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Ira Smolowitz, Ph.D.

Ira Smolowitz, Ph.D. Professor of Finance and Dean, Bureau of Business Research and Program Development at the American International College, Springfield, MA.

Virtual Teams: Identifying The Benefits and Problems
By Ira Smolowitz, Ph. D.

Virtual teams have been defined as "the 21st century's version of traditional teams. 1]

"…studies indicate that virtual teams (teams in which most members cannot regularly meet face-to-face) embrace technology quickly and use it to disseminate information more efficiently than traditional teams." 2]

TechnoTeams has listed the benefits of virtual teams. I have taken the liberty of summarizing their three-page list of benefits. 3]

Improved Decision-Making: Virtual teams become adept at moving information quickly, and at making it available for the entire team or entire organization. This efficient flow of information facilitates better and faster decision processes.

Ideal Matching of Personnel & Task (without concern for location): By removing location as a component of team selection, virtual teams can assemble the organization's overall best possible mix of knowledge and skills. Talent dispersed throughout a global company can be used efficiently without constant travel or relocation (which sometimes drives talented employees away.) This is a considerable benefit and often the point that pushes companies to start using virtual teams. Take Lockheed Martin for example. "Having the wrong skills in the wrong place most of the time was what drove us to think about virtual teams," says Joe Cleveland, president of Lockheed Martin Enterprise Information Systems (as quoted in Melymuka, p.70 (3).

Fewer Face-to-Face Meetings: Since virtual teams can converse and share information easily through the use of technology, the need for face-to-face meetings is greatly reduced. The reduction in meetings also results in a reduction in time lost due to travel and the disruption of being out of the office. Opper & Fersko-Weiss estimate one in three meetings can be eliminated in this manner (Opper & Fersko-Weiss, p.45). In the future, face-to-face meetings may be eliminated all together as cutting edge technology helps virtual teams feel like they are meeting in person. For example, NCR has employed a high-speed, full bandwidth continuously available audio/video/data link that they affectionately nicknamed "the Worm Hole" (a reference to Start Trek) (Lipnack & Stamps, p.78). Engineers positioned the cameras and tables in the meeting rooms to create the illusion of everyone sitting at one table. However, because technologies like this are very expensive to develop and to maintain, they are currently only a possibility for large companies with deep pockets.

Here are some examples of prominent companies employing virtual teams: 4]


Verifone is owned by Hewlett-Packard, and produces low-cost equipment for credit card and cheque authorization. Verifone\u2019s employees are scattered all over the world, with less than 7% located at the tiny corporate headquarters in California. All employees are linked electronically and are able to share in major decision. Verifone's transnational infrastructure juxtaposes efficiency, responsiveness, and learning.

Eastman Kodak

A virtual team was used to develop a single-use camera for the European market. Though the camera's features were similar to those on the market elsewhere in the world, Kodak wanted to adapt the camera's features so that it would appeal to European buyers. German engineers worked with the design teams, first in New York, and later through telecommunications links from Europe. By creating a virtual team that allowed input from people across the world, Kodak was able to quickly respond to a local market opening.

Benefits not withstanding, there are, in my opinion, serious problems associated with virtual teams. The Stanford Graduates School of Business has indicated:

…Virtual teams may extract an unexpected price: People who add their hard-won knowledge to a common pool may became alienated from the organization and even fear that they are sowing the seed for their own replacement.

After all, says Stanford's Margaret Neale, if your knowledge - not to mention the tricks and tips it has taken years to learn - is deposited in a database for all to access, does the organization still need you? "It's a real fear," says Neale. "Technology has the potential to destabilize the relationship between organization and employees."

Also a serious concern: Employees working in virtual teams are, to a certain extent, isolated from their colleagues. Although they may have contact with other employees of their organization, they don't spend much time with them. In this situation, the virtual worker loses opportunity to learn from his or her closest colleagues. In effect, there's a double penalty. The virtual worker perceives herself as giving away her knowledge but not having the chance to "replenish her own reservoir of knowledge," and thus feels even more vulnerable, says Neale. 4]

In my opinion, in a period of down-sizing, employees are reluctant to share knowledge. This is true whether virtual teams are or are not in place.

Consider the following scenario: Jones or Smith are to be downsized: Jones has general skills and knowledge. Smith has more specific skills and to some extent is the sole repository of the above knowledge. All things considered, Jones is the more vulnerable employee. It seems to me, that Stanford's Margaret Neale has identified a serious problem associated with virtual teams.


1. "TechnoTeams - A Resource for Virtual Teams…" downloaded 3/12/04 from dmswed.badm.sc.edu/technoteam/BenefitsFina (.htm p.1)

2. "Workers Fear Cooperating in Virtual Teams May Make Them Obsolete"Stanford Graduate School of Business-Research (October 2003)-downloaded 3/12/04 from http://www.gsb.stanford.edu/news/research_virtualteams.shtml, p.1

3. Techno Teams, op.cit., pp.1-3

4. Stanford Graduate School of Business, op.cit., p.1

Articles printed with the permission of Dr. Ira Smolowitz, Professor of Finance and Dean, Bureau of Business Research and Program Development at American International College, Springfield, MA.

The views and opinions expressed in this article do not necessarily reflect the views and opinions of the Sacramento Chapter of APICS.


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