This report seeks to provide insights into the prevalence, and management, of virtual teams in business today. For the purposes of this report, the term “virtual teams” refers to a group of geographically dispersed people, either within a single organisation, business unit or department or spanning several organisations, relying primarily or exclusively on information and communications technology (ICT) to communicate and work together towards common goals.

Over the past decade, the much-hyped promises of the dotcom bubble have steadily become commonplace. The cost of fixed broadband has plummeted and is now in the process of becoming increasingly pervasive across mobile devices too. Online social networks have emerged and boomed, while instant messaging, web and video conferencing, blogs and other online communication and collaboration tools have become the norm. In the process, information and communications technology (ICT) has broken down the boundaries within organisations and between organisations.
All this has freed people to work in a location of their choice. Yet, despite predictions to the contrary, there has not been a mass migration to the countryside, and most people do not work from home. In fact, research from the UK’s Office for National Statistics suggests that full-time teleworkers are mainly comprised of the self-employed.
Yet the outcome of the ICT revolution has been a sea change in the working environment. It has given organisations the ability to pool people from wherever they are in the world, without having to relocate them. People no longer have to be physically co-located to work on the same project, problem or task.
Although diverse management literature exists on the topic of managing virtual teams, little has been done to quantify the extent of these practices within business today, and what forms they typically take. In order to redress this lack of information, the Economist Intelligence Unit conducted a survey of European businesses to assess the extent to which they use virtual teams—and how these teams are recruited and managed. Some of the key findings are highlighted below.

• The use of virtual teams, although effective for remote working and reduced travel, has simply evolved into place at one-half of the organisations polled. Rapid advances in ICT in the past decade have made virtual team working both within and across companies practical and cost-effective for any organisation. This style of working and collaboration has primarily expanded organically, rather than explicitly as a means of facilitating other benefits, such as flexible working. Just 11% of survey respondents say that virtual working had been primarily implemented at their organisation to facilitate more flexible working. Only 3% say it was implemented to reduce their firm’s carbon footprint.
• Good management is not the norm in virtual working. One in three executives agrees that virtual teams are badly managed. This is probably a result of virtual working simply evolving into being rather than being planned in advance, but it is also to do with the difficulty of leading people from a distance. The latter issue is cited as the second-biggest challenge for virtual team managers, after misunderstandings arising from cultural differences. More simply, most managers (and management theory) have not kept pace with the rate of technological advancement.
• Executives are generally positive about working in virtual teams. More than two out of three survey respondents believe that the advantages of working in a virtual team outweigh the disadvantages. Also, virtual working is not always detrimental to a work-life balance. Fully 45% of respondents disagree that virtual working blurs the lines between work and life and a further 21% are undecided. Three out of every four respondents also state that they travel less as a result of working virtually.
• Despite positive feelings towards virtual work, there are a number of challenges when working at a distance. There are a host of challenges for anyone trying to lead a team remotely, such as the obvious issue of building rapport and common understanding without much (or any) physical interaction or operating across multiple time zones. The single most common challenge, selected by 56% of executives polled, relates to the misunderstandings that emerge as a result of cultural and language differences from teams operating globally. Just one in 20 executives say they have never experienced any difficulty in managing a virtual team.
• More than one-half of executives say that their virtual teams use video conferencing on a regular basis. This rises to about two-thirds (64%) for the largest firms (those with annual revenue in excess of US$10bn), prompted in part by significant cutbacks in corporate travel budgets over the past two years. But visual communication does not always equate to better communication. Both cultural and gender-based differences need to be taken into account when choosing methods of communication. Research suggests that that men find eye contact threatening, while East Asians are more comfortable using other approaches, such as instant messaging.
• One in three companies has set up virtual working so that they can tap into the global talent pool. One of the most significant benefits of being able to use technology to collaborate globally is the ability to draw on a much deeper pool of skills, without being constrained by geographical location. Yet the majority of survey respondents say that virtual team members are recruited by local managers (58%), suggesting that most companies only recruit in locations where they have an office, thereby severely curtailing the size of the talent pool on which they can draw. Also, relatively few managers embrace the actual technologies they use to communicate in their virtual teams as the method for meeting and interviewing new prospects.