Tuesday, April 12, 2011

Lesson #16: The Plusses & Minuses of Virtual Employees

The internet, web video and mobile technologies have clearly made working from outside of the office easier than ever.  And, now, we are seeing more and more "virtual companies" getting staffed with employees located in numerous cities around the country, or in some cases, around the world.  But, is building a a virtual company the best thing for your business?  I believe the "inside vs. virtual" hiring decision really comes down to three points: (1) how critical is it that position be located at the home office; (2) how hard is it to recruit for that position; and (3) are there business efficiencies created by a virtual workforce.

The first point is pretty obvious:  it would be pretty hard to hire a virtual call center manager if the call center employees are all centrally located in the home office.  You can never beat that face-to-face engagement with your staff, especially in a team building or sales-driving environment.  But, the flip side to that, it would be pretty easy to have your outside sales team remotely located in cities around the world.  Salespeople are largely independent and are constantly on the road meeting with clients.   So, no harm if your sales team is virtual, as they typically aren't in the office anyway.

As for ease of recruitment, let's face it, certain positions are easier to fill than others.  If you need a simple web designer, there is a large and fertile pool of prospective employees in any major city.  So, I would try to fill that position locally for any permanent staff positions, for better team building and communications with the rest of the tech staff.  But, if your office is located in Kalamazoo, Michigan and there are very few hard core tech developers with C++ or C# experience, you may have no choice by to hire a virtual tech developer in Chicago or elsewhere, including India where labor rates are a fraction of what they are in the U.S.

In terms of business efficiencies, virtual employees bring a ton of potential economic value.  You don't need to pay rent in the home office to house them, you don't have to pay relocation costs to move them, you have access to lower salaried employees in smaller markets, willing to do the same job for less, etc.  And, there are ways to take this model to far extremes with crowd-sourced solutions over the internet.  At MediaRecall, our secret sauce was a distributed work force of 2,000 digital media professionals that worked from their homes all over the country.  We were able to hire talent at $10 per hour (compared to our clients paying on-site engineers $40 per hour) and we were able to throw hundreds of bodies at a project (getting work done in months, not years with in-house solutions).  In this example, the virtual workforce became our entire value proprosition to clients and was the foundation of our entire business.

Overall, I think the core management team needs to be centrally located, in order to facilitate easier communications between the team.  But, for non-critical positions, that can easily be completed and managed remotely, virtual employees are a great way to go.

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