The Impact of Cross-Functional Teams on Performance and Productivity

The Impact of Cross-Functional Teams on Performance and Productivity

Florida Institute of Technology February 24, 2013

James L. Johnson

Abstract

Cross-functional teams can have a significant impact on performance and product development. These teams are usually made up of individuals who can break down departmental silos and help teams focus on revenue generating ideas. Cross functional teams foster and environment that improves workplace cohesion and fosters an environment in which innovative, high-quality products can be developed. They also improve overall organizational functionality by allowing employees to connect through their superordinate identities.

Research Question and Study Objective

We have entered an era in which successful companies are those that are more open and social workplaces that lean on all of their employees to create innovative environments in which diversity and creative ideas can take hold. Still, many organizations struggle to answer the question of "what impact can cross-function teams have on performance and product development?" A look into previous research on cross-functional teams, as well as their impact on productivity and performance was necessary to answer to this question. The objective is to determine the value cross- functional teams have as they relate to focus, workplace cohesion, product development and quality, and their impact on the organization as a whole.

Discussion and Literature Analysis

Focus on Specific Tasks. Most of the studies recognized that too many companies today are designed around command and control type structures. They form a top- down, vertical structures consisting of teams and departments that branch off and working in silos to complete tasks, produce products, etc. "Staff sections are designed to support both the commander and the unit. They help the commander understand the current situation, prepare for future actions, and command, control, and communicate with subordinate units." (Hurley, 2005). However, in an increasingly more social and open world, organizations can no longer function effectively as homogeneous silos. They need to find ways in which "units work with different organizations to perform a wide variety of unique missions and tasks." (Hurley, 2005).

Geoffrey Bellman supports this approach by stating that "we need to break out of those glass silos." (1995). Increasingly, organizations are finding ways to trim themselves down into leaner and flatter organizations that are more task oriented. Instead of the vertical, oversized command and control structure, there is a shift to "to a more horizontal or lateral one." (Bellman, 1995). Instead of looking above for solutions, employees can look to the side and form teams that introduce new ideas and allow them to focus better on completing tasks that will benefit the organization as a whole. In addition to being able to help improve the focus on specific tasks, cross-functional teams also add to the organization's overall social cohesion.

Social Cohesion. Several of the studies reviewed concluded that social cohesiveness is determined by the strength of the interpersonal ties between each of the group's members. Social cohesion is a critical element of sustaining cross-functional teams. "Interpersonal, social ties lubricate exchanges within a team and thereby foster integration." (Nakata et al, 2010).

Cross-functional teams have proven to be highly effective when it comes to generating and implementing new ideas. "The real value comes from the range of solutions that a group can generate as opposed to those offered by one individual in isolation." (Dyer, 2004). Since cross-functional "teams are made up of people from different departments in an organization, they typically perform different job functions and bring a variety of skills and experience to their teams." (Parker, 1994).

However, organizations should not limit team membership to only employees from different professional disciplines; they can also be comprised of members from different geographical locations and specialties. As Jann Dyer points out, "Cross-functional teams could also be developed for the purpose of providing a better service to a specific type of client." (2004).

With that said, it's important leadership be aware that "functional diversity also had an indirect effect through job stress on group cohesiveness." (Keller, 2001). This is why it's important for an organization's leadership to examine the possible "implications for the development of conceptual models of cross-functional groups and their effective management. (Keller, 2001).

If leadership can can take into account the implications and nuances of creating cross- functional teams, and plan accordingly, then the organization will be able to see the value of the ideas generated from these diverse groups, which can lead to improved product development and quality.

Product Development and Quality. Cheryl Nakata and Subin Im take the concept of social cohesion