VIRTUAL ORGANISATIONS
Virtual?
Not physically existing as such but made
and connected by software.
7
The Virtual Enterprise
• A virtual organization is a “business without
walls”
• A temporary network of independent
companies, suppliers, customers, even
erstwhile rivals—linked by information
technology to share skills, cost, and access to
one another’s markets
• Its goal is to deliver highest-quality product at
the lowest possible cost in a timely manner.
SAPNA Book Mall
Store Warehouse
Suppliers Transport
Marketing
ORGANISATION BOUNDARY
SAPNA Books Online
VO’s BOUNDARY
Store Warehouse
Mail
Suppliers
Transport
Marketing
Virtual Organisation
Virtual Organisation
TECHNOLOGY
Virtual Organisation
TECHNOLOGY IMPROVEMENT
Virtual Organisation
TECHNOLOGY IMPROVEMENT
NO BORDERS
Virtual Organisation
TECHNOLOGY IMPROVEMENT
NO BORDERS NO CLEAR IDENTITY
Virtual Organisation
TECHNOLOGY IMPROVEMENT
OPPORTUNITY
NO BORDERS NO CLEAR IDENTITY
Virtual Organisation
TECHNOLOGY IMPROVEMENT
TRUST
NO BORDERS
VO OPPORTUNIT
Y
NO CLEAR IDENTITY
Virtual Organisation(VO)- Meaning
• Virtual organization (VO) can be defined as a
temporary network of goal-oriented
enterprise (independent
members composed companies,
of multiple suppliers, employees
etc.) who reside in geographically dispersed locations and use
ICT (information and Communication Technology) technology
to communicate and coordinate the fulfilment of a defined
objective or task.
• Its goal is to deliver highest-quality product at the lowest
possible cost in a timely manner.
• Eg: Amazon, Nike, Dell, Wikipedia
Ligo Koshy, Assistant Professor, MACFAST
A Virtual Organisation- A temporary network of independent
organisations, suppliers, employees working together to bring a
product to the market
Alliance Partner 1 Alliance Partner 2
Core Competence Core Competence
Lead Corporation
Core Competence A
Core Competence
B
Alliance Partner 3 Alliance Partner 4
Core Competence
Core Competence
Ligo Koshy, Assistant Professor, MACFAST
Ligo Koshy, Assistant Professor, MACFAST
Features
1. Flat organisation
2. Dynamic
3. Informal communication
4. Power flexibility
5. Multi-disciplinary (virtual) teams
6. Vague organisational boundaries
7. Goal orientation
8. Customer orientation
9. Home-work
10. Absence of apparent structure
11. Sharing of information
12. Staffed by knowledge workers.
Features
Small Sized Partners
Extensive use of Information and Communication Technology
Virtual Organisation Has Its Own Identity
No Organizational Chart
Semi-Stable Relations
Dependent On Opportunism
Based On Trust
Shared Ownership
Shared Leadership and Loyalty
Geographically Dispersed
Customer Based and Mass Customization
Ligo Koshy, Assistant Professor, MACFAST
Flexibility and Quick Response
Some popularly
known virtual
organizations.
What led to the transformation of HR processes today?
The driving force behind the virtual HR concept is the emergence of new technology, the need for high speed
management of workforce, a networked organization and knowledge workers. Globalization, diversity,
intellectual capital, information technology and the like are expanding the scope of organizations, accelerating
the pace of change, and placing a premium on organizational agility, flexibility and rapid response. As the
global competition is rising, the firms are more focusing on importance of collaborating with external partners,
focusing on resources from outside, integrating the knowledge from outside etc., and for all these changes, HR
function is the epicenter.
The HR functions are to be simultaneously static, flexible, cost-efficient and customer–oriented and can be
operated much faster. The traditional model for HR is poorly suited for all these challenges. This led to the raise
of virtual HR systems.
The Technology Infrastructure for Virtual HR:
The backbone of virtual HR is information technology (IT). IT allows firms to store and retrieve large volumes
of information quickly and inexpensively. Firms can communicate more easily and selectively with others in
remote parts of the world, thereby allowing for even better use of the information at their disposal.
Relational Impact of IT over HR:
While the operational impact of IT focuses on efficiency and productivity improvements within HR, IT also
influences HR’s relationships with other parties within the organization. It allows HR to enhance service by
providing line managers and employees with remote access to HR databases, supporting their HR-related
decisions, and increasing their ability to connect with other parts of the corporation.
By making information accessible on-line, HR can improve decision quality, reduce cycle time, and enhance
flexibility and customization.
Differences between Traditional
Virtual Organisation
Virtual Organisation Traditional Organisation
Virtual organizations do not usually have any Traditional organizations have physical
physical presence. existence like real-world offices and
continuity in their operations.
There is no face-to-face communication among There exists physical contact and face-to-
the members in completely virtual face communication among the employees.
organizations. They rely on electronic
communication to share information.
The membership is dynamic in nature, with The membership tenure is normally stable
members joining and leaving the organization and independent of the completion of a
when their roles begin and end. specific project or work.
Virtual organizations keep a flatter hierarchy Traditional organizations maintain a vertical
and insist on voluntary commitment from their hierarchy and follow an imposed discipline
members and on self-discipline. system.
Performance evaluation and work control are They are actual and simple.
virtual and difficult.
Ligo Koshy, Assistant Professor, MACFAST
Differences between Traditional
Virtual Organisation
Virtual Organisation Traditional Organisation
Statutory HR practices governing the They are well-established with proven
functioning of employees are not effectiveness.
clear and effective, but evolving.
Leadership and control are self- They are based on external command
managed. and control.
The employees’ skills and knowledge They are usually developed through
are usually developed through the real training and development
e- learning process. programmes.
The power of employees depends on It depends upon the positions
their role in business process. occupied by the employees in the
hierarchy.
Ligo Koshy, Assistant Professor, MACFAST
Type of virtual Organisations (Bradt’s
classification)
Displaced
Organisations
Types of Truly Virtual
Alliance Organisatio
Virtual
Organisations ns
Organisations
Invisible
Organisations
Ligo Koshy, Assistant Professor, MACFAST
Types of virtual Organisations (Bradt’s
classification)
• 1. Alliance Organization (based
on competencies):
• Partnering organisation replaces vertical
integration with virtual integration
• Horizontal networks between business partners,
rather than vertical integration within an organisation.
• Each partner linked with the VO performs different but
related activities.
• The core competencies of the partners are combined
to produce synergy effect for the VO.
• Eg: Compaq, Lenovo
Ligo Koshy, Assistant Professor, MACFAST
Traditional Organisation
Ligo Koshy, Assistant Professor, MACFAST
Virtual Organisation
Types of virtual Organisations (Bradt’s
classification)
• 2. Displaced Organization (Based on
Geographical dispersion):
• The individual members are geographically dispersed
but connected by information technology.
• The physical separation of members is usually not
known to the outsiders, who perceive them as a single
unit.
• Make use of tele-conferencing, video-
conferencing and tele-commuting
– "hoteling" (being assigned to a desk via a reservations
system), and "hotdesking“(several people using the same
desk at different times).
• Eg: IBM
Ligo Koshy, Assistant Professor, MACFAST
Displaced Virtual Organisation
Ligo Koshy, Assistant Professor, MACFAST
Types of virtual Organisation (Bradt’s
classification)
• 3. Invisible Organization ( Telephonically) :
• Will not have a physical structure as such, except
that a small place will be used as an office for a
few employees.
• The products of such an organization are
mostly virtual and directly downloadable from
computer
• Operates through a network of call-
centers and back offices.
• Eg: Fantasoft( Online game developer)
Ligo Koshy, Assistant Professor, MACFAST
Ligo Koshy, Assistant Professor, MACFAST
Types of virtual Organisation (Bradt’s
classification)
• [Link] Virtual
Organization(mixed/blended):
• is a mixture of the characteristics of
alliance, displaced and invisible organizations.
• The Internet is the major platform for offering its
products or services to the customers.
• Eg: Amazon
Ligo Koshy, Assistant Professor, MACFAST
Ligo Koshy, Assistant Professor, MACFAST
Models of a Virtual Workplace
• On the basis of the nature of networking among the members
of the organisation
Virtual workplace
models
Telecommuting Front-line Cyber-link
model model model
Ligo Koshy, Assistant Professor, MACFAST
Models of a Virtual Workplace
• Telecommuting model
• Employees often perform work from their home and remain away
from the office.
• The organizations can have formal or informal arrangements
to facilitate the employees’ skipping office and working from
home.
• Merits
• (i) Eliminating or reducing the office space requirements
• (ii)Saving the time and cost of commuting by the employees to and
from the office,
• (iii) Ensuring the best work–life balance for employees
• Demerits
• Setting performance standards is difficult
• Difficult to coordinate the activities of the employees
• Organizations may not be sure about the statutory and non-statutory
rights and duties of the telecommuters and the organization
Ligo Koshy, Assistant Professor, MACFAST
Models of a Virtual Workplace
• The front-line model
• The employees perform their work from the client’s
workplace or site.
• Clients have a better control and an easy and immediate
access to the activities of the virtual organization.
• The major limitation of this model is that the performance
and behavioral problems of the employees would be
known to the clients at once, thus affecting the image of
the virtual organization.
• This model may enhance the space requirements of the
clients, causing time and cost inconvenience to them.
Ligo Koshy, Assistant Professor, MACFAST
Frontline model continuation
= Moving employees (e.g. sales and service) out of the office and into the field to
work from remote locations, mobile offices and customer locations
• At these remote locations employees can share offices -> huge cost savings for
orga, better service delivery to customers, as employees are physically closer.
benefits
- new, corporate-wide focus on speed of execution
- shared sense of stagey and purpose among all
- truly empowered workforce
- everyone compensated wth reward systems closely aligned wit orga objectives
- more open, timely, candid and ongoing communication across functions
- teams managing and directing themselves
Requirements
• must have some charter for working together
• must be interdependent & committed to working together
• Group must be accountable as a unit to someone or something in the bigger
organisation
• strong comm. skills, motivated and energetic
• share leadership among members
Models of a Virtual Workplace
• Cyber-link Model
• In this model, the team of producers, suppliers and
customers is networked through cyberspace and works
collectively and collaboratively towards the
achievement of common goals.
• The primary purpose of this model is to ensure
complete client satisfaction and get repeat orders.
• Once a goal is achieved, the team is dissolved and the
members of the team may form new teams with new or
existing members to carry out the next goal.
Ligo Koshy, Assistant Professor, MACFAST
Cyberlink model types
• Project teams: member come together for duration of specific project,
accordingly suitable qualified staff needs to be identified, measurable outputs
• Service teams: solve problems and provide advice, IT support, abnormal working
hours, focus on problems and people outside team itself
• Process teams: fluid membership, called upon to address challenges team faces at
any time
Advantages and disadvantages of
Virtual Organisation
• Advantages/ Benefits • Disadvantages/ Limitations
• Absence of Distance Barrier • Absence of Managerial
• Reduction of Overhead costs Control
• Faster response • Technology – related
• Saving in space cost Problems
• Round-the clock Service • Misuse of electronic
• Customer driven instruments and consumables
• Competitive edge
of organisation
• Exploiting Labour Market • High Maintenance Cost
Imbalance • Absence of Involvement and
• Avoiding Man-Hour Losses commitment
• Reduced Work stress and fatigue • Aloofness and Boredom
• Maintaining the Work-Life Balance
Ligo Koshy, Assistant Professor, MACFAST
Managing HR In Virtual Organisation
• Virtual organisations composed of experts who
work on time-bound projects and are
geographically
connected by informational
dividedand and communication tools.
• The HR management in virtual organizations is mostly
performed through E-HRM.
• E-HRM may be defined as a network-based structure built on
partnerships and typically mediated by information
technologies to help the organisation acquire, develop, and
deploy intellectual capital.” (D. P. Lepak and S. A. Snell)
Ligo Koshy, Assistant Professor, MACFAST
Major HR issues in VO
• 1. Recruitment is conducted under time pressure and requires high
performance expectations.
• 2. Both human capital i.e., knowing one‘s job and social capital i.e., knowing
each other become
• extricably linked.
• 3. Stability in social relationship is not very much required.
• 4. Master-apprentice relationship is craft-based learning techniques matter.
• 5. Work pace is variable because the need for readiness to be mobilized at any
moment, like defence service, is high
Managing HR In Virtual Organisation
• Recruitment and Selection
• Make the optimum use of technology for
recruiting candidates.
• Web -based e-recruiting effectively for building
their applicant pool.
• Selection process is unique- rare opportunity for a face to
face contact with future employees.
• Ensure team compatibility and the selected members
gel well with the team to which they are assigned.
• Online assessment
• Online interviewing
Ligo Koshy, Assistant Professor, MACFAST
Recruitment and selection issues in
VO
The important ones are:
1. Self-guided and motivated because employees are left to ‘do their own
thing’
2. Knowledgeable about the organisational procedures
3. An effective communicator
4. Adaptable
5. Familiarity with the job
6. Result-oriented
Managing HR In Virtual Organisation
• Training and Development
• Provide e-learning facilities for skills enhancement
and knowledge acquisition.
• Three forms of e- learning platforms
– Computer -based training
– Web -based training
– Technology-based instruction
• E-learning activities of a virtual organization also include
activities like live workshops, virtual discussion and
conferences, simulation, e-assessment, and e-mentoring (like
coaching and e-mail exchanges) through electronic mode
• Virtual training should also enable employees to plan,
prioritize and schedule their activities in their own way with
little guidance Ligo Koshy, Assistant Professor, MACFAST
Managing HR In Virtual Organisation
• Compensation
– Employees are judged only by the
–results.
compensating the skills, knowledge and ability of
virtual employees. the
– ‘Person-based’ system for determining the compensation
of - primarily considers the job holder as the unit of
analysis and not the job.
Ligo Koshy, Assistant Professor, MACFAST
Managing HR In Virtual Organisation
• Performance Management
• No face-to-face contact between the superiors and
the subordinates.
• Need to depend only on the end results produced by the
virtual employees for performance measurement.
• clear performance objectives and set
measurable standards for performance evaluation.
• Use electronic modes of communication for
conducting evaluation and sharing the results.
• the performance evaluators must possess an
adequate knowledge about the employee to be evaluated
by them.
Ligo Koshy, Assistant Professor, MACFAST
Managing HR In Virtual Organisation
• Communication
• Employees would be missing face-to-face informal communication
grapevine with their
like
superiors and co-employees.
• “Communication training” Programmes to enhance trust and understanding.
• Information channels of communication need to be supplemented to
the two-way communication channels open.(telephonic conversation, e-mail
keep
communication and periodic face-to-face meetings)
• Control Process
• Set performance standards, then measure actual performance critically, and
finally compare the actual performance with the standard performance.
• Coordination
• coordination among the team members is critical
• Use electronic media to enhance the coordination among the employees.
Ligo Koshy, Assistant Professor, MACFAST
Prerequisites for the Success of
Virtual Enterprises
• Make efforts to create a discussion forum for virtual
workers so that they can meet their colleagues face to
face to discuss the events and matters of
common interest.
• Provide information on role expectations clearly.
• Support mechanisms,like updated technology, to
enable them to work from anywhere.
• Recognition of cultural diversity among the workforce.
• Ensure that the team members have a core IT
capability and are adequately familiar with technology
to solve recurring problems associated with software
and hardware.
Ligo Koshy, Assistant Professor, MACFAST
Impact of international assignment on
individual career
Career advancement is the primary motive for
accepting international posting
? – research to be made
Career path is a consequence of international
assignments
Refer to subha rao diagram
repatriate turnover and repatriation
• Stroh88 found that the best predictors of repatriate
turnover were whether the company had a career
development plan; and whether the company was
undergoing turbulence, such as downsizing.
• She argues that lower rates of repatriate turnover
are more likely in organizations that planned for
the repatriation of their employees and provided
career development planning for them
Devaluing the overseas experience.
• Career progression is important but to be promoted upon reentry
signifies that international experience is important and valued by
the organization.
• However, the re-entry position may be a less challenging job with
reduced responsibility and status than that held either during the
international assignment, or prior to the period overseas, in
‘holding’ positions such as a task force or project team, or in
temporary positions engaged in duties that do not appear to exploit
their newly gained international expertise.
• For some, the return position is frequently a lateral move rather
than a promotion. The positions do not seem to be related, nor draw
upon, experiences and skills the person may have acquired during
the international assignment – that is, giving the impression that
such experience is devalued.
CAREER ISSUES
a mismatch of expectations can affect the repatriate’s perception of the role associated with a
new position. A role is the organized set of behaviors that are assigned to a particular position.
Although an individual may affect how a role is interpreted and performed, the role itself is
predetermined, usually defined in the job description.91 Effective role behavior is an
interaction between the concept of the role, the interpretation of expectations, the person’s
ambitions and the norms inherent in the role. Readjustment problems may occur because,
although the repatriate is attempting to function back in the home country, his or her role
conception remains influenced by the experience of the foreign assignment. Torbio¨ rn92
contends that as long as the repatriate’s ‘identity and basic values
are still bound up in the culture of the home country, the strain of adjusting to conditions at
home will be slight’. However, while the repatriate may retain the role conception, and the
cultural norms regarding behavior appropriate to that role, the foreign subsidiary’s influence
may linger, and what is communicated to the home company, in the form of role behavior,
may not fully conform to the home firm’s expectations.