Business Brains

How to run a 100% virtual company

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Most, if not all companies, still have a physical, core presence somewhere. And there's a reason for that.

Given all the attention on telecommuting and virtual operations, you would think there was now a huge roster of companies running entirely "in the cloud," if you will. But most, if not all companies, still have a physical, core presence somewhere.  And there's a reason for that.

What it takes to run an entire company out of Starbucks: communication, and lots of it. Photo: Marguerite Reardon, CNET.

The Wall Street Journal's Rachel Emma Silverman describes the workings of one prototypical 21st-century "completely office-less" company: Web-services company Automattic Inc., which has 123 employees working in 26 countries, 94 cities and 28 U.S. states -- all working from home.

"Nobody knows for sure how many completely office-less companies there are or how fast their ranks are growing, but management researchers say such firms are still rare," Silverman writes. But their ranks are growing.

Still, while virtual workplaces have a lot of pluses, there are still a lot of minuses as well that need to be overcome -- both on the management and employee side. Managers often feel they are not in control of things when employees are not within sight. Plus, there may be data security or confidentiality concerns. For employees, there are often feelings of isolation and being left out of the career-advancement loop.

To run an effective all-virtual organization -- or partially virtual for that matter -- communication is the vital link. Some observations made in the article include the following management tips:

Address the "virtual workstyle" in hiring and orientation: Before making a hire, Automattic assigns applicants to work on a trial project. Plus, once hired, all new employees are required to work in customer service for their first three weeks.

Emphasize "overcommunication": This is key to heading off misunderstandings. Employees at Automattic, for example, are constantly exchanging messages within an internal blogsite -- a virtual water cooler. "When misunderstandings occur with text-based chats, participants are encouraged to pick up the phone," Silverman writes.

Emphasize teamwork: "If someone misses the mark, the team leader or another staffer will reach out to the employee to figure out what went wrong."

Organize regular get-togethers or meet-ups: Even in the virtual era, nothing bonds like face-to-face meetings. At one company, not only is there constant chatter between employees via instant messaging and email, but employees are also flown in every year for an annual meeting.

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Joe McKendrick

Contributing Editor

Joe McKendrick is an independent analyst who tracks the impact of information technology on management and markets. He is a co-author of the SOA Manifesto and has written for Forbes, ZDNet and Database Trends & Applications. He holds a degree from Temple University. He is based in Pennsylvania. Follow him on Twitter. Disclosure