Challenges to the virtual organization



by Deborah Bigelow, PMP, Contributing Editor

THERE HAS BEEN MUCH written about Virtual Teaming, but what about the new trend of Virtual Organizations—companies that have either no or limited brick and mortar? Why would a company want to be virtual, and how can it achieve success?

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 include the ability to:

Leverage skills throughout the organization

Provide customers with the “best and brightest”

Balance work/home relationship

Save organization overhead costs.

Obviously, virtual teams and virtual organizations face many of the same opportunities and challenges. However, a virtual organization is at greater risk of failure, with more at risk as well. The high degree of interdependence required by virtual teams results in a higher degree of performance. A virtual organization, however, will be somewhat more diluted in being specifically interdependent, since multiple teams will be working on multiple projects. Therefore, a virtual organization requires even more work to make 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. In a recent focus group, composed of 20 representatives of one virtual organization with numerous sites, the following challenges were recorded: communication, leadership/management, knowledge transfer, processes, and infrastructure.

With each of these challenges, specific issues were noted. For this column, I will review the issues of the two major challenges identified: communication and infrastructure.


Deborah Bigelow, PMP, is executive vice president of PM Solutions Inc., a project management consulting company. She was executive director of the Project Management Institute from 1992 through 1996. Comments on this column should be directed to [email protected].

Issues within communication were responsiveness, effectiveness, too many assumptions, being taken by surprise, wasted administrative time, trust, and corporate connectivity.

As you might guess, good communication must evolve into excellent communication and become a core competency. For this particular organization, there actually is a communication manager who has developed numerous communication vehicles, including an intranet with the capability of sharing files, a weekly electronic newspaper, a monthly newsletter, an electronic Newsblast and Company Current, and monthly “brown bag” knowledge-sharing sessions, as well as face-to-face group, team, and leadership meetings.

In addition to all of the extra programs and vehicles the organization provides, 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 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), and 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.

At this particular company a virtual help desk was available to all members of this focus group. Yet, less than half were even aware of it. Thus I believe active and constant communication is the most critical success element of a virtual organization.

IT WILL BE INTERESTING to see the evolution of the virtual organization in the new millennium. From my personal experience, a virtual organization can be a wonderful alternative to the traditional organization, with multiple benefits to its employees, provided management recognizes the challenges and the leadership approach that is required for its success! ■

July 2000 PM Network



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