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Schumpeter - Businesses are embracing the idea of working in teams

But managing them is hard

Mar 16th 2016

TEAMS have become the basic building-blocks of organisations. Recruitment ads

routinely call for team players . Business schools grade their students in

part on their performance in group projects. Office managers knock down walls

to encourage team-building. Teams are as old as civilisation, of course: even

Jesus had 12 co-workers. But a new report by Deloitte, Global Human Capital

Trends , based on a survey of more than 7,000 executives in over 130 countries,

suggests that the fashion for teamwork has reached a new high. Almost half of

those surveyed said their companies were either in the middle of restructuring

or about to embark on it; and for the most part, restructuring meant putting

more emphasis on teams.

Companies are abandoning functional silos and organising employees into

cross-disciplinary teams that focus on particular products, problems or

customers. These teams are gaining more power to run their own affairs. They

are also spending more time working with each other rather than reporting

upwards. Deloitte argues that a new organisational form is on the rise: a

network of teams is replacing the conventional hierarchy. The fashion for teams

is driven by a sense that the old way of organising people is too rigid for

both the modern marketplace and the expectations of employees. Technological

innovation puts a premium on agility. John Chambers, chairman of Cisco, an

electronics firm, says that we compete against market transitions, not

competitors. Product transitions used to take five or seven years; now they

take one or two. Digital technology also makes it easier for people to

co-ordinate their activities without resorting to hierarchy. The millennials

who will soon make up half the workforce in rich countries were reared from

nursery school onwards to work in groups.

The fashion for teams is also spreading from the usual corporate suspects (such

as GE and IBM) to some more unusual ones. The Cleveland Clinic, a hospital

operator, has reorganised its medical staff into teams to focus on particular

treatment areas; consultants, nurses and others collaborate closely instead of

being separated by speciality and rank. The US Army has gone the same way. In

his book, Team of Teams , General Stanley McChrystal describes how the army s

hierarchical structure hindered its operations during the early stages of the

Iraq war. His solution was to learn something from the insurgents it was

fighting: decentralise authority to self-organising teams.

A good rule of thumb is that as soon as generals and hospital administrators

jump on a management bandwagon, it is time to ask questions. Leigh Thompson of

Kellogg School of Management in Illinois warns that, Teams are not always the

answer teams may provide insight, creativity and knowledge in a way that a

person working independently cannot; but teamwork may also lead to confusion,

delay and poor decision-making. The late Richard Hackman of Harvard University

once argued, I have no question that when you have a team, the possibility

exists that it will generate magic, producing something extraordinary...But don

t count on it.

Hackman (who died in 2013) noted that teams are hampered by problems of

co-ordination and motivation that chip away at the benefits of collaboration.

High-flyers forced to work in teams may be undervalued and free-riders

empowered. Groupthink may be unavoidable. In a study of 120 teams of senior

executives, he discovered that less than 10% of their supposed members agreed

on who exactly was on the team. If it is hard enough to define a team s

membership, agreeing on its purpose is harder still.

Profound changes in the workforce are making teams trickier to manage. Teams

work best if their members have a strong common culture. This is hard to

achieve when, as is now the case in many big firms, a large proportion of staff

are temporary contractors. Teamwork improves with time: America s National

Transportation Safety Board found that 73% of the incidents in its

civil-aviation database occurred on a crew s first day of flying together.

However, as Amy Edmondson of Harvard points out, organisations increasingly use

team as a verb rather than a noun: they form teams for specific purposes and

then quickly disband them.

Teeming with doubts

The least that can be concluded from this research is that companies need to

think harder about managing teams. They need to rid their minds of sentimental

egalitarianism: the most successful teams have leaders who set an overall

direction and clamp down on dithering and waffle. They need to keep teams small

and focused: giving in to pressure to be more inclusive is a guarantee of

dysfunction. Jeff Bezos, Amazon s boss, says that If I see more than two

pizzas for lunch, the team is too big. They need to immunise teams against

groupthink: Hackman argued that the best ones contain deviants who are

willing to ruffle feathers. A new study of 12,000 workers in 17 countries by

Steelcase, a furniture-maker which also does consulting, finds that the best

way to ensure employees are engaged is to give them more control over where

and how they do their work which may mean liberating them from having to do

everything in collaboration with others.

However, organisations need to learn something bigger than how to manage teams

better: they need to be in the habit of asking themselves whether teams are the

best tools for the job. Team-building skills are in short supply: Deloitte

reports that only 12% of the executives they contacted feel they understand the

way people work together in networks and only 21% feel confident in their

ability to build cross-functional teams. Slackly managed teams can become

hotbeds of distraction employees routinely complain that they can t get their

work done because they are forced to spend too much time in meetings or

compelled to work in noisy offices. Even in the age of open-plan offices and

social networks some work is best left to the individual.