In past blogs we have explored the “how tos” and evolving approaches towards the process of organizational design. In this second blog of a five part series on innovative and emerging alternatives for the organization of the workplace, organizational design expert David Creelman explores the virtual company.
It’s great to be CEO of your own company, but employees can be a burden. You have to pay them, you have to develop them, and you have to show up and hang out in the office with them for long hours every day. What if you want to run your company from a beach in Mauritius? Well, the best way to do that is to have no office…and no employees.
The virtual design
The virtual organization, where all the workers are freelancers, has long excited the imagination of management theorists—and now thanks to fast and pervasive Internet connectivity, devices and applications it is very real. Some companies, like AppMakr and AH Global, are almost entirely virtual. These are not big companies but they are not tiny; for example, AppMakr can have up to 200 freelancers working there at one time.
These companies are possible because we’ve reached a stage where many kinds of work can be done entirely online. Many people would rather be freelancers working at home or from other remote locations (think your local Starbucks) than employees working in an office.
Advantages and disadvantages
Often when we hear about people who don’t have secure full-time jobs, we think it is a sad story.
But the freelancers who work for virtual organizations often have no desire to trade their life for work in a Dilbert-style office environment. They might well feel even more secure than their full-time friends who are constantly worrying about the next wave of downsizing, and feeling powerless about it.
For the CEO (besides the advantage of being able to live on and work from the beach), the flexibility that comes with a virtual workforce is a fantastic business advantage. When sales slow down, it’s no problem; labour costs shrink immediately. When sales ramp up, it’s easy to quickly expand the workforce.
It’s not all paradise, of course. The CEO still has to find, attract, and retain a relationship with talented free agents. Managing people at a distance requires a different set of skills than managing employees face to face. Furthermore, some types of work really need to be done face to face by committed long-term employees. The question is whether that type of work is the norm in your business, or whether most of the work could actually be done in a virtual organization.
What it means to you
Hiring an employee into a job seems the natural way to get work done. Yet for entrepreneurs who have launched virtual organizations, hiring a roomful of employees seems like a crazy way to run a business. The blog on the fissured organization showed how it is possible to control the work of people who are not your employees. Your life as a manager might be easier with some of the work done in a virtual organization. You might be happier as a freelancer doing virtual work. These are options to be considered and possibly pursued.
David Creelman is CEO of Creelman Research. He helps organizations identify, make sense of, and address important new issues in human capital. His work with Andrew Lambert on one such issue (board oversight of human capital) won the Walker Award. His work with Wanda T. Wallace on “leading when you are not the expert” topped the “Most Popular List” on the Harvard Business Reviews blog. His much endorsed book on the on-demand economy & future of work is called Lead the Work: Navigating a world beyond employment. It is coauthored with USC professor J. Boudreau and Towers Watson thought leader Ravin Jesuthasan. David lives in Toronto. To get in touch email dcreelman@creelmanresearch.com; or to simply establish a connection LinkIn at https://ca.linkedin.com/in/davidcreelman.
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We’ve talked about the pros and cons of virtual teams and remote work in past blogs. Interested in how you can create and manage the org charts for your remote team or virtual company, online? In minutes? Try Organimi.
As always, thanks for reading.