HRM in Virtual Organizations

A Research Submitted to Partially Fulfill the SHRM Course

Requirements

Team Members

1. Amira Mohamed Samir 1138 2. Asmaa Adel Hassan 1134 3. Ehdaa Refaat Shahien 1139 4. Maggy Wahib Boshra 1188 5. Salma Mohammed Dehis 1255

Team Code (DR04)

December, 2012

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Introduction

HRM in Virtual Organizations (VOs) is a developed research seeks to provide further information

and knowledge about the future of virtual organizations and its implementation. It covers an

overview of VO, including its definition, characteristics, types, factors of its implementation,

advantages and challenges. Also it covers major HR policies and practices in such organizations.

These policies include staffing, recruiting, selection, training, compensating, performance

appraisal, communication and controlling. In each policy, it shows the key differences between

HRM in traditional organizations and VOs. In addition to showing how much advanced

technology is important to VOs. This report ends with practical examples, conclusions and

references.

Virtual Organizations Overview

Definition

Virtual organizations (VOs) are business and organizational models made possible by

globalization and developments in transportation, information, and communication

technologies in the late 20th and early 21st century (Mowschowitz, 2002; Kuruppuarachchi, P. R.,

2009; Hortensia, 2008). Simply, a virtual organization can be defined as a goal-oriented

enterprise composed of multiple members who reside in geographically dispersed locations and

use technology media to communicate and coordinatethe fulfillment of a defined objective or

task (Workman, 2005; Mowshowitz, 2002; Stoica & Ghilic-Micu, 2009; Moshowitz, 2002; and

Nemiro, Beyerlein, Bradley, & Beyerlein, 2008).

Characteristics of Virtual Organizations

1. Small Sized Partners

Initially VOs are based on core competencies, which mean that VO partners determine what is

best for the business process in relation to the complementary skills of each partner. We should

note that the smaller the size of partners the more flexible the organization is, and the better

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opportunity the organization has in the market. The overall effect of this feature is known as the

"synergy effect" (Lau & Wong, 2010; Jacobsen, 2004 & Durai, 2011).

2. VO Has Its Own Identity

Actually it has a hard identity. VOs are an open organizational system, so it doesn't have a fixed

internal structure or hierarchy nor does it have a product or a brand name. It's mainly based on

electronic linkage and featured by loose coupling (Lau & Wong, 2010; Jacobsen, 2004 & Durai,

2011).

3. No Organizational Chart

VOs are based on information technology and is known as a meta-organization which means

that the partners come and go based on whether their goals have been accomplished or not.

Hence their presence or absence doesn't affect the organization (Lau & Wong, 2010; Jacobsen,

2004 & Durai, 2011).

4. Semi-Stable Relations

There is dependency among partners, so the relation is not too formal or too permanent. As we

mentioned before the existence of the partners or absence doesn't really affect the VO (Lau &

Wong, 2010; Jacobsen, 2004 & Durai, 2011).

5. Dependent On Opportunism

VO partners work together to meet a specific market opportunity and try to enlarge their scope

to take place in the market and share the risk (Lau & Wong, 2010; Jacobsen, 2004 & Durai,

2011).

6. Based On Trust

Since VOs are based on sharing information and knowledge, trust must be present among

partners (Lau & Wong, 2010; Jacobsen, 2004 & Durai, 2011).

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7. Shared Ownership

Since every partner has his own interest in the VO, therefore the VO can be owned by different

partners. Once a partners' interest have been accomplished, he can walk out and it will not

affect the other parties (Lau & Wong, 2010; Jacobsen, 2004 & Durai, 2011).

8. Shared Leadership and Loyalty

Each partner controls his own resources not the VO resources. Workers of VO are different

whether culture or language, therefore workers need to identify themselves that would help the

workers grasp the feeling of respect and sharing time and space (Lau & Wong, 2010; Jacobsen,

2004 & Durai, 2011).

9. Geographical Dispersed

Since VOs don't have a physical location. VOs based on technology; therefore companies

collaborate autonomously of time and location. This gives the partners a sense of presence even

though they are far apart (Lau & Wong, 2010; Jacobsen, 2004 & Durai, 2011).

10. Customer Based and Mass Customization

As the VO product is mainly based on customer interaction (Lau & Wong, 2010; Jacobsen, 2004

& Durai, 2011).

11. Flexibility and Quick Response

The collaboration of workers on a specific task makes it easier to manage resources based on

market demand (Lau & Wong, 2010; Jacobsen, 2004 & Durai, 2011).

Types of Virtual organizations

1. Alliance Organization

The essence of an alliance organization is the horizontal networking among its partners. It

replaces the traditional vertical organization, in which all powers were centralized in a single

organization and the employees just executed the orders. In the alliance type of VO, each

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partner linked with the VO performs different but related activities. In fact, the core

competencies of the partners are combined to produce synergy effect for the VO (Durai, 2011).

2. Displaced Organization

In a displaced organization, the individual members are geographically dispersed but connected

by information technology. However, the physical separation of members is usually not known

to the outsiders, who perceive them as a single unit. Many software and investment companies

are adopting this style of operation in which employee dislocation is not known to the

customers (Durai, 2011).

3. Invisible Organization

An invisible organization will not have a physical structure as such, except that a small place will

be used as an office for a few employees. The primary duty of these employees is to attend to

the phone calls of the customers in need of the goods or services offered by this kind of VO. The

products of such an organization are mostly virtual and directly downloadable from computer

like BSNL Hungama portal. This type of organization keeps no visible high-street branches but

operates through a network of call centers and back offices (Durai, 2011).

4. Truly Virtual Organization

This type of organization is a mixture of the characteristics of alliance, displaced and invisible

organizations. The Internet is the major platform for performing its operations. It enables

organization to offer its products or services to the customers. Book publishing companies often

use the truly VO to market their products and pay it a commission for its role in displaying and

selling its products. The online Amazon.com bookstore is a typical truly VO (Durai, 2011).

Factors of Implementation

In the race for Excellency organizations always try to innovate, as to create for itself a

competitive advantage over their competitors. One of the ways to gain such advantage is

implementing VOs. There are a number of factors that initiate the process of implementing VOs.

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1. Sharing Core Competencies

As the workers or teams in VO work together to perform a task naturally, they would share their

core competencies to increase the effectiveness of the VO in all different aspects of work (Lau &

Wong, 2010).

2. Flexibility

To implement VO successfully, VO has to be more flexible. It has a changing environment, as

partners come and go as they wish. Also the working nature in VOs requires special and expert

knowledge that can be outsourced to experts to adapt such volatile environment, partners in

VO have to be flexible and are willing to share what they know (Lau & Wong, 2010).

3. Enabling Technology

It is the very basic principle for VOs existence, as the workers would communicate with each

other using technology from any place at anytime. These communication devices and platforms

are a must in any VO to operate (Lau & Wong, 2010).

4. Globalization

For any company to grow and enter the global market, it would have to cooperate with other

companies in different countries. So the emergence of VO made it easier for these companies to

merge and be partners. Those partners should have the local knowledge of their own countries

and handle work regardless of the distribution or sale of product in other countries (Lau &

Wong, 2010).

5. Mobile Workers

Virtual employees are who perform their work from different places, therefore the concept of

VO made it easier for such workers to communicate effectively with each other (Lau & Wong,

2010).

6. Cost eduction

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As workers can work from any location even their own home, as long as there is internet

connection this helped in reducing the cost of commuting from home to work every day. Also

some VOs don't need large physical assets, as most of its work is done via networks. All what

some VOs need is a small office for management purpose. Hence the cost relating to physical

assets are reduced rapidly (Lau & Wong, 2010).

7. Efficiency

The corporation among partners made it easier for organizations to utilize the resources to

meet the market demand. Therefore VOs lead to reduce resources, idle time and increase the

fulfillment of customer's demand (Lau & Wong, 2010).

From Physical to Virtual

More and more organizations are seeking a better method to transform into VO in order to

obtain certain competitive advantages. These advantages like that; (1) globalize its business,

(2)pooling expert resources quickly,(3)understanding customers’ perceptions and behaviors

toward new products in different countries. As a result of such benefits we can get from being

VO, company can gradually evolve part of it to virtual one when it satisfies certain requirements

and changing its structure to adapt new ways of conducting business. New concepts in VO are

noticeable nowadays such as virtual team, virtual office and laboratory. VO moreover focusing

on cost saving, it is more flexible in using new knowledge and technology to create new services

and products which meet dynamics of market. We can conclude the advantages which make VO

more than outsourcing and strategic alliances:

1. Save time and travel expenses.

2. Employees can accommodate both personal and professional lives.

3. Firms can expand their potential labor markets.

4. Employees can be assigned to multiple concurrent teams.

5. Virtual teams are able to work even when they are miles apart.

6. Team communication and work reports are available on-line to facilitate swift responses

to the demands of a global market.

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7. Improving communication and internal control.

8. Unlimited creativity because company’s products are not developed by the same people

and work groups all the time (Jacobsen, 2004).

Virtual Organizations Challenges

VO is the concept of people working together without really meeting each other. Virtual

organizations govern with the same fundamental principle of traditional organization but there

is one main difference which is the way the members communicate. Team members face

challenges in four areas as follow (Vinaja, 2003):

1. Time Zone

If the team members live in different areas across the world time zone will be major

consideration. Individuals can be a day behind of getting something done as it may be midnight

in part of the world and rush hour in another part so it’s very important to set a schedule and

use non real time communication like E-Mails. But this can slow down the development process

and will not enable the team to react quickly to sudden problems. For example; a firm named

BakBone software located in San Diego. U.S. and Israeli members face seven hours time

differences and Israeli team doesn’t work on Friday so to overcome these differences they use

E-Mails, video conference, conference calls (Vinaja, 2003).

2. Technology

In businesses where employees work together in the same place they can get the work done

even if the network fails unlike virtual communication as they rely on the network. So it will be a

big problem the company can lose millions in couple of hours and that will affect the

development process. Slow computers, traffic on network and using later release data for soft-

ware can also affect the organization negatively (Bowerman, 2011).

3. Project Management

Team leaders must be aware of cultural differences as some people like to work in teams like

Japanese and other people are more independent like Americans as they don’t like lot of

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directions and monitoring. Team leader also should be aware of maintain clear goals,

performance standard and communication rules. Team leaders must ensure that all members

interacting, communicating across the network and benefiting from this interaction. Policies and

procedures must be followed and respected (Vinaja, 2003).

4. Communication

In VO team members are not able to see each other faces, emotions, and body language even

hear each other tone of voice in return the potential for miscommunication and

misunderstanding each other. Keeping virtual communication professional is the easiest method

for preventing miscommunication. Not everyone can work in virtual organization the employee

must be self motivated, able to work independently, clear, accurate and brief as he phrase

questions to avoid misunderstanding, sending changes and making up for the time lost

(Bowerman, 2011).

4.1 Culture

VO members reside in different areas so the likelihood of interacting with people with different

cultural background is very high. According to vision Inc “Multiculturalism is a process of change

by which we learn to recognize understand and appreciate cultural identities as well as

similarities and differences of people from other cultural background”. As there are workers

with cultural differences, many problems can occur like stereotyping people from other

countries and misunderstanding each other behavior that will lead to distrust. Team members

must understand and recognize cultural differences in order to work effectively and efficiently.

Studies show that cultural differences affect work group composition, process and outcomes

(Vinaja, 2003).

4.2 Language

One of the main challenges VOs is language differences. If team members speak different

languages it would really hard to communicate with each other. To overcome this problem a

common language should be chosen in advance. Languages used in business today English,

Spanish, Japanese and Chinese (Vinaja, 2003).

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Roles, Policies and Supportive Technologies of HR in Virtual

Organizations

5 Roles Played By HR

Advanced technology let the chance for VO to be existed and compete in the economy. VO

competition comes much more from intellectual capital than from other sources of competitive

advantage. Therefore every asset added must add greater economic value and greater customer

wealth than in the past. To meet these increased expectations, HR professionals must be more

than partners; they must be players to add and deliver value, compete and do thing that make a

difference. Researchers identified five roles that may be played by HR to engage in VO which

are: Coach, Architect, Designer, Facilitator and Leader (Ulrich & W.Beatty, 2002).

1. HR Player as Coach

Coaches focus on both behaviors and attitudes and have to understand individual differences to

show how to motivate desired behavior. Coaches teach as well as learn and should know when

to be critical and demanding and when to be positive and supportive. They know how to

encourage teamwork, given coaches may not be popular but they are accountable for the

results they deliver. With increased time pressures, new economy realities and requirements of

the VO have appeared. HR people help CEO’s succeed by observing their behavior and providing

personal feedback on how to make changes for both shaping business direction and adapting

personal style. They have training in the human side of business and away from the career

politics which enable them to offer specific insights not often shared with the business leader,

HR players can do executive coaching (Ulrich & W.Beatty, 2002).

Actually HR coaches help the leader focus on attention and energy and identifying actions those

need to be taken to accomplish organizational goals. They do very critical task which is giving

feedbacks and it requires knowing how the person will respond. One person may become

defensive, so they should care about that feedback works better if offers suggestions for

improvement more than criticism, focuses on the future more than past and encourages

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reflection more than acceptance. In order for HR professionals to coach, they must build a trust

based relationship with the leader. By expressing personal concern for the leader, emphasize on

leader’s challenges and offer specific observations. Coaches must find ways to share good and

bad news with the trust that both messages are intended to help the leader and company

improve (Ulrich & W.Beatty, 2002).

2. HR Player as Architect

We all learned the importance and the role of the architect in building the house and making

sure that it is right. The architect spends a lot of time listening to us to find out our lifestyle. Too

HR architects play the same role in VOs who help turn general and generic ideas into

organizational actions. They shape the way work flows consistent with ideas and ideals of the

business leader and identify choices about how organizations might be better governed. They

often understand business realities and ensure that dialogue focuses on the right issues. With

available resources they assure that organization capabilities cross boundaries and adopt new

workforce policies to attract and retain voluntarily employees (Ulrich & W.Beatty, 2002).

Organization architects possess multiple skills; they focus on the ways in which the organization

may be aligned with strategy. They continually look for the strategic agenda of the firm and try

to determine how it turns that into goals and actions. Architects in VO have to focus on

competencies required for the firm to deliver the vision. With these competencies, they have to

align the firm’s HR practices to deliver the competencies. Architects are not owners, however

they offer informed choice. Therefore architects must know when and how to give choices, such

hiring or paying someone must fit legal and ethical requirements (Ulrich & W.Beatty, 2002).

HR professionals can be architects after having a concept of organization to be able to apply

that concept to the firm. That means they have a model of what constitutes an effective

organization. Jay Galbraith constructed organizations into five dimensions or a “star” model:

strategy, structure, rewards, processes and skills. The capabilities the organization requires to

win have been called processes, organization characteristics and core competencies. The

capabilities a firm might require such are quality, quick response, innovation and customer

focus. Often consultants serve as organization architects, they may partner with input and

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advice. Internal architects are more sensitive to the needs of the firm; they understand

requirements and political realities of creating successful and right organization (Ulrich &

W.Beatty, 2002).

3. HR Player as Designer and Deliver

Turning ideas into action matters because unless creative ideas are implemented, they add no

value. Acting on ideas comes when employees who come to work behave in ways consistent

with strategy. Psychologists have found that people act differently due to information, behavior,

and reinforcement. HR practices drive each of these three levels to shape employee behavior in

the new VO. HR practices are a primary source of information signals for employees, so HR

professionals design and deliver HR practices to send information to all employees about what

matters most (Ulrich & W.Beatty, 2002).

HR professionals as designers and deliverers align, integrate and innovate HR practices by

creating various choices that may be made to compete and are generated by those working in

the centers of expertise. To do so require that HR professionals identify domains of HR choices

and know the choices in each of these categories based on current theory and research.

Domains are: Competence, Rewards and performance management, Communication,

Governance and Change processes. In order to design and deliver HR practices, HR players must

know innovative HR policies deployed by other firms and be able to adapt those ideas to their

firms. Often HR professionals are not active learners, but followers of what others have done.

Also HR players should know where to invest limited resources and how to measure the impact

of the HR investments they make. Since they are implementers of ideas they architect, they

become not only experts at seeing what needs to be done, but also making it happen (Ulrich &

W.Beatty, 2002).

4. HR Player as Facilitator

HR professionals as facilitators understand the process for getting things done long term, not

short term. They have the ability to make change happen and to sustain that change at three

levels. First, they help teams operate effectively and efficiently and share in both building and

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coaching teams. Teams are inevitable due to no one person has access to all knowledge and

information. HR facilitators must ensure team performance because teams outperform

individuals if managed well. Second, HR facilitators have to become speed mavens who are not

only think as leaders. However, practice masters for getting the organization to make things

happen, bring resources, focus attention and make sure that decisions are made quickly and

accurately. Third, facilitators ensure that alliances operate for rapid response in the new

economy. Also ensuring the ideas, competencies, authority and rewards move across alliances

boundaries. In some ways facilitators are like coaches who shape points of view and often

feedback on progress. However, facilitators focus on teams not individuals and having more

complicated task to do for them. With the principles of involvement, information and decisions,

HR professionals may increase teams, organization and alliance operations. Regarding to those

effective facilitators should ensure that all information required is accurate and choices are

made with speed and clarity. HR facilitators increase organization capacity for speed when

ensure that ideas turn into competent and committed organizational actions (Ulrich & W.Beatty,

2002).

5. HR Player as Leader

HR leaders should face the challenges of running their functions. As senior HR professionals who

did not face up to and implement HR practices with their own functions lose credibility to

others. Human resources should be run as a business, so HR need the same elements of

business plan which are as follow:

1. Business realities.

2. HR vision.

3. Deliverables.

4. HR investments.

5. HR governance.

6. HR measures and actions.

This HR business plan should be shared both inside and outside the HR functions. Inside it

should offers direction and intention. Outside it should increase credibility of the HR functions.

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In order to lead HR leaders need to apply an effective leadership model to them. It should

simple include the attributes and results. Attributes mean that leader know the right way to do

things. Results mean that leaders ensure outcomes from their knowledge and actions. HR

leaders need to set clear goals, be a decisive, communicate inside and outside and manage the

change (Ulrich & W.Beatty, 2002).

HR Policies and Practices in VOs

The Human Resources management in VO requires innovative approach from HR managers who

call for newer understanding of the different dimensions of people and their problems. The HR

managers in VO have to effect transformation in skills, team working, identification and

empowerment. Also HR activities need to be strategic, flexible, cost efficient, customer

oriented. The performance of HR functions through information technology lead us to define E-

HRM which is a system concerned with HR policies that ensure the best utilization of human

resources and work in a web-based environment towards the achievement of organizational

goals. Human Resources department in VO must design unique HR policies which fit the specific

requirements of virtual environment. It should ensure that rules are simple, easy to understand

and self explanatory because VO is totally different than traditional organization which is

flexible and mostly temporary (Durai, 2011).

(1) HR Practices On Staffing Strategies

Staffing plan is a decision that an HR manager should perform to achieve company target. It is

critical element that determines the success of a project or a business. The first step in staffing

plan is to determine the objectives of a project, then is to define staffing needs which means

that organization should clearly define particular skills or characteristics that staff must have.

Some scientists suggest that opened recruitment systems will allow employees to position

themselves into innovative ones because that will create better match between requirements of

the organization and the needs of employee (Heneman & Greenberger, 2002).

The characteristics of successful virtual employees include self motivation, self reliance, the

ability to tolerate ambiguity, to work independently but are not alone and the ability to be

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excellent communicators. HR managers should consider at the team formation stage assessing

whether employees possess skills. Besides, if there is expectation that organization will expand

the use of virtual teams, assessing job candidates during selection process will position the

organization in good form in the future (Heneman & Greenberger, 2002).

(2) Recruitment

Skills required to work in VO differs than traditional; the skills listed below may assist HR

professionals in recruiting, assessment and selection of effective virtual team:

1. Proficiency with technical and electronic tools.

2. Ability to form team relationships quickly and effectively.

3. Ability to communicate in virtual environment.

4. Ability to access, analyze and manage data.

5. Project management capabilities.

6. Ability to communicate across cultures.

7. Basic teamwork skills.

8. Self management skills (Heneman & Greenberger, 2002).

Employment policy in VOs is goal centered and temporary, so HR department must ensure

faster and time bounded recruitment process. Many technological programs enable VO to make

optimum recruiting candidates such as web-based e-recruiting which offers focused recruitment

campaigns and faster processing of applications. HR department must set upper and lower

limits for the organization’s expectations from potential applicants, also it should recruit

candidates who are able enough to fulfill high performance expectations and be satisfied and

motivated the task itself (Durai. 2011).

The virtual recruitment environment can be called also E- Recruitment, which is defined as the

online environment that allows companies and potential job applicants to interact with each

other (Maurer &Iiu, 2007). Internet services have rapidly growth and developed in recent year

that lead to an increase on online recruitment (De Meo, Quattrone, Terracina, & Ursino, 2007).

The increase in e-recruitment is reflected by the decrease of using of traditional employment

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advertising in newspapers (Lee, 2007). E- Recruitment has different shape. There are many

categories for e-recruitment such are: general-purpose job boards, niche job boards, e-

recruiting application service providers, hybrid recruiting service providers, e-recruiting

consortiums, and corporate career, Web sites (Lee, 2007). Internet job boards have two

formats: (1) First general –purpose job boards which is comprehensive on- line recruitment

solution. It is useful for people who search for job opening based on their specifications. It helps

also job seeker to be recruited in large number of companies. It has negative effect on

companies, because many applicants are not qualified for the position. (2) Niche job boards

which are designed to reach passive job seekers by focusing on highly specialized profession,

industry or education level. (Lee, 2007) thinks that the quality of applicant increase in niche job

boards than in general -purpose job boards, because they are more specialized. Niche job

boards achieve large financial gains in last few years (White, 2007).

Other e-recruitment options for firms are Hybrid recruiting service providers and E-Recruitment

consortiums. Hybrid recruiting services providers are traditional recruiters services providers

that expanded their services into e-recruitment. It has the advantage of expertise the service

providers has acquired using traditional recruitment methods, which can be applied to on-line

methods. While E- Recruitment consortiums is a low cost option and an alternative to job boards

(Lee, 2007). Besides the last kind which is corporate career web site. It is the natural extension

of e-business applications. The most popular users of this kind are 500 companies that develop

their web sites to generate significant traffic. It has a disadvantage of high start up cost; because

it needs strong information technology support and this cost will be equal the marginal cost.

However, corporate career web sites give recruiters the flexibility to brand the web sites with

specific company information and helping applicant to make informed decision about

organization (White, 2007).

(3) Selection

Since VOs lack face to face contact, HR professionals have to be careful in selection process

which it provides a rare opportunity for this problem with future employees. They should use

this opportunity for building relationship with employee and creating a lasting impression on

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employee about work in organization which would be done mostly in the non-face to face

mode. Besides that selected candidates should have team capability because performance in VO

relies on teamwork (Durai, 2011).

The selection system and tools for VOs are mainly concerned with the philosophical approach

that the organization utilizes. The types and the dynamic work environment in VOs require the

selection process to adapt to the transition; hence, incorporate with technology. As (Byrne,

2000) mentioned in his study "everything in e-commerce environment must be faster in order

to remain competitive". Therefore we understand that the selection process should be fast and

efficient; along with the selection tools that should distinguish and reflect the interdependence

between VOs and technology. One of these tools for example is "electronic resumes"; that way

the selection process would be faster and documented (Heneman & Greenberger, 2002).

Another tool in selection in VOs is "online assessment"; which is basically about testing

candidates online. That will help the candidate access from any location and submit his

response, get an automatic score and an immediate feedback. This tool minimizes time and

reduces costs. Also, it helps gathering multiple types of information from different applicants.

The third tool would be "online interviewing". As most organizations rely on interviews when

selecting and evaluating an applicant, first HR professionals should make a distinction between

a structured interview which is about measuring cognitive ability and unstructured interview

that is concerned with measuring interpersonal skills. For VOs the structured interview would

serve as a useful evaluating tool; through video conferencing technology and web cams which

will allow suitable feedbacks among geographically remote locations. This tool will help

managers to focus on what they need in a candidate based on the organization's criterion for

selection such as; team contribution, adaptability, knowledge acquisition and professional

growth (Heneman & Greenberger, 2002).

One may ask what would be the main obstacle while selecting a candidate. It would be placing

that candidate in a team not selecting him. To overcome the "placement challenge" of how to

match an individual's characteristics in a VO team, researches showed that HR managers should

ensure that team members should be similar in their level of conscientiousness and emotional

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to conduct a successful team and effective social functioning. There must also be differences

within a team to succeed such as the level of extraversion; it should vary among team members.

All in all the selection process should demonstrate innovative tools that will help HR

professionals to focus on mental judgment and intrinsic traits required in a candidate. For HR

work in VOs will be about product analysis, problem solving and social tact. Therefore the

selection should be as universal as possible and thus making a good use of economies of scale

through relying on core characteristics and applicable measurements (Heneman & Greenberger,

2002).

(4) Training and Development

Although the purpose of training programs at any organization is knowledge and skills acquiring,

HR department must be sensitive to the special needs of virtual employees and should have

necessary provisions in training system. Virtual training should be designed to enable employees

to plan, prioritize and schedule their activities in their own way with little guidance. It should

emphasize on identifying competencies of employees and ensuring that these competencies

shared among other members, also training programs must teach employees some techniques

such time management, office organization at home and child caring to be followed while

working at home. In addition to that, VOs often provide E-learning facilities which refer to the

use of electronic media to conduct online training for employees. It could be done through web

based training with link to external learning resources, audio visual tools such TVs and

computers and other activities like live workshops, virtual discussion and conferences, e-

assessment and e-mentoring (Durai, 2011).

University of North Carolina (UNC) Professors “Ben Rosen and Richard Blackburn” conducted an

in depth study on the training needs for virtual teams and found that executives working on

virtual teams needed training in the following:

1. Leading a virtual team meeting.

2. Coaching and mentoring team members virtually.

3. Monitoring progress and tacking corrective action.

4. Managing external relationships with local managers.

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5. Evaluating and rewarding individual contributions to the team.

Virtual team members needed to develop skills in:

1. Establishing trust and managing conflict among the team.

2. Demonstrating cultural sensitivity and communication.

3. Exhibiting positive team building practices.

4. Using communication technologies (Rosen & Blackburn, 2006).

(5) Compensation

Obviously the reward system in VOs should be focused on compensating the skills, knowledge

and ability of virtual employees who they are judged only by their results. HR professionals

should consider the flexibility and goal achievement ability of the employees in compensation

packages. For example, “Person based system” which is a type of compensation models

primarily focus on the job holder as the unit of analysis not the job itself to determine suitable

compensation of each employee (Durai, 2011).

Teams to be more effective, they need a good reward system to be developed based on the

required behavior and skills. The most important thing is to mix between the characteristics of

the rewards system and the characteristics of the team, since teams are different in their

purpose structure. No reward system can be designed to make a global effect. The solution is to

create reward system that combines between the characteristic of the team and the

organization context is which it operates. It is a difficult task to choose among the major pay

system approaches; that based upon the outcomes will generate when they are applied to a

type of team in a given environment. Major HR professionals’ concern is to look at the

outcomes that affect two major decisions: (1) How to determine base of paying reward. (2) How

to pay for performance (Lawler III, 2003).

Researches show that reward and pay systems in general have a great effect on the individual

and organization behavior. The reward systems can influence a company’s strategy

implementation and overall effectiveness in five ways:

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1. Attracting and Retaining Employees

Job choice, career choice and employee turnover show the different types of rewards

organization offer to their employees. Rewards have an effect in attracting and retaining

employees. Also they differ from one employee to another according to his skills (Lawler III,

2003).

2. Motivating Performance

Rewards are able to motivate employee performance in specific condition. Employees must

understand that organization will give them the rewards in timely fashion when they do great

performance. They must feel that according to their performance they will pay back. Employees

are motivated to act in a specific way when they feel that, they will reach attractive outcomes

(Lawler III, 2003).

3. Promoting Skills and Knowledge Development

Encouraging employees to develop new skills can motivate their performance. There is an

effective approach company can implement which is “skills-based-pay”. It is a new approach

that focuses on the type of skills that company want employee to acquire to improve their

performance in important situations. By contrast many job-based-systems tie increased pay and

require higher-level jobs; thereby encouraging employees to learn those skills that they feel will

lead to promotion. Actually, there are no well developed systems for determining the worth of

individuals in the market place till now. Skill-based-system generally seems to fit well in

companies that want a flexible, relatively permanent workforce oriented toward learning,

growth and development. In addition, more companies are applying skill-based system (often

called competency-based system) pay to knowledge workers, managers and service employees

where the strategy calls for high performance teams and high level of customer focus and

satisfaction (Lawler III, 2003).

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Impact of Job- and Skill-Based Pay

Job Based Skill Based

Attraction Provide good market data Learning-oriented and high skill

individuals

Motivation No performance impact Little performance impact

Skill development Learn job- related and

upward mobility-skills

Can motivate needed skill

development

Culture Bureaucratic and hierarchal Learning and self managing

Structure Hierarchal, individual jobs

and differentiation

Horizontal teams based

Cost Good control for individuals’ pay

rates

Higher individual pay

(Lawler III, 2003).

4. Shaping Corporate Cultures

It is a way for the company to develop, administer and managing reward system that affect

organization culture. For example, the reward system can affect how employee see his company

as human resource oriented culture, an entrepreneurial culture, team based culture and so on.

Reward system is clearly shape culture, because it has a great effect on employees' skills,

motivation and satisfaction and to feel what is important for the organization (Lawler III, 2003).

5. Reinforcing and Defining Structure

Pay systems can define organization’s structure; however this is not considered when pay

systems are designed. They primarily affect the level of differentiation and integration in an

organization. They can cause the individuals in it to pull together or compete with each other,

depending on whether they compete for rewards or share equally in reward pool that is

influenced by the performance of multiple teams (Lawler III, 2003).

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(6) Performance Appraisal

The nature of VOs requires from HR people to rely on the end results produced by the virtual

employees in measuring their performance. In this regard they must have clear and measurable

performance objectives and criteria such as quality standards and speed of performance to

evaluate employees. Also HR department can use electronic modes of communication like e-

mail, telephone and fax for conducting evaluation and sharing the results. For effective and

justifiable performance evaluation, evaluators should possess an adequate technical knowledge

about employee to be evaluated by them (Durai, 2011).

It's very important to evaluate and focus on processes and outcomes of virtual teams. This

template helps manager align with virtual teams for objectives of organization. 360 degree

model is very crucial to provide feedbacks and improvement for performance management. The

goals of performance management are: attract, retain, promote skills and develop knowledge

for team members. It's better to evaluate performance of the team as whole not as individuals

(Carroll, 2008).

Motivation is another important factor to increase performance of individuals and there are

many sources of motivation as some of employees can motivate by feeling that they achieve

goals of organization and others can motivate by rewards and money. Another source of

motivation by keeping employees in picture do not classify them, asking them about their

opinion in project and at the end it will reflect on increasing for the performance of individuals

on the team and the organization. In conclusion performance management is the most difficult

problem in VO. It requires daily attention on three principles due to physical separations of

workers and managers:

a. Define the performance goal of each member or team clearly.

b. Facilitate performance by eliminating all obstacles and providing necessary resources.

c. Encourage performance by providing rewards (Carroll, 2008).

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(7) Communication

The lack of face to face communication is the most critical issue in VOs which affects most of HR

policies and should be considered when designing and forming policies and regulations. HR

department must ensure that the information channels of communication are clear and

supplemented with telephonic conversation, e-mail communication and periodic face to face

meetings to keep the two way communication channels open. Communication is essential in

any organization because it can strengthen member identification and thus provide team

members with an opportunity to create and share their perception of their organizations'

features and goals; or simply it's about sharing norms, values, and culture. This way will give

workers a sense of unity and proper social context (Durai, 2011).

With the technological advancements, both hard and soft modes can be visualized. That is

where the term media richness appeared, as there is a notion that both modes are of major

importance. The term richness alone implied that hard modes of communication are somewhat

less powerful than soft modes in general. But to better understand these modes it is better to

use two categories that will distinguish them from each other. (1) Time; were hard modes are

timeless because it exists outside the immediate interaction. Therefore it allowed for a

synchronous communication. (2) Geographic space; were hard modes useful as it is

disembodied from the sender. Therefore it can work in communication over great distance. But

since face to face interaction is necessary a new technology presented itself "virtual meetings"

that can be conducted through webcams for example. This also has aroused new theory called

"the normative theory"; it suggests that soft modes in which media richness theory are known

as "rich communication media". They will be needed at different times during a project to build

a shared understanding among members along with hard modes in VOs (Godar & Ferris, 2004).

(8) Employee Monitoring and Control Process

Unlike the traditional organizations, control process in VOs ensures greater involvement of

employees and self imposed discipline. Part of control process is to set performance standards,

then measure actual performance and finally compare the actual with the standard

performance. HR department play important role here which is determining weakness points of

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employees and organizing suitable training to enhance them to keep the success of VO . Virtual

teams is one of the main characteristics of VO which make coordination is critical, therefore HR

managers need to put in special support which may be helpful in reducing negative fall outs

such as job stress and work and non-work conflict. One of the ways to increase productivity and

improve employees’ performance and customer relations is employee monitoring. Employers

can legally monitor the employees, however they want. They can log and review all computer

activity especially if they own the machine (Durai, 2011).

1. Reasons of monitoring the employee computer activity

1.1 From Security Stand Point.

Avoiding the misuse of company information and this can be occurred by sending that

information to a third party. That causes a big financial damage like affecting the organization

reputation and losing customer confidence. The loss can far out weight the cost of fraud itself

and that is called intellectual property theft (Turner, 2008).

1.2 Time is money so personal surfing has become a problem.

Employees’ shop, chat, brows, face book and play games during the working hours are

considered the main tools of wasting time. And those cause a loss of productivity and affect the

employees’ performance, as they are continually distracted by the latest updates on their social

network and that will affect the company profit (Turner, 2008).

1.3 Downloads affect the Company Negatively.

If the company needs the network for important business, it will experience bottleneck in

network capability which can slow down access for the money making venture of the company

(Turner, 2008).

1.4 Downloading and Web Surfing can lead to Viruses.

That can bring down the entire network or cause a computer to crash. So that it can be too

costly to the company (Turner, 2008).

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1.5 Measuring Employee Productivity (Turner, 2008).

1.6 Provide Defense against Lawsuit (Turner, 2008).

2. The Right Way to Do It

Employees may accept and support the idea of monitoring in case of explaining the monitoring

mechanism to them clearly. That can be done by giving rational reasons of monitoring like

improving employee performance, customer relations and the quality of products and services.

Failing to advice the employee that his computer activity will be monitored may cause a

problem, because he may think that the company doesn’t respect his privacy rights. The

number of employees who break the rules that were set to protect the company decreases

when they are informed about the monitoring process. There are programs that inform

employees at start up that their computers are being monitored. Prevision is better than cure.

There are many occasions when unannounced monitoring is necessary but that action should

not be taken without careful consideration. Employees use software applications that loaded

directly to their computer such: (a) View the desktop in real time, (b) Monitor and log websites

visited, (c) Track application usage, (d) Record e-mail sent and received, (e) Record chats in IM

programs, (f) Record keystrokes in real time, (g) Remotely control the computer, (h) Schedule

screen captures, (I) Store activity logs in a centralized location and (j) Export logs to HTML or

Excel (Turner, 2008).

3. Monitoring From Employee and Employer Perspective

According to the employee, being monitored at work is much like being spied upon and that

makes him nervous and apprehensive about their moves. From the employer perspective, it is

crucial to know what employees are doing with the time he is paying them for. Although

employee monitoring has become more commonplace and has many legitimate uses, it should

be used carefully (Turner, 2008).

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HR and How much Technologies are important in Virtual Organizations

Highly developed technologies and software tools enable good team leaders being on track of

progress and productivity. So HR department should consider these technologies before

forming virtual teams to see facial expression and assess non verbal key drivers which establish

trust among team members. Information Technology department also has important role in

assessing these ways which help virtual members such instant messaging and chat platforms

(Yahoo! Messenger and Skype), shared technology services (Microsoft exchange), remote

computer access, web conferencing (Web Ex) and file transfer (E-mail). HR professionals should

ensure that training on How and When to use these communication technologies is offered and

should also consider creating a space in organization’s computer system especially for teams’

use to enable them share personal experiences and family news such as bulletin board. Creating

such social networking will encourage employees to interact on more personal basis and

building trust (Leonard, 2011).

Practical Examples

1. Cisco’s Response to Virtual Teams: a Collaborative Enterprise Framework

Cisco Systems, Inc. developed a model to help organizations align their business strategies with

the emerging technologies that allow for virtual teamwork. Called a Collaborative Enterprise

Framework, it is focused on managing people, processes and technology—in that order.

According to Christine Fisher, head of Cisco’s supply chain collaboration center, before

implementing the framework, most collaboration among the 9,000 supply chain employees and

30,000 outsourced workers occurred through phone, e-mail and in- person meetings. With the

company’s rapid global expansion, the group turned to new technologies to help coordinate the

resulting challenges. The group started by using collaboration tools to address particular

projects where virtual team input was necessary. For example, employees used Cisco WebEx

Connect, a collaborative workspace and document sharing software, to create a blueprint for

lean manufacturing. Employees also started using video conferencing technology to replace

face-to-face meetings (Cisco systems, 2009).

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The group wanted to ensure that collaboration tools were acquired strategically, keeping the

company’s business goals in mind, and were used properly, so instead of continuing to roll-out

technologies on an ad hoc basis, the group took a step back. They held a series of workshops

where employees received basic training on Web 2.0 tools. Workshop participants were then

asked to identify high-touch and problem areas where people and information intersect.

Workshop participants then detailed various what-if scenarios to see how Web 2.0 tools might

address various operational challenges. With the information gathered in these workshops, the

group formulated a strategy for using new collaborative technologies to meet their needs.

As a result, the “Connected Supply Chain Workspace,” was born, a place where all the people

involved in Cisco’s supply chain (partners and Cisco employees) can share pertinent information

to coordinate their activities (Cisco systems, 2009).

2. Agile

Agile is a software development method where requirements and solutions evolve through

collaboration between self organizing and cross functional teams. It promotes adaptive

planning, evolutionary development and delivery time. Agile enhances customer collaboration

over contract negotiation and interaction between team members so Agile is applied for

customized products. Agile method is adaptive method. Adaptive method means adapting

quickly to the changes. If any change occurred in the project the adaptive team will change. The

team can’t describe what tasks they will do next week but only what features they will do next

month. Adaptive team is able to report only the mission statement for the release. It is

characterized by breaking tasks into small increments and it doesn’t evolve long term planning.

Every task is time boxed and it last from one to four weeks (Ambler, 2001).

2.1 Principles Underline the Agile Manifesto

Customer satisfaction by rapid delivery of useful software.

Welcome changing requirements, even late in development.

Working software is delivered frequently (weeks rather than months).

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Working software is the principal measure of progress.

Sustainable development, able to maintain a constant pace.

Close, daily co-operation between business people and developers.

Conversation is the best form of communication.

Projects are built around motivated individuals, who should be trusted.

Simplicity- The art of maximizing the amount of work not done - is essential.

Self-organizing teams.

Regular adaptation to changing circumstances (Ambler, 2001).

2.2 Team of Agile

The team in agile project is usually cross functional and self organizing. There no hierarchy or

corporate roles of the team members. Team members take responsibility of the task. They

decide individually to face any problem. Team size is small (5-9 people) to simplify work, team

communication and team collaboration. Since team members are in different locations they use

videoconferencing or E-mails to contact each other. Each agile team contains customer

representative. Customer representative is the voice of the customer as he writes the customer

critic items and orders them according to their priority. Customer representative is appointed

by the customer to act on his behalf and be available for the team to answer any mid questions

(Ambler, 2001).

2.3 Meeting in Agile

Meeting is very important for team members, they report to each other what they did the

previous day, what they are going to do today and what are the problems they faced. This

meeting is a daily meeting occurs at the time and it last no more than 15 minutes. (Ambler,

2001).

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Conclusion

Finally, our research concludes that work can be done in different and distant geographical

places through new trends of VOs. Since customers are looking for the same kind of service

presented by VOs, they will be loyal to VOs where they can find different and global needs easily

and almost immediately. So that VOs will have the edge of its competitors and affect general

culture and private life of customers. The success of VOs needs few conditions to be fulfilled.

Such building trust which is the heartbeat of VOs and using advanced technologies that help HR

policies to be implemented successfully. In addition to cooperation among all units and teams

to share the information and experiences.

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