Virtual Team Risks Worth Considering

Virtual staff and online offices that build business connections through the cloud are a staple of the modern marketplace. The lure is in the real and imagined cost savings, which some management consultants say will be there only if things are done right.

The urge to handle mortgage servicing capacity shortages is pushing many lenders and servicers to use or at least consider either third-party service providers or new locally based virtual staff.

The growing virtual-teams phenomenon and popularity is now easier than ever thanks to new and emerging technologies that offer an effective solution for companies on a budget, say Richard Lepsinger and Darleen DeRosa, president and managing partner at OnPoint Consulting, who together have 35 years of management consulting experience. But unless the steps taken necessary to ensure their virtual teams are successful many companies fail badly.

If replacing cubicles and costly real estate with a website is an easy way to cut costs, companies opting for virtual collaboration may not get it right.

According to Lepsinger it is not uncommon for “complex companies” to have as many as 50% of employees working remotely using technology that has made it easier than ever to manage competitive pressures by employing dispersed groups of people fit for a global marketplace.

DeRosa says that as proven by at least two separate studies—the risk is in selecting ineffective teams that do not pay off or bring in a return.

Recently an OnPoint Consulting study of over 48 virtual teams across industries designed to help organizations maximize their investment in virtual collaboration found that 27% of the survey participants were not fully performing. An “MIT Sloan Management Review” study found only 18% of the 70 global business virtual teams assessed were found to be highly successful, adds DeRosa, which means a whopping 82% did not achieve their goals.

The main mistake these businesses make is in the approach, Lepsinger explains, because they work and lead virtual teams “as if the dynamics were the same as those for co-located teams,” starting with simply recycling the same guidelines and best practices and than hope for the best, which “just doesn't work.”

The reason, argues DeRosa, is because face-to-face teams and virtual teams are like the proverbial “apples and oranges.” Judging from her experience, she says, only a few organizations that use virtual teams “actually understood how to set their virtual teams up for long-term success.”

And ineffective leadership comes first especially for virtual teams. The “warning signs” include not meeting performance objectives, extensive delays in deliverables, damaged relationships between the team members and the leader, lack of clarity of the team’s direction or purpose, or lack of attention to team members who are not at the same location.

An effective team leader is especially sensitive “to interpersonal, communication and cultural factors to overcome the limitations of distance," says Lepsinger, which is why they should not only have the necessary technical skills but also have the team-building abilities and always keep members engaged through timely feedback, and periodic face-to-face meetings.

Lack of clear goals, direction, or priorities tends to inhibit team performance because it is tougher to communicate with and inform team members who are geographically apart, so goals and objectives need be outlined immediately through a kickoff meeting, says DeRosa. At the same time it is important to define upfront clear roles and accountabilities among all team members.

Lepsinger recalled how a global information technology team in the OnPoint Consulting study created a “team handbook” that provided background on each team member and clearly laid out how each person was to contribute to the team. “When questions arose during large, complex projects, team members would consult the handbook to determine which team member to consult with.”

Cooperation is as important when a diverse group of individuals is asked to work together to accomplish shared objectives when there is a lack of face-to-face contact.

Also, office cliques and the conflicts that come with them can still form with virtual teams Lepsinger says. For example, a virtual team in OnPoint's study with two-thirds of the members located in Philadelphia and the remaining scattered in different sites around the world created a natural environment for the team members in Philadelphia to develop stronger relationships with one another than with the members who worked outside the main hub.

Lack of engagement is another risk to which leaders and team members should pay attention to by asking themselves questions such as: Are all team members contributing to conversations and projects? Are they attending and actively participating in team meetings? Are they motivated to take on new work, or are they feeling overwhelmed? Are people working well together, or is there frequent and unproductive team conflict? Lepsinger says looking out for these “common red flags” can help prevent engagement issues from derailing a team.

Virtual teams may also suffer from inability to replicate a face-to-face "high-touch" environment since while electronic technology has made virtual teaming possible “it is not a perfect substitute for human interaction” and one of the greatest performance barriers.

"Poor communication, lack of engagement, and lack of attention during virtual meetings are a few of the warning signs that a high-touch environment has not been achieved," says DeRosa who together with Lepsinger co-authored “Virtual Team Success: A Practical Guide for Working and Leading from a Distance.”

To ensure better overall performance she suggests virtual teams invest in one or two face-to-face meetings per year, develop a communication strategy and continuously re-examine it.

According to DeRosa, many companies “either don't realize that their teams are underperforming, or despite their initial investments in these teams, they don't take the time to focus on enhancing their effectiveness.” The good news is that there are numerous strategies they can use to improve performance.