Virtual Organizations: Implications in Business, Organization, and Career - Essay Example

Virtual Organizations (VOs Implications in Business, Organization, and Career Introduction The dramatic emergence of Virtual Organizations must be one of the notable features of the 21st century. Information technology has altered organizational structure, labor market, and Human Resource Management (HRM) of modern business world. Both web-based technology and scientific business-approach has intensified global business more than ever before. As modern organizations pay great attention to enhance productivity, coordinated resource sharing and problem solving has great significance. Therefore, many of the conventional business groups also have adopted the features of virtual organizations. “A virtual organization is a group of individuals whose members and resources may be dispersed geographically and institutionally, yet who function as coherent unit through the use of cyber infrastructure (CI)” (Beyond Being There p.3) This paper tends to discuss the multifaceted effects of virtual organizations in business, organizational structure, and career. The significance of VOs Tremendous changes have been visible in the area of organizational management for the past few decades. Unlike traditional organizations, modern companies are able to store every valuable data in their specially designed software. This information system is highly integrated with the enterprise planning (ERP) of a company. Technological advancement has enabled business operators to focus more on the advantages of outsourcing. It enables them to reduce labor cost and time for the accomplishment of intended tasks. Coordinated resource/knowledge sharing is the main facet of virtual organization. Not only VOs but also many of the traditional organizations also take advantage of the broad information technology to strengthen the area of their service. Technology helps big organizations to collaborate and coordinate their resources and people from all around the globe. Computer and computer-based communication facilities are the inevitable requirement for virtual management. Cyber infrastructure helps organizations to integrate the whole system and enable easy access to resources and information. According to the writers, “VOs enable system-level science, facilitate access to resources, enhance problem-solving processes, and are a key to national economic and scientific competitiveness.” (Beyond Being There p.5). VOs and Impacts on HR management Virtual Organizations primarily have document processors for storing organizational data. It ensures instant access to organization’s HR information. This is normally known as Human Resource Information System (HRIS) which is highly useful in HR decision making process. In order to be competitive, organizations need to have timely and accurate information about their human resources. Employee selection, retention and motivation are the significant factors that determine the productivity and growth of a company. Hence, it is important to a firm to have immediate access to information regarding the potential candidates and current human resource. As the members and resources of VOs remain dispersed, the system has vital significance in VOs’ HR management. For instance, a company which has broad HR and international linkage requires instant access to its HR information in order to align its workforce. In addition, the web-based technology integrates all other information and process regarding manufacturing, supply, financials, and customer relations. However, as compared to other areas of interests, Human Resource Information is the inevitable part of Virtual Organizations. It is not a mere process of transferring the employee data from paper to web based system, but is to use the information as a decision making tool in all its administrative functions. In short, technology allows VOs to acquire, store, and distribute information related to their HR. Moreover, VOs can easily maintain all information regarding employee performance report, salary statement, personal file and applicant tracking. Therefore, they can also meet the total integration of the business including the greater customer satisfaction, reduced manufacturing cost, and improved services. An effective system would reduce response time to serve customers and clients, improve the quality of HR services to employees, and makes HR more responsive and competitive. Extensive use of collaboration software and outsourcing help organizations to avoid further expenses on infrastructure maintenance. However, it has been refuted that web-based HRM would adversely affect personal interaction and relationship between the members of an organization. The absence of visible authority and leadership would eliminate the feeling of teamwork among the workers of virtual organizations. Although team work is the essential element of HRM, inappropriate strategic implementation and system maintenance will cause negative effect on the HR management of an organization. If the communication is not effective in a firm it would adversely affect every area of business. In addition, outsourcing may result in reduced effectiveness due to communications problems. The main problem is that it may reduce effectiveness between outsourced functions and the value of consolidating outsourced activities under a single vendor. Inappropriate system management would lead to centralized HR management in VOs because they tend to focus excessively on individuals and categorize them on their performance base. Moreover, people may feel less connected and less motivated due to the absence of direct social connections. Unlike traditional organizations, HR management has become rather unimportant area of concern in virtual organizations. Since many of the virtual organizations are of temporary arrangement, hire and fire method is mostly adopted as the employment strategy. Once the intended task is achieved, the HR motivation becomes irrelevant to virtual organizations. Impact on Organizations The dramatic growth of VOs has changed the traditional concept of business operations. Profit driven companies today mainly focus on customer relation business management; and therefore, business today is an interlinked net work of producers, customers, and suppliers. Technology has significant role in modern business for aligning various segments and factors to achieve business goals. Moreover, companies today tend to introduce their products/services to the people of high potential and to retain them by providing best service. The most significant advantage of the virtual organizations is that technology allows them to compress time through fast electronic communication. As it has been stated in Franke (2002), “the better an organizations’ communications, the better it is able to compress time; and compressing time in turn allows spatial dispersion” (Franke, 2002. p.30). As communication is the key element of an organization, it has a very important role in determining the effectiveness of the time management. Since modern technology allows communication to any part of the world in few seconds, organizations do not have to keep their departments closer. Today any knowledge or information can be transferred to remote-access networks in few seconds. It includes the knowledge transfer between the members of the organization, between the firm and suppliers, and partners. Similarly, VOs can easily collect feedback from the customers, suppliers, and shareholders; and value them while designing further business strategies. Marketing strategies and advertising obviously depends on the consumers’ purchasing behavior. Virtual organizations can easily establish their reputation and promote customers all over the world. The main advantage is that they can use various cognitive techniques to influence customers’ buying attitude. Similarly, they heed high concern to ensure after-sale services in order to retain their customers. As consumer acquisition and retention is the initial step of marketing, organizations compete to maintain their potential customers. On the other hand, customers today focus more on the accessibility of cost effective product and service in market. Hence, up-to-date service and up dated strategies are the priority of modern virtual organizations. Technology is the inevitable element that makes feedback collection and strategic management rather easy. A consumer in his daily life confronts with hundreds of new products and service offers. Marketers are to introduce novel techniques to initiate their products and services because each purchaser is unique and his/her needs also vary. Companies have to struggle to sustain in the field by providing adequate service to the customers on time. In addition to the growing competition, customers are highly informed about the numerous services available in the market. Therefore, further research on consumer behavior and marketing has great significance in modern business environment. As compared to conventional organizations, VOs are highly leveraged with technological backup that enables coordinated research sharing and problem solving. It helps them understand the consumers according to their traits and to approach them through the proper channel. The system is highly beneficial for non-profit organizations to conduct studies on issues of national or international interests. For instance, experiments on certain epidemics like HIV/AIDS require collaborated efforts and information sharing. It helps researchers advance in their experiments depending on the technological possibilities of virtual organizations. Networks integration allows Virtual Organizations to cover every area of business environment, in order to identify the weakness of current strategies. Interviews, surveys, auditing, and feedback collection have become comparatively easy. Although in general sense, the term ‘organizational strategy’ indicates the preset programs, organizational decisions are always subjected to immediate changes according to the variation in the firm’s environments. For instance, virtual organizations can easily anticipate unexpected events like economic down fall, market variation, and technological advancement. Therefore, as compared to traditional organizations, VOs can better vie with the situational changes. In addition to long term strategies, they can formulate new decision in response to emerging situations in the domestic as well as international levels. Today marketing planning in VOs involves various types of marketing techniques, systematic preparations and exercises. Once the initial factors such as firm’s size, service/product, and market to be served are clearly identified, people who initiate new VOs must identify the possible impediments to the business growth. In order to develop appropriate marketing strategy, the organization can collect knowledge and information from its dispersed members, share holders, customers, and from other groups of similar goals. Marketing research is an area where organizations spend considerable portion of their budget. However, VOs have been benefited by technology for keeping their research objectives concise enough to achieve better result. However, irrespective of the various benefits, virtual organizations have been criticized for their over dependence on technology. Since they rely on electronic means of communication, their accessibility also have been restricted to the limitations of the same technology. As it has been stated, ‘the two primary issues associated with the development of VOs are the viability of the shared infrastructure and the development, maintenance, and support of VO infrastructure’ (Beyond Being There p.37). To illustrate, the developing unique infrastructure for each new VO is rather unaffordable. Therefore, people rely on existing models and shared infrastructure instead of inventing a new one. As the writers believe it would lead to the emergence of ‘5 minutes VOs’ where maintenance would become more centralized and flexible. People are skeptical about outsource services and do not like to expose internal resources to others. Moreover, those who build VOs do not have sufficient knowledge and experience with governance, policy administration, and contracts. As the various domains of VOs are extremely complex “A talented pool of professionals will be necessary to build and operate these systems. An important factor is to cross-train people in information technology.” (Beyond Being There p.39). Moreover, since VOs are out of the normal organizational infrastructure, they can not be easily managed by ordinary entrepreneurs. Furthermore, they require specialists in networks, storage, and hardware application. Similarly, VOs should have access to competitive electronic tools such as intranet, internet, groupware, and powerful database. Outsourcing is the notable advantage of the people of Virtual organizations. Since it does not demand huge investments, people can easily enter the business world; and perhaps due to the same reason, one can not assess the consistency of a company. Impacts on Career Working with virtual organization is entirely different from that of working in a traditional organization. Working with virtual organization has its own pros and corns. Initially, telecommuting enables employees to avoid driving or traveling to a specific location for work. They feel more freedom while working for VOs than working at a confined office of a company. It also helps people to earn more income and to avoid unnecessary expenses on dress, food and travel. Perhaps employment in a virtual organization allows them to involve in multiple careers without the stress of office work. On the other hand, virtual organizations have altered the notion of career ethics. The major problem with the VOs is that they do not render job security to their employees. A virtual organization is answerable to no one and can be vanished at any moment; or the workers can be fired without any solid reason. The jobs also demand workers to have multiple communication skills and immediate decision making ability. Moreover, if workers confront with difficulties to perform their duty, they hardly get assistance from the company. In other words, an assigned work always seems to be the sole responsibility of individuals. Therefore any failure to meet the requirement would adversely affect one’s career. Core values of traditional organizations have seldom been considered when a virtual organization conducts performance appraisal, potential assessment, and learning and development. A system, in which these values are not considered, inevitably spoils the employee-employer relationship. A virtual organization presumably has these features; and does not contribute to the HR motivation. In the same way, management personnel whose organizations have adopted outsourcing would loose their role-significance. Unlike in traditional organizations, the HR managers in virtual organizations can not achieve integration of basic marketing, manufacturing and finance activities. Furthermore, labor unions in traditional organizations are highly concerned about workplace safety and employees’ welfare. Therefore they can negotiate reasonable advantages with the employers. However, employees in virtual organizations neither have the ability to form unions nor have the ability to bargain for privileges. Virtual organizations’ approach toward employee retention is highly suspicious for their leaving workers at a high risk of termination. VOs always target potential individuals who would align with their business goals. Labor unions in fact have a significant role in determining the socio-economic status of common people. Unions bargain for safe working condition and wages on behalf of the working individuals. Irrespective of the class, rank or sector, unions establish big alliance of millions of men and women who are fighting together for the common interests. Unions’ power to strike promotes timely action/negotiation with government and employers. However, workers in virtual organizations do not have access to many of these advantages of traditional organizations. They are exceedingly isolated and are bound to experience the subsequent effects of their success or failure alone. Conclusion Virtual organizations have turned to be the inevitability of the rapid changing business environment of the modern world. It has changed the old concept of independent business operation into broad and further collaborated information sharing and outsourcing. Sophisticated web-based technologies have enabled entrepreneurs to reduce operation cost as well as human efforts. When traditional organizations invest huge amounts on the maintenance of their headquarters and other regional offices, virtual organizations do not have any such financial burdens. Outsourcing has enabled people to initiate new organizations comparatively at lower expense. However, effective transmission of knowledge is the backbone of virtual organizations. The success of virtual organization depends on the effective utilization of internet, computer networks, and groupware. As the other side of the coin, VOs have altered the perspectives of professional ethics. The traditional theories of motivation and HR management have been questioned; and career has turned to be a mere private affair. Although workers would earn better from virtual organizations and companies in turn would benefit from less absenteeism, the absence of teamwork and creative interaction may result in reduced social contacts. References Franke U J. (2002). Managing Virtual Web Organizations in the 21st Century: Issues and Challenges. Idea Group Inc (IGI). National Science Foundation (2008). Beyond Being There: A Blueprint for Advancing the design, development, and evaluation of virtual organizations. Building Effective Virtual Organizations. Chicago: Computation Institute, University of Chicago. Read More