Today virtual organizational design is all of the rage. Every day more companies (including Fortune 500 companies) are more readily integrating virtual teams into their organizational design and hiring processes. The benefits are quite attractive.
However, for smaller companies and startups, making the decision to hire a remote workforce is a big one. Often, it is done with the advantages in mind, but without looking deeply enough into the disadvantages and issues that can arise from that decision.
Making the right decision for your company, based on your own goals and hopes, is critical. Making the wrong decision could set your startup back years or limit your growth for years to come. It’s important that startups go into the decision informed and with a solid understanding of what they would like to achieve from their decision.
In this article, we’ll take a deep look at the advantages and disadvantages of virtual organization design. Using this article as a guide, you’ll be able to better understand the pros and cons of each choice and make a decision that best reflects your organizational goals.
Advantages of a Virtual Organization Design
There is a good reason why a recent forecast by the World Economic Forum called virtual teams “one of the biggest drivers of transformation in the workplace.” There are considerable advantages to virtual organization design. These advantages include:
- Lower Overhead Costs. Virtual organizations enjoy significant decreases in operating costs. Aetna was able to shed 2.7 million square feet of office space and save $78 million due to a shift toward virtual teams and remote work. American Express also enjoyed lower overhead costs to the tune of nearly $15 million thanks to a focus on hiring remote workers.
- Improved Employee Satisfaction. Employees are simply happier when they are able to work from home. 82% of remote workers have reported that they have lower stress levels. The study also showed that a shift toward remote work led to fewer absences and a higher morale.
- Improved Employee Efficiency. Remote employees get more work done without the transactions of the office. 30% of workers in a recent survey stated that working remotely allowed them to accomplish more in less time.
- Improved Scalability and Growth Potential. Without the overhead typically associated with maintaining an office space and fewer investments in supplies, companies can free up capital to improve their scalability and growth potential. Remote teams are simply more agile.
- Larger Talent Pool. Startups who hire workers remotely are able to access a larger pool of talent. You can hire talent from anywhere in the world without limiting yourself to one specific geographic location.
- Improved Employee Retention. Employees that are happier in their work are more likely to stick around. With competitive salaries, remote workers are less likely to leave their jobs.
- Access to New Markets. Hiring remotely allows your startup to tap into new markets. This is particularly useful when it comes to remote sales teams, who will be able to reach out to new customers that otherwise would have been out of reach for your organization.
The benefits of remote and virtual teams are numerous. However, many teams hone in on these benefits without addressing the downsides of choosing a virtual organization design. It’s important to understand both the advantages and disadvantages of virtual organization design to ensure that you make the best choice for your startup.
Disadvantages of a Virtual Organization Design
To offset the benefits of hiring remotely, there are some serious disadvantages. Often, startups that opt for a virtual organizational design without being fully informed find out about these disadvantages the hard way.
Difficulties Installing a Company Culture. Remote teams often have problems fostering cohesiveness among the team. Remote teams often choose their own work hours, which can lead to a fragmented company culture. Once that culture is in place, it can be difficult to make the changes required to get things back on track.
- Lack of Camaraderie. Remote workers rarely speak face-to-face. Even companies that make full use of video chat solutions often find that it isn’t enough to fully simulate the camaraderie that you build when you work together in an office environment. There is less opportunity for impromptu conversations. You learn less about the people that you work with. Companies with remote teams need to take steps to bring their teams together and facilitate that togetherness.
- A Need for Increased Focus on Communication. Because your teams will not be able to pass information between themselves like they would in an office environment, you need to give them the tools and policies that ensure that they actively communicate. Whether that means setting up a slack channel, getting on daily calls, or simply encouraging them to email each other new information often — communication plays a key role in the success of virtual organizations.
- Reputational Risks. A poorly run virtual team can lead to knocks to your reputation. Some potential customers may be wary of working with a company that has a virtual office with remote employees and may not take your startup as seriously.
- Security and Compliance Issues. Working remotely means passing a lot of data back and forth. In some industries (health, financial, etc.) it may be too risky for startups to opt for a virtual organizational design.
Ensuring that you understand how the disadvantages of virtual hiring can offset some of the advantages is critical for making the right decision for your startup.
An Important Decision
For startups, the decision of whether to focus on hiring for a traditional office setting or virtual teams is an important one. Having a complete understanding of the advantages and disadvantages of virtual organization design can help you to make a choice that puts your startup in a position for success.
Organimi can help you to map your organization, whether you ultimately choose for a virtual design or a more traditional in-office setting.