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10Teams and Organizations
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Learning Outcomes After reading this chapter, you should be able to:
• Outline what significance organizational context has on teams.
• Define team-based organizing (TBO) and explain its five principles.
• Provide a practical road map for transitioning to TBO.
• Explain the psychology of organizational change and outline how learning and innovation can help overcome resistance to change.
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Introduction
Pretest
1. Successful teams are complete units, working without reference to their organizational context.
2. Team members in TBO organizations are interdependent at both the individual and team level.
3. Most people consistently choose to maintain current conditions or circumstances even when they are inferior to other alternatives
4. Clarifying whether—and how—a shift to TBO will support organizational strategies and goals is the essential first step in restructuring an organization for TBO.
5. Organizational employees tend to resist organizational change, especially when it is imposed on them.
Answers can be found at the end of the chapter.
Introduction The CEO and senior management of a large manufacturing company are concerned about worsening safety issues in their plants. They want to implement a new safety philosophy and are prepared to accept that this change might require their organization to be significantly restructured. After much discussion, the CEO and senior management spend 18 months researching the matter and consulting with experts to determine the feasibility of using TBO to improve safety. The senior team believes the shift to TBO will not only improve safety but also increase productivity, flexibility, and performance quality—but only if the organization can successfully restructure itself to support a highly collaborative environment.
The CEO and senior management know that restructuring will require employees at every level to be more interactive, interdependent, and involved in organizational processes, change, and learning. To attain such a high level of participation, members of senior management begin to question how they can align the organization to support teams. They know they will have to consider the team as the fundamental work unit, as opposed to the current work unit, which is the individual. They also know this might be quite confusing, as both teams and individuals will still be used in various capacities throughout the organization.
It is also apparent to the CEO and senior management that they will need to set an example for the organization and begin to function as a team themselves. They hope that their managers and directors will learn from their example and be more willing to embrace changes to their own roles. They will still be managers, but their role will now involve more coaching and training their employees to function as teams, rather than the more traditional managerial role of directing work and making decisions. Managers will now be encouraged to collaborate with their team members and share decision-making responsibilities.
To further support the restructuring and ensure that employees have everything they need to successfully work in teams, the CEO and senior management have been working
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Introduction
closely with human resources (HR) and the IT department. Human resources will be responsible for preparing training guides and making presentations to employees about how their roles are changing. In addition, HR has worked to create a reward system to support the new team structure that will provide both team and individual bonuses for meeting performance goals. The IT department, meanwhile, will work with teams to provide customized technology support. By involving other departments, senior management is confident they are developing the infrastructure to support TBO from the ground up.
It is possible that not all employees will welcome this change, and senior management is aware of this fact. Some employees may leave the company, while others who choose to stay might resist it. Such changes have the potential to disrupt employee morale and satisfaction, and even individuals’ self-esteem. To mitigate these negative potentials, senior management encourages employees to think of the change as a learning process for which management will provide the necessary support.
With nearly all organizations today utilizing some form of teamwork, teams enjoy almost universal popularity within the organizational environment (Kozlowski & Bell, 2003; Morgeson et al., 2010). While research supports the idea that teams are central to organizational success (Martin & Bal, 2006), many organizations fail to use teams to their full potential—mainly because they simply do not know how to effectively integrate teams into their organization (Dumaine, 1994). The treatment of teams as separate entities, rather than pieces of the organizational whole, ironically results in teams that do not work well together.
Organizations are more than just a framework from which business processes and products emerge. They are complex, multidimensional systems composed of interrelated and interdependent processes and subsystems, represented by organizational culture and structure, human and technological resources, and business processes. Thoughtlessly adding teams to that mix is like throwing a monkey wrench into a complex machine. With the right strategy and coordination, the wrench could act as a tool for better performance, but simply tossed in the middle it just becomes a frustrating obstruction.
In this chapter, we examine how organizational leaders can harness the power of teams by revamping the organization as a whole. Team-based organizations are designed to function with teams as their basic work unit. For an organization to transition to a team-based organization, leadership must radically change the way it works. This involves rethinking the organization’s strategy, work processes, hierarchy, and support systems, such as HR and IT. This chapter outlines the significance of team-based organizing and the steps involved in structuring or restructuring an organization to support a team-centric work model. We also discuss how to overcome the resistance to change that inevitably arises during major organizational transformations.
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Section 10.1Changing the Way We Work: Team-Based Organizations
10.1 Changing the Way We Work: Team-Based Organizations The growing complexity of the modern business environment over the past few decades has ushered in two major organizational trends: (a) an absolute need for flexibility and speed at both the individual and organizational level and (b) increasing dependence on teams and teamwork to satisfy those needs (Harris & Beyerlein, 2003). Teams are powerful tools for promoting and supporting employee and organizational productivity, flexibility, and performance quality, but scholars and practitioners alike recognize that their effectiveness is profoundly influenced by the organizational structure and culture within which they function. However, business literature largely misses this aspect of team effectiveness. There is a wealth of theories about how to organize and manage teams internally for success, but far less attention has been paid to the organization as a whole.
When introduced in isolation, without consideration for the organizational context, teams are more likely to fail—primarily because leadership does not understand how to make them work cooperatively within the organization (Dumaine, 1994). Organizations that are not fully prepared to integrate and support teams tend to isolate and weaken them to the point of fail- ure or dissolution. A team may function successfully within the boundaries of its own mem- bership, but if the surrounding organizational culture contradicts the values and principles of teamwork, the team is essentially functioning in a hostile environment (Harris & Beyerlein, 2003). In such cases, organizations may set teams in place only to see them fail to thrive– undermined by the lack of internal acceptance and support (Mohrman et al., 1995).
Imagine for instance, a group of employees working under a department head who believes in teamwork. She regularly includes her employees in key decisions that affect the life of the department and organizes their work according the principles of teamwork. The organization, however, is quite hierarchical and has a culture of top-down decision making. Despite the department head’s best efforts, some of her team’s decisions will ultimately be negated by top-down decisions, even if the team’s decisions are of superior quality and made more democratically. The team’s morale will go down, and teamwork will eventually die off. The department head might even be viewed as a deviant by her own hierarchy—her efforts at building teamwork undermined, unappreciated, even censured.
Scenarios like this occur all too often. If teamwork is not supported throughout the organiza- tion, then it is undermined from within. Team-based organizing works to create the support that teams need to succeed, looking beyond internal team dynamics to the significance of their organizational context.
What Is Team-Based Organizing? Team-based organizations describe a new millennium organizational model in which teams are the core unit for performance within an organizational context optimized to support them (Harris & Beyerlein, 2003). The shift to such a model involves a continuous process of organizational improvement and reinvention as a team-based organization, referred to as team-based organizing (TBO). Today TBO centers on the concept of formally optimizing collaborative capacities within a company by considering teams and teamwork as parts of a systemic whole.
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Strategy
Structure
ProcessesRewards
People
Organizational Culture
Direction: Includes current and future organizational goals, products/services, resource/market development, and plans for maintaining competitiveness.
Interdependence: Includes organizational hierarchy, distribution of power, networks and interrelations between organizational areas, departments, and work units, and the procedural roles and norms which shape them.
Functioning: includes business processes/resource allocation, product development, methods of working, and work flow within the organization.
Motivation: Includes compensation, incentives, leadership styles, and practices that promote employee identification and goal alignment within the organization.
Human Resources: Includes employee hiring, assimilation, development, and involvement practices, skills management, and formal/informal support systems for employee performance and well-being.
Section 10.1Changing the Way We Work: Team-Based Organizations
The transition to TBO introduces changes across all areas of an organization—at the individ- ual, group, and organizational level (Gard, Lindstrom, & Daliner, 2003). Although the change often begins with management-led episodic shifts in structure and process, proper imple- mentation of TBO requires a continuous learning and growth process that drives comprehen- sive and fundamental changes in the principles by which organizational structure, process, and systems are devised (Weick & Quinn, 1999). Reorganizing a business into a team-based organization requires employees across all levels and functions to be more interactive, inter- dependent, and involved in organizational process, change, learning, and innovation. The transition to TBO will also transform the organizational culture. As the terminology implies, teams are at the center of team-based organizing. Yet teams that are meant to work within a larger organization cannot function effectively if the influence of that organization—and the role that teams play within it—remain unexamined or unacknowledged. Businesses built around TBO concepts continually progress toward an organizational alignment that follows five core principles, which are discussed next.
The Five Principles of TBO Alignment To be successful in any context, organizations must have a certain level of coherence, or organizational alignment, across structural, strategic, and cultural components (Quiros, 2009). This alignment must occur across all areas of the organizational context, acknowledging the relationship between formal and informal organizational elements (Semler, 1997). Figure 10.1, a modern variant of Galbraith’s classic star model (1995), graphically illustrates the interdependence between the major aspects of organizational alignment. You might recognize the similarity between this patterning and that of the decentralized network discussed in Chapter 3. Like the team members within that all-channel communication network, the
Figure 10.1: Variant of Galbraith’s star model of organizational alignment
Alignment under the star model creates coherent relationships between organizational elements.
Strategy
Structure
ProcessesRewards
People
Organizational Culture
Direction: Includes current and future organizational goals, products/services, resource/market development, and plans for maintaining competitiveness.
Interdependence: Includes organizational hierarchy, distribution of power, networks and interrelations between organizational areas, departments, and work units, and the procedural roles and norms which shape them.
Functioning: includes business processes/resource allocation, product development, methods of working, and work flow within the organization.
Motivation: Includes compensation, incentives, leadership styles, and practices that promote employee identification and goal alignment within the organization.
Human Resources: Includes employee hiring, assimilation, development, and involvement practices, skills management, and formal/informal support systems for employee performance and well-being.
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Section 10.1Changing the Way We Work: Team-Based Organizations
elements of organizational strategy, structure, processes, people, and rewards are intercon- nected and influence each other. Changes in organizational goals, products, or services, for example, can affect an organization’s distribution of power, and the interrelations between its departments and work units. Business processes will likewise evolve to fit organizational needs, as will the employee skills, training, and motivation methods required to fulfill those needs. The interaction of all of these elements creates the comprehensive organizational cul- ture within which employees operate.
Alignment means that an organization’s strategy—in other words, its main services or prod- ucts and how it delivers them—matches its organizational structure, processes, rewards sys- tem, culture, and type of employees. For instance, one would expect a technology start-up such as Uber’s car-ride service to be organized very differently than a large car-manufactur- ing company like General Motors. Uber is more likely to have a flat hierarchical structure (that is, few levels of hierarchy) and a flexible, informal, and creative culture that is aligned with the types of employees who work there, who are likely young, hip, creative, and technologically savvy. Furthermore, one would expect Uber’s employees to be rewarded for being creative and working together to take the company off the ground, even if that means doing tasks that are not in their job descriptions. This means incentivizing them through potentially lucrative stock options. General Motors will have a very different alignment that features older, less educated, and less innovative employees; a more formal culture; a more rigid hierarchy; and more emphasis on cutting costs. If Uber tried to adopt the same tall, hierarchical structure as General Motors or hire the same type of employees, it would be out of alignment. Alignment is the foundational component of TBO; it is the means by which organizational context achieves coher- ence with effective teamwork.
To illustrate alignment in the context of TBO, con- sider a company like IDEO, a world-renowned inno- vation consulting firm. IDEO (2016) presents itself as a global design and innovation company that helps others apply design thinking to any situation in virtually any industry. IDEO’s core product is its process of innovation. To support this, IDEO’s lead- ership has developed a very unusual organizational culture, structure, and set of work processes, all of which are in alignment and work synergistically to create an organizational context that systemi- cally supports IDEO’s product and its team-based method of production.
IDEO is organized around teams that practice a particular form of brainstorming dubbed the “deep dive.” Teams are carefully constructed to maximize members’ diversity of experiences and educational background; this promotes a diversity of ideas and perspective that serve innovation. IDEO’s open, tol- erant, nonhierarchical culture is in alignment with the focus on teams as the unit of work, and the pro- cess of brainstorming as the method through which innovation is achieved.
Noah Berger/Bloomberg via Getty Images
IDEO has created an organizational culture that supports teams and innovative brainstorming. Pictured here is a filing cabinet designed to help employees share ideas.
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Section 10.1Changing the Way We Work: Team-Based Organizations
This alignment even carries over to how IDEO reinvents itself. In the 1990s founder Larry Kelley and other leaders at IDEO recognized the need to help their clients not only design new products, but also redesign their own organizational structure, culture, and work processes in order to identify new areas of innovation and new products (Edmondson, 2012). This led to a type of service offering called Phase Zero, which now accounts for 30% of IDEO’s revenues. Such an evolution was made easy by IDEO’s flexible and open culture, structure, and processes, which are all in alignment and rely on teamwork as a core aspect of work.
For organizations to successfully transition to TBO, it is imperative that organizational struc- ture, systems, processes, and practices align with the team concept. TBO experts Harris and Beyerlein (2003) have identified the following five essential TBO alignment principles:
1. The team is the basic work unit for performance and accountability. 2. The leadership of the organization functions as a team. 3. The organization still uses both teams and individuals for different purposes. 4. The organization is designed to support teams and teamwork from the ground up. 5. The organization is dynamic and constantly evolves to support teamwork.
The following sections examine these principles in more detail.
The Team Is the Basic Work Unit for Performance and Accountability Describing the team as the basic unit for performance and accountability is the central principle of TBO and the one that most distinguishes the TBO model from other organizational formats. Businesses structured around TBO are not just organizations that frequently use teams. Rather, teams within TBO organizations perform core organizational functions, encompassing all facets of planning, decision making, and implementation (Mohrman et al., 1995; Mohrman & Mohrman, 1997; Shonk, 1997).
Keep in mind, however, that teamwork for the sake of producing teams is rarely effective in the long term; teams are meant to perform, and TBO organizations must maintain focus on team performance and integration. While the core unit for performance and accountability must be a team, teams should not become the company product.
An experiment conducted at Volvo in 1974 (Sagoe, 1994) provided one of the earliest examples of this principle at work. Testing the effectiveness of teams as a work unit, Volvo replaced its assembly-line model with self-managed teams. Each team was given production and quality quotas, but teams were left to organize themselves as they saw fit with respect to many aspects of their work. Team bonuses were awarded for meeting or exceeding quotas. However, each team was free to redistribute them among their members, also as they saw fit, depending on their individual performance and contribution to the team. Workers were cross-trained to perform each other’s jobs, and they rotated functions on the team. Teams were even afforded a degree of discretion in selecting new entrants and in firing underperformers from their team. In effect, teams became the basic work unit, instead of the individual or the assembly line. The experiment resulted in improved quality on the cars produced, a slight improvement in productivity, and improvement in employees’ job satisfaction (Cohen & Ledford, 1994). This and similar experiments marked the advent of teams in the workplace, but they still had a long, hard climb to get from factory floor to executive boardroom.
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Section 10.1Changing the Way We Work: Team-Based Organizations
The Leadership of the Organization Functions as a Team Teams entered the business world as industrial work units. Over the years, they have worked their way up the corporate ladder, finding relevance at all levels. However, traditional organizational hierarchies still tend to view teams as work units, managed at some point up the chain by an individual or group of individuals. Advocates of TBO believe that incorporating teams and teamwork into all levels of an organization is key to modeling and reinforcing the team concept (Mohrman et al., 1995). Organizational failure to effectively incorporate teams and teamwork is often related to having a top management group that pushes for teamwork yet is unable to effectively model it (Harris & Beyerlein, 2003; Katzenbach & Smith, 1993).
When the leadership of the organization functions as a team, it promotes and supports teamwork by modeling it from the top down. Likewise, the middle management of an organization often reflects the dynamics and conditions found at the top (Fry, Rubin, & Plovnick, 1981). When top management fails to work as a team, so does middle management. This mirror effect further illustrates the importance of incorporating teamwork values and behavior into leadership and management for effective teaming at all levels. Experiencing and modeling the management process as a team also allows top management to comprehensively understand the use, value, and challenges of teamwork. This in turn helps inform executive decisions and directs the development and adjustment of organizational support systems. Top management groups that learn to function effectively as a team support TBO and typically enjoy increased market success (Mathews, 1996; Smolek, Hoffman, and Moran, 1999).
Pixar, the award-winning animation studio that revolutionized animated features with box office successes such as Toy Story, Finding Nemo, and Inside Out, exemplifies TBO. Animation is an extremely complex and creative process that requires collective work. Teams work at every level of the organization, beginning at the top. For two decades Pixar was led by Ed Cat- mull, Steve Jobs, and John Lasseter (Catmull, 2014). Although it is highly unusual for organiza- tions to be headed by more than one leader, the three executives worked together as a team to make key strategic decisions.
Another example of team leadership at Pixar is the “braintrust,” which meets every few months to assess films in production. The braintrust model evolved naturally when a small group of editors and writers involved in making Toy Story met to discuss and resolve story and production issues. It was so useful and conducive to creative solutions that it became institutionalized at Pixar as a core mechanism by which key decisions are made and problems are solved. The braintrust is a great example of how team leadership near the top of the orga- nization supports team development at lower levels of the organization.
In organizations that employ TBO, teams tend to assume many of the roles traditionally held by individuals. How then does the individual fit into a team-based organization? It turns out, there is room for both.
The Organization Still Uses Both Teams and Individuals for Different Purposes Given that teams are the core units of performance and accountability, one misperception that commonly accompanies the TBO concept is that everyone must be part of a team at all times. However, this is not the case. Part of effective teaming involves correctly assessing when and where teams are best used—and when and where they are not. Some tasks or efforts are simply better performed by individuals, and TBO does not advocate blindly assigning every
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Section 10.1Changing the Way We Work: Team-Based Organizations
task, process, or function to a team without practical consideration. Rather, TBO organizations should use both teams and individuals wherever they are most appropriate and advantageous to the required performance. Individuals must be trained to work in parallel, in cooperation, and in support of teams—and vice versa. Additionally, employees should be equally prepared to perform in teams or act alone, as the situation requires. Appropriate implementation of TBO also encompasses team type. Rather than setting up permanent work teams, flexible organizations typically require a variety of temporary teams. Team type, composition, empowerment, responsibility structure, and longevity should be dependent on and adapted to the needs of the situation.
Let us return to the example of Pixar. While the animation studio makes extensive use of teams, it still relies on individual work. Programmers, animators, graphic designers, and such each have individual pieces of work that they spend a large amount of their day (and sometimes night) working on alone (Catmull, 2014). A team would not do a good job drawing or animating a character at a single workstation. This would be a case of too many cooks in the kitchen. Even in team-centric organizations like Pixar, there remains a time and place for individual work.
The Organization Is Designed to Support Teams and Teamwork From the Ground Up When implementing TBO, everyone within the organization must undergo a fundamental shift in the way they view the organization and their place within it. They must transition not only from individual to team-oriented logic, but also from merely managing teams to becoming a team-based system. This type of radical transition requires a multidimensional focus on both teams and their organizational context (Mohrman et al., 1995). While overall alignment is considered key to organizational effectiveness at all levels (Middleton & Harper, 2004; Kathuria et al., 2007), aligning organizational support systems—including managerial strategies and philosophies—with team operation and performance has been specifically identified as a critical factor for maintaining effective teams (Beyerlein et al., 1997; Mohrman & T
