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  • The Virtual Workforce: What You Need to Know

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    Advantages and Disadvantages of a Virtual Workforce

    At first glance, actually seeing what’s going on in your business seems like the best approach to running a growing company. But more small businesses are now creating virtual teams that work remotely—in many cases hundreds or thousands of miles away from each other.

    Is this a good idea to meet your business needs? Perhaps; here are some of the key advantages to establishing a virtual workforce:

    • Lower overhead costs. If you run your company virtually, you don’t have to worry about leasing office space, buying furniture, paying for utilities, etc. And even if you establish a main office with just a few employees, you won’t need to lease nearly as much office space.
    • More satisfied employees. Because of a need or desire for flexible hours, more talented employees than ever are looking for jobs where they can work from home. This gives you more opportunities to hire talented team members who might not otherwise be able or willing to work for you.
    • Higher scalability. With a real office, increasing your staff often requires moving into a larger office space. But with a virtual team, you can scale up your business without worrying about how much more square footage you need. And there’s no need to worry about increased power, heating, and air conditioning costs.

    There are, however, some potential pitfalls to consider when deciding whether to create a virtual workforce. These include:

    • Less cohesiveness. When you allow a virtual team to mostly choose their own work hours, your organization can be more fragmented. For example, if there’s an emergency, such as a major equipment failure or serious IT issues, you can’t easily call a meeting of your entire organization to deal with these crises.
    • Lack of camaraderie. Social interaction does help encourage more effective teamwork. In a virtual environment, however, there isn’t much of an opportunity for employees to gather for impromptu conversations that can often enhance collaboration.
    • Risk to reputation. If potential customers find out that you run a virtual office with remote employees, they may not think of your firm as a “real” company.
    • Security and compliance issues. In some industries, it’s extremely risky to have confidential information stored remotely. For example, the accidental loss or release of data in specific industries, such as financial services and healthcare, can carry serious repercussions.

    Weigh these advantages and disadvantages against your business needs to decide whether a virtual workforce can work for your company.

    But think carefully. While you can change your mind after assembling a virtual workforce and revert back to a traditional workforce again, this can be highly disruptive to your business.

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    • If you know of other business owners with a virtual workforce—especially businesses in your industry—ask them about their experience and for tips on making your virtual workforce a success.
    • Read this Forbes article on working from home and this Staff.com article on the advantages of establishing a virtual team.
    • Review this section of the Management Study Guide with more than 20 articles on the advantages and pitfalls of establishing a virtual team and best practices for creating and running a virtual workforce.