Virtual Organization Structure: Benefits, Limitations, And Challenges

Organization can be referred to a community or group of people working together for a common cause. They have guidelines, benefits and consist of leaders or managers who lead them in the direction of the organization. Employees or members are from the same geographical location as the company and are paid a fixed salary based on the understanding between the organization and the workers. An organization can be small and have small focused structure dealing only with production or only with marketing however larger organizations are more diversified and works across various areas. For instance an organization can have various departments within it with people of various skill specializations. These types of organizations have its own advantages and disadvantages and require a lot of time investment as well as resources to set it up. In the modern world, a world of technology and computing people want to work with less control, more autonomy and more space. They want to be able to work in their own space and allow work-life balance. This has given rise to several recruiters going out to the world through the use of internet and interacting with people of different fields with different types of expertise. This gives them the ability to interact with people from various countries and have access to different areas of work without having to move to the client’s location, which costs more money, time consuming and meaningless given the number of options people have today.

Rapid technological advancements have caused tremendous changes in the field of business and business structure. People are making use of the internet and media to work across borders and nations to find workers of various skills and technical knowledge. Use of internet in recent times has become rampant which has led to the need to interact, communicate, build networks and also provide flexible working hours. As a result of the development in these areas people have sought the options of connecting and doing business with people through the internet. It has given everyone a platform to interact with different nationalities, achieve experience in a number of genres and acquire multinational exposure through these communications and networks. The question is what really is Virtual Organization Structure? Virtual Organization structure can be referred to as a company whose employees work across various geographical areas usually through the internet, email and groupware. However to the world they represent a company that is unified and serving people through their services. Most of these companies also have a geographical location usually, one that belongs to the one who started the company. (Rouse, n.d.) As a result of the recent developments in the field of internet technologies, virtual organizations have gained more competitive advantage over traditional companies as a result of their ability to reach out to clients much more quickly and efficiently, use of core competencies and also a reduction in cost. Since there are no hassles of rent, capital investment etc; they are able to charge customers at a better rate than traditional companies are charging. This has caused people to interact and do business with virtual organizations more than traditional offices. (Burma,2014).

Limitations

Following are some of the features of Virtual Organization Structures.

1. Virtual organizations form their teams by hiring people based on a project and are eventually structured after the goal is achieved, unlike other organizations where people are hired for specific designations and with pre-decided job descriptions.
2. Virtual organizations are flexible and can quickly adapt to the needs of the client based on client needs as soon as required.
3. In a virtual organization, informal relationships are highly essential as a result of no official rules, no clear reporting structure.
4. People interact more through the use of technology and less in person (Burma,2014).

In this report the benefits, limitations and challenges to working as a Virtual organizational structure will be covered.

There are a number of benefits of Virtual organization structure today due to which people have opted for this form of structure in order lessen their investment load and work successfully without much burden and avoid many road blocks to working in a corporate environment. Some of these benefits can be observed clearly in the following section.

1. Overcoming geographical boundaries: There are a number of advantages to virtual organizational set up, one can work from anywhere, be it home, office, while travelling or even while vacationing. One can also work for people across the world and have the opportunity to earn a much better salary than in a local job. People are highly cooperative in such type of settings which allows more ease to work at one’s own pace. (Burma, 2014).  
2. Flexibility:These types of organizations are highly adaptable and flexible in terms of work agreements, timings and submission of works too. There is room for providing quick service, quick response as well as buying time when in need. Virtual organizations are usually smaller in size compared to traditional organizations which allows tremendous flexibility and quick service and communication, as a result of availability of service providers online almost round the clock. Some people work late into the nights or are almost always available on their phone to receive and have email exchanges at any time of the day. This gives added advantage to clients over traditional companies who shut after a particular period of time. A typical 9-5 job may not provide such an advantage. (Burma, 2014).
3. Gaining autonomy and work power:Companies who work in this set up have more autonomy of work and are more spaced out. They are able to work within their own space in accordance to their own understanding and there is not much pressure as a traditional organization would have. People feel more confident and at ease to work without someone having to constantly nag them with their demands. As a result of this people are able to be more creative and effective with their work and are also able to specialize in the areas of competencies. (Burma, 2014).
4. Access to unlimited talent:Because the companies are not located in any particular geographical location, it allows company owners to find talent and skilled people across nations. They are not confined to their own locality or state but are able to look beyond boundaries to find people who are capable. It also helps find motivated people because there is no dearth of people today who like to be their own boss, work on their own terms which gives them more encouragement and motivation. (Burma, 2014).
5. Pool of knowledge, money and expert employees:As a result of having access to a large number of skilled workers across the globe, Virtual organizations have access to ample amount of knowledge in the global market. When one goes beyond their own city or town or even country, you have just made yourself available to so much talent, so much skill and so much expertise. For workers too there is an availability of tremendous financial gain as a result of virtual organizations. (Burma, 2014).
6. Availability of specialized labor:The market has a pool of specialized labour and companies can search skill based employees when they are operating as a virtual organization. The internet is full of such profiles where people are specialized in certain areas that the organization may be in need of. This advantage may not be there if you are geographically based in any particular city. (Burma, 2014).  
7. Opportunity to tap the global market:For people who are available for being part of virtual organizations have great opportunities to be part of a varied number of cultures, people and experience. Not everyone who is talented has the right opportunity in their own city or country. For instance, a person who is highly technical or has done engineering may not have many opportunities in the Gulf countries but because of Virtual organizations they are able to live in these countries and yet serve other countries through the internet. Therefore opportunities for people are way higher in Virtual organization structure. (Burma, 2014).
8. Lower overhead charges:When you are running as a Virtual organization you do not have to worry about renting an office space, paying for furniture or utilities. There are a number of miscellaneous expenses that a Virtual organization can avoid if they are not a huge organization such as legal expenses or even buying various necessities that a traditional office may need to have such as capital investments, kitchen space and things required in it. (Bloch, n.d.)

As much as there are positives, there are drawbacks to this type of structure as well. These drawbacks can be carefully examined in this section.

1. Creates unnecessary power conflict:Since people are given the ease of working in their own space employees can get wishful and do things the way they want and not heed to the instructions of the employer. Legally these companies do not have a strong grounding therefore people can rebel or decide to do things as they wish. There is a lack of recognizing the company vision and working accordingly as well which gives rise to unnecessary tension between the employees and the owners. (Burma, n.d.)
2. Lack of Camaraderie:One of the biggest advantages of working in traditional organizations is the ability to connect to social groups on a personal level, find people you can connect with and strike up a good rapport with however in virtual organization this factor is strongly missing which results in a lack of collaboration among the workers. Bringing together the different groups of people to communicate together on a project may also not be feasible all the time as people may be living in different time zones. (Bloch, n.d.)
3. Security risks:There may be security issues involved in such forms of organizations. Organizations that deal with finance or healthcare may find it difficult to trust people across the globe who they have not met; there are chances of fraud as well as mishandling of information. In the case of lawsuits, it is not easy to file cases against frauds living in a different country as it is difficult to track people down, in addition the legal system in different countries differ in nature making it more  difficult to file any case against an individual. Bloch, n.d.)
4. Risk of company reputation:Virtual Organizations may not be very reliable or appeal to people who are looking for more real setups so that they can feel secure while dealing with you in terms of legalities or finance. In fact some people don’t view virtual organizations as real setups which give these companies a huge disadvantage while operating. The concept of remote employees with no physical presence may make it difficult for people to trust the authenticity of such organizations. (Bloch, n.d.)
5. Lack of trust:There is a huge issue of trust involved in virtual organizations as a result of distance. You just have to believe what your employees tell you because there is no way in which you can find out. Lack of meeting the person in person gives way to too many drawbacks. Trust issue happens even in terms of payments as there is not much one can do against a virtual owner who is miles away from you. Several people and agencies have lost money in the process of operating as a Virtual organization. (Burma, n.d.)
6. Lack of commitment:People who work for virtual organization owners are not always committed as a result of lousy legal laws. There are barely any repercussions except in financial matters, and because people have so many clients in the virtual world they are not committed to performing their tasks. If a condition does not suit them they don’t think twice before quitting. There is barely any desire to be honest with the responsibilities that is rendered to them. In fact commitment among virtual owners may also be very less as they are constantly looking for someone who is better as well as affordable. The ability to tolerate any kind of disagreement in such setups is very low. (Vartianen,n.d.)
7. Ambiguity of roles:Employees may be thoroughly confused about their roles in their area of work. Sometimes there is an overload of work on one person because the employer may be trying to save money by trying to get work done by fewer workers. Absenteeism is rampant in such a setup which may give clients an impression that employees are not reliable or permanent. Consistency also greatly lacks in such a form of organization. (Vartianen,n.d.)
8. Lack of cohesiveness:When people are allowed to choose their own comfort zone and timings for work the company can feel divided in mission and vision. There is also a lack of collaboration in the event of any emergency. For instance if there is a system failure, it is difficult to contact people working across different nations and in different time zones. Such limitations can really hinder growth and quality of work. (Bloch, n.d.)

Virtual organizations are very useful to people in several ways due to its adaptability and flexibility of working hours, speedy response and the availability of a pool of skilled workers. However as one can see above there is tremendous risk involved as well as lack of consistency and reliability. Inasmuch as one would like to operate as a virtual organization, there are challenges to how one can operate under such a system. There may be a number of issues that an entity or an employee may face and it is important that every individual considers these drawbacks before entering into such a setup. In this section the different challenges faced by an organization as well as employees will be discussed in detail.

The problems faced are:

1. Language barriers:There is a tremendous pressure on people who interact with employers or employees of different languages. Even though English may be the main medium of communication, some technical employees may be excellent with their work but lack language skills, in such situations it may become highly impossible or difficult to explain the job requirement or the problems faced by the company. In the absence of appropriate understanding, companies may not be able to operate effectively. (Lee, n.d.)
2. Difference in interpretation:Different nations have different contexts in which they operate. Business means different in different nations and to communicate that difference in terms of situation, clientele etc; may be difficult and serve as a barrier to successful business operation through virtual organization structure. (Lee, n.d.)
3. Cultural barriers:Miscommunication is a major barrier in Virtual organization due to difference in cultures. The way people view certain manner in which communication may differ. For instance, British or Americans are very upfront and have a way of talking that may appear offensive to an Asian. Different cultures have different impact on communication causing a barrier in effective communication thereby creating unnecessary conflict among the workforce. (Lee, n.d.)
4. Difference in time zones:This is by far a huge barrier to effectively functioning as a Virtual Organization as mentioned above. People live in different time zones that are even 15 hours apart from each other and therefore getting immediate work done is a huge problem. Work may be fine when given in advance however in times of emergency companies can suffer. (Lee, n.d.)
5. Difference in legal system:Applying for lawsuits become extremely difficult against frauds and mishandling of data or resources. If the countries are within the European Union list it may still be dealt with but countries that don’t fall in any of these international organization categories may find it difficult to deal with legal issues arising out of a disagreement or conflict etc; (Lee, n.d.)
6. Lack of escaping mundane life:People like to sometimes have a break from the four corners of their walls, meet people, communicate, feel unified or even have comradeship but in the virtual world that becomes a challenge. People get so engrossed in their work-life that they even lose time for their families and friends. Time rarely permits them to step out unless deadlines are met. (Lee, n.d.)
7. Lack of team spirit:Working together builds teams and creates cohesiveness but in virtual work systems, people feel disconnected from other people working on the same project or from the company as a whole. Building a spirit of unity over the internet is quite a task and many a times, employers lack the necessary skills to build that team spirit within the team. (Bailey, 2013)

Conclusion

Virtual Organization structure can really be a success and have more positives than negatives if positive ways are inculcated within the teams. Many of the drawbacks can be dealt with so that working within a virtual organization setup can be fulfilling. As one can see, there is tremendous potential in virtual organization setup and it is immensely convenient. The benefits of a virtual organization structure cannot be disregarded. Many people save a tremendous amount of money in a virtual organization structure and are happily bearing fruits of hard labor. There is instant money and the possibility for working for several such companies become possible which is a huge advantage considering the amount of competition seen in the market currently, many people who may be talented and yet without work can gain a lot from such working environments. Due to flexibility in time and availability of a number of working options in various genres, people find are able to explore new areas of areas in their own lives and try different types of work; this makes people more skilled, gain experience in different areas and also get motivated to perform better. In addition, there is a pool of information available on the internet to get equipped in various fields. (Agarwal, 2012).

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