Water-cooler talk is harder online, so many remote companies encourage personal sharing. YNAB has a Slack channel for employees’ vacation photos.
- Embrace the remote-working aspect and ask employees to share information about their local culture. YNAB tells staff right on their careers page: “Just share pictures so we can really hate you and your life of extravagant travel to exotic places.”
What about payroll and HR for a remote team?
This is where it gets complex.
If you want to start a remote workforce, it isn’t as simple as just obeying the tax, payroll, and HR laws for your own state. You need to obey them for every state your employees are in.
“There are savings in terms of not having an office, but it’s not as simple as saying you’re going to hire different people from different states,” says Gurr. “You have to register for an entity in each state, make sure you’re paying payroll taxes for each state, and the process for obtaining a tax number in each state is different.”
“We’re in 31 states, and it definitely gets complex,” Gurr admits.
If you use remote workers, you’ll need to:
- Register as an entity in each state
- Obtain a tax number for those states
- Obey payroll tax laws for every state
- Administer possible tax returns for those states
- Create employee contracts for each state
And this doesn’t even mention human resources! A remote company has to make sure it follows all the rules for each state its employees live in—not just the state where its HQ is based.
So that means your employees in California will get mandatory sick time, but employees in Alabama may not. It also means that the vacation time you pay in Indiana is considered “deferred compensation,” but it counts as “wages” in Massachusetts.
If you’re starting a remote workforce as a small business, this shouldn’t discourage you. But you should definitely speak to the right people first.
Your remote workforce HR and payroll checklist:
Is it time for your business to go remote?
It may take time and effort, but remote working has its benefits: Gurr says YNAB is able to hire some of the top people in their fields because they aren’t restricted by space.
The savings on rent might be a bonus. But getting the best people? That’s the ultimate win.
He says success for remote businesses all comes down to one thing:
“Dial in to your culture. Hire for it, fire by it, make it real, and model it from the top down.”