Physical vs Virtual Organizations: 4 Key Differences Every Modern Business Manager Needs to Know: How remote and hybrid companies must adapt operating systems for the future of work
Written by: Laurel Farrer
It’s easy to figure out how a work from home job is different from an on-site job. From your commute to your clothes, being a virtual worker can seem vastly different from being an office worker. But is the job itself any different? What about the business? Do remote and hybrid companies inherently operate differently from traditional organizations?
The short answer is: yes. Successfully enabling workplace flexibility requires a much more complex change management system than just moving a computer to a new desk. When a team isn’t located in close proximity to each other, many of the elements of work can feel foreign — communication, supervision, recognition, even motivation. All of which need to be updated and adapted. Such a vast to-do list can feel daunting for business leaders. But luckily, there is a common thread; a single strategy that encompasses all of the variables of sustainable remote work. This primary difference between on-site and virtual-first businesses is how work is managed.
Since the industrial revolution, business has relied on managers to lead, supervise, and motivate teams using physical resources (equipment, tools, processes, messages, etc.). Historically, those resources were centrally located; so, the workforces needed to congregate around them in order to produce work. However, over the past half-century, those resources for work slowly started evolving from physical versions to virtual. In our generation, many professionals are producing digital results, but leaders are still trying to manage them with methods that were originally designed with the assumption that their work would be physical. Therefore, office-based management methods are incompatible with — or even detrimental to — the nuances of virtual work.
This is exactly why many business leaders believe that remote work isn’t successful — because how they’re managing work hasn’t been updated for virtual ways of working. Certain processes require certain strategies. If I tried to eat soup with a sieve, I would likely feel unsuccessful too. But when equipped correctly, I’ll be able to quickly and easily enjoy my meal. Virtual operations aren’t any different — when a distributed team uses the right tools and strategies, they’ll unlock the efficiency and effectiveness that may have been eluding them.
To maintain business continuity and optimize the performance of a hybrid or distributed staff, it is the responsibility of any virtual business manager to learn how to support and lead their teams in this new environment. The four new types of management strategies that they’ll need to develop are: knowledge management, project management, self-management, and performance management.
Knowledge Management
Have you noticed that iconic remote-first companies like GitLab, Atlassian, Buffer, and Doist seem to talk about their “handbook” a LOT? That’s because knowledge management is crucial in virtual operations to ensure that information and resources are accessible to all workers — no matter where or when they may be working. Unlike office teams that rely on knowledge transfer between people and departments, virtual teams depend on knowledge retrieval via digitized databases and operational documentation.
Locking resources in physical offices creates accessibility imbalances (especially in hybrid teams), potentially hindering productivity for remote employees. By maintaining a handbook or wiki as a “source of truth” for all employees, company leadership encourages independent problem-solving, standardizes operational processes (and outputs), and reduces repetitive work for managers.
Documentation of a company’s organization intelligence is the first step to reducing dependency on a physical location, and enables the self-managed autonomy that every modern professional deserves.
Project Management
Sometimes, it seems like half of the responsibility of an office job is just to be there — available at a moment’s notice in case something goes wrong or someone needs to contact you. To reduce dependence on shared time and location, distributed teams have to take a more proactive approach.
Systemized workflows are vital for remote teams to ensure consistent productivity and efficiency. By establishing clear project management plans in advance of a team working to achieve a goal, teams can anticipate and address potential issues before they happen instead of after.
On both a macro and micro level, this proactive approach to problem-solving helps remote teams stay aligned and maintain high performance despite physical distances. For example, meetings with pre-planned agendas are far more efficient and effective, providing clear objectives and expectations compared to those with no predetermined focus. Most business people know this fact, but successful virtual companies are uniquely vehement in enforcing rules about canceling any meeting that doesn’t have an agenda.
Performance Management
In an office-based, activity-based performance measurement system, an employee might be judged on their productivity by their presence at their desk from 9 to 5, attending meetings, and appearing busy. However, this approach doesn’t necessarily reflect their actual contributions to the team’s goals. For example, an employee might spend hours at their desk but still struggle to meet project deadlines or produce high-quality work.
Conversely, in a results-based measurement system, an employee’s performance is evaluated based on their ability to deliver specific outcomes, such as completing projects on time, achieving sales targets, supporting team members through a sprint, making a valuable proposal, or improving customer satisfaction. To help workers self-manage these results (see previous section), managers and workers can collaborate to design clear objectives, key results, rubrics and metrics to ensure each role is built and evaluated fairly.
This approach provides a clearer picture of their effectiveness and commitment, regardless of how many hours they spend at their desk. By focusing on tangible results, managers can better identify high performers who consistently deliver value, even if they do so on a flexible schedule or from a remote location.
Self-Management
By far, the most common concern of managers that are new to remote work is whether or not their team members are staying productive without supervision. It’s a problem that stems from our belief that workers are dependent on physical management methods (like “drive bys” and open office designs) to produce results, instead of being capable of holding themselves accountable.
Virtual work still needs a manager; so if its not going to be an on-site manager, then it needs to be managed by the worker themselves. Therefore, self-management is essential in remote work environments, where employees must independently navigate their tasks and responsibilities.
To optimize autonomous ways of working, managers need to replace their supervision habits with support strategies — embracing servant leadership to empower their teams. When earned with skills like consistency and communication, trust is the foundation of self-managed productivity. To start building this level of psychological safety, managers can prove their confidence in their teams by encouraging independent decision making, facilitating constructive group feedback, providing generous recognition, and relying heavily on documentation and workflows (see above) to prevent blocks and delays.
Remember, transitioning from physical to virtual organizations demands more than just relocating employees; it requires a fundamental shift in how work is managed. By focusing on knowledge management, project management, self-management, and performance management, business leaders can effectively support and lead their distributed teams.
Embracing these new strategies ensures that virtual work environments are not only functional but also thrive, unlocking the full potential of remote work. The future of business lies in adapting to these changes and fostering a culture that values flexibility, support, and innovation.