5 Reasons to Refrain From Hiring Virtual Employees

5 Reasons to Refrain From Hiring Virtual Employees
Image credit: Pixabay

Franchise Your Business

Schedule a FREE one-on-one session with one of our Franchise Advisors today and we’ll help you start building your franchise organization.
Entrepreneur Leadership Network Contributor
Founder & COO of Recruiter.com
6 min read
Opinions expressed by Entrepreneur contributors are their own.

Check around and it's possible to find a lot of advice about hiring virtual employees. For every big company sending people home to save on electricity bills, there is a company like Yahoo, bringing people back to the office. For every small company touting the benefits of working elbow to elbow in an incubator space, someone else is advocating for hiring the best, no matter where he or she is. What’s a startup to do?

There's the story -- and some say mythology -- of Basecamp. The founders of Basecamp documented -- perhaps better than anyone else -- the reasons for their success through blogs, columns and books such as Rework and Remote. One of the primary themes of these writings is how hiring very talented virtual employees can increase productivity.

The message is pure genius. The company advocates remote work while building software tools that enable that very thing. That’s marrying a product to the corporation's values and eating the company's own dog food. In short, it's brilliant PR. 

But what’s right for Basecamp might not be right for another company. Marc Andreessen wrote in a recent Twitter update, “Your startup is not the next Whatsapp.”

I’m here to say that not every startup is the next Basecamp.

Remote work is booming, rising 79.7 percent from 2005 to 2012, according to Global Workplace Analytics. But those running a startup should not merely model a business after a trend. In fact, having an “all-virtual” environment might absolutely kill a business, perhaps even just as it's getting started. Consider these five reasons for not hiring virtual employees:

Related: 4 Ways to Manage Remote Employees

1. Dealing with managerial burdens.

When a manager hires someone virtually, the relationship can be set up so the worker is an employee (using a W-2 form). Or it the staffer can be an independent contractor (with a 1099 used). Especially when hiring and managing virtual employees across state lines, going the W-2 route can cause a lot of headaches, including dealing with all the filing requirements and regulations.

When using the services of an independent contractor, the employer really shouldn’t manage the person's work or time -- factors that can completely degrade the relationship over the long term. Instead of building value, learning together and deepening communication, hiring virtual staffers on a 1099 basis merely accomplishes one thing: work.

2. Increasing the burden of specifications. 

It might seem easy to outsource some aspects of a business, such as programming or content production. But distance is a difficult barrier to overcome. With a local developer, for example, it's possible to hold a quick whiteboard session and conversation.

But when using the services of an outsourced developer who is not local, it's necessary to write lengthy documents and visual specifications. A real difference emerges with the feedback loop. Instead of the boss making a quick, over-the-shoulder comment like “I thought that button would be bigger,” the work must be checked on a test server and perhaps an email sent to someone working in another time zone. It’s easy to see how costs can go up and productivity dip in such a situation.

Related: When Does Switching to a Remote Workplace Make Sense?

3. Wrestling with domestic distractions.

Constant distraction is a real problem in the modern workplace. Employees must deal with Facebook pings and text messages, along with flooded inboxes and an onslaught of automated voicemails from vendors.

It’s easy to imagine that working from home without the additional interruptions from co-workers could be a distraction-free nirvana of peace and quietude. But telecommuters face a set of different and very real distractions.

Can employees handle the stress of laundry piling up -- perhaps atop their keyboards? Can they handle the pressure of carrying their work with them constantly if there's no physical separation of space between home and work?

4. Making a mistake of short-sightedness.

Hiring remote workers might initially seem like smart way to source labor. It's possible to tap an unlimited talent pool of remote workers to drive down product-development costs. A new product could be developed for a fixed price instead of relying on an endless employment relationship.

Yet, there are pitfalls. Products generally need endless improvements, enhancements and support to function. Viewing projects as having a fixed end date doesn’t reflect the modern reality of rapid development cycles.

Business owners might be tempted to try to minimize costs by using lower-wage employees -- by locating support staff in a low-cost state, for example. But for startups, saving a nickel might cost a dollar in opportunity cost. What if a support role -- currently performed by someone working remotely -- could have filled by someone local, who in time could have been developed into playing a strategic role at the company?

5. Ignoring the importance of friendships.

When it comes down to it, work is about much more than work. Though socializing might initially seem counterproductive to getting things done, it's an essential ingredient to employee retention and productivity. Many people want to meet new people and build fresh friendships in the workplace. An employer can view those relationships in two ways: as needless distractions or as integral ingredients to helping the company stay competitive and efficient. Collaboration software tools like Yammer won’t replace quick, in-person meetings.

Of course, any employer that forgoes use of a certain hiring practice is doing itself a disservice. There are certain scenarios where remote work functions best and certain times when it might be preferable.

When building a startup, build its philosophy alongside its products. A big part of that thinking should cover how the company hires. It’s a good idea to get the hiring practices right from the beginning: It's always possible to pivot a product but not necessarily employees.

Related: How to Fix Virtual Team Challenges Before They Happen

More from Entrepreneur
Our Franchise Advisors will guide you through the entire franchising process, for FREE!
  1. Book a one-on-one session with a Franchise Advisor
  2. Take a survey about your needs & goals
  3. Find your ideal franchise
  4. Learn about that franchise
  5. Meet the franchisor
  6. Receive the best business resources
Discover the franchise that’s right for you by answering some quick questions about
  • Which industry you’re interested in
  • Why you want to buy a franchise
  • What your financial needs are
  • Where you’re located
  • And more
Whether you want to learn something new, be more productive, or make more money, the Entrepreneur Store has something for everyone:
  • Software
  • Gadgets
  • Online Courses
  • Travel Essentials
  • Housewares
  • Fitness & Health Devices
  • And More

Latest on Entrepreneur