By Tom Bowen, Economist, Gusto and Liz Wilke, Principal Economist, Gusto
Download slides with the key findings of this survey here.
- The next generation of entrepreneurs are starting their businesses as remote or hybrid. Companies that started in the last three years tended to be either completely remote (31%) or hybrid (47%). Less than half (43%) of companies that were fully in-office before the pandemic are still fully in-office.
- Fully remote SMBs score higher across almost every indicator of performance. Remote SMBs report being better at finding talent, building culture, achieving high performance, and employee retention than fully in-person or hybrid companies. Strikingly, 40% of fully remote SMBs reported being “far above average” at building personal connections among workers, while just 33% of fully in-office and 24% of hybrid companies reported the same. And 28% of fully remote SMBs said they excelled at achieving high employee performance, compared to 13% and 14% of fully in-office and hybrid businesses.
- Fully remote SMBs tend to pay their employees the exact same. Pay rates were consistent, no matter whether their employees are based in another state or a different country. Almost three-quarters (73%) said they never or rarely paid employees differently based on country, while 82% said the same based on different states and time zones.
- Flexibility for employees = higher performance. SMBs that give employees more autonomy over their working hours reported higher performance, access to higher-quality talent, and less employee burnout than those that did NOT offer flexibility over workdays.
- Want a 4-day workweek? Work for a small business. 10% of SMBs in knowledge-based industries already offer a 4 day workweek, while another 14% are considering it. Surprisingly, there was no notable difference in companies’ ability to attract talent or reduce employee burnout. However, businesses offering a 4-day workweek were 20% more likely to say they had maximized the positives of remote work – indicating a 4-day workweek might pair well with a more flexible remote strategy.
- The right daily habits add up to successful businesses. Successful remote and hybrid companies tend to document their knowledge and processes (NOT standards of behavior for employees); set clear team goals; and hold regular check-ins between managers and employees.
- The top-performing remote and hybrid SMBs trust their employees – they don’t monitor them or do surveillance. 1 in 4 SMBs said they monitor their staff – but they were less likely to say remote work benefited them. They were also 16% less likely to say remote work positively impacted their company performance.
- A positive culture isn’t about perks. It’s about gratitude. Want a great culture? Regularly thank your teams and celebrate them for great work. For fully remote companies, holding in-person gatherings still correlated with great company culture – but regular celebrating and giving kudos to staff doesn’t fall far behind.
Embracing Remote and Hybrid Work: An Overview
The past few years have transformed work as we know it. We’ve been reimagining how, when, and where we work. This presents an opportunity for SMBs – a strategic advantage for those embracing remote and hybrid work, and using that advantage to attract the best and brightest.
But we’re entering uncharted territory. To create great places to work when remote and hybrid, leaders have been forced to rely on guesswork and instinct – until now.
We surveyed nearly 1,000 SMBs to develop this research, highlighting the habits, best practices, and rituals the most successful SMBs are doing to empower their remote and hybrid teams.
The result: Data-backed insights for any SMBs interested in building a distributed workforce that’s high-performing, committed, and happily connected.
Offering Employees Flexibility Improves Company Performance
One of the key benefits employees cite from remote and hybrid work is flexibility. It’s not just about location – it’s also giving them more choices about where, when, and how they work.
SMBs that give employees more autonomy over their workdays reported higher performance, access to higher-quality talent, more positive company cultures, and less employee burnout than those who offered little to no flexibility.
Remote companies offering a lot of flexibility for working hours are 20% more likely to say remote work has boosted their performance – compared to companies with no flexibility.
Hybrid companies offering a lot of flexibility are 32% more likely to say hybrid work has improved their performance, compared to those with no flexibility.
Figure 1 – Remote and hybrid companies can increase company performance by offering more flexibility over working hours
More worker choice over hours and locations is a talent draw. Remote companies that offer ‘a lot’ of flexibility* in working hours are twice as likely to report being far above average at finding high-quality candidates compared to those with no flexibility*.
Hybrid companies that offer ‘a lot’ of flexibility over working hours are nearly two and a half times more likely to report being far above average at finding high-quality candidates compared to those with no flexibility.
Remote and hybrid companies prioritizing flexibility over working hours report having a significant advantage in managing employee burnout. Remote companies that offer ‘a lot’ of flexibility* over working hours are 32% more likely to report being ‘far above average’ at managing employee burnout, compared to companies that provide no flexibility* over working hours.
For hybrid companies, this is an even larger benefit. Hybrid companies that offer ‘a lot’ of flexibility over working hours are more than two times more likely to report being far above average at managing burnout compared to companies that offer no flexibility over working hours.
Flexible work arrangements empower employees to maintain a healthy work-life balance, prevent exhaustion, and reduce stress levels, ultimately promoting employee well-being and engagement.
Figure 2 – Hybrid (top) and Remote (bottom) companies are more likely to be far above average in talent acquisition and managing burnout when they offer flexibility over working hours.
Among both remote and hybrid companies, empowering employees with flexibility over their working hours is associated with a positive impact on company culture.
Remote companies that give employees ‘a lot’ of flexibility* over working hours are 13% more likely to report having a very positive culture than those with no flexibility.* Moreover, remote companies with ‘a lot’ of flexibility are 30% more likely to report a positive benefit to the company culture after transitioning to remote work than companies that offer no flexibility*.
Similarly, hybrid companies that provide ‘a lot’ of flexibility over working hours are 22% more likely to report having a very positive culture than companies with no flexibility over working hours.
Figure 3: Both remote and hybrid companies can increase the likelihood of having a “very positive culture” by embracing flexibility over working hours
*A lot of flexibility – Workers mostly choose when they work.
*No flexibility – Working hours are set with few exceptions
As displayed in Figure 4, hybrid companies that ask employees to come into the office for 1-2 days a week are more likely to report that their company has maximized the positives and minimized the negatives of hybrid work, and that their company has a very positive company culture, compared to companies that have employees in the office 3-4 days per week.
However, there are benefits to having more in-office time. Companies that ask employees to work onsite 3-4 days a week tend to report a better ability to build personal connections among workers.
Plus, most businesses seem to use in-office days for larger meetings and in-person collaborations. Three-quarters of businesses said they believe smaller meetings of 2-3 participants are as effective when conducted remotely. However, nearly 60% believe larger meetings of 4-9 participants are more effective in person.
Figure 4: Hybrid companies that come into the office 1-2 days per week are more likely to self-report high satisfaction with remote work
Hybrid companies that allow employees to choose in-office days, either as a team or individually, are the most likely to report that remote work has been a positive development for company performance. The key is allowing employees to determine for themselves – either as individuals or with their close teams – what arrangement makes the most sense to encourage great work.
The difference between giving employees input and choice over in-office days versus not is large. Thirty percent (30%) of companies that have teams choose their own in-office days and give employees input into those in-office days agree that remote work has been a positive development for company performance. This is 45% higher than companies that do not give employees input into the decision-making process for in-office days. If management has a need to set in-office days for the entire company, creating a process that allows employees to provide input can help employees embrace the decision.
41% of businesses allowing employees to choose in-office days “strongly agree” remote work has positively impacted company performance. Among companies that do require a minimum number of days in the office, but allow employees to choose those days – just 26% say remote work has been positive for their company’s performance.
The decision to make employees come into the office may seem arbitrary to workers, and they may be less likely to come into the office when their peers and colleagues are in, even if they get to choose.
SMBs in Tech and Professional Services Are Pushing the Envelope on the 4-Day Workweek
Roughly 10% of SMBs in tech and professional services are offering a 4-day workweek – and 14% are considering it. This appears to be a shift, as these industries have traditionally had 5-day workweeks, with most employees working 9-5.
Surprisingly, there was no noticeable difference in companies’ ability to attract talent or reduced employee burnout if they offered a 4-day workweek. But businesses with a 4-day workweek were 20% more likely to strongly agree they have maximized the positives while minimizing the negatives of remote work – showing a 4-day workweek may complement a well-executed remote work strategy.
Success Comes From Documentation, Check-Ins, and Clear Goals
Good documentation is widely recognized as a crucial aspect of knowledge management, and it’s even more important for remote and hybrid work. Because workers are working at different times or locations, they are more dependent on written knowledge and documentation to have the needed information to do their jobs without getting ‘stuck’.
Remote companies that reported “highly effective” documentation are nearly two times more likely, and hybrid companies that reported highly effective documentation are nearly three times more likely to report strong agreement that remote and hybrid work has been a positive development for the company’s performance compared to companies that reported having somewhat effective documentation.
Documentation should be focused on the outcomes to be achieved, the tools required to achieve those outcomes, and the principles to follow while achieving those outcomes. Overall, just over half of companies report that processes and project documentation are the most important things to document.
However, documenting company values and policies is the biggest differentiator between companies that strongly believe remote work has been a positive development and those that do not. For companies that reported remote or hybrid work did NOT improve performance, they also tended to focus their documentation on management principles, expectations, and behaviors.
In short, they tend to focus on explaining how people should behave – rather than providing them with the information they need to complete their work and achieve their goals.
Setting clear goals for the team is the best way to ensure employees are productive. Across both remote and hybrid companies, having clear team goals is the biggest differentiator between companies that believe remote work has been a positive development for the company and those that do not. However, only about half of companies report having clear team goals.
Of companies that report having clear team goals, 46% of remote companies and 49% of hybrid companies also reported strong agreement that remote or hybrid work has been positive for company performance.
Figure 5: Regular check-ins and clear goals are the most common ways managers at remote and hybrid companies trust their employees are working
When it comes to remote work, successful day-to-day management involves trusting the team by default while still holding them accountable and ensuring constant conversations, like the virtual version of an ‘open-door’ policy.
Regular check-in between managers and employees about projects is the most common practice managers use to trust employees are getting their work done. Three-quarters of both remote and hybrid companies use regular check-ins between managers and employees to maintain productivity in a remote environment.
Managers need to find a balance between keeping the work flowing and making employees feel micromanaged. Most remote companies had regular communication between managers and their direct reports, with 80% holding live meetings at least once weekly.
A strong relationship with one’s manager is crucial for employee engagement. Additionally, there is a slight productivity gain at companies where employees provide written updates to their managers more frequently.
Companies where managers meet multiple times per week are 20% more likely to report being better at retaining workers. They’re also 30% more likely to report being much better at managing burnout than companies with meetings only once a week.
However, asking employees to provide updates to their managers more than once a day is also linked to a higher risk of burnout and attrition – so there needs to be a balance.
Monitoring Employee Activity May Be Counterproductive
When managers cannot physically see their employees working in the office, there may be a desire to implement surveillance or tracking systems to ensure that work is still getting done. However, monitoring employee activity may not only be unnecessary – it can also be counterproductive.
Overall approximately one in four companies reported monitoring employee activity as a way for managers to trust that employees are getting their work done. However, these companies are 28% less likely to strongly agree that their company has been able to maximize the positives and minimize the negatives of remote and hybrid work and 16% less likely to strongly agree that remote work has been a positive development for company performance than companies that do not report monitoring employee activity.
Gratitude and Celebrations Help Employees Feel Connected
The most common practices that both remote and hybrid companies use to foster connections within the company are regular celebrations or small gifts and expressions of gratitude/ kudos.
Nearly three-quarters of hybrid companies also rely on in-person social gatherings to foster connections within the company. In contrast, only one in three fully remote companies reported holding in-person social gatherings. However, remote companies are significantly more likely to have company or team retreats. Two in three fully remote reported holding in-person social gatherings or company or team retreats.
Figure 6: Regular celebrations and expressions of gratitude/ kudos are the most common practices remote and hybrid companies use to foster connections within the company.
Regular celebrations and expressions of gratitude/kudos are key differentiators between companies that say they excel in building connections between employees and company culture and those that are average in these areas.
Remote companies that hold regular celebrations are nearly twice as likely to report building stronger company cultures – and those that express gratitude or kudos are 1.5 times more likely, compared to those who do not.
Hybrid companies that report holding regular celebrations and giving expressions of gratitude/kudos also have similar benefits to building company culture.
Gusto surveyed 930 owners and key decision-makers at small and medium-sized businesses that identified themselves as having either a fully remote or hybrid workforce during April 2023.
The survey asked respondents about the company’s experience with remote and hybrid work, and the behaviors and practices at the company related to recruiting, managing, and building culture with remote and hybrid organizations.