In a team-based organizational structure, company executives group employees performing similar job functions into lateral teams. Team members support each other, make their own decisions and rely on their own expertise to make changes in processes, policies and procedures. In theory, this approach requires minimal overhead and less management for experienced personnel. In practice, this strategy presents many challenges for inexperienced teams. While this model makes it possible for teams to respond quickly to customer demands without layers of management approval, without sufficient expertise, teams falter.
Increased Need for Effective Leadership
Because team-based organizational structures lack management structure by design, team members need to recognize the need for good communication, effective project management and efficient resource allocation. These teams need competent, highly trained team leaders. Additionally, teams need policies and procedures that define how work gets done. This helps balance the lack of traditional hierarchical structure with the ability to respond quickly to team needs without consulting layers of ineffective management.
Less Contact With Other Functions
Team-based organizations group employees based on function. Self-contained teams stay focus on their tasks. This limits contact and exposure to other functions. Individual teams may develop ideas and products in isolation without realizing the impact on other company employees, customers, products or services. This leads to less organizational collaboration and sharing best practices, which could result in higher costs, increased waste and decreased customer satisfaction. For example, teams may not be able to negotiate the best deals with suppliers if they work separately.
More Change and Instability
Because a team-based organization enables teams to make decisions quickly, teams undergo constant change. This instability may result in confusion and chaos if team leadership does not step in to communicate effectively with team members, sponsors and stakeholders. Decisions made by team consensus tend to take longer to reach. Teams may experience increased conflict, tension and stress as a result.
Less Organizational Consistency
Disadvantages associated with team-based organizational structure result in less organizational consistency. Each team functions independently without ensuring alignment with each other. While teams can act in an entrepreneurial spirit that fosters innovation and creativity, the lack of bureaucracy does not ensure a more-cooperative workforce. Lateral team-based organizations need to establish liaison roles, task forces and other project management structures to increase the company’s ability to process information in an interdependent, complex environment. Without these mechanisms, miscommunication, stress, absenteeism and poor performance tend to result.
Team-based organizations emphasize the value and importance of all employees regardless of their specific roles or the simplicity and complexity of the tasks that they perform. In a team-based business, work processes are handled by groups of employees that are assigned specific projects with timelines established to achieve goals. In this organizational structure, employees have more autonomy and more authority to make decisions, without needing managerial approval.
Team-Based Organization Elements
In a team-based organization, employees work in specific groups that are tasked with a project. With a few exceptions, these teams don’t have supervisors, which means that employees must establish trust with each other to achieve project goals. This also means that employees share responsibility for managing every task, and are given the authority to make decisions that are typically made by managers and supervisors in more traditionally structured businesses.
In most team-based organizations, managers establish goals, milestones, and performance standards, but allow team members to determine how to meet these requirements.
Advantage: Better Communication
The primary advantage of a team-based organization is that because there are usually no managers or only one manager supervising multiple teams, communication between employees is much more free-flowing and effective. Team-based organizations lack the multiple layers that employees would otherwise have to go through before making a suggestion or receiving the go-ahead to implement a new idea.
Advantage: Teams Resolve Problems Quicker
This improved communication also means that companies can resolve work issues quicker because employees can share information at a faster rate, which speeds up responsiveness.
Advantage: Flexible and Empowered Workforce
Another advantage is that team-based organizations are more flexible than organizations that are traditionally structured. As a business owner, you can shift employees from one team to another to maximize their skills and talent and to also keep them motivated with new challenges. Employees that work in teams are also more likely to understand their specific roles in the organization and are also more likely to feel validated and empowered.
Disadvantage: Potential for Conflict
A major disadvantage of a team-based organization is that personality conflicts within the team can negatively impact efficiency and group harmony. Although managers have the option of moving one employee out of the team to preserve unity, the disruptive employee would have to fit well with another team, which can be a challenge.
Disadvantage: Some People are not Team Players
Another disadvantage is that not all employees are suited to teamwork. Some employees work more efficiently on their own, and being part of a group may not maximize their skill set.
Disadvantage: Under-performing Employees Hide Behind the Team
Another drawback is that some employees in a team setting may rely on other employees to make up for their own lack of effort. In other words, some employees may coast on the efforts of other employees, which may require managers to implement individual performance milestones to ensure that each member of the team is putting forth the same effort.