After a lecture I gave recently, an audience member stood up and told the story of a service company that had converted to a virtual operation. The managers were looking for a way to reduce office operating costs. They had installed a corporate E-mail system, bought laptop computers for their sales and service people, and closed down and subleased their offices. The results had been disastrous. Sales had dropped, turnover had skyrocketed, and frustrations at all levels of the organization were at an all-time high.
The managers had been working from the common misconception that all you need to do to become a virtual company is to supply your employees with the right electronic tools, such as E-mail and remote databases. Nothing could be further from the truth. Virtual operations come with their own set of management challenges, and managers must be skillful enough to recognize those problems and solve them.
Business is, at its heart, a highly personal activity, and to date we don't have electronic tools that can fully replace the richness of face-to-face contact. Whenever you substitute electronic tools for a physical work space, you lose the synergy that can come only from daily informal contact, and you risk alienating workers from one another and from the company's goals.
One of the attractions of operating virtually is the promise of immediate productivity gains from adding work-at-home and remote workers to an organization; such gains have been documented in several research studies. However, my experience suggests that, in the long run, productivity is likely to droop--if managers are not alert to potential problems like reduced informal contact, improper workspaces, and increased friction between remote and onsite workers.
There are steps managers can take to prevent such problems from the outset, some of which involve additional costs. Are the costs worth it? At VeriFone, every year we reevaluate whether a virtual operation still makes economic sense. And we have consistently found that the benefits from deploying our staff and company resources so that they are near our customers or centers of technological know-how (for example, we have a Unix programming office in Bangalore, India, a site of Unix expertise) are much greater than the loss of internal operating efficiency. In fact, the close customer contact has enabled the company to grow much more rapidly than it would have as a traditional, centralized company. Here is a list of what managers need to do to make a virtual operation work:
1) Make sure your senior managers operate virtually at least part of the time. There is no management substitute for keeping one's finger on the pulse, and the best way to do that in a virtual company is to be virtual. Sitting in a central office without plugging into the virtual culture is almost a guarantee of failure. Not only do you not know what's going on, but you also signal to your employees that operating virtually isn't really important.
At a practical level, operating virtually means learning how to type and how to use a personal computer. Learning to type in midcareer can be daunting, and many senior managers have so far been able to relegate all computer work to support staff. But with a virtual operation, the gig is up. Senior managers must be in the virtual culture in order to experience the operating issues firsthand and do the necessary fine-tuning when the need arises--and it will. There are excellent software products on the market that quickly teach basic typing and PC skills in the privacy of one's own office or home, including Mavis Beacon Teaches Typing (from Mindscape, 800-283-8499) and Individual Software's Learn to Type Quick and Easy (800-822-3522). VeriFone has recruited several senior managers from top Fortune 100 and 500 companies and trained them to type and to survive in a virtual company. They not only get it, but they now say they can't imagine operating any other way.
2) Visit your remote offices frequently. It may seem paradoxical for a company that prides itself on operating from all corners of the world to require its top-level managers to meet face-to-face with staff at remote offices as often as possible, but it's crucial. It's the only way to develop and strengthen relationships with staff and customers.
At VeriFone, the CEO and senior managers meet face-to-face for one week every six to eight weeks in order to sort through issues and chart strategy. The senior managers are scattered around the globe at remote offices, and we purposely rotate meeting sites. During the week, each senior manager makes sure to mingle with the staff assigned to his or her remote office--home workers and those at customer sites are brought in--and we have an "all-hands" question-and-answer period, in which all employees have the chance to ask about any aspect of the business either in writing or verbally.
Outsiders often marvel at the amount of time our senior managers are on the road, assuming that this travel is expensive. In fact, because we set all our major corporate, regional, and business-unit meetings at least a year ahead, we are able to save substantially through advance-ticket purchases. Last-minute travel is kept to an absolute minimum.
3) Make sure that employees have a work space that promotes productivity. In my experience, the two main causes of productivity decline within virtual organizations are lack of a proper work space and increased friction between remote and central-office workers. Physical work space is so important that companies should provide written guidelines for home offices. At a minimum, the home office must be a separate room, with a door that can close. When people share their office space with other house functions, such as their kitchen table or bedroom, they have a hard time taking a break from work. Every time they see the papers piled up, they feel guilty and sit down to do some short task. That accounts for the short-term productivity increases among home workers that researchers have documented. But business is a marathon, not a sprint. In time, this work style leads to bone-weary exhaustion, and productivity slumps. One of my biggest tasks as a manager of virtual employees is ensuring that they take sufficient breaks. I don't worry about people goofing off. I worry about them working themselves to death.
In addition to a separate room, people who work at home need a separate work phone with its own answering machine and at least one other phone line for E-mail and fax. Managers need to educate their remote workers about why these requirements and breaks from work are so important. In addition, managers should visit occasionally, both for the face-to-face contact and to see what else the company might be able to provide to make the home-office setup a productive one.
4) Help remote workers form strong ties to people at the office. People who work out of their homes or at customer sites also need to spend some time in an office with colleagues. Any face-to-face meeting--such as regular status meetings, or annual, sales, or planning meetings--is an opportunity for cross-fertilization. When you set the agenda, schedule more time for socializing than a centralized company would. And give each office within the organization on the opportunity to host so that employees not involved in the meetings get a chance to socialize with colleagues. Some managers are bound to wonder if such organized socializing is a waste of money. But I believe that forging such ties creates not just a sense of belonging to the company but the personal relationships necessary for remote employees to work effectively.
5) Find ways to compensate for the loss of daily, face-to-face informal contact. When you become a virtual organization, your staff suddenly loses all those interactions in the hallways, in the elevators, and by the water coolers that can help move projects forward and smooth out conflicts. There are several ways a virtual company can compensate:
Encourage staff to use videoconferencing with remote colleagues, rather than just E-mail. Telephone conversations also encourage more informal interaction.
Set a policy that helps employees know when to set up a face-to-face or telephone meeting or a videoconference--if they're having a major disagreement, for example. When workers are communicating mostly via E-mail, small irritations too easily build into major conflicts. Learning how to disagree remotely is an important component to being able to operate virtually.
Create an on-line chat area, where employees can drop in to schmooze during breaks.
Ask employees to create personal home pages that present their interests and hobbies, and provide a cross-referencing index to allow quick, easy access. When traveling employees are in town, they can use the pages to find fellow employees to get together with for, say, a hike or a game of bridge.
Make your on-line communication systems available to the spouses and children of employees. At VeriFone, for example, we have a global E-mail pen-pal network called VeriPal for employees' children. Linking employees' families helps create a sense of community.
6) Counteract the sense among remote workers that they're missing out on key business advances. A big psychological problem that remote workers encounter is the feeling that the "action is elsewhere." Managers can counteract this feeling in several ways:
Send remote workers frequent, even daily updates about what's happening in the company. It's especially important to show how specific remote workers are affecting company progress.
Give each employee an opportunity to contribute to the annual and long-term planning processes. Electronic tools make this easy. Once the plan is completed, present it in person to all employees, allowing time for questions and concerns.
Develop a clearly worded corporate mission and vision statement so that employees know where the company is headed and how they fit in. Periodically, distribute examples of individuals' actions that exemplify the mission and vision.
Set up discussion groups in which employees can talk about the problems of working remotely and brainstorm about solutions.
Working virtually is a relatively new concept, and today's practitioners are the pioneers for the way I believe most business will be conducted 25 years from now.