Update on the Virtual Organization: A New Idea, Twenty Years On

Some years ago, I wrote an article about the trend of Virtual Organizations—companies that have either no or limited brick and mortar. At the time they were a rarity, more buzzword than reality. Yet as we formed the PM Solutions/PM College company, we found ourselves drawn to the concept.

Undoubtedly, the primary benefit of a virtual organization is that it can unite highly qualified people without location restrictions.  Other reasons that an organization would want to consider being virtual rather than traditional are the ability to:

• Leverage skills throughout the organization
• Provide customers with the “best and brightest”
• Balance work/home relationship
• Save organization overhead costs.

All this made a lot of sense for a young company trying to attract big talent. At the time there was little research to fall back on, so our organization has been a kind of “action research” project. After twenty years we have some of the kinks worked out, and there is also now a significant body of knowledge to help other organizations understand when and how to apply virtual teams and virtual organizations. (Just to toot our own horn, we early on gathered the available research into a section in our book, Optimizing Human Capital; see Chapter 8.)

Obviously, whether it’s a team or an organization, virtually managed entities face many of the same opportunities and challenges.  However, a virtual organization has more at risk.  The high degree of interdependence required by virtual teams results in a higher degree of performance.  A virtual organization, however, has multiple teams working on multiple projects, and requires even more work at making all teams (including administration, marketing, sales, as well as the numerous project teams) feel more connected.

A virtual organization is not “business as usual”.  It requires a new management approach and an incredible awareness of the issues and challenges that could cause its demise. Early on, we conducted a focus group represented by twenty members of the organization, located at numerous site locations, and recorded the following challenges:

• Communication
• Infrastructure
• Leadership/management
• Knowledge transfer
• Processes

With each of these challenges, specific issues were noted, but for purpose of this blog, let’s review the issues surrounding  the top two challenges: Communication and Infrastructure. Issues within communication were:

• Responsiveness
• Effectiveness
• Too many assumptions
• Being taken by surprise
• Wasted administrative time
• Trust
• Corporate connectivity.

As you might guess, good communications must evolve into excellent communications and become a core competency.  We designated a Communication Manager who developed numerous communication vehicles, including: an intranet with the capability of sharing files, frequent electronic news about internal happenings, a monthly newsletter, and periodic “brown bag” knowledge sharing sessions, as well as face-to-face and web-enabled group, team, and leadership meetings. Over the years, we have sought to constantly refine and change up these communications strategies, as need and budgets have warranted.

In addition to all of the extra programs and vehicles provided by the organization, virtual employees must “go the extra mile” to keep others informed.  It is a culture shift for many and critical to their personal and professional growth in a virtual organization.  The organization and employees both need to become active and constant communicators.

This leads to this focus group’s second challenge – Infrastructure.  Issues within infrastructure included:

• Lack of proper backup and tools
• Wasted administrative time (no on-site IT support)
• Knowledge sharing (loss of “water cooler” effect)
• Need for corporate connectivity.

As you can see there is overlap in the two areas, specifically wasted administrative time and corporate connectivity.  Bottom line is that a virtual organization needs to invest in technology and training.  It must provide its employees with the proper tools and support to foster success. Interestingly, although a virtual Help Desk was available to all of the members of the focus group, fewer than half of them were aware of it.  Thus, we circle back to the MOST critical success element of a virtual organization — active and constant communication. 

As an early adopter of the virtual organization model, PM Solutions/PM College follows with interest the evolving research on the virtual workplace. From my personal experience, a virtual organization can b e a wonderful alternative to the traditional organization with multiple benefits to its employees provided management recognizes the challenges and leadership approach that is required for its success!