Here is an excerpt from an article written by Keith Ferrazzi for Harvard Business Review and the HBR Blog Network. To read the complete article, check out the wealth of free resources, obtain subscription information, and receive HBR email alerts, please click here.

Illo Credit: Anna Parini

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“Virtual” teams—ones made up of people in different physical locations—are on the rise. As companies expand geographically and as telecommuting becomes more common, work groups often span far-flung offices, shared workspaces, private homes, and hotel rooms. When my firm, Ferrazzi Greenlight, recently surveyed 1,700 knowledge workers, 79% reported working always or frequently in dispersed teams. Armed with laptops, Wi-Fi, and mobile phones, most professionals can do their jobs from anywhere.

The appeal of forming virtual teams is clear. Employees can manage their work and personal lives more flexibly, and they have the opportunity to interact with colleagues around the world. Companies can use the best and lowest-cost global talent and significantly reduce their real estate costs.

But virtual teams are hard to get right. In their seminal 2001 study of 70 such groups, professors Vijay Govindarajan and Anil Gupta found that 82% fell short of their goals and 33% rated themselves as largely unsuccessful. A 2005 Deloitte study of IT projects outsourced to virtual work groups found that 66% failed to satisfy the clients’ requirements. And in our research, we’ve discovered that most people consider virtual communication less productive than face-to-face interaction, and nearly half admit to feeling confused and overwhelmed by collaboration technology.

There is good news, however. A 2009 study of 80 global software teams by authors from BCG and WHU-Otto Beisheim School of Management indicates that well-managed dispersed teams can actually outperform those that share office space. Similarly, an Aon Consulting report noted that using virtual teams can improve employee productivity; some organizations have seen gains of up to 43%.

So how do you create and lead an effective virtual team? There’s a lot of advice out there, but through our research and our experience helping organizations navigate collaboration challenges, we’ve concluded that there are four must-haves: the right team, the right leadership, the right touchpoints, and the right technology. By following simple high-return practices for each, managers can maximize the productivity of teams they must lead virtually.

The Right Team: Team composition should be your starting point. You won’t get anywhere without hiring (or developing) people suited to virtual teamwork, putting them into groups of the right size, and dividing the labor appropriately.

People: We’ve found that successful virtual team players all have a few things in common: good communication skills, high emotional intelligence, an ability to work independently, and the resilience to recover from the snafus that inevitably arise. Awareness of and sensitivity to other cultures is also important in global groups. When building a team, leaders should conduct behavioral interviews and personality tests like the Myers-Briggs to screen for all those qualities. If you inherit a team, use the same tools to take stock of your people and assess their weaknesses; then train them in the skills they’re lacking, encourage them to coach one another, and consider reassignment for those who don’t make progress.

Size: Teams have been getting larger and larger, sometimes even exceeding 100 people for complex projects, according to one study. But our work with companies from large multinationals to tiny start-ups has taught us that the most effective virtual teams are small ones—fewer than 10 people. OnPoint Consulting’s research supports this: Of the virtual teams the firm studied, the worst performers had 13 members or more. “Social loafing” is one cause. Research shows that team members reduce effort when they feel less responsible for output. The effect kicks in when teams exceed four or five members. As groups grow, another challenge is ensuring inclusive communication. The late Harvard psychology professor Richard Hackman noted that it takes only 10 conversations for every person on a team of five to touch base with everyone else, but that number rises to 78 for a team of 13. Thus to optimize your group’s performance, don’t assemble too many players.

Roles: When projects require the efforts of multiple people from various departments, we devise appropriate subteams. Our approach is similar to the X-team strategy advocated by MIT professor Deborah Ancona, who defines three tiers of team members: core, operational, and outer. The core consists of executives responsible for strategy. The operational group leads and makes decisions about day-to-day work but doesn’t tackle the larger issues handled by the core. And the outer network consists of temporary or part-time members who are brought in for a particular stage of the project because of their specialized expertise.

Ferrazzi Greenlight worked with a large multinational manufacturing company to help a dispersed team make better cross-division decisions, particularly when product output from one area fed others. The group was composed of more than 30 members—a mix of HQ, operational, and divisional leaders, some of whom reported to others. While many had knowledge vital to the work at hand, a fair number were included on an honorary basis. By the time we were asked to help, teammates openly acknowledged that they were in disarray and unable to achieve their financial goals. We brought everyone together for a face-to-face summit and then broke the group into smaller constituencies to brainstorm short-term wins. Those subteams continued to meet virtually after all parties were back in their respective offices. One group, made up of five divisional GMs, latched onto the goal of greater cross-selling and had a near-immediate success story: As a small, narrowly focused team, they were able to recognize that a plentiful stabilization agent used in ice cream could be repurposed to replace a scarce agent needed by other customers, including makers of hairstyling products and fracking fluids.

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Here is a direct link to the complete article.

Keith Ferrazzi is the CEO of Ferrazzi Greenlight, a research-based consulting and training company, and the author of Who’s Got Your Back: The Breakthrough Program to Build Deep, Trusting Relationships That Create Success–and Won’t Let You Fail (Broadway Books, 2009).