What is a distributed company

A distributed company is an organization where most, if not all of the workforce, are physically spread across different countries and locations and engage in remote work. A distributed workforce model functions like any other company but without an official headquarters or physical location.

Distributed companies comprise employees, contractors, and freelancers that do not have an on-site workspace. Teams work from distributed work environments such as home offices, a coworking space, or their local coffee shop. A distributed workforce can reside in the same country or around the world.

Fully distributed companies are changing the future of work because they offer benefits and compensation comparable to in-person work without a daily commute or the high cost of office space. Plus, distributed companies can employ individuals worldwide–not just employees centralized in a handful of high-cost-of-living locations.

Are distributed companies the same as remote companies?

Remote employees have a local or central office they can choose to work from (full-time or part-time). Distributed teams have no official headquarters or office spaces. They operate on a remote-first model, meaning they support employees who reside on all corners of the globe and work in different locations.

Are distributed companies the same as hybrid companies?

Unlike hybrid companies, distributed teams don’t have a physical office space. They comprise remote team members from different cities, states, or countries.

What are the advantages of distributed teams?

Better coverage across different time zones and languages: Distributed companies have around-the-clock and multilingual coverage, significantly benefiting sales and customer support teams.

Higher productivity: Distributed work allows employees to prioritize their work over commuting and spend on-the-clock hours getting it done. Distributed and remote workers also feel more liberated to take breaks whenever needed and design their schedules to suit them, which boosts productivity.

Access to a fresh talent pool regardless of borders: The distributed work model opens the door for talented individuals from across the globe to join your team. Companies like, Buffer, Automattic, Zapier, and GitHub prefer distributed teams as it allows them to hire the best (not just the closest) talent. A distributed workforce also provides multicultural perspectives and keeps business up and running 24/7 with team members operating across time zones. 

Cost savings on real estate: A distributed team saves costs because the company doesn’t have to invest in office real estate, utility, and maintenance costs and purchase equipment, furniture, and office supplies. 

Natural diversity: Diverse perspectives and experiences lead to better performance and business results. Hiring a diverse workforce is also necessary to reverse long-standing inequalities.

What are the challenges of running a distributed team?

Working across time zones: Some teams may struggle with working effectively across time zones, especially if they’re transitioning from an in-office setting where everyone is available and working simultaneously. The key is to shift to asynchronous communication, which de-prioritizes (often unfocused and unproductive) live communication.

The absence of in-person interaction: Distributed team members don’t have the chance to meet face-to-face or bump into one another organically. Virtual gatherings using video conferencing software like Zoom and instant messaging are an excellent alternative for teams to get a feel for the company culture and bond in an informal setting. Online tools like TeamBuilding offer tons of online team-building events your distributed team may enjoy.

Keeping track of tasks: Without effective communication or project management software, it can be difficult for teams to monitor workflow and progression. Real-time communication apps such as Slack and Trello help ensure everyone is up to date with projects and deadlines and working on the most critical tasks.