10 Critical Factors in Creating an Effective Virtual Organization

Virtual companies and organizations have become very common in recent times, but what are they?

A virtual organization or company is one whose members are geographically dispersed, usually facilitated by information technology and groupware to meet market dynamics. In other words, virtual organizations depend on technology to complete production.

For a virtual organization to be successful, critical factors must be defined for the organization to accomplish the overall objectives of the business. In this article, I will highlight ten critical factors of an effective virtual organization.

1. Technology

Technology is the key enabler for any virtual organization. After all, they are all internet-based. As such, it is of great importance that all members of a virtual organization have access to similar and compatible technological tools. Technology is a critical element of virtual organizations because it is the lifeline that facilitates communication. Through it, team members of the organization can talk to one another and have their work organized in a centralized way so that everyone can keep track of what’s happening. It also allows for tasks to be shared among individuals and submitted as required, with ease. It facilitates productivity and enables everyone to work to their most efficient level.

2. Virtual Teams

An effective virtual organization consists of interdependent virtual teams that interact with a common purpose. These teams are usually created to work on specific projects or day to day operations that keep the organization running. For the virtual team to achieve any measure of success, it must have a defined purpose, exemplary leadership, sound communication channels, expectations that are outlined in a team chart, and finally, the skills required to complete the task. Most importantly, the team members must be connected to the work; passion becomes the fuel that motivates and drives individuals, particularly when the capacity for in person prep rallies no longer exists.

3. Virtual Leadership

For any organization, leadership is of the utmost importance because it sets direction, manages interpersonal relationships, provides support, and motivates and coaches the employees to perform at the next level. With outstanding leadership in an organization, employees can achieve the maximum effectiveness and efficiency required to attain organizational goals. This is also true for leaders of virtual organizations.

While the importance of a virtual leader is similar to that of any other organizational leader, the virtual leader requires an additional set of skills to compensate for the lack of in-person connection. The skills include the ability to manage a whole network of individuals that are all interdependent, creatively design the organization’s virtual operations, create virtual relationships, support and sustain them whether internally or externally, and to inspire and maintain focus among the virtual teams.

4. Virtual Connection

Creating team camaraderie for any organization is essential to develop a sense of connection to each other, to the work, to the people you serve, to the business, and most importantly to the mission. There are proven ways to do this in an organization that physically connects every day to deliver the desired goals, objectives, and results.

In a virtual environment however, everyone must deliberately take responsibility to create such an experience. The way to do this is to balance the personal and professional; start every connection with a personal check-in to let each other know you care. Additionally, leadership must ensure that everyone is included in the conversation by constantly asking questions and soliciting feedback; open dialogue is critical to creating a high level of engagement. Finally, simulating face to face interaction by use of video conferencing is critical. When virtually connecting, make sure you can see and hear each other clearly, no one should be off-camera, everyone is expected to participate via regular injections of comments, chat, emojis, hand raising, etc.

5. Virtual Learning

Continuous learning in an organization is critical for the growth and development of all employees. This concept should not get put on the back burner because your team is virtual. Virtual learning should become even more of a priority because the team needs to know that the organization and its leaders value them. The benefits of such an investment are two-fold. First, the suggestion that employees matter so their leader chooses to invest in them as an individual is reinforced. Second, continuous learning allows the organization to reap the benefits of their employees’ increasing capability, knowledge, and skillset. As their competency levels rise, the delivery of innovative solutions and breakthrough results is certain, keeping the company competitive and achieving organizational goals.

Virtual learning is by no means new. It is and has always been about investing in your employees no matter where they are located. This gesture sends a clear message that growing and developing your employees matters. The bottom line is that just because you are virtual doesn’t mean you should stop investing in growing your talent, otherwise you risk remaining competitive.

6. Virtual Policies

Oftentimes in a virtual organization, team members work from different geographical locations, in different time zones and have unstable technology and/or personal support structures. For this reason, concise policies and clear expectations are an essential component of a great virtual organization.

While there have previously been a number of different opinions surrounding formal Work from Home (WFH) policies, a recent turn of world events has necessitated that these be quickly (re)examined and implemented in organizations around the globe. In many places this has now come to be viewed as the acceptable norm, and flexibility regarding your employees’ needs in this regard is critical.

Continuously asking yourself whether or not you, as a Leader, are promoting a healthy work-life balance that improves productivity and satisfaction is crucial, as the answer may determine your ability to retain your best employees.

7. Virtual Structure

Many systems make up an organization’s infrastructure. Most companies are brick-and-mortar organizations that also offer remote working/telecommuting. In contrast, other companies have no brick-and-mortar locations, and all their employees work remotely, which is considered a virtual company. It is essential to point out the distinction between the two because both have different requirements, such as communication, support/resources, policies, leadership, ways of measuring productivity, etc. Determine first what structure your’s comprises; remote “friendly” (remote working/telecommuting) or remote “first” (all remote workers). Then build or reinforce your infrastructure.

Remember two things 1) when measuring the productivity of an employee in a virtual structure look at what they get done, as opposed to how they get it done— output is king! 2) Regardless of either structure, the same challenge exists— the value of face-to-face communication can not be substituted. The highest quality of human communication occurs when you can read the body language, facial expressions, and vocal intonations of the person you are speaking with. The farther away from that ideal you move, the greater the risk of miscommunication and misunderstanding.

8. Virtual Culture

Culture consists of a shared set of beliefs that are supported by strategy and structure. When an organization has a strong culture, three things happen: 1) employees know how management wants them to respond to any situation, 2) employees believe that the expected response is the proper one, and 3) employees know that they will be rewarded for demonstrating the organization’s values. This understanding is even more critical in a virtual environment because the behaviors are not easily seen, are sometimes hard to measure, and most times go unrewarded.

Hence, for a virtual environment to sustain its culture, Leaders have to be very deliberate with what and how they communicate and have established (clear and measurable) targets, along with a formalized assessment of deliverables. This way, you develop a culture of open and trusted relationships that creates loyalty. Furthermore, a culture that fosters collaboration and partnership, creates accountability. Finally, a culture that is innately team-oriented and celebratory, rewards and recognizes all its employees for a job well done.

Since personal and professional rewards/recognition are so essential in the virtual environment; intention coupled with thoughtful actions are necessary to create a healthy culture. Some notable milestones to consider are birthdays, marriage, new babies, new house, relocation, new assignment, promotions, company anniversaries, project milestones/completion, newly awarded contracts/business, etc.

9. Conflict Management

Managing conflict is a key element in measuring the health of any organization . It is also a key indicator of a company’s culture. If gone unchecked, it can impact the bottom-line. Therefore, managing conflict in a virtual environment is vital to sustaining a healthy work environment. Normally, miscommunication and unresolved disagreements, power struggles, ambiguity regarding roles, and lack of leadership can create such conflicts. One would say those things are typical, but in a virtual world, they become even more critical to resolve because people can quickly check out without it being noticed until it’s too late. Because conflict can survive like a cancer within an organization, all employees, Leaders in particular, must protect the integrity of the culture by addressing the issue, sharing any concerns with a manager or colleague, reporting it to HR, or requesting mediation to get the conflict resolved immediately.

Virtual environments are inherently more fragile and can pose quite a challenge, especially because conflicting parties are in different locations. Setting expectations and putting conflict management mechanisms in place provides a higher probability that an issue will be handled sooner rather than later.

10. HR Support

Within any company, supportive resources such as IT, Finance, and Human Resources are functions critical to day-to-day operations. Without these crucial partners, organizations would fail to exist. In a virtual environment, these functions are even more advantageously positioned to ensure you have the essential infrastructure IT provides, the pivotal financial stability FA offers, and the key talent HR renders to deliver the company’s strategic and financial goals. After the infrastructure is in place and backed by the financial stability to do the work, HR is tasked with ensuring you have the right people, with the right skills, in the right position, at the right time, to do the right job.

The human systems, policies, processes, and procedures to support a virtual organization are essentially the same except for the exceptions that come with working remotely or being remote friendly. It is important to incorporate sound HR practices to ensure the organization runs smoothly. Partnering with an HR professional will help you navigate various processes such as recruitment, succession planning, training, talent development, and performance management, so that your virtual organization achieves next-level performance.

The required knowledge and understanding of those policies and practices for a virtual organization are paramount to the operations of the organization. Most times they do not exist at all, so you may require an HR partner to create. It is times like that when those who have a qualified Human Resources to partner with celebrate, and those who do not wish they had one. Either way, this partnership is especially critical to have in today’s working climate.

If you have questions regarding creating/sustaining virtual organizations, please go to I am pleased to both support and assist your organization in building the virtual team you desire.

Knowledge is enlightenment.