How effective are virtual teams?

By Dr. Al Jury · March 28, 2011

I am often asked the question – are virtual teams more effective than face to face (co-located) teams?

It is a very important question and I believe that the answer with the evidence that has been collected to date is a definitive YES! For example:

Volvo: A study by the Corporate Executive Board found that Volvo decreased their travel costs by 50% by implementing virtual teams. In addition, 75% of workers believed they increased their value to the company by using virtual teams.

BT: Claims that their 9,000-plus home workers are 20 per cent more productive than their office-based colleagues and spend less time off sick.

ICP: A study by the Institute for Corporate Productivity found that 80% of companies surveyed with over 10,000 employees belive that virtual teams will become very important for businesses.

I believe that virtual teams offer significant benefits over co-located teams, for instance:

A) Ability to source human capability from the globe - find the best global talent in a worldwide talent pool – why restrict yourself to your local area. Virtual teams allow companies to build teams to suit their exact needs, whether that means composing a team for experience, specialization etc

B) Decreased costs – reduce your real estate expenses, travel costs and mobility expenses – real estate costs (hiring offices) forms a large part of company expenses. I often walk around my office and see many desks empty as people are in meetings, travelling or working from home. Virtual teams can help reduce real estate costs considerably. In addition, global corporations, spend a lot of time and money relocating knowledge workers around the globe. With virtual teams, these knowledge workers can start contributing productively and instantly from wherever they are. Finally, if you use video conferencing and collaboration tools, you can very quickly reduce your travel expenses related to meeting travel. Why fly everyone in to one location at great time and cost when you can hold successful meetings on video?

C) Flexibility – virtual teams offer a ‘just-in-time’ workforce. Companies go through peak periods and rather than have an inflated workforce to cope with those peak periods, keep a lean workforce and bring in outside consultants to handle peak work loads and short-term job assignments as required. Sites like Odesk, V Worker and Mechanical Turk offer a huge range of skilled workers available at short term notice at hourly rates.

D) Increased employee work-life balance – people are a company’s best asset and we must do what we can to keep our best talent. For many, this means designing a more flexible and balanced career and personal life. In many cases, this can be achieved by allowing working from home or in the location they desire. For instance, say an exceptional geophysicist lives in the USA but an oil company needs that person to work on projects in the Middle East. Using technology like video conferencing and collaboration tools, much of the work can be done remotely and allow that person to remain in the USA, close to friends and family. This flexibility greatly reduces employee turnover and need for recruitment and training of new employees. In addition, this also allows for greater cultural diversity within teams – leading to alternative approaches and increased strategic outputs through different perspectives and relevant local experience and insight.

E) A 24/7 workforce – Virtual teams can be strategically located around the globe allowing companies to implement a “follow-the-sun” approach to product and service development. For example, a sales presentation for a client could be started in Sydney, then worked on by the London team and finally handed over to the USA team. This could have the impact of significantly shortening the development time significantly.

So, as is evident from the discussion above, companies cannot afford to ignore the benefits of virtual teams. What is important is that they do not implement virtual teams without appropriate analysis and understanding of the differences between virtual teams and face to face teams.

How effective are virtual teams?