Why virtual teams fail, and how to make them work (part 1)

Turning back?

In times where many companies push their employees to work from home and employees request this new freedom, YAHOO’s announcement surprised putting away with it all and returning to the old 9-to-5 office hours.  (WSJ, March 5, 2013)

Senior leaders like YAHOO’s new CEO, Marissa Meyer, have doubts if remote working models work – or they struggle how to make it work effectively.

Executive paragigm: Cutting cost vs. increasing productivity

When organizations move to remote work models such as “working-from-home” or variations of it, their primary objective is either

  • Saving fix cost by reducing their office space footprint or
  • Increasing the productivity of their workforce.

They cannot have both because once hard decisions have to be made, the other side falls short – and hard decision will have to be made on the way.

If the chosen approach is to increase productivity, the implementation focuses on how to enable employees to become significantly more productive in a sustainable way, even if it incurs cost lower than the productivity gains.

Open spaces for collaboration

Sadly, however, cost cutting tends to rank top on the list for large and mature organizations, which can ultimately sacrifice productivity. Reducing office space “footprint” aims to cut cost from entertaining the real-estate and work environment including everything from utilities, to furniture, to site security, to property taxes, etc.

In practice, individual (‘closed’) offices are replaced by open office environments with the goal to have more employees working in less, shared space.  Setting up colorful open office environments with cubicle clusters or zones for different work purposes is often sold as boosters for creativity and innovation, which somewhat obscures the true motives.

These office setups typically mimic the environment and agility of entrepreneurial start-up companies.  They suggest increased collaboration by enabling those spontaneous and valuable ‘water cooler’ talks that randomly bring together a diverse mix of employees to exchange their ideas and collaborate on a spur, which then leads to new products and creative solutions.  Some offices spaces even seem inspired by “Willy Wonka’s Chocolate Factory” (with less edible elements): nice to look at and tempting to get close but caution is advised before taking big bites…

Why not to focus on cutting cost

While architecture and interior design can very well affect creativity and collaboration, there are many reasons why this approach tends to fall short:

  • The goal of cost-cutting is to have more people sharing less space, so the open office environment works best when not all employees work there at the same time, which becomes the end-game of cutting cost.  The approach consequently requires some employees to work remotely, typically from home as ‘tele-commuters’, which effectively leads to creating virtual teams.
    Thus, not all employees are physically present at the same time to start off with, which defeats the idea of spontaneous meetings around the water-cooler or pulling teams together spontaneously as needed.
  • Size does matter:  start-ups take their energy and agility from everyone collaborating in the same space at the same time, which is the opposite scenario of large companies trying to reduce this footprint and, subsequently, ending up moving towards remote working models.
    The start-up model does not scale for large, mature companies.  This is one of the reasons why large companies often break the monolithic organization at some point to form more agile hence competitive entities.  A lesson learned perhaps from Charles Darwin’s “survival of the fittest.”
  • Since cost cutting has priority, typically, the workforce was trimmed down, so the remaining staff carries more work on less shoulders.  Not only does this leave less time for the remaining office staff to hang out next to the water-cooler for a random chat, but there is less staff to meet and hang out with in the first place.
    Little to no attention is given on how to make the remaining workforce more productive to manage the increased workload and invest accordingly, as here these ‘hard decisions’ come in and cost cutting is given priority.

Now, this does not mean there are no more water-cooler talks – they do happen and can be extremely valuable.  But they happen less frequent and with a smaller pool of people you could possible bump into randomly.  Since this “water-cooler innovation” model does not scale under the cost-saving paradigm, it effectively reduces the innovation potential resulting from random meetings overall.

What does your workplace look like, does this sound familiar at all?

Paying the price for cutting cost: Virtual Teams

Under a cost-cutting paradigm, the need for working remotely leads to the formation of more virtual teams throughout the organization.  We already find 66% of virtual teams in Global 500 Enterprises include members from at least three time zones and 48% including external business partners (Harvard Business Review study of Project Management Best Practices in Global 500 Enterprises).

When ‘cost-cutting’ has priority, the performance of virtual teams still comes second.  Faced with the increasing need to enable communication for a distributed workforce, for ‘cost-cutting’ organizations here comes the next challenge:  how to facilitate collaboration and information flow on a budget?
This is one of the hardest decisions management is confronted with.

With tight budgets in mind, the focus turns to ‘enabling technology’ and often leads to implementing a better phone or teleconferencing system.  However, cost-saving and -consequently- company-wide standards lead to compromises and mediocre features due to (what else could it be?) cost saving considerations.

What is the cost of ‘rich’ communication?

Face-to-face communication remains the ‘gold standard’ (more about the why follows in part 2 of this blog post.)
Typically, information-rich channels such as latest ‘tele-presence’ systems are disregarded for their ‘expensive’ price tag.  They allow communicating in the broadest possible (virtual) way peer-to-peer. 

If they are purchased at all, they often remain restricted for privileged use by executives; so there is an implied business case for rich communication channels.  

Unfortunately, these are far less frequently shared with their staff lower in the organizational hierarchy.  Regular employees and middle management are often enough left alone with more limiting conferencing systems and other technology to figure out how to make ‘virtual teams’ work.

Interestingly, I have never heard serious consideration given to quantify the opportunity cost, i.e. what the costs are of not implementing a tele-communication system that gets as close to face-to-face conversations as possible.  It would be interesting to find out if the actual cost to buy a more expensive system is offset by the gains for its users and businesses across the organization, don’t you think?

Though this would be coming from the less popular approach to increase productivity…

Composing effective teams

Also the mix of the team members should be considered and lots more can be said about this aspect alone, so let’s just pick a few that that tend to be less on people’s minds:

For example, generational differences translate into different work styles and preferences than can strengthen or weaken a team.  As an example: “Generation Y for managers – better than their reputation?

Another soft factor that remains stubbornly neglected is the team composition of introverts and extroverts complementing each other for better results.  Extroverts seem favored by hiring managers over introverts, but extroverts don’t necessarily make good team mates as recent UCLA studies show:

Introverts are often perceived anxious or neurotic, which feeds into the stigma of volatility and negativity that can drag on the team, when in fact they tend to work very hard so not to let their team mates down.

In contrast, extroverts appear to be the better team players yet in their core personality its all about being in the center of attention.  Extroverts are good at building relationships and getting themselves noticed; this self-presentation may leave a good first impression but the self-centric core proves rather disruptive in collaborative situations, so the researchers concluded.

Also little attention is given to whom needs to work together and should be closer connected or even collocated; this approach of looking at network and workflow is usually sacrificed by enforcing cost-control top-down.  Established departmental silos and cost-centers effectively become barriers for collaboration rather than by following the internal workflow and connections throughout the lower levels of the hierarchical pyramid that often remain hidden from the executive view down from the pyramid’s tip.

Why to Invest in communication and collaboration

A study on communications ROI by Towers Watson finds a 47% higher total returns to shareholders by companies that are highly effective communicators. (Capitalizing on Effective Communications, ROI Study, 2010)

Even more reason to focus on enabling collaboration and productivity – and to invest into enabling communication and relating technology accordingly.

Let’s leave the misery of why virtual teams fail here – check back soon for part 2 on How to make virtual teams work!

 

Do managers miss the sweet-spot of remote working?

Stumbling in the dark?

Organizations often find themselves struggling with a dilemma: The need for employees working remotely, often from home, is at rise for many business reasons that include cost savings and the competition over attracting and retaining top talent.

On the other hand, many managers have a hard time allowing their staff to work outside their proximity and direct supervision. Their reasons often include the fear of change introducing the unknown but also a certain cluelessness of how to effectively manage a remote workforce and moving beyond their personal comfort zone.

These conflicting drivers open a tension field that organizations tend to struggle with. – Does this sound familiar to you?

No silver bullet
Unfortunately, there is no ‘silver bullet’, i.e. a one-size-fits-all solution that works for everyone and in every environment. Too much depends on the nature of the work, necessary interactions and communication between team members as well as the jobs and personalities involved. It takes a close look at the individual organization to craft a remote working program that fits an organization, maximizes collaboration at a measurable performance level.

Common ground for remote working
However, we can learn from others how to establish a basis for a fruitful remote working program in your organization (if you don’t have one yet).  Research offers tangible results such as the “MTI Report 09-14: Facilitating Telecommuting: Exploring the role of Telecommuting Intensity and Differences Between Telecommuters and Non-Telecommuters”. The study compares telecommuters and non-telecommuters and it came up with the following findings. (Note that I use telecommute, telework and remote working synonymously throughout this article.)

  • Telecommuters show increased commitment to their organization and experience more work-life satisfaction over the non-telecommuters group. No differences between both groups though on job satisfaction and turnover intent, i.e. how likely employees are to leave the company.

On a side note, the latter two findings are quite different from my own professional studies and experience, where employees working remotely reported a 57% increase in work-life balance. Increasing workplace flexibility including remote working, i.e. giving the employee more control over their schedule and location, became a driver also for employee attraction and retention.
– What are your experiences? Do you see remote work influencing job satisfaction and employee retention? Please comment.

  • Interestingly, the study explored also ‘personalities’ and found that more extroverts tend to be telecommuters, so people with a higher drive for social interaction and communication rather than the quiet ones.

This appears conclusive in the light of the simple finding that (a) telecommuting in many companies is not implemented consequently but rather as an “idiosyncratic deal” between individual supervisors and employees. (b) These supervisors prefer granting permission to telecommute to high-performers. This can explain a pre-selection of extroverts over introverts, who may not show up on the supervisor’s radar as much and therefore tend to receive less remote working opportunities.

  • Generally, teleworkers commute from farther away. They find commuting more stressful and want to avoid rush-hour traffic.
  • Less surprising, telecommuters were interrupted more by family members given their physical presence at their off-site work location.

This seems to suggest that working-from-home could be less effective than working in the office given more family interruptions. My own observations are quite different and based on a controlled pilot project which showed that the workers in the office feel distracted by their colleagues stopping by randomly; the workers preferred working from home when they needed focus and want to avoid distractions calling this their most productive work time.
Disruptions occur at home as well as in the office. It is the employee’s responsibility and best interest to ensure a professional work environment at their home-office so not to jeopardize their work results. Consequently, also performance needs to be measured by results and not physical presence. This levels the playing field and allows for fair comparison between all workers independent of their working location and distractions.

  • In the triangle of telecommuters, supervisors and Human Resources (HR) practices the telecommuters generally view the organization differently from non-telecommuters. Most telecommuters perceive technology training is available to them and that the organizational reward system as well as their supervisors was supporting telecommuting. Telecommuters also believe that there is an underlying business requirement that drives working remotely.

Once again we see that a level playing field is viewed as an important success factor for effective teleworking. Technology serves as enabler that makes teleworking possible in the first place and connects coworkers across remote locations. Offering remote working not only becomes a business necessity but also addresses increased expectations of the modern work force to telework powered by ever improving communication and collaboration technology.
Now, the telecommuters in the study seem to understand the changed business environment that pushes organizations to open up to flexible work arrangements for competitive reasons including cost savings as well as employee productivity and retention – the supervisors ‑apparently‑ did not ‘get it’.

For most of us the times are over where workers came to the factory or office only because the resources needed to accomplishing the work were concentrated in a specific location and could not be distributed (think early typewriters, heavy production equipment, incoming mail and so on). For a growing services industry these limitations no longer exist – yet this out-dated paradigm remained present in the minds of many. People tend to have a certain picture in mind what work ‘looks like’ and where it has to happen which comes down to an office with everyone present from 9am to 5pm.

  • From the supervisors’ perspective things look different than for telecommuters. Over 50% of the supervisors of telecommuter believe “that employees have to be high performers”. This view is shared by only 37% of the non-telecommuting supervisors.
    This brings us to a most critical component and success factor for making remote working work…

Management attitudes – the make or break
The MTI study phrases this barrier kindly as “challenges and obstacles emanating from attitudes of individuals in the organization”. The obstacles to implementing an effective telecommuting model often originate from management itself or even the Human Resources department tasked to make a policy.  The reasons for resistance can be multifold and include a lack of better knowledge, fear of change such as losing perceived control, lazy avoidance to probe outdated beliefs or taking a one-size-fits-all approach without evaluating the specific environment.

I even experienced the paradox of managers believing they can work from home just as effective as from their office desk and making use of this flexibility at their convenience while not trusting that their staff could be similarly effective or was trustworthy enough just as much. They see remote working being a ‘perk’ for their staff reserved for ‘top performers’ who deserve it – a double standard is being applied which is often enough based on murky or questionable criteria (if at all). These managers show a sense of entitlement while ignoring that (as the MTI study confirms) remote working increases employee satisfaction and commitment which tends to increase also performance; as an example, performance increased by 30% in the department I manage.

Some managers fear they may lose ‘control’ and that their staff may abuse the newly acquired freedom to control their schedule and work location. This ‘control’ is often based on the deceptive perception that staff works ‘better’ and is ‘under control’ when confined to an office location and ‘eye-balled’ by the supervisor.

More effective is the consistent application of measurable and pre-defined goals that demonstrate unambiguously, transparently and quantifiable whether an employee met the goal or not – independent from their schedule or work location. In practice, managing-by-performance showed more effective to distinguish effective performers from under-performers than a manager looking around the office space and hoping the staff is performing just by their mere presence.

What it takes to make remote working work
Implementing remote working is not exactly rocket science but takes an honest and diligent approach based on trust and clear expectations. From a practical perspective, a viable model includes:

  • Put away with the ‘telecommuting-is-a-perk’ attitude
  • Closely look at which jobs have remote working potential together with the affected employee
  • Identify the employee’s team, i.e. the people who need to cooperate closely even across departmental boundaries (organizational, geographic, etc.)
  • Include employees to model how remote working could work in their team, try it out and be flexible to improve the model
  • Strictly rate all employees by their performance based on measurable and tangible results that are clearly defined
  • Apply transparent standards for all employees consistently
  • Treat remote and non-remote workers similarly including equal opportunities treatment and rewards
  • Provide effective communication technology and adequate training
  • Address manager concerns and prepare management with adequate training and guidance.

It is true that managing a remote working environment provides new challenges. They include in particular:

  • Strictly managing-by-performance by setting clear expectations and exercising transparency.
  • Overcoming ‘old thinking’. Questioning ones habits and beliefs to approach with an open-mind new or different ways of working. Include your staff to come up with ideas on how to make it work.
  • Diversifying and mastering the spectrum of communication channels. Choosing and using the media preferred by the staff to communicate effectively and efficiently with employees.

If this includes peer-to-peer video, instant messaging or texting (SMS) then learn to master these technologies. Limit face-time for confidential or sensitive topics that should better not be communicated electronically; don’t abuse face-time for routine communication.

Most of all, mutual trust is the key component in the critical relationship between manager and employee. This can be the hardest to build. For managers, taking some temporary measures can prove helpful to establish a trustful working relationship with their staff; for example, start with documenting and reviewing weekly performance plans together with the employee until the manager develops more trust and is comfortable with exercising less timely supervision.

In general, if an organization lacks trust then remote working will hardly be implemented effectively, consistently or to its full potential – but then, remote working may not be the biggest problem this organization faces…