There’s more urgency than ever before for organizations to transition from hierarchical, siloed structures to cross-functional teams. With markets continually changing, emerging technologies transforming the workplace, and customer expectations on the rise, these teams can give your company a competitive edge by boosting agility, innovation, and productivity.

In a recent global survey of business leaders, 65 per cent said they viewed the shift to team-centric organizational models as important or very important, yet only seven per cent felt “very ready” to execute this move. The traditional tree structure has deep roots in most companies, so it’s no surprise that efforts to break it down can be frustrating or downright disastrous.

But there are proven, practical ways to set up cross-functional teams for success. Before we get to those strategies, though, let’s define cross-functional teams, provide some examples, and look at the challenges and benefits of this collaborative model.

What is a cross-functional team?

Cross-functional teams are a group of people with different skill sets who come together to accomplish a task or project. These teams draw members from various departments and levels of the organization and may include external stakeholders.

Many cross-functional teams are temporary, working towards a common goal and then disbanding. In some companies, they’re a permanent fixture. Research shows that almost a third of companies do most or all their work in teams.

There are countless cross-functional team examples that fall within two broad categories:

• Temporary: These are task-based and exist only for the duration of a project. Examples include: change management projects, task forces, or event planning committees.
• Permanent: These are long-standing teams that are embedded in the organizational structure and are often more successful than temporary ones. Examples include: product development teams or customer service teams.

Benefits of cross-functional teams

There are measurable benefits when organizations shift to a team-based organizational structure, with 53 per cent of respondents in a recent study reporting significant improvements in performance, and 21 percent reporting a minimal improvement. Three factors drive these gains:

1. Increased productivity

By eliminating the barriers created by functional divisions, cross-functional groups accelerate decision-making and production cycle times. There’s no telephone effect, where messages get diluted or confused as they pass between departments. Instead, key information flows freely and directly between team members, leading to better integration, coordination, and problem-solving.

2. Greater creativity

Cross-functional teams are diverse by design, uniting people with different experience, backgrounds, perspectives, and capabilities. And research shows that diverse teams are smarter. Employees have to challenge their ingrained ways of thinking and doing things when they’re thrown together with people who think and do things differently. The result: outside-the-box ideas, innovative approaches, and new solutions.

3. Stronger alignment

It can be hard for employees to see their importance in the overall organization if they only contribute to their own department. In a cross-functional team, people play a key role in reaching a larger, company-wide goal. This leads to a renewed sense of belonging, which increases morale.

Challenges of cross-functional teams

There’s no arguing with these benefits, but they only come from highly effective cross-functional teams. One study found nearly 75 per cent of these groups are dysfunctional. Why? Here are some common problems that crop up when employees work cross functionally:

Competing loyalties: Team members may put their home department’s priorities over the priorities of the team. This leads to distraction, knowledge hoarding, and less than 100 per cent effort.

Power plays: Most cross-team collaboration involves people from different ranks. Members with higher ranking within the larger organization may try to dominate, even if lower-ranking members hold more authority on the team.

Insufficient support: Even the best team will underperform if they don’t have support from the top, including the right tools for communication and collaboration. A recent digital workplace report found 55 per cent of employees who work remotely have been excluded from meetings or brainstorming sessions.

Cultural obstacles: A culture that rewards individual achievement and fosters competition between departments inhibits open, efficient collaboration.

Top 3 characteristics of successful cross-functional teams

Building cross-functional teams that can overcome these challenges requires planning, support, and investment. Let’s look at the traits of successful cross-functional teams and consider how your organization can cultivate these characteristics:

1. Collaborative

Strong collaboration is vital to team performance. In fact, research demonstrates that collaboration is more important to innovation than leadership and access to financial resources. To ensure team members are willing and able to work together, consider these strategies:

• Promote a culture of collaboration: From capitalizing on team members’ strengths to recognizing team achievements, there are simple ways to create a thriving teamwork culture. Research also confirms that cross-functional teams with executive champions have a 76 percent success rate, so leadership buy-in is crucial.
• Incentivize collaboration: Include team performance in your reward and compensation structure.

2. Connected

Whether cross-functional team members work on-site or remotely, they need easy ways to communicate:

• Provide dedicated spaces: Give teams dedicated physical and digital spaces (project rooms or team rooms) to share knowledge and ideas.
• Encourage social connections: Provide opportunities for team members to get to know each other at gatherings and in a digital social hub. Deliver conflict resolution training before problems happen.

3. Organized

The inherent diversity and complexity of cross-functional groups demands a systematic approach:

• Assign a leader: Despite the flatter structure of these teams, there should be one person in charge of delegating tasks and ensuring accountability.
• Provide the right tools: Cross-functional teams need efficient ways to keep track of meetings, files, and tasks. Digital collaboration tools keep everyone on the same page.

Create effective cross-functional teams with a central digital destination

We’ve explored the benefits, challenges, and characteristics of cross-functional teams. In theory, bringing a wide range of perspectives and expertise together to solve a particular problem is a smart way of working. In practice, however, it’s critical to have the tools to make it happen. So, how are you enabling your cross-functional teams to get more work done?

Learn more about how a digital destination for collaboration can optimize cross-functional teams in your organization.