Press Room

Managing The Virtual Office
by Frank S. Washington

In a five-year span, Turner Consulting Group’s income grew almost ten-fold. The company, which provides information technology, management services and consulting to the federal government, commercial enterprises and to non-profit organizations, saw its revenue increase dramatically. During its 10-year existence, Turner has hired 25 people. But other than CEO Dan Turner and a manager who sometimes works out of a Washington, D.C. office, the rest of Turner’s employees work from home.

Turner Consulting Group is one of a growing number of virtual companies. In other words, Turner is a business enterprise with little or no office space and employees who work at home. It is difficult to pinpoint how many virtual enterprises there are, but the number of Americans who performed any kind of work from home (for as little as one day per year to full time) grew from 41.3 million people in 2003 to 44.4 million in 2004, a 7.5 percent increase, according to the 2004 American Interactive Consumer Survey. The same survey found that eight million of them are full-time employees of either virtual companies or traditional corporations.

The primary reason for the growth in full-time virtual employment is cost cutting. Employers can save from $5,000 to $10,000 per virtual employee through reduced absenteeism and reduced costs. However, there are reasons other than saving money why companies use virtual employees. The talent pool broadens and deepens because virtual employees can be hired and work from anywhere. The lack of commute times improves productivity and it helps the environment. And an organization with virtual employees is more agile, fluid and more responsive to market conditions.

Virtual enterprise can be applied to just about any sector of the economy. The obvious ones are service industries such accounting, communications and consulting. But certain aspects of any business, whether it’s fashion or manufacturing, can be transformed into virtual departments.

David Cassidy, a spokesman for Turner Consulting Group, says there are three challenges for virtual organizations to overcome. First is providing the infrastructure to allow virtual employees to do their jobs. Second is establishing policies and procedures by which every employee’s work can be collated. Third, and most important, is managing a virtual organization.

Most companies manage the method by observation. They give a task and then manage the way it is achieved. “That isn’t how we manage,” Cassidy says. “The better way to manage is managing by objective. Give folks a task to do and don’t manage the execution of that task, but manage its completion. Our clients are all aware that we manage by objective as opposed to managing by head count.”

A recent study published in the Harvard Business Review found that “far flung” teams outperformed teams whose members worked side by side. The researchers who conducted the study found that the “far flung” teams succeeded by practicing three principles:

• They exploited their diversity, challenging people from different disciplines, cultures, and the like to come up with something better together.
• They used technology to simulate reality. More than 80 percent of the teams use teleconference calls and shared websites. More than half used instant messaging even when their companies prohibited it.
• And they communicated. Some team leaders spent as much as a third of their time on the phone with team members.

Some companies compensate their virtual employees for the space used to create offices at home; others do not. Other companies mandate that the home offices are in separate rooms with doors that shut and dedicated phone lines.

But there are some generalities. Virtual employers provide desktop computers, laptops (if needed), faxes, cell phones, and dedicated phone lines, and they will pick up the tab for some furniture. When dedicated lines are not provided, companies will reimburse their virtual employees for their phone bills.

Broadband Internet connections are provided and virtual companies are utilizing VoIP (Internet phone service). The high-speed technology lets virtual companies set up internal networks. Just dial an extension and talk to a virtual co-worker across the country or across the street.

Jean Halliday was a full-time virtual employee in Detroit for only 16 months. Ad Week magazine provided her with a desktop computer and a fax machine in her home. She paid the phone bill and was reimbursed.
Halliday had to check in with the main office in New York. But she liked working from home so much that she negotiated the right to work from home two days a week in her current job.

“The thing I really liked about it was there was no commuting to an office,” Halliday says. “They were closing parts of I-75 for two summers in row; it was just a hassle. At home you walk down the hall and you’re ready to work. You do have to be self-motivated; I feel like I was. You get it done. In a way, you get more done because you’re not all frazzled when you get to work from the commute.”

David Kiley worked from his home for four years as USA Today’s Detroit bureau chief. Not only did he always rank near the top of the business section in byline counts, but he wrote two books and never took a leave of absence. “I could never have done that in this job,” he says. Kiley is the marketing editor at BusinessWeek and his daily commute to his New York office is 1.5 hours each way.

During his stint as a virtual employee, Kiley felt disconnected from the “mother ship.” He says there were plenty of times that he missed the socialization of the work place. Over time, however, he became a home office worker straight out of central casting, working in his pajamas well into the afternoon. “That sort of freedom and informality you can get used to,” he says. “There’s no oversight or supervision.”

Just as important as the equipment, policies and procedures of virtual companies are the processes they use to hire virtual employees. Everybody doesn’t work well from home.

Candidates for the Virtual World
Obviously, the best virtual employees are independent self-starters who don’t need constant supervision. But there’s more. Virtual employees must embrace and be comfortable enough with technology so as to create a virtual community workspace through e-mail, instant messaging, phone and faxes. And a company should stay in constant contact with its virtual employees, lest they become disconnected from the enterprise.
Turner Consulting Group looks for self-directed, communicative people who want to use the tools that let them communicate — telephones, instant messaging, e-mail, or whatever it might be.

But they also seek individuals with an “excessive amount” of innate responsibility. In other words, Turner wants people who will take responsibility for tasks and ensure that those tasks are executed properly.
“Most people get a huge chunk of their social network from work,” Cassidy says. “We want people who already have other ways of establishing their social network because they’re not going to get it by walking into their office everyday. So we look for folks who take classes, have large family gatherings … who basically demonstrate to us that they’re not going to sit themselves in an office and do nothing else.
We very strongly believe that external stimulus into everyone’s life is a great way of creating creativity. If you don’t have that, you’re missing out on something.”

The federal government is committed to converting a large portion of its employees into virtual workers. Studies have found that AT&T’s virtual employees work five more hours per week than the company’s office workers.

JD Edwards’ virtual workers are 20 to 25 percent more productive than its office workers. Plus, research has found that a 40-minute commute equals eight working weeks every year.

If it weren’t apparent, such statistics certainly bear out that virtual enterprises are the best and most cost efficient way to get some jobs done. ?