1. HRM in Virtual Organizations
A Research Submitted to Partially Fulfill the SHRM Course
Requirements
Team Members
1. Amira Mohamed Samir 1138
2. Asmaa Adel Hassan 1134
3. Ehdaa Refaat Shahien 1139
4. Maggy Wahib Boshra 1188
5. Salma Mohammed Dehis 1255
Team Code (DR04)
December, 2012
1

2. Introduction
HRM in Virtual Organizations (VOs) is a developed research seeks to provide further information
and knowledge about the future of virtual organizations and its implementation. It covers an
overview of VO, including its definition, characteristics, types, factors of its implementation,
advantages and challenges. Also it covers major HR policies and practices in such organizations.
These policies include staffing, recruiting, selection, training, compensating, performance
appraisal, communication and controlling. In each policy, it shows the key differences between
HRM in traditional organizations and VOs. In addition to showing how much advanced
technology is important to VOs. This report ends with practical examples, conclusions and
references.
Virtual Organizations Overview
Definition
Virtual organizations (VOs) are business and organizational models made possible by
globalization and developments in transportation, information, and communication
technologies in the late 20th
and early 21st
century (Mowschowitz, 2002; Kuruppuarachchi, P. R.,
2009; Hortensia, 2008). Simply, a virtual organization can be defined as a goal-oriented
enterprise composed of multiple members who reside in geographically dispersed locations and
use technology media to communicate and coordinatethe fulfillment of a defined objective or
task (Workman, 2005; Mowshowitz, 2002; Stoica & Ghilic-Micu, 2009; Moshowitz, 2002; and
Nemiro, Beyerlein, Bradley, & Beyerlein, 2008).
Characteristics of Virtual Organizations
1. Small Sized Partners
Initially VOs are based on core competencies, which mean that VO partners determine what is
best for the business process in relation to the complementary skills of each partner. We should
note that the smaller the size of partners the more flexible the organization is, and the better
2

3. opportunity the organization has in the market. The overall effect of this feature is known as the
"synergy effect" (Lau & Wong, 2010; Jacobsen, 2004 & Durai, 2011).
2. VO Has Its Own Identity
Actually it has a hard identity. VOs are an open organizational system, so it doesn't have a fixed
internal structure or hierarchy nor does it have a product or a brand name. It's mainly based on
electronic linkage and featured by loose coupling (Lau & Wong, 2010; Jacobsen, 2004 & Durai,
2011).
3. No Organizational Chart
VOs are based on information technology and is known as a meta-organization which means
that the partners come and go based on whether their goals have been accomplished or not.
Hence their presence or absence doesn't affect the organization (Lau & Wong, 2010; Jacobsen,
2004 & Durai, 2011).
4. Semi-Stable Relations
There is dependency among partners, so the relation is not too formal or too permanent. As we
mentioned before the existence of the partners or absence doesn't really affect the VO (Lau &
Wong, 2010; Jacobsen, 2004 & Durai, 2011).
5. Dependent On Opportunism
VO partners work together to meet a specific market opportunity and try to enlarge their scope
to take place in the market and share the risk (Lau & Wong, 2010; Jacobsen, 2004 & Durai,
2011).
6. Based On Trust
Since VOs are based on sharing information and knowledge, trust must be present among
partners (Lau & Wong, 2010; Jacobsen, 2004 & Durai, 2011).
3

4. 7. Shared Ownership
Since every partner has his own interest in the VO, therefore the VO can be owned by different
partners. Once a partners' interest have been accomplished, he can walk out and it will not
affect the other parties (Lau & Wong, 2010; Jacobsen, 2004 & Durai, 2011).
8. Shared Leadership and Loyalty
Each partner controls his own resources not the VO resources. Workers of VO are different
whether culture or language, therefore workers need to identify themselves that would help
the workers grasp the feeling of respect and sharing time and space (Lau & Wong, 2010;
Jacobsen, 2004 & Durai, 2011).
9. Geographical Dispersed
Since VOs don't have a physical location. VOs based on technology; therefore companies
collaborate autonomously of time and location. This gives the partners a sense of presence even
though they are far apart (Lau & Wong, 2010; Jacobsen, 2004 & Durai, 2011).
10. Customer Based and Mass Customization
As the VO product is mainly based on customer interaction (Lau & Wong, 2010; Jacobsen, 2004
& Durai, 2011).
11. Flexibility and Quick Response
The collaboration of workers on a specific task makes it easier to manage resources based on
market demand (Lau & Wong, 2010; Jacobsen, 2004 & Durai, 2011).
Types of Virtual organizations
1. Alliance Organization
The essence of an alliance organization is the horizontal networking among its partners. It
replaces the traditional vertical organization, in which all powers were centralized in a single
organization and the employees just executed the orders. In the alliance type of VO, each
4

5. partner linked with the VO performs different but related activities. In fact, the core
competencies of the partners are combined to produce synergy effect for the VO (Durai, 2011).
2. Displaced Organization
In a displaced organization, the individual members are geographically dispersed but connected
by information technology. However, the physical separation of members is usually not known
to the outsiders, who perceive them as a single unit. Many software and investment companies
are adopting this style of operation in which employee dislocation is not known to the
customers (Durai, 2011).
3. Invisible Organization
An invisible organization will not have a physical structure as such, except that a small place will
be used as an office for a few employees. The primary duty of these employees is to attend to
the phone calls of the customers in need of the goods or services offered by this kind of VO. The
products of such an organization are mostly virtual and directly downloadable from computer
like BSNL Hungama portal. This type of organization keeps no visible high-street branches but
operates through a network of call centers and back offices (Durai, 2011).
4. Truly Virtual Organization
This type of organization is a mixture of the characteristics of alliance, displaced and invisible
organizations. The Internet is the major platform for performing its operations. It enables
organization to offer its products or services to the customers. Book publishing companies often
use the truly VO to market their products and pay it a commission for its role in displaying and
selling its products. The online Amazon.com bookstore is a typical truly VO (Durai, 2011).
Factors of Implementation
In the race for Excellency organizations always try to innovate, as to create for itself a
competitive advantage over their competitors. One of the ways to gain such advantage is
implementing VOs. There are a number of factors that initiate the process of implementing VOs.
5

6. 1. Sharing Core Competencies
As the workers or teams in VO work together to perform a task naturally, they would share their
core competencies to increase the effectiveness of the VO in all different aspects of work (Lau &
Wong, 2010).
2. Flexibility
To implement VO successfully, VO has to be more flexible. It has a changing environment, as
partners come and go as they wish. Also the working nature in VOs requires special and expert
knowledge that can be outsourced to experts to adapt such volatile environment, partners in
VO have to be flexible and are willing to share what they know (Lau & Wong, 2010).
3. Enabling Technology
It is the very basic principle for VOs existence, as the workers would communicate with each
other using technology from any place at anytime. These communication devices and platforms
are a must in any VO to operate (Lau & Wong, 2010).
4. Globalization
For any company to grow and enter the global market, it would have to cooperate with other
companies in different countries. So the emergence of VO made it easier for these companies to
merge and be partners. Those partners should have the local knowledge of their own countries
and handle work regardless of the distribution or sale of product in other countries (Lau &
Wong, 2010).
5. Mobile Workers
Virtual employees are who perform their work from different places, therefore the concept of
VO made it easier for such workers to communicate effectively with each other (Lau & Wong,
2010).
6. Cost eduction
As workers can work from any location even their own home, as long as there is internet
connection this helped in reducing the cost of commuting from home to work every day. Also
6

7. some VOs don't need large physical assets, as most of its work is done via networks. All what
some VOs need is a small office for management purpose. Hence the cost relating to physical
assets are reduced rapidly (Lau & Wong, 2010).
7. Efficiency
The corporation among partners made it easier for organizations to utilize the resources to
meet the market demand. Therefore VOs lead to reduce resources, idle time and increase the
fulfillment of customer's demand (Lau & Wong, 2010).
From Physical to Virtual
More and more organizations are seeking a better method to transform into VO in order to
obtain certain competitive advantages. These advantages like that; (1) globalize its business,
(2)pooling expert resources quickly,(3)understanding customers’ perceptions and behaviors
toward new products in different countries. As a result of such benefits we can get from being
VO, company can gradually evolve part of it to virtual one when it satisfies certain requirements
and changing its structure to adapt new ways of conducting business. New concepts in VO are
noticeable nowadays such as virtual team, virtual office and laboratory. VO moreover focusing
on cost saving, it is more flexible in using new knowledge and technology to create new services
and products which meet dynamics of market. We can conclude the advantages which make VO
more than outsourcing and strategic alliances:
1. Save time and travel expenses.
2. Employees can accommodate both personal and professional lives.
3. Firms can expand their potential labor markets.
4. Employees can be assigned to multiple concurrent teams.
5. Virtual teams are able to work even when they are miles apart.
6. Team communication and work reports are available on-line to facilitate swift responses
to the demands of a global market.
7

8. 7. Improving communication and internal control.
8. Unlimited creativity because company’s products are not developed by the same people
and work groups all the time (Jacobsen, 2004).
Virtual Organizations Challenges
VO is the concept of people working together without really meeting each other. Virtual
organizations govern with the same fundamental principle of traditional organization but there
is one main difference which is the way the members communicate. Team members face
challenges in four areas as follow (Vinaja, 2003):
1. Time Zone
If the team members live in different areas across the world time zone will be major
consideration. Individuals can be a day behind of getting something done as it may be midnight
in part of the world and rush hour in another part so it’s very important to set a schedule and
use non real time communication like E-Mails. But this can slow down the development process
and will not enable the team to react quickly to sudden problems. For example; a firm named
BakBone software located in San Diego. U.S. and Israeli members face seven hours time
differences and Israeli team doesn’t work on Friday so to overcome these differences they use
E-Mails, video conference, conference calls (Vinaja, 2003).
2. Technology
In businesses where employees work together in the same place they can get the work done
even if the network fails unlike virtual communication as they rely on the network. So it will be a
big problem the company can lose millions in couple of hours and that will affect the
development process. Slow computers, traffic on network and using later release data for soft-
ware can also affect the organization negatively (Bowerman, 2011).
3. Project Management
Team leaders must be aware of cultural differences as some people like to work in teams like
Japanese and other people are more independent like Americans as they don’t like lot of
8

9. directions and monitoring. Team leader also should be aware of maintain clear goals,
performance standard and communication rules. Team leaders must ensure that all members
interacting, communicating across the network and benefiting from this interaction. Policies and
procedures must be followed and respected (Vinaja, 2003).
4. Communication
In VO team members are not able to see each other faces, emotions, and body language even
hear each other tone of voice in return the potential for miscommunication and
misunderstanding each other. Keeping virtual communication professional is the easiest
method for preventing miscommunication. Not everyone can work in virtual organization the
employee must be self motivated, able to work independently, clear, accurate and brief as he
phrase questions to avoid misunderstanding, sending changes and making up for the time lost
(Bowerman, 2011).
4.1 Culture
VO members reside in different areas so the likelihood of interacting with people with different
cultural background is very high. According to vision Inc “Multiculturalism is a process of change
by which we learn to recognize understand and appreciate cultural identities as well as
similarities and differences of people from other cultural background”. As there are workers
with cultural differences, many problems can occur like stereotyping people from other
countries and misunderstanding each other behavior that will lead to distrust. Team members
must understand and recognize cultural differences in order to work effectively and efficiently.
Studies show that cultural differences affect work group composition, process and outcomes
(Vinaja, 2003).
4.2 Language
One of the main challenges VOs is language differences. If team members speak different
languages it would really hard to communicate with each other. To overcome this problem a
common language should be chosen in advance. Languages used in business today English,
Spanish, Japanese and Chinese (Vinaja, 2003).
9

10. Roles, Policies and Supportive Technologies of HR in Virtual
Organizations
5 Roles Played By HR
Advanced technology let the chance for VO to be existed and compete in the economy. VO
competition comes much more from intellectual capital than from other sources of competitive
advantage. Therefore every asset added must add greater economic value and greater
customer wealth than in the past. To meet these increased expectations, HR professionals must
be more than partners; they must be players to add and deliver value, compete and do thing
that make a difference. Researchers identified five roles that may be played by HR to engage in
VO which are: Coach, Architect, Designer, Facilitator and Leader (Ulrich & W.Beatty, 2002).
1. HR Player as Coach
Coaches focus on both behaviors and attitudes and have to understand individual differences to
show how to motivate desired behavior. Coaches teach as well as learn and should know when
to be critical and demanding and when to be positive and supportive. They know how to
encourage teamwork, given coaches may not be popular but they are accountable for the
results they deliver. With increased time pressures, new economy realities and requirements of
the VO have appeared. HR people help CEO’s succeed by observing their behavior and providing
personal feedback on how to make changes for both shaping business direction and adapting
personal style. They have training in the human side of business and away from the career
politics which enable them to offer specific insights not often shared with the business leader,
HR players can do executive coaching (Ulrich & W.Beatty, 2002).
Actually HR coaches help the leader focus on attention and energy and identifying actions those
need to be taken to accomplish organizational goals. They do very critical task which is giving
feedbacks and it requires knowing how the person will respond. One person may become
defensive, so they should care about that feedback works better if offers suggestions for
improvement more than criticism, focuses on the future more than past and encourages
10

11. reflection more than acceptance. In order for HR professionals to coach, they must build a trust
based relationship with the leader. By expressing personal concern for the leader, emphasize on
leader’s challenges and offer specific observations. Coaches must find ways to share good and
bad news with the trust that both messages are intended to help the leader and company
improve (Ulrich & W.Beatty, 2002).
2. HR Player as Architect
We all learned the importance and the role of the architect in building the house and making
sure that it is right. The architect spends a lot of time listening to us to find out our lifestyle. Too
HR architects play the same role in VOs who help turn general and generic ideas into
organizational actions. They shape the way work flows consistent with ideas and ideals of the
business leader and identify choices about how organizations might be better governed. They
often understand business realities and ensure that dialogue focuses on the right issues. With
available resources they assure that organization capabilities cross boundaries and adopt new
workforce policies to attract and retain voluntarily employees (Ulrich & W.Beatty, 2002).
Organization architects possess multiple skills; they focus on the ways in which the organization
may be aligned with strategy. They continually look for the strategic agenda of the firm and try
to determine how it turns that into goals and actions. Architects in VO have to focus on
competencies required for the firm to deliver the vision. With these competencies, they have to
align the firm’s HR practices to deliver the competencies. Architects are not owners, however
they offer informed choice. Therefore architects must know when and how to give choices, such
hiring or paying someone must fit legal and ethical requirements (Ulrich & W.Beatty, 2002).
HR professionals can be architects after having a concept of organization to be able to apply
that concept to the firm. That means they have a model of what constitutes an effective
organization. Jay Galbraith constructed organizations into five dimensions or a “star” model:
strategy, structure, rewards, processes and skills. The capabilities the organization requires to
win have been called processes, organization characteristics and core competencies. The
capabilities a firm might require such are quality, quick response, innovation and customer
focus. Often consultants serve as organization architects, they may partner with input and
11

12. advice. Internal architects are more sensitive to the needs of the firm; they understand
requirements and political realities of creating successful and right organization (Ulrich &
W.Beatty, 2002).
3. HR Player as Designer and Deliver
Turning ideas into action matters because unless creative ideas are implemented, they add no
value. Acting on ideas comes when employees who come to work behave in ways consistent
with strategy. Psychologists have found that people act differently due to information, behavior,
and reinforcement. HR practices drive each of these three levels to shape employee behavior in
the new VO. HR practices are a primary source of information signals for employees, so HR
professionals design and deliver HR practices to send information to all employees about what
matters most (Ulrich & W.Beatty, 2002).
HR professionals as designers and deliverers align, integrate and innovate HR practices by
creating various choices that may be made to compete and are generated by those working in
the centers of expertise. To do so require that HR professionals identify domains of HR choices
and know the choices in each of these categories based on current theory and research.
Domains are: Competence, Rewards and performance management, Communication,
Governance and Change processes. In order to design and deliver HR practices, HR players must
know innovative HR policies deployed by other firms and be able to adapt those ideas to their
firms. Often HR professionals are not active learners, but followers of what others have done.
Also HR players should know where to invest limited resources and how to measure the impact
of the HR investments they make. Since they are implementers of ideas they architect, they
become not only experts at seeing what needs to be done, but also making it happen (Ulrich &
W.Beatty, 2002).
4. HR Player as Facilitator
HR professionals as facilitators understand the process for getting things done long term, not
short term. They have the ability to make change happen and to sustain that change at three
levels. First, they help teams operate effectively and efficiently and share in both building and
12

13. coaching teams. Teams are inevitable due to no one person has access to all knowledge and
information. HR facilitators must ensure team performance because teams outperform
individuals if managed well. Second, HR facilitators have to become speed mavens who are not
only think as leaders. However, practice masters for getting the organization to make things
happen, bring resources, focus attention and make sure that decisions are made quickly and
accurately. Third, facilitators ensure that alliances operate for rapid response in the new
economy. Also ensuring the ideas, competencies, authority and rewards move across alliances
boundaries. In some ways facilitators are like coaches who shape points of view and often
feedback on progress. However, facilitators focus on teams not individuals and having more
complicated task to do for them. With the principles of involvement, information and decisions,
HR professionals may increase teams, organization and alliance operations. Regarding to those
effective facilitators should ensure that all information required is accurate and choices are
made with speed and clarity. HR facilitators increase organization capacity for speed when
ensure that ideas turn into competent and committed organizational actions (Ulrich &
W.Beatty, 2002).
5. HR Player as Leader
HR leaders should face the challenges of running their functions. As senior HR professionals who
did not face up to and implement HR practices with their own functions lose credibility to
others. Human resources should be run as a business, so HR need the same elements of
business plan which are as follow:
1. Business realities.
2. HR vision.
3. Deliverables.
4. HR investments.
5. HR governance.
6. HR measures and actions.
13

14. This HR business plan should be shared both inside and outside the HR functions. Inside it
should offers direction and intention. Outside it should increase credibility of the HR functions.
In order to lead HR leaders need to apply an effective leadership model to them. It should
simple include the attributes and results. Attributes mean that leader know the right way to do
things. Results mean that leaders ensure outcomes from their knowledge and actions. HR
leaders need to set clear goals, be a decisive, communicate inside and outside and manage the
change (Ulrich & W.Beatty, 2002).
HR Policies and Practices in VOs
The Human Resources management in VO requires innovative approach from HR managers who
call for newer understanding of the different dimensions of people and their problems. The HR
managers in VO have to effect transformation in skills, team working, identification and
empowerment. Also HR activities need to be strategic, flexible, cost efficient, customer
oriented. The performance of HR functions through information technology lead us to define E-
HRM which is a system concerned with HR policies that ensure the best utilization of human
resources and work in a web-based environment towards the achievement of organizational
goals. Human Resources department in VO must design unique HR policies which fit the specific
requirements of virtual environment. It should ensure that rules are simple, easy to understand
and self explanatory because VO is totally different than traditional organization which is
flexible and mostly temporary (Durai, 2011).
(1) HR Practices On Staffing Strategies
Staffing plan is a decision that an HR manager should perform to achieve company target. It is
critical element that determines the success of a project or a business. The first step in staffing
plan is to determine the objectives of a project, then is to define staffing needs which means
that organization should clearly define particular skills or characteristics that staff must have.
Some scientists suggest that opened recruitment systems will allow employees to position
themselves into innovative ones because that will create better match between requirements of
the organization and the needs of employee (Heneman & Greenberger, 2002).
14

15. The characteristics of successful virtual employees include self motivation, self reliance, the
ability to tolerate ambiguity, to work independently but are not alone and the ability to be
excellent communicators. HR managers should consider at the team formation stage assessing
whether employees possess skills. Besides, if there is expectation that organization will expand
the use of virtual teams, assessing job candidates during selection process will position the
organization in good form in the future (Heneman & Greenberger, 2002).
(2) Recruitment
Skills required to work in VO differs than traditional; the skills listed below may assist HR
professionals in recruiting, assessment and selection of effective virtual team:
1. Proficiency with technical and electronic tools.
2. Ability to form team relationships quickly and effectively.
3. Ability to communicate in virtual environment.
4. Ability to access, analyze and manage data.
5. Project management capabilities.
6. Ability to communicate across cultures.
7. Basic teamwork skills.
8. Self management skills (Heneman & Greenberger, 2002).
Employment policy in VOs is goal centered and temporary, so HR department must ensure
faster and time bounded recruitment process. Many technological programs enable VO to make
optimum recruiting candidates such as web-based e-recruiting which offers focused recruitment
campaigns and faster processing of applications. HR department must set upper and lower
limits for the organization’s expectations from potential applicants, also it should recruit
candidates who are able enough to fulfill high performance expectations and be satisfied and
motivated the task itself (Durai. 2011).
15

16. The virtual recruitment environment can be called also E- Recruitment, which is defined as the
online environment that allows companies and potential job applicants to interact with each
other (Maurer &Iiu, 2007). Internet services have rapidly growth and developed in recent year
that lead to an increase on online recruitment (De Meo, Quattrone, Terracina, & Ursino, 2007).
The increase in e-recruitment is reflected by the decrease of using of traditional employment
advertising in newspapers (Lee, 2007). E- Recruitment has different shape. There are many
categories for e-recruitment such are: general-purpose job boards, niche job boards, e-
recruiting application service providers, hybrid recruiting service providers, e-recruiting
consortiums, and corporate career, Web sites (Lee, 2007). Internet job boards have two
formats: (1) First general –purpose job boards which is comprehensive on- line recruitment
solution. It is useful for people who search for job opening based on their specifications. It helps
also job seeker to be recruited in large number of companies. It has negative effect on
companies, because many applicants are not qualified for the position. (2) Niche job boards
which are designed to reach passive job seekers by focusing on highly specialized profession,
industry or education level. (Lee, 2007) thinks that the quality of applicant increase in niche job
boards than in general -purpose job boards, because they are more specialized. Niche job
boards achieve large financial gains in last few years (White, 2007).
Other e-recruitment options for firms are Hybrid recruiting service providers and E-Recruitment
consortiums. Hybrid recruiting services providers are traditional recruiters services providers
that expanded their services into e-recruitment. It has the advantage of expertise the service
providers has acquired using traditional recruitment methods, which can be applied to on-line
methods. While E- Recruitment consortiums is a low cost option and an alternative to job boards
(Lee, 2007). Besides the last kind which is corporate career web site. It is the natural extension
of e-business applications. The most popular users of this kind are 500 companies that develop
their web sites to generate significant traffic. It has a disadvantage of high start up cost; because
it needs strong information technology support and this cost will be equal the marginal cost.
However, corporate career web sites give recruiters the flexibility to brand the web sites with
specific company information and helping applicant to make informed decision about
organization (White, 2007).
16

17. (3) Selection
Since VOs lack face to face contact, HR professionals have to be careful in selection process
which it provides a rare opportunity for this problem with future employees. They should use
this opportunity for building relationship with employee and creating a lasting impression on
employee about work in organization which would be done mostly in the non-face to face
mode. Besides that selected candidates should have team capability because performance in VO
relies on teamwork (Durai, 2011).
The selection system and tools for VOs are mainly concerned with the philosophical approach
that the organization utilizes. The types and the dynamic work environment in VOs require the
selection process to adapt to the transition; hence, incorporate with technology. As (Byrne,
2000) mentioned in his study "everything in e-commerce environment must be faster in order
to remain competitive". Therefore we understand that the selection process should be fast and
efficient; along with the selection tools that should distinguish and reflect the interdependence
between VOs and technology. One of these tools for example is "electronic resumes"; that way
the selection process would be faster and documented (Heneman & Greenberger, 2002).
Another tool in selection in VOs is "online assessment"; which is basically about testing
candidates online. That will help the candidate access from any location and submit his
response, get an automatic score and an immediate feedback. This tool minimizes time and
reduces costs. Also, it helps gathering multiple types of information from different applicants.
The third tool would be "online interviewing". As most organizations rely on interviews when
selecting and evaluating an applicant, first HR professionals should make a distinction between
a structured interview which is about measuring cognitive ability and unstructured interview
that is concerned with measuring interpersonal skills. For VOs the structured interview would
serve as a useful evaluating tool; through video conferencing technology and web cams which
will allow suitable feedbacks among geographically remote locations. This tool will help
managers to focus on what they need in a candidate based on the organization's criterion for
selection such as; team contribution, adaptability, knowledge acquisition and professional
growth (Heneman & Greenberger, 2002).
17

18. One may ask what would be the main obstacle while selecting a candidate. It would be placing
that candidate in a team not selecting him. To overcome the "placement challenge" of how to
match an individual's characteristics in a VO team, researches showed that HR managers should
ensure that team members should be similar in their level of conscientiousness and emotional
to conduct a successful team and effective social functioning. There must also be differences
within a team to succeed such as the level of extraversion; it should vary among team members.
All in all the selection process should demonstrate innovative tools that will help HR
professionals to focus on mental judgment and intrinsic traits required in a candidate. For HR
work in VOs will be about product analysis, problem solving and social tact. Therefore the
selection should be as universal as possible and thus making a good use of economies of scale
through relying on core characteristics and applicable measurements (Heneman & Greenberger,
2002).
(4) Training and Development
Although the purpose of training programs at any organization is knowledge and skills acquiring,
HR department must be sensitive to the special needs of virtual employees and should have
necessary provisions in training system. Virtual training should be designed to enable employees
to plan, prioritize and schedule their activities in their own way with little guidance. It should
emphasize on identifying competencies of employees and ensuring that these competencies
shared among other members, also training programs must teach employees some techniques
such time management, office organization at home and child caring to be followed while
working at home. In addition to that, VOs often provide E-learning facilities which refer to the
use of electronic media to conduct online training for employees. It could be done through web
based training with link to external learning resources, audio visual tools such TVs and
computers and other activities like live workshops, virtual discussion and conferences, e-
assessment and e-mentoring (Durai, 2011).
University of North Carolina (UNC) Professors “Ben Rosen and Richard Blackburn” conducted an
in depth study on the training needs for virtual teams and found that executives working on
virtual teams needed training in the following:
18

19. 1. Leading a virtual team meeting.
2. Coaching and mentoring team members virtually.
3. Monitoring progress and tacking corrective action.
4. Managing external relationships with local managers.
5. Evaluating and rewarding individual contributions to the team.
Virtual team members needed to develop skills in:
1. Establishing trust and managing conflict among the team.
2. Demonstrating cultural sensitivity and communication.
3. Exhibiting positive team building practices.
4. Using communication technologies (Rosen & Blackburn, 2006).
(5) Compensation
Obviously the reward system in VOs should be focused on compensating the skills, knowledge
and ability of virtual employees who they are judged only by their results. HR professionals
should consider the flexibility and goal achievement ability of the employees in compensation
packages. For example, “Person based system” which is a type of compensation models
primarily focus on the job holder as the unit of analysis not the job itself to determine suitable
compensation of each employee (Durai, 2011).
Teams to be more effective, they need a good reward system to be developed based on the
required behavior and skills. The most important thing is to mix between the characteristics of
the rewards system and the characteristics of the team, since teams are different in their
purpose structure. No reward system can be designed to make a global effect. The solution is to
create reward system that combines between the characteristic of the team and the
organization context is which it operates. It is a difficult task to choose among the major pay
19

20. system approaches; that based upon the outcomes will generate when they are applied to a
type of team in a given environment. Major HR professionals’ concern is to look at the
outcomes that affect two major decisions: (1) How to determine base of paying reward. (2) How
to pay for performance (Lawler III, 2003).
Researches show that reward and pay systems in general have a great effect on the individual
and organization behavior. The reward systems can influence a company’s strategy
implementation and overall effectiveness in five ways:
1. Attracting and Retaining Employees
Job choice, career choice and employee turnover show the different types of rewards
organization offer to their employees. Rewards have an effect in attracting and retaining
employees. Also they differ from one employee to another according to his skills (Lawler III,
2003).
2. Motivating Performance
Rewards are able to motivate employee performance in specific condition. Employees must
understand that organization will give them the rewards in timely fashion when they do great
performance. They must feel that according to their performance they will pay back. Employees
are motivated to act in a specific way when they feel that, they will reach attractive outcomes
(Lawler III, 2003).
3. Promoting Skills and Knowledge Development
Encouraging employees to develop new skills can motivate their performance. There is an
effective approach company can implement which is “skills-based-pay”. It is a new approach
that focuses on the type of skills that company want employee to acquire to improve their
performance in important situations. By contrast many job-based-systems tie increased pay and
require higher-level jobs; thereby encouraging employees to learn those skills that they feel will
lead to promotion. Actually, there are no well developed systems for determining the worth of
20

21. individuals in the market place till now. Skill-based-system generally seems to fit well in
companies that want a flexible, relatively permanent workforce oriented toward learning,
growth and development. In addition, more companies are applying skill-based system (often
called competency-based system) pay to knowledge workers, managers and service employees
where the strategy calls for high performance teams and high level of customer focus and
satisfaction (Lawler III, 2003).
Impact of Job- and Skill-Based Pay
Job Based Skill Based
Attraction Provide good market data Learning-oriented and high skill
individuals
Motivation No performance impact Little performance impact
Skill development Learn job- related and
upward mobility-skills
Can motivate needed skill
development
Culture Bureaucratic and hierarchal Learning and self managing
Structure Hierarchal, individual jobs
and differentiation
Horizontal teams based
Cost Good control for individuals’ pay
rates
Higher individual pay
(Lawler III, 2003).
4. Shaping Corporate Cultures
It is a way for the company to develop, administer and managing reward system that affect
organization culture. For example, the reward system can affect how employee see his company
as human resource oriented culture, an entrepreneurial culture, team based culture and so on.
Reward system is clearly shape culture, because it has a great effect on employees' skills,
motivation and satisfaction and to feel what is important for the organization (Lawler III, 2003).
21

22. 5. Reinforcing and Defining Structure
Pay systems can define organization’s structure; however this is not considered when pay
systems are designed. They primarily affect the level of differentiation and integration in an
organization. They can cause the individuals in it to pull together or compete with each other,
depending on whether they compete for rewards or share equally in reward pool that is
influenced by the performance of multiple teams (Lawler III, 2003).
(6) Performance Appraisal
The nature of VOs requires from HR people to rely on the end results produced by the virtual
employees in measuring their performance. In this regard they must have clear and measurable
performance objectives and criteria such as quality standards and speed of performance to
evaluate employees. Also HR department can use electronic modes of communication like e-
mail, telephone and fax for conducting evaluation and sharing the results. For effective and
justifiable performance evaluation, evaluators should possess an adequate technical knowledge
about employee to be evaluated by them (Durai, 2011).
It's very important to evaluate and focus on processes and outcomes of virtual teams. This
template helps manager align with virtual teams for objectives of organization. 360 degree
model is very crucial to provide feedbacks and improvement for performance management. The
goals of performance management are: attract, retain, promote skills and develop knowledge
for team members. It's better to evaluate performance of the team as whole not as individuals
(Carroll, 2008).
Motivation is another important factor to increase performance of individuals and there are
many sources of motivation as some of employees can motivate by feeling that they achieve
goals of organization and others can motivate by rewards and money. Another source of
motivation by keeping employees in picture do not classify them, asking them about their
opinion in project and at the end it will reflect on increasing for the performance of individuals
22

23. on the team and the organization. In conclusion performance management is the most difficult
problem in VO. It requires daily attention on three principles due to physical separations of
workers and managers:
a. Define the performance goal of each member or team clearly.
b. Facilitate performance by eliminating all obstacles and providing necessary resources.
c. Encourage performance by providing rewards (Carroll, 2008).
(7) Communication
The lack of face to face communication is the most critical issue in VOs which affects most of HR
policies and should be considered when designing and forming policies and regulations. HR
department must ensure that the information channels of communication are clear and
supplemented with telephonic conversation, e-mail communication and periodic face to face
meetings to keep the two way communication channels open. Communication is essential in
any organization because it can strengthen member identification and thus provide team
members with an opportunity to create and share their perception of their organizations'
features and goals; or simply it's about sharing norms, values, and culture. This way will give
workers a sense of unity and proper social context (Durai, 2011).
With the technological advancements, both hard and soft modes can be visualized. That is
where the term media richness appeared, as there is a notion that both modes are of major
importance. The term richness alone implied that hard modes of communication are somewhat
less powerful than soft modes in general. But to better understand these modes it is better to
use two categories that will distinguish them from each other. (1) Time; were hard modes are
timeless because it exists outside the immediate interaction. Therefore it allowed for a
synchronous communication. (2) Geographic space; were hard modes useful as it is
disembodied from the sender. Therefore it can work in communication over great distance. But
since face to face interaction is necessary a new technology presented itself "virtual meetings"
23

24. that can be conducted through webcams for example. This also has aroused new theory called
"the normative theory"; it suggests that soft modes in which media richness theory are known
as "rich communication media". They will be needed at different times during a project to build
a shared understanding among members along with hard modes in VOs (Godar & Ferris, 2004).
(8) Employee Monitoring and Control Process
Unlike the traditional organizations, control process in VOs ensures greater involvement of
employees and self imposed discipline. Part of control process is to set performance standards,
then measure actual performance and finally compare the actual with the standard
performance. HR department play important role here which is determining weakness points of
employees and organizing suitable training to enhance them to keep the success of VO. Virtual
teams is one of the main characteristics of VO which make coordination is critical, therefore HR
managers need to put in special support which may be helpful in reducing negative fall outs
such as job stress and work and non-work conflict. One of the ways to increase productivity and
improve employees’ performance and customer relations is employee monitoring. Employers
can legally monitor the employees, however they want. They can log and review all computer
activity especially if they own the machine (Durai, 2011).
1. Reasons of monitoring the employee computer activity
1.1 From Security Stand Point.
Avoiding the misuse of company information and this can be occurred by sending that
information to a third party. That causes a big financial damage like affecting the organization
reputation and losing customer confidence. The loss can far out weight the cost of fraud itself
and that is called intellectual property theft (Turner, 2008).
1.2 Time is money so personal surfing has become a problem.
Employees’ shop, chat, brows, face book and play games during the working hours are
considered the main tools of wasting time. And those cause a loss of productivity and affect the
24

25. employees’ performance, as they are continually distracted by the latest updates on their social
network and that will affect the company profit (Turner, 2008).
1.3 Downloads affect the Company Negatively.
If the company needs the network for important business, it will experience bottleneck in
network capability which can slow down access for the money making venture of the company
(Turner, 2008).
1.4 Downloading and Web Surfing can lead to Viruses.
That can bring down the entire network or cause a computer to crash. So that it can be too
costly to the company (Turner, 2008).
1.5 Measuring Employee Productivity (Turner, 2008).
1.6 Provide Defense against Lawsuit (Turner, 2008).
2. The Right Way to Do It
Employees may accept and support the idea of monitoring in case of explaining the monitoring
mechanism to them clearly. That can be done by giving rational reasons of monitoring like
improving employee performance, customer relations and the quality of products and services.
Failing to advice the employee that his computer activity will be monitored may cause a
problem, because he may think that the company doesn’t respect his privacy rights. The
number of employees who break the rules that were set to protect the company decreases
25

26. when they are informed about the monitoring process. There are programs that inform
employees at start up that their computers are being monitored. Prevision is better than cure.
There are many occasions when unannounced monitoring is necessary but that action should
not be taken without careful consideration. Employees use software applications that loaded
directly to their computer such: (a) View the desktop in real time, (b) Monitor and log websites
visited, (c) Track application usage, (d) Record e-mail sent and received, (e) Record chats in IM
programs, (f) Record keystrokes in real time, (g) Remotely control the computer, (h) Schedule
screen captures, (I) Store activity logs in a centralized location and (j) Export logs to HTML or
Excel (Turner, 2008).
3. Monitoring From Employee and Employer Perspective
According to the employee, being monitored at work is much like being spied upon and that
makes him nervous and apprehensive about their moves. From the employer perspective, it is
crucial to know what employees are doing with the time he is paying them for. Although
employee monitoring has become more commonplace and has many legitimate uses, it should
be used carefully (Turner, 2008).
HR and How much Technologies are important in Virtual Organizations
Highly developed technologies and software tools enable good team leaders being on track of
progress and productivity. So HR department should consider these technologies before
forming virtual teams to see facial expression and assess non verbal key drivers which establish
trust among team members. Information Technology department also has important role in
assessing these ways which help virtual members such instant messaging and chat platforms
(Yahoo! Messenger and Skype), shared technology services (Microsoft exchange), remote
computer access, web conferencing (Web Ex) and file transfer (E-mail). HR professionals should
ensure that training on How and When to use these communication technologies is offered and
should also consider creating a space in organization’s computer system especially for teams’
26

27. use to enable them share personal experiences and family news such as bulletin board. Creating
such social networking will encourage employees to interact on more personal basis and
building trust (Leonard, 2011).
Practical Examples
1. Cisco’s Response to Virtual Teams: a Collaborative Enterprise Framework
Cisco Systems, Inc. developed a model to help organizations align their business strategies with
the emerging technologies that allow for virtual teamwork. Called a Collaborative Enterprise
Framework, it is focused on managing people, processes and technology—in that order.
According to Christine Fisher, head of Cisco’s supply chain collaboration center, before
implementing the framework, most collaboration among the 9,000 supply chain employees and
30,000 outsourced workers occurred through phone, e-mail and in- person meetings. With the
company’s rapid global expansion, the group turned to new technologies to help coordinate the
resulting challenges. The group started by using collaboration tools to address particular
projects where virtual team input was necessary. For example, employees used Cisco WebEx
Connect, a collaborative workspace and document sharing software, to create a blueprint for
lean manufacturing. Employees also started using video conferencing technology to replace
face-to-face meetings (Cisco systems, 2009).
The group wanted to ensure that collaboration tools were acquired strategically, keeping the
company’s business goals in mind, and were used properly, so instead of continuing to roll-out
technologies on an ad hoc basis, the group took a step back. They held a series of workshops
where employees received basic training on Web 2.0 tools. Workshop participants were then
asked to identify high-touch and problem areas where people and information intersect.
Workshop participants then detailed various what-if scenarios to see how Web 2.0 tools might
address various operational challenges. With the information gathered in these workshops, the
group formulated a strategy for using new collaborative technologies to meet their needs.
27

28. As a result, the “Connected Supply Chain Workspace,” was born, a place where all the people
involved in Cisco’s supply chain (partners and Cisco employees) can share pertinent information
to coordinate their activities (Cisco systems, 2009).
2. Agile
Agile is a software development method where requirements and solutions evolve through
collaboration between self organizing and cross functional teams. It promotes adaptive
planning, evolutionary development and delivery time. Agile enhances customer collaboration
over contract negotiation and interaction between team members so Agile is applied for
customized products. Agile method is adaptive method. Adaptive method means adapting
quickly to the changes. If any change occurred in the project the adaptive team will change. The
team can’t describe what tasks they will do next week but only what features they will do next
month. Adaptive team is able to report only the mission statement for the release. It is
characterized by breaking tasks into small increments and it doesn’t evolve long term planning.
Every task is time boxed and it last from one to four weeks (Ambler, 2001).
2.1 Principles Underline the Agile Manifesto
 Customer satisfaction by rapid delivery of useful software.
 Welcome changing requirements, even late in development.
 Working software is delivered frequently (weeks rather than months).
 Working software is the principal measure of progress.
 Sustainable development, able to maintain a constant pace.
 Close, daily co-operation between business people and developers.
 Conversation is the best form of communication.
 Projects are built around motivated individuals, who should be trusted.
 Simplicity- The art of maximizing the amount of work not done - is essential.
28

29.  Self-organizing teams.
 Regular adaptation to changing circumstances (Ambler, 2001).
2.2 Team of Agile
The team in agile project is usually cross functional and self organizing. There no hierarchy or
corporate roles of the team members. Team members take responsibility of the task. They
decide individually to face any problem. Team size is small (5-9 people) to simplify work, team
communication and team collaboration. Since team members are in different locations they use
videoconferencing or E-mails to contact each other. Each agile team contains customer
representative. Customer representative is the voice of the customer as he writes the customer
critic items and orders them according to their priority. Customer representative is appointed
by the customer to act on his behalf and be available for the team to answer any mid questions
(Ambler, 2001).
2.3 Meeting in Agile
Meeting is very important for team members, they report to each other what they did the
previous day, what they are going to do today and what are the problems they faced. This
meeting is a daily meeting occurs at the time and it last no more than 15 minutes. (Ambler,
2001).
Conclusion
Finally, our research concludes that work can be done in different and distant geographical
places through new trends of VOs. Since customers are looking for the same kind of service
presented by VOs, they will be loyal to VOs where they can find different and global needs easily
29

30. and almost immediately. So that VOs will have the edge of its competitors and affect general
culture and private life of customers. The success of VOs needs few conditions to be fulfilled.
Such building trust which is the heartbeat of VOs and using advanced technologies that help HR
policies to be implemented successfully. In addition to cooperation among all units and teams
to share the information and experiences.
References
Ambler,Scott W. (2001). Examining the Agile Manifesto. Retrieved from:
http://www.ambysoft.com/essays/agileManifesto.html in 2012.
30

31. Bowerman, t. (2011). Barriers to Virtual Communication. Retrieved from:
http://www.ehow.com/info_8076457_barriers-virtual-communication.html
Carroll, Beasty (2008). Motivation in Virtual Teams: Lesson from virtual worlds. Retrieved from:
http://www.leadingvirtually.com/virtual-worlds-and-motivation-lessons-for-virtual-teams.html
in 2012.
Durai, Pravin (2011). Chapter 31, HRM in virtual organization of a book titled Human Resource
Management. Pearson Published Company.
Malhotra & Leonard (2007). How HR Can Support Virtual Work Teams. Kenan- Flagler Business
School, The University of North Carolina at chapel Hill. MBA@UNC.EDU.
Gibson, Cristina B. & Cohen, Susan G. (2003). ‘’ Pay systems’’ by Lawler III, Edward E. is a chapter
of a book titled Virtual Teams That Work: Creating Conditions for Virtual Team Effectiveness.
Published by Jossey-Bass, A Wiley Imprint: San Francisco.
Godar, Susan H. & Ferris, Sharmila Pixy (2004). Virtual and Collaborative Teams: Process,
Technologies and Practice. IDEA GROUP Publishing: United States of America and United
Kingdom.
Heneman, Robert L. & Greenberger, David B. (2002). Human Resource Management in Virtual
Organizations. Information Age Publishing: United States of America.
Heneman, Robert L. & Greenberger, David B. (2002). The Role of HR Professionals in the Virtual
Organization by Ulrich, Dave & Beatty, Richard B. (2002), is a chapter in a book titled Human
Resource Management in Virtual Organization. Information Age Publishing: United States of
America.
Jacobsen, Kristoffer (2004). Study in Virtual Organization- In mobile computing environments- .
Norwegian University of Science and Technology, Department of Computer and Information
Science, NTNU.
Lau, Ryan & Wong, Brian (2010). Implementation of Virtual Organization. Retrieved from:
31

32. http://ryan-briantute1hbm370.blogspot.com/2010/11/implementation-of-virtual-
organization.html in 2012.
Turner, Rhonda(2001). Employee Monitoring: An essential component of your risk management
strategy. Retrieved from: http://www.softactivity.com/employee-monitoring-softactivity.pdf
Vinaja, Robert (2003). MAJOR CHALLENGES IN MULTI-CULTURAL VIRTUAL TEAMS. University of
Texas-Pan American, 1201 W. University DR. Edinburg, TX 78541 (965) 381-3314.
White, Wendy (2007). E-Recruitment. The Journal of Organizational Leadership & Business,
winter (2008).
32