Companies such as Cisco Systems, BMW and Corning have designed their office layouts to maximize interpersonal interactions. At Cisco Systems Inc.’s sites in Germany, for example, only three people have their own individual offices. All other 850 employees work in an open-space environment that provides opportunities for “hall talks” and other informal interactions.
Does this help? Yes, it turns out. But this setup is not the norm. More and more companies organize projects over distance, with teams increasingly consisting of people based in different geographical locations and possessing different cultural backgrounds.
Conventional wisdom suggests that teams don’t perform as well when they’re in disparate locations. So managers tend to see dispersion as a liability rather than an opportunity. But dispersion has its benefits if companies can take advantage of the diversity and varied expertise of their team members. In fact these virtual teams can outperform their more traditional counterparts when managed correctly.
Researchers looked at two fundamental questions: 1) When do virtual teams outperform collocated ones? and 2) How should companies manage dispersed teams? Frank Siebdrat, a consultant for the Boston Consulting Group and Martin Hoegl and Holger Ernst, both professors at the WHU-Otto Beisheim School of Management in Germany, studied software development teams from 28 different labs in various countries including Brazil, China, Denmark, France, Germany, India and the United States. They found that certain team processes drive performance, and that it’s these processes which allow teams to succeed -- not their proximity to one another.
Below, key lessons to help companies maximize the performance of virtual teams.
First, don’t underestimate the significance of small distances. The researchers found that teams performed noticeably worse when the people in them were located in the same building but on different floors, as compared to when team members were all on the same floor. This was true regarding both their effectiveness and efficiency. In fact, teams with members in the same buildings but different floors performed even worse than teams with greater degrees of dispersion -- including those spread across a city, country, or even continent.
This might seem odd, but consider that team members on different floors don’t generally consider themselves as dispersed and therefore might underestimate some of the barriers of meeting face to face. They consider an email or voicemail just as effective, using these means as often as dispersed teams. Groups that know themselves to be dispersed, however, make extra efforts to improve task-related communication and coordination.
Second, emphasize teamwork skills. Don’t assume that people will automatically know how to collaborate in a virtual environment. One of the reasons companies create dispersed teams is because they want to draw on the superior skills of people who reside in different locations. But staffing teams solely on the basis of people’s expertise and availability fails to account for social skills, which is a major prerequisite for good teamwork.
Third, promote self-leadership across teams. Managers should pick people who display social skills; they should also pick members who have leadership capabilities. When a group is collocated, a leader can more easily detect deficiencies in teamwork and address them. For example, a manager could resolve an interpersonal conflict by talking in an informal setting with the people involved. This is all but impossible in virtual teams, so it’s best if team members are self sufficient, since the team leader isn’t in a position to step in otherwise. Furthermore, companies serious about virtual collaborations must target their HR efforts not only at team leaders but also at team members, so all individuals can develop the skills necessary to work in virtual settings.
Fourth, provide periodic face-to-face meetings. This can be particularly effective for initiating and then maintaining key social processes that will encourage informal communication, team identification and cohesion. Bring everyone together at the start of a project so they can develop a shared understanding of their tasks and begin to identify with the team.
Fifth, foster a global culture, one in which people see themselves as part of an international network. This helps create environments conducive to dispersed teams. Nestlé, General Electric, IBM and SAP provide good examples. Nestlé S.A., for instance, expects its managers to move to another country every three or four years so that they can learn about the specifics of each of those markets and develop a global mind-set. They learn to become more inclined toward diversity and better able to work in different contexts.
This article is adapted from “How to Manage Virtual Teams,” by Frank Siebdrat, Martin Hoegl and Holger Ernst, which appeared in the Summer 2009 issue of MIT Sloan Management Review. The complete article is available at http://sloanreview.mit.edu/smr/.