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Virtual Companies

No 4 walls? No ceiling? No problem. How to connect with staff and clients.

By Steve Eddy Published: January 17, 2008

“I just had to share what I’m doing this morning,” Kim Shepherd writes excitedly in an email. “I am playing nurse for one of my best friends who is, at this very moment, undergoing a surgical procedure. The doctor has me in the medical chair in an examining room with a Wi-Fi connection.”

From there, Shepherd announces proudly, she will conduct business for the next 3 hours. “This really brings a whole meaning to the term ‘virtual office,’” she says.

All this might sound a bit like a novelty or stunt, but for Shepherd, CEO of the recruitment firm Decision Toolbox, it’s anything but. In fact, it’s becoming an everyday way of life for an increasing number of companies as they do away with “brick and mortar” facilities altogether and operate 100% from home.

And we’re not talking cottage-industry outfits operated out of garages and storage units via eBay. These are “real” companies, thriving in a variety of fields and jumping on a speeding bandwagon. How fast is it going? Gartner Group, a research firm specializing in the global information-technology industry, estimates that some 41 million corporate employees worldwide are working virtually at least 1 day a week.

In his new book, “Microtrends,” pollster Mark Penn notes that 4.2 million Americans now work exclusively from home (a nearly 100% increase from 1990), while some 20 million do it part time.

“I think we’re moving into a place where the separation of personal and professional is going to go away,” says Shepherd of Laguna Beach, a former TV newswoman, longtime recruitment specialist and well-known motivational speaker who joined the company – founded by Jay Barnett – in 2000. “Gen X’ers and Gen Y’ers are doing this a lot. They think of themselves as a whole body. They’re not saying, ‘I don’t want to go to work.’ They’re saying, ‘I want work to be incorporated into my life.’”

Why go virtual? Most of the reasons are obvious. No workplace landlord, no heavily mortgaged building, a total absence of conventional overhead.

“This way w e can offer the fastest, best, cheapest service out there, because I don’t have ‘sticks and bricks,’” Shepherd says.

How to go virtual

“The biggest obstacle,” says Shepherd, who started the firm’s virtual model in 2002, “was people saying, ‘You mean you don’t have sticks and bricks?’ And I say yes, and you always see this pause. They go, ‘Hmmm,’ like maybe that doesn’t make us a credible company.” All that is changing rapidly, she says.

“It’s breaking down quickly. The world is getting rewired. Technology did it. It forever changed the way we look at time. Virtually is going to grow exponentially in the next 3 to 4 years. Cheap? It’s smart.”

The trick “is to build the glue so that people aren’t working in silos,” says Shepherd, whose company employs 42 people in far-flung locales and brings in a cool $5 million a year. And don’t panic: “So many people are afraid to take the first step. They’ll stick their toe in the water by having a person work from home on Fridays. Then Wednesdays and Fridays. That’s not a virtual company; you need to take the plunge.”

Besides all the expected tools – Internet access, phones, email, chat tools and the like – Decision Toolbox holds thrice-yearly in-person sessions. And a big part of Decision’s “glue” is a common platform, software that Barnett developed called Recruiting Machine.

“It’s the pulse, the arteries,” Shepherd says. “It generates reports, captures everything. It does everything for everybody.”

But beyond technological matters, there’s the human element, “imagining what they’re like working at home. What are they missing? They don’t know what to do at tax time – let’s get them financial services. Share information with the team. There’s a person in Wisconsin whom I’ve never met who knows more about the inner workings of my operation than somebody who’s under a roof sitting in a cubicle 5 days a week.

“I’ve been in recruitment 17 years and never met a smart recruiter who wasn’t smarter than any boss they ever reported to,” she says. “So why give them a boss? It’s antiquated. We flipped the hierarchy. The leadership team really reports to the staff, not the other way around. Our job is to give them whatever they need to make them happier, jump higher, run faster. I think that’s what the future leadership team should do.”

And don’t forget plenty of “warm and fuzzy” touches, Shepherd urges.

“There’s a newsletter that goes out,” she says. “It tells what’s going on behind the scenes with leadership, deals we’re about to close, so that nobody is blindsided by anything.” And there are the weekly “awards,” congratulations for various achievements in the form of gift cards and the like.

“A lot of ‘attaboys’ go out,” she says. “We call them ‘green flags.’ Whenever somebody does something great, it’s a green flag.” If someone has a baby – or gets a new dog or cat – they’ll send their cohorts a picture. “We have a library of everybody’s pictures and stories. If a new person joins the team, a mini-bio goes out, and there’ll be a whole day’s worth of ‘Welcome Kathleen!’”

Who makes a strong virtual-company worker? There’s no set “type,” but the stay-at-home mom can be an ideal candidate, Shepherd says.

“How lucky for them that they can make a lot of money and work their own schedule,” she says, “but they have the uncanny ability to negotiate an issue while putting toys in the toy box; the uncanny ability to be logical while changing a diaper. They can multitask like nobody’s business.”

Barnett says Decision Toolbox went all-virtual out of necessity. In the wake of the 9/11 attacks, U.S. hiring essentially dried up.

“It was a move that we made in order to survive,” he says. “I didn’t realize how perfect we already were for that model. We sort of fell into it and it worked. We’ve found out that people are even more productive (in a virtual environment).”

“We all jumped into the trench,” Shepherd says. “It was act of survival. I said, ‘Hey, this feels good, this is my calling.’ I don’t want to just make this a virtual company, I want to break a lot of rules.”

Now, Shepherd says, “We are a company that provides virtual recruitment across industry lines and geographical lines. We are the recruiting department for Black & Decker. We are the recruiting department for Autobytel. It’s kind of neat, taking virtual to another level. We’re not just virtual. We’re a virtual company providing a virtual service! We’ve grown beyond anything I ever imagined.”

Not surprisingly, Decision’s employees are delighted to be aboard. In December, the company threw a big Christmas party at the Hyatt Regency in Huntington Beach, where some people met their co-workers in the flesh for the first time.

“I can’t imagine doing anything else,” says Nicole Cox of Laguna Niguel, Decision’s director of recruitment quality, who has been with the company since 2003 and has children ages 12 and 14. “I have a passion for this company and the team that we have. It works for me because I get to work my job around my life. I don’t have to ask for time off.”
And, she adds, “I’m not a micro-manager. I can see that my recruiters are doing their job. I don’t have to ask, ‘Where are you at 8 o’clock in the morning or 4 in the afternoon?’”

Joanna Sherriff, vice president of creative services, has taken telecommuting to new extremes in her work with Decision. Like her compatriots, she works out of her home – but home happens to be in New Zealand, where she’s lived with her New Zealand-born husband for 2 years.
“He’s at home with the children, so we tag team,” she says. “It’s ideal.”

Sherriff has been with the company for 8 years, so she went through the transition to virtual.

“It was hard,” she recalls. “I had always worked in an office and had a structure – saying ‘Hi’ to everyone, sitting down at a desk and having someone looking over you saying, ‘Get back to work.’” Gradually, though, beginning with working from home several days a week, she says she learned to deal with distractions and shape her time.
But, she adds, “It’s not for everyone. Some people want a social network, to go out for a beer after work. Not everyone will be ideal.”

Not for every business

The virtual business definitely has its allures. But it isn’t necessarily good for all professions. Will Swaim, former editor of OC Weekly magazine and now publisher of The District Weekly, focuses on Long Beach goings-on.

“It turns out that ‘virtual companies’ in the journalism world are like ‘virtual cars.’ It means you’re riding a bike,” Swaim says. He explains his odyssey from brick-and-mortar to virtual and then (partially) back again: At the Weekly, the staff moved into “great” space in Santa Ana in 2003, almost double what they’d had before.

“We worked our asses off to make it usable,” Swaim says. “We designed it with journalists in mind – low walls, public space, the art department was accessible to ad sales. We had 40 or so people in there, and there was a lobby area. It was beautiful. People had complained about crowding in the old space, and now they had all this new room.”

But frequently, people would call in and say they were going to work on their stories at home, which seemed fine, “because people attached to a desk in the editorial department probably aren’t going to get the best story.
“There’s a notion that people don’t need a permanent workspace with modern technology,” he says. “PDAs, the wireless environment.”
So when Swaim left the Weekly and set up The District last year, “We had no office at all. We met at a coffeehouse in Long Beach.” But a downside became apparent.

“If I wanted to work on a story with a writer, the writer might be at home with the phone turned off,” he says. “I had to send an iChat note. Are they working?

Is deadline an hour past? There was a problem of immediate communication.”

And, beyond that, “it became tough to know one another. That really disappeared. The phone and computer turned out to be a poor substitute for real intimacy – the simple proximity of one person to another.

“It gradually occurred to me that we’ve got to be in physical contact, be in the same space,” Swaim says, “for spontaneous feedback between colleagues.” To anchor the sales staff and provide something for the writers, a small (approximately 600-square-foot) office was located, “and sales jumped. People could meet someplace. We added space for the editorial department and a conference room for everybody.”

Swaim and 16-member crew use a “hoteling” concept (known as “warm bunking” in the Navy), with staff members sharing docking stations. They can drop in when, and if, they want.
“Anybody can come in and work,” he says. “I can’t imagine doing journalism all alone. It takes real, shared knowledge, particularly with art and graphics. A very collegial effort.”

Virtually customer-focused

For Ken Jones, founder and executive managing director of Lyndon Group, a financial and information-technology consulting firm, it all comes down to what the customer wants.

“When I started the group, the real focus was on client service and having the best people,” Jones says. “Neither one required having an office building. Clients confirmed that they want to pay for what they’re getting value from. They didn’t care about paying for a water cooler and janitorial service and Perrier in the refrigerator.”

And, of course, he says, they want “good, solid communication,” and that’s all possible via Lyndon’s use of such tools at a virtual PBX system that allows clients to reach anyone at any time, whether in their home office or on a cell phone. Such tools as Outlook are also essential, he says.

“Email is perfect, phone service is critical,” says Jones, an accountant whose background includes a stint with Deloitte & Touche, as well as owning a company that designed and manufactured of precision-made mountain bike components. “If we didn’t have a phone system, and email, and remote access and laptops, then this would not work. But we do have all of that.”

But the business isn’t completely faceless, Jones adds. In fact, there are periodic meetings at various clients’ facilities, and there are biweekly management gatherings at the venerable Pacific Club. There, they discuss “what are the new clients being brought in, what’s in the pipeline.”
And, he says, to prospective clients, “We actually promote the fact that we don’t have an office. We never kept it a secret. Now it’s one of our selling points. We are a low-overhead model.”

Jones declined to divulge exact figures, but says his company, with about 30 full-time consultants, has one $7 billion company as a client, and has enjoyed consistent double-digit growth in revenues, success bolstered by what he says is a 25% to 30% savings by having everyone work remotely. That means, among other things, “that we can pay our people better.”

Dump the meetings

Finally, Steve Gibson says it was all about meetings – as in, way too many of them.

“We went virtual about a year ago,” says the computer-security expert and software developer. He and his employees had nice digs in Aliso Viejo, “but all I was doing was having meetings. I once had a meeting about meetings.

“For me, the Internet is the best thing that ever happened,” Gibson says. “My website is my sales and marketing medium.” When he’s not at home, he can be found at a nearby Starbucks, which he says has clearly become an ad hoc “office” for people without a real one.

“You see corporate types gathering,” he says. “Telecommuters. The atmosphere encourages people to come together. They have coffee. The laptops are out.” OCM

Steve Eddy is OC METRO Business Magazine’s technology columnist. For feedback, go to ocmetro.com.