Via WebWorkerDaily, here’s 11 tips for managing virtual workersUpdate, 6/2009: this link is dead, but here’s the wayback machine’s archived version.
I have been working virtually on and off for over three years (mostly as a contractor). I think that most of Scott’s comments are spot on, except two of them.

#1 (It’s not cheaper) says that you’ll need hardward like webcams and wireless keyboards. I’ve done prefectly well with a laptop and cellphone. In fact, one of the great things about working virtually is that everyone can choose their equipment to suit their needs.

#4 (Metrics, Metrics, Metrics) is one I’d amend, rather than totally discount. I think what Scott is really saying is that you need some means of verifying that work is getting done. And if it is not, you want to know sooner rather than later, so the more incremental feedback you can get, the better. In software, this can be accomplished by metrics, but frequent releases can also serve the same purpose.

That said, all of his post is worth reading.

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