60 Business The EconomistMarch 28th 2020
2 lytics” more relevant. Beth Galetti, Ms
Gherson’s opposite number at Amazon and
an engineer with no prior hr experience,
oversees 1,000 developers working exclu-
sively on hr tech. The e-commerce titan’s
earlier investment in digital induction for
new hires is paying off. “We on-boarded
1,700 new corporate employees on Monday
[March 16th] alone,” Ms Galetti reports.
Covid-19 may lead more hr chiefs to
adopt such systems. Right now most have
more pressing problems. Mala Singh, chief
people officer at ea, a maker of video
games, represents the c-suite in its pan-
demic-response group. This occupies
60-70% of her (long) day. Her team has
been getting desks, computers, even noise-
cancelling headphones for home-workers.
A bigger concern is balancing jobs with
child care. Ms Singh told the caregivers on
staff to take as much time as they need to
adapt without using up paid leave. She is
digitally monitoring employee sentiment,
particularly anxiety. In a creative business
like ea’s, stress about family “does not en-
able productive work”, she explains.
Many companies outside the knowl-
edge economy face tougher choices. hr
leaders must strike a balance between a
firm’s professed purpose, which these days
often involves treating staff well, and the
bottom line, observes Dan Kaplan of Korn
Ferry, a consultancy. The instinct is to cut
costs through mass lay-offs. Rather than
slash payrolls willy-nilly, says Bill Schan-
inger of McKinsey, another consultancy,
good hr heads can try to reconfigure com-
pany work flows: what needs to be done by
whom, what can be automated and what
requires people to share the same space.
Some workers who at first appear redun-
dant may be redeployed or reskilled.
The smartest hr-ers at the doughtiest
firms are already gazing beyond the flat-
tened curve. Though not quite recruiting—
times are too uncertain—Ms Gherson has
begun to groom rivals’ talent. Now that
everyone is working from home, she says,
no one is listening in on their calls. For an
hr chief, “it’s the perfect opportunity.” 7Human capital
United States, selected public companiesSource: Equilar *Chief human resources officer12.5
10.0
7.5
5.0
2.5
0
19152010Median total
compensation,$mCFO
CEOCHRO*CFOCEOCHRO*7550250
19152010Share who are
female, %“W
eirdly, things haven’t changed
much”, says Kyle Mathews as he
sprays disinfectant on his hands. At least at
work. His startup, Gatsby, helps websites
manage content in the cloud. It has no
headquarters and its 50-odd employees
straddle the world, from Mr Mathews’s
home in Berkeley, California, to Siberia.
Such “fully distributed” firms were on
the rise before covid-19. As national lock-
downs spread, conventional ones are
forced into similar arrangements. Those
that have grown up this way offer lessons.
Distributed organisations are as old as
the internet. Its first users 50 years ago real-
ised how much can be done by swapping
emails and digital files. These exchanges
led to the development of “open source”
software, jointly written by groups of
strangers often geographically distant.
Today most distributed startups have
open-source roots. Gatsby is one. Nearly all
1,200 employees of another, Automattic,
best known for WordPress, software to
build websites, work from home. GitHub,
which hosts millions of open-source pro-
jects (and was acquired by Microsoft in
2018), may be the world’s biggest distri-
buted enterprise. Two-thirds of its 2,000
staff work remotely. Most firms that build
blockchains, a type of distributed database,
are by their nature dispersed.
Plenty of startups start out distributed
to avoid high rents—and so high wages—in
Silicon Valley and other tech centres. Many
opt to stay that way. Joel Gascoigne, boss of
Buffer, which helps customers manage so-
cial-media accounts, works remotely in
Boulder, Colorado. Stripe, an online-pay-
ments firm, has a head office in San Fran-
cisco but its new engineering hub is a col-
lection of remote workers.
Distributed startups exist thanks to a
panoply of digital tools—most obviously
corporate-messaging services such as
Slack (chat) and Zoom (videoconferenc-
ing), as well as lesser-known firms like
Miro (virtual whiteboards for brainstorm-
ing) or Donut (which pairs employees to
forge personal bonds). Others, like Process
Street, Confluence or Trello, help manage
work flow and keep track of what goes on in
virtual corridors—crucial when people do
not share the same physical space. Firms
offering organisational scaffolding for dis-
tributed firms include Rippling, which
manages payroll and employee benefits,
grants workers access to corporate servicesand sets up their devices. Much that is now
done in spreadsheets could be turned into
a virtual service, predicts Rich Wong of Ac-
cel Partners, a venture-capital (vc) firm
(and early investor in Slack).
Besides new tools, distributed firms
need novel management practices. One
rule is not to mix physical and virtual
teams. Online participants in mixed meet-
ings often feel excluded. GitHub’s boss, Nat
Friedman, has all employees—himself in-
cluded—log in to meetings virtually, even
if they are in the office. Looking over some-
one’s shoulder to see if they are working (or
worse, use software to do it) is another
no-no. Remote workers do not slack off, as
some managers fear. Trust your team, set
clear and, where possible, measurable
goals, and let people do their thing, coun-
sels Mr Mathews. To foster camaraderie,
Buffer organises an annual in-person re-
treat (covid-19 will push it online this year).
Trust also requires transparency and ex-
plicitness—another reason documenta-
tion is key, says Michael Pryor, co-founder
of Trello (whose workforce is 80% remote).
Discussions that lead to a decision must be
captured in writing, he explains, so every-
one understands the trade-offs being con-
sidered. As a result, distributed firms fa-
vour wordsmiths, not good speakers as
traditional firms do. Good writing de-
mands clear thinking and discipline, says
Mr Friedman, who has been managing dis-
tributed teams for 20 years. vcs duly report
that distributed startups tend to be better at
preparing board meetings.
The pandemic may lead some compa-
nies that have outsourced lots of opera-
tions to the cloud to go a step further and
get rid of at least some offices. “I just don’t
think we are going to go back [to business
as usual]”, says Frank Slootman, boss of
Snowflake, a database firm. Even digerati
like Twitter plan to turn more virtual.
Still, some businesses suddenly forced
into remote work will rue the experience,
predicts Mr Gascoigne. Without a learning
period they will get all the drawbacks and
few of the benefits. Brainstorming and oth-
er creative activities are possible online but
take practice—and even then feel like an
imperfect ersatzof an actual room. Recruit-
ing and breaking in new employees is hard
virtually. According to one recent survey of
3,500 remote workers, one in five struggles
with loneliness. That is partly why GitHub
and Trello operate optional offices.
Most businesses will always have to be
located somewhere and need people to
work side by side. But as technology im-
proves, swathes of the knowledge econ-
omy will gradually move more functions
online, thinks Venkatesh Rao of Ribbon-
farm, a consultancy. New firms will erect a
new virtual floor, which others then inhab-
it. The coronavirus-fuelled exodus to cy-
berspace is unlikely to be the last. 7BERKELEY AND SLACK
Pandemic lessons for all businesses
from startups born office-lessDistributed companiesThe nowhere firm