Virtual organisations

Virtual Organisations, Types, Models, Traditional vs Virtual Organisations, Features

1. Virtual Organisations
Ligo Koshy, Assistant Professor,
MACFAST

2. Virtual Organisation(VO)- Meaning
•Virtual organization (VO) can be defined as a temporary
network of goal-oriented enterprise composed of multiple
members (independent companies, 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

3. Core Competence A
Core Competence B
Core Competence Core Competence
Core Competence
Core Competence
Alliance Partner 1
Alliance Partner 3
Alliance Partner 4
Lead Corporation
Alliance Partner 2
A Virtual Organisation- A temporary network of independent
organisations, suppliers, employees working together to bring a
product to the market
Ligo Koshy, Assistant Professor, MACFAST

4. Ligo Koshy, Assistant Professor, MACFAST

5. Features of Virtual Organisation
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
Flexibility and Quick Response
Ligo Koshy, Assistant Professor, MACFAST

6. Differences between Traditional
Virtual Organisation
Virtual Organisation Traditional Organisation
Virtual organizations do not usually have any
physical presence.
Traditional organizations have physical
existence like real-world offices and
continuity in their operations.
There is no face-to-face communication among
the members in completely virtual
organizations. They rely on electronic
communication to share information.
There exists physical contact and face-to-
face communication among the employees.
The membership is dynamic in nature, with
members joining and leaving the organization
when their roles begin and end.
The membership tenure is normally stable
and independent of the completion of a
specific project or work.
Virtual organizations keep a flatter hierarchy
and insist on voluntary commitment from their
members and on self-discipline.
Traditional organizations maintain a vertical
hierarchy and follow an imposed discipline
system.
Performance evaluation and work control are
virtual and difficult.
They are actual and simple.
Ligo Koshy, Assistant Professor, MACFAST

7. Differences between Traditional
Virtual Organisation
Virtual Organisation Traditional Organisation
Statutory HR practices governing the
functioning of employees are not
clear and effective, but evolving.
They are well-established with proven
effectiveness.
Leadership and control are self-
managed.
They are based on external command
and control.
The employees’ skills and knowledge
are usually developed through the e-
learning process.
They are usually developed through
real training and development
programmes.
The power of employees depends on
their role in business process.
It depends upon the positions
occupied by the employees in the
hierarchy.
Ligo Koshy, Assistant Professor, MACFAST

8. Type of virtual Organisations (Bradt’s
classification)
Types of
Virtual
Organisations
Truly Virtual
Organisatio
ns
Invisible
Organisations
Displaced
Organisations
Alliance
Organisations
Ligo Koshy, Assistant Professor, MACFAST

9. 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

10. Traditional Organisation
Virtual Organisation
Ligo Koshy, Assistant Professor, MACFAST

11. 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

12. Displaced Virtual Organisation
Ligo Koshy, Assistant Professor, MACFAST

13. 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

14. Ligo Koshy, Assistant Professor, MACFAST

15. Types of virtual Organisation (Bradt’s
classification)
•4. Truly 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

16. Ligo Koshy, Assistant Professor, MACFAST

17. Models of a Virtual Workplace
•On the basis of the nature of networking among the members
of the organisation
Virtual workplace
models
Front-line
model
Telecommuting
model
Cyber-link
model
Ligo Koshy, Assistant Professor, MACFAST

18. 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

19. 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

20. 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

21. Advantages and disadvantages of
Virtual Organisation
•Advantages/ Benefits
•Absence of Distance Barrier
•Reduction of Overhead costs
•Faster response
•Saving in space cost
•Round-the clock Service
•Customer driven
•Competitive edge
•Exploiting Labour Market
Imbalance
•Avoiding Man-Hour Losses
•Reduced Work stress and fatigue
•Maintaining the Work-Life Balance
•Disadvantages/ Limitations
•Absence of Managerial
Control
•Technology – related
Problems
•Misuse of electronic
instruments and consumables
of organisation
•High Maintenance Cost
•Absence of Involvement and
commitment
•Aloofness and Boredom
Ligo Koshy, Assistant Professor, MACFAST

22. Managing HR In Virtual Organisation
•Virtual organisations composed of experts who work on
time-bound projects and are geographically divided and
connected by informational 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

23. 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

24. 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 guidanceLigo Koshy, Assistant Professor, MACFAST

25. Managing HR In Virtual Organisation
•Compensation
–Employees are judged only by the results.
–compensating the skills, knowledge and ability of the
virtual employees.
–‘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

26. 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

27. Managing HR In Virtual Organisation
•Communication
•Employees would be missing face-to-face informal communication like
grapevine with their superiors and co-employees.
•“Communication training” Programmes to enhance trust and understanding.
•Information channels of communication need to be supplemented to keep
the two-way communication channels open.(telephonic conversation, e-mail
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

28. 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