Leading virtual teams: How to lead in the 21st century knowledge economy

Advances in technology and the global economy are changing leadership

Through advances in technology and changes in the global economy, many organizations are now recruiting and hiring personnel to work remotely (Schmidt, 2014). Amidst the recent COVID-19 pandemic, a shift to remote work has become even more prevalent. These changes  and the very unpredictability of the VUCA world have resulted in a need for virtual leadership.

Effective leadership is an integral part of business effectiveness so it is important for organizations to consider how best to integrate virtual leadership into business strategy. Based on research into virtual leadership, this dossier suggests several ways in which organizations can implement an effective virtual leadership system.

Virtual teams have become crucial to conducting daily business

There is a growing number of companies who are now employing virtual teams. A study by MCIWorldcom (2001) found that already at the beginning of the century, 61% of employees in large companies were engaged in a virtual team. Virtual teams have now become an even bigger part of how work is organized and implemented in the workplace (Schmidt, 2014).

A report from 2018 shows that among 1620 surveyed professionals in 90 countries, 89% of respondents stated that they were working remotely in at least one team; 88% stated that their virtual teams are crucial components of conducting daily business; and 62% stated that they work on teams with members from at least three different cultures (RW3 Culture Wizard, 2018).

Virtual leadership and virtual teamwork differ from face-to-face interactions

Because of this increase in virtual teams, there has also arisen a need for virtual leadership. Virtual leaders are responsible for supervising and managing virtual teams and to help them to be as effective as possible.

There has been research on the effectiveness of leadership within a virtual team setting (e.g., Bell & Kozlowski, 2002; Purvanova & Bono, 2009) and this has enabled a deeper understanding of how to lead virtual teams. However, it is fair to say that most research has focused on how virtual teams can enhance organizational effectiveness.

Virtual teams operate differently than regular teams - leadership must adapt too

Indeed, virtual teams do not necessarily share the characteristics and dynamics of regular teams. It is therefore no surprise that research shows that effective leadership style differs in virtual teams versus face-to-face interactions (Schmidt, 2014). Not only does it differ, scholars have also found that it is simply more difficult (Hoch & Kozlowski, 2014). 

As opposed to regular teams, virtual teams can be described as "group of people who work interdependently with a shared purpose, across space, time, and organisational boundaries, using [communication technology] to communicate and collaborate" (Kirkman et al., 2012). This premise - the idea of borderless, online communication towards a shared goal - makes the importance of a leader undeniable: a leader must not only be able to lead a team, but must also be aware and mitigate challenges arising from the complexity and transcendental nature of virtual teams.

Virtual leadership must consider how team members process information

Context matters in leadership. The virtual team environment is different and keeps on changing due to the use of different media tools, such as Skype, Zoom, or similar platforms. This difference in communication media creates a need for leadership to account for this change in environment in order to facilitate communication and to effectively engage with team members (Lord & Dinh, 2014). The virtual team context influences the process of leadership.

Leaders who manage virtual teams also need to consider the ways in which their team members process information. The differences in media communication e.g., email, phone, etc. influence the way in which information is presented and leaders are not always able to process important non-verbal cues if they don’t have access to teleconferencing media. These differences in information sources have an impact on how the team and the leader is perceived (Schmidt, 2014).

One way to deal with this change in information processing is for leaders of virtual teams to provide relevant information to enable effective team performance (Hoch & Kozlowski, 2012). When problems are discovered, the leader must gather information to determine the nature of the problem and use this information to devise and implement effective solutions (Bell & Kozlowski, 2002).

Communication is key to ensuring virtual teams function effectively

Research also suggests that communication is very important in leadership within virtual teams. Brown et al. (2007) found that 70% of information exchanged in face-to-face meetings is non-verbal. This alone makes virtual communication more difficult and more nuanced to manage.

Research finds that communication between leader and team members appears to have a great impact on team effectiveness within a virtual environment. At the same time, the social connections between team members appear to matter more in a virtual team environment (Gajendran & Joshi, 2012). 

Leaders must be aware of technological developments and facilitate usage

One way to improve communication is simply through using online tools that enbla face-to-face communication and to make use of this feature. It is important that leaders keep abreast of changes in technologies and reflect on how these technologies change interactions within a team. For example, a participative leader might use a virtual chat room or polling function to gain consensus from team members when making decisions.

It is also important for leaders to consider how the workforce reacts to differences in technology. Future generations of employees have grown up with technology and respond to social media with comfort and ease, preferring them as a communication method (Bennet, Maton, & Kervin, 2008).

It is important that virtual leaders account for generational differences in acceptance of new technologies. One way in which to gain acceptance of new technologies is to implement effective training and development sessions that allow for older employees to become accustomed to new technologies. Training and development can ease anxiety among employees who are uncomfortable with new technology.

Leading virtual teams requires frequent and individual communication

Leaders also need to consider the type of behaviors that will have maximal impact within a virtual team. Leader-member exchange theory shows that the effective leader has a quality relationship with each member of the team. In research on virtual teams, leader member exchange is related to the amount of resources that a leader allocates to the team rather than having a direct impact on team and individual performance (Goh & Wasko, 2012).

The more often communication takes place, the better

It does appear that the relationship between the leader and the team member can be strengthened significantly by communication frequency (Gajendran & Joshi, 2012). Communication frequency becomes even more important when geographic location and time zones of team members is more varied (Gajendran & Joshi, 2012). Consequently, it is important for leaders of virtual teams to communicate frequently with the members in the team. There is no research on how frequently to conduct virtual meetings, but it is important to have a plan that is amenable for all team members.

Transformational leadership has a positive effect on virtual teams if practiced strongly and consistently

Over the last twenty years, there has been considerable research showing the effectiveness of transformational leadership on individual, team, and organizational performance. However, the findings of the effects of transformational leadership in virtual teams has received inconsistent support (Schmidt, 2014). It seems that transformational leadership has less of an impact on team performance when the teams are virtual (Hoch & Kozlowski, 2012).

However, there is also research suggesting that transformational leadership is more effective in a virtual environment than a face-to-face setting (Purvanova & Bono, 2009). It seems that communication frequency helps explain these conflicting results (Schmidt, 2014). What seems to matter is the actual amount of transformational leadership behavior enacted by the leader as opposed to perceived transformational leadership (Schmidt, 2014).

Virtual leaders can also increase their level of charisma within groups through telling personal stories and encouraging team members to perform well. Personal stories can be used to better connect team members and to build a climate of trust and social connection (Saphiere, 1996). Establishing strong personal relationships is a way to make virtual teams more effective (Hart & McLeod, 2003).

Team cohesion, trust, and psychological safety are crucial foundations

As a leader, it is not an easy task to foster team cohesion in a team that is geographically dispersed. However, research has continuously found that team cohesiveness and high team performance are intimately linked. Therefore, leaders in virtual teams must be aware that despite leadership playing a crucial role in a virtual team's success, the cohesiveness and quality of the team itself is at least as important as all other efforts.

Similarly to organizations, virtual teams work best if team members trust each other, share the same vision, feel safe around each other, and work well together. However, these things will not emerge out of the blue. Rather, there are some cornerstones that should be in place to ensure the team is set up for success. These include a cohesive environment, well-understood and shared goals, and strong inter-team social support. 

Shared leadership is a tool to help foster team cohesiveness

There is a series of frameworks that can have a positive impact on team cohesion and can help tie together the above-mentioned cornerstones: one of these frameworks is shared leadership. Introducing components of shared leadership in decision-making was shown to increase team member satisfaction and therefore heighten the sense of individual autonomy. This, in turn, has a positive impact on trust within the team (Lionel & Sangseok, 2018). 

Shared leadership means that tasked are shared through a team environment. According to Carson (2007), shared leadership consists of three components: 

• a shared purpose,
• social support, and
• voice.

However, shared leadership will likely not work if the team does not have a solid grounding on which to implement such an approach. This is a challenge to achieve in the virtual environment, but it is not impossible. Simple factors like having fun together, speaking openly about ideas and visions, and listening without judging can help build such a foundation. Also outside interventions can help. 

Emerging technologies enable virtual teams to think ahead

Technology is advancing on a daily basis and is a powerful incentive to create and sustain strong virtual teams. Online social media and internet-based applications allow users to create and share a variety of content among fellow users (Kaplan & Haenlein, 2010). For example, Skype, Zoom or other platforms are often free and can connect employees who work at a distance and to increase the social connections of virtual team members. These technologies also make it easier for leaders to connect with virtual team members and to increase their presence within the teams.

In conclusion, the workplace is rapidly changing due to technological advances and differences in ways of working. Organizations are now employing virtual teams to produce quality work. It is important that leaders prepare for the workforce of the future to be successful through utilization of effective technologies.