Benefits of a Virtual Organization
According to Peter Drucker (1988), by the year 2008 the typical large business will have half the levels of management and one-third the managers of its counterpart of today. Specialists will be brought together in task forces that cut across traditional departments. Coordination and control will depend largely on employees' willingness to discipline themselves. According to Drucker, behind these changes lies information technology. Information-based organizations pose their own management challenges: motivating and rewarding specialists; creating a vision to unify an organization of specialists; devising a management structure that works with task forces; and ensuring the supply, preparation, and testing of top management people.
What are the anticipated benefits of "virtual" organizations? There are eight major benefits discussed in the literature including: increased effectiveness; reduced costs; improved client satisfaction; reduced capital investment needs in new businesses; expenses are greatly reduced; lead times are shortened; inventory is better managed; and a direct connection is established with the customer.
According to Charles Handy (1995) in a Harvard Business Review article, the technological possibilities of the virtual organization are seductive. But he argues its managerial and personal implications require rethinking old notions of control. As it becomes possible for more work to be done outside the traditional office, trust will become more important to organizations. Handy proposes seven rules of trust. First he says trust is not blind: It needs fairly small groupings in which people can know each other well. Second, trust needs boundaries: Define a goal, then leave the worker to get on with it. Third, trust demands learning and openness to change. Fourth, trust is tough: When it turns out to be misplaced, people have to go. Fifth, trust needs bonding: The goals of small units must gel with the larger group's. Sixth, trust needs touch: Workers must sometimes meet in person. Finally, trust requires leaders.
There will be many types of virtual organizations. Some will succeed and realize the anticipated benefits; other types will fail for lack of trust and a lack of technological expertise.