How Time Zones Affect Global Businesses

When your biz spans the globe, it might not feel like time is on your side.
Magazine Contributor
3 min read

This story appears in the June 2006 issue of Entrepreneur. Subscribe »

When Harry Tsao and Talmadge O'Neill wrap up work in Los Angeles, their employees in Shanghai are just getting started. "At 6 p.m. our time, it's 10 a.m. their time," says Tsao, co-founder with O'Neill of Mezimedia Inc., a 110-person creator of online shopping tools that had $7.4 million in 2005 sales.

For Tsao, 35, and O'Neill, 38, it's hard to have many real-time conversations with the company's product developers in Shanghai or its sales office in Tokyo. Unless a problem arises during the few hours their workdays overlap, resolution often gets delayed. "What would normally be resolved in a three-minute conversation can be postponed 24 to 48 hours," Tsao says.

That's just one way the long, strange workday of the 21st century can throw sand in the gears. As the number of time zones your operation crosses approaches the double digits, cultural norms and biological imperatives mean somebody--often the entrepreneur--is working all day, every day. Breakfast in Silicon Valley is dinnertime in London, and Sunday is no holiday in Israel.

Much can be said for globally distributed work forces. Employing Chinese developers enabled Mezimedia to deploy its comparison-shopping service at a significantly lower cost, say the co-founders. But the savings aren't free.

U.S. businesses lose $206 billion each year due to factors related to extended-hours operations, including lost productivity, high absenteeism, greater turnover, higher health-care costs and more accidents on the job, says a 2003 report from Circadian Technologies Inc. With about 24 million people working irregular, nighttime or extended schedules, that comes to costs of about $8,600 per employee, according to the Burlington, Massachusetts, research firm. Overtime pay and recruitment costs also rise as hours extend.

And people inevitably work longer days. "I might send an e-mail in the afternoon but log in from home at 10 at night to see if there are any comments," says O'Neill. Likewise, a Shanghai manager might be up at midnight to exchange information with U.S. counterparts in real time.

Mezimedia uses videoconferencing to supplement e-mail, IM and phone calls. Since beginning last year, videoconferences between Los Angeles and Shanghai happen almost daily. "Videoconferencing is a whole lot better than IM or e-mail," says O'Neill. Conferencing by internet costs little and effectively replaces many of the up to 20 international trips the co-founders were making each of the past few years.

Workers should share the burden of long hours, says Trina Hoefling, a management consultant in Denver and author of Working Virtually: Managing People for Successful Virtual Teams and Organizations. Have the team members negotiate and agree on how they'll communicate, Hoefling says. Try to resolve who will communicate with whom about what and using what medium. "If you just [take] those [steps], a huge chasm will be crossed," says Hoefling.

Entrepreneurs may prove disruptive in 24-hour global operations. Hoefling says some leaders favor impromptu meetings in which adrenaline and inspiration run high as people seek solutions to critical issues. "In a virtual environment, that's devastating," she says.

The Mezimedia co-founders are pushing for a faster internet connection to Shanghai and also to increase the size and sophistication of the company. With experienced people in China and the U.S., Tsao and O'Neill hope to relax a bit more. "As you scale the business," explains O'Neill, "the need to be there all the time is reduced."

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