7 tips to develop the best cross-functional teams

Today’s business landscape is more competitive than ever due to globalization and lower barriers to entry. Organizations are more likely to embrace more agile workforce approaches to gain a competitive advantage and stay on top of the game. 

One such approach is the establishment of cross-functional teams.

What is a cross-functional team?

Simply defined, a cross-functional team is a group of people from different departments who pool their experiences, expertise, and knowledge to achieve a shared goal. It contrasts with the conventional vertical approach in which businesses compartmentalize departments based on hyper-specific specializations.

A cross-functional team that operates like a well-oiled machine promises a host of benefits that could significantly boost your organization’s performance. However, as with any other innovative solution, there are kinks, challenges, and shortcomings that require attention.

Read on to learn more about cross-functional team characteristics, benefits, disadvantages, and best practices.

Here’s what we’ll cover:

• Do cross-functional teams work?
• Cross-functional team best practices
• What are the benefits of cross-functional teams?
• What are the disadvantages of cross-functional teams?
• What are the key characteristics of cross-functional teams?
• Why do employers want cross-functional skills?

Do cross-functional teams work?

The topic of cross-functional teams is somewhat divisive. Staunch proponents of the approach believe it offers a competitive advantage in an increasingly complex market.

Simultaneously, there is a skeptical camp that points out documented dysfunction associated with these multi-departmental teams. In particular, attention has been drawn to a widely cited study published in the Harvard Business Review. 

In the study, researcher Behnam Tabrizi noted, “Nearly 75% of cross-functional teams are dysfunctional.” However, this begs the question of what the remaining 25% from the study did to overcome the challenges of running a cross-functional team. How can businesses leverage these best practices to improve their processes?

Cross-functional teams work—provided leaders implement the necessary processes. Considering their potential to help a company gain an edge, it’s an opportunity worth exploring.

Best practices for building a cross-functional team

In the Tabrizi study, the researcher mentions that “cross-functional teams often fail because the organization lacks a systemic approach. Teams are hurt by unclear governance, lack of accountability, goals that lack specificity, and organizations’ failure to prioritize cross-functional projects’ success.”

With the high failure rates that characterize these teams, organizations need to understand cross-functional team best practices to achieve success. 

Here are seven well-researched cross-functional team best practices:

1. Build a foundation of open communication.

Effective and regular communication between the group is the foundation of any successful cross-functional team. However, this might not come naturally—especially if team members are accustomed to working in silos.

Proper collaboration demands open channels of communication and a shift in mindset. Much like in sports, everyone should sync up and move toward the goal. 
Some ideas to promote effective communication include scheduling regular meetings, encouraging open lines of communication across the board, and organizing team-building exercises.

2. Define goals and develop a plan of action.

Different organizational departments typically have their own legacy processes, agendas, and cultures. So when you pull these individuals from their conventional roles and ask them to collaborate, there’s a risk of dysfunction or conflict. The solution to this conundrum is to align the entire team toward shared goals.

Determine the outcome the cross-functional team wants to achieve and map out the deliverables necessary to achieve that goal. This means creating a comprehensive action plan in which each team member’s role is well-suited to their unique skill set.

3. Build trust.

Cross-functional collaboration relies on trust, and it’s not possible if team members keep falling back into their respective silos.

“Remember, teamwork begins by building trust. And the only way to do that is to overcome our need for invulnerability.” —Patrick Lencioni

People tend to seek comfort and familiarity in any situation, including the workplace. To help create a sense of belonging and trust within the team, there should be a shared language, respect for everyone’s opinions, proactive effort to bond, and acceptance of any individual shortcomings.

4. Streamline decision-making processes.

The decision-making processes of a successful cross-functional team should encourage team buy-in and promote accountability. How do you achieve this?

Each member of the team should be well aware of their scope of decision-making authority, the level of expertise needed to make informed decisions, and the established decision-making processes. As a project manager or leader, you should support and rely on the team’s collective expertise to make sound decisions.

5. Understand your team’s identity.

Too often, businesses tend to overlook the immense potential of collaboration in favor of individual talent. Sure, having highly skilled personnel is important. But getting them to work together as a closely-knit unit is crucial. Everyone must contribute to the end goal in their respective roles. 

Managers can make use of software solutions such as PI Team Discovery to better understand their team’s collective behavioral identity. 

Team Discovery, part of PI Design, allows you to view this team identity, or Team Type, alongside your team’s goals. By understanding your Team Type and the strategy you’re pursuing, you can visualize where the team is equipped to succeed and where there are potential gaps.

Say you’re an Exploring Team that innovates quickly, yet tends to overlook the finer details. If you’re tasked with improving product quality, your team members may need to “stretch” their behavioral skill set to achieve that goal. Team Discovery can help you create a plan to address those collective shortcomings and build that muscle.

With a better understanding of your team’s dynamics and how those align with team goals, you can better guide your team to success. The key is to make everyone feel comfortable, motivated, and at home in the cross-functional team—just as they would in their respective department. 

6. Prepare for conflict resolution.

Workplace conflict is an inevitable part of any organization. In fact, research shows that more than 8 in every 10 workers experience conflict in their roles. The risk of conflict is even higher for cross-functional teams due to differing viewpoints and processes from the departments represented.

Without the necessary management skills, the team may suffer from power struggles, in-fighting, tussles over limited resources, or even sabotage. Managers should be well-prepared for difficult situations, and treat any differences in opinion as opportunities for growth.

7. Re-evaluate and improve processes.

“The greatest asset of a company is its people.” 

This quote by Jorge Paulo Lemann—the co-founder of Banco Garantia—is ubiquitous in every business school and organization. It highlights the importance of keeping the workforce motivated and satisfied in their roles. This means continually working to improve working conditions, even in the agile environment of cross-functional teams.

For this reason, managers should stay on top of things in real-time with the help of project management software and standardized processes that establish consistency. 

What are the benefits of cross-functional teams?

The logic behind the cross-functional approach is that the goals of different departments should be consistent even though their functions are inherently distinct. 

For example, the phone or computer you’re using to read this post likely went through multiple verticals before making its way into your hands. There was a marketing team that wooed you into making the buying decision, software developers that built the operating system, factory workers who assembled the parts, and a sales team that ultimately pushed the product. 

All of these different departments have the common goal of providing a great customer experience. Rather than work in silos, cross-functional teams bring all these departments under one roof to optimize their efforts.

When processes are implemented properly, these teams can significantly impact an organization’s overall health and well-being. Here’s how:

• They create a collaborative culture. Cross-functional teams inherently facilitate team collaboration. They promote streamlined decision-making processes, shared goals, and team-building exercises throughout the organization. 
• They promote engagement. According to PI’s Employee Engagement Report, companies with optimized talent strategies consistently report higher employee engagement levels. Cross-functional teams encourage regular communication, interaction, and trust—all strong drivers of engagement and satisfaction.
• They increase productivity. In a cross-functional team, people get to share their expertise and best practices to optimize processes. They also tend to be more agile and adaptable to emerging challenges.
• They spark innovation. Putting people with diverse skills and expertise in a new environment where they’re encouraged to think outside the box can help remedy stymied growth.

What are the disadvantages of cross-functional teams?

Cross-functional teams are great, but they’re not foolproof. They’re also vulnerable to pitfalls that hinder other types of teams. The insights from understanding some of the disadvantages of these teams allow managers to prepare for them when they arise. These common pitfalls include:

• Turf wars: Unless an organization has adopted widespread agile processes, departments can often work in silos. In a cross-functional team, members of these departments may fall back on their respective functional areas, and try to dictate the project’s direction. This can lead to misunderstandings and unhealthy conflict, hindering team performance. 
• Communication barriers: Communication is at the heart of any successful team project. Yet communication issues can arise on a cross-functional team when people use slang, complex terminology, or department-specific acronyms. Working as a cohesive unit is difficult when understanding each other is a challenge.
• Conflicting priorities: Often, team members of a cross-functional team will have a hard time letting go of the priorities that come from their respective backgrounds. 

What are the key characteristics of cross-functional teams?

For any cross-functional team to succeed, there are certain characteristics that they must portray. Without them, the group may be doomed to fight an uphill battle. Some of the key characteristics of these teams include:

• Strong leadership: Habits, culture, and team unity start from the top. Members will look to their leader to set the pace of everything the team does. Good leadership can promote a sense of respect and trust; a lack of leadership will lead to confusion, indecisiveness, and disorganization. 
• Diversity: Cross-functional teams leverage the knowledge and experiences of each unique member to achieve the common goal.
• Accountability: Team members understand they are ultimately responsible for their individual roles and duties, and they take accountability for their actions. 
• Open-mindedness: A willingness to listen to the viewpoints of others reduces the risk of conflict and instead promotes the sharing of ideas and innovation.
• Clear, open, and frequent communication: Established processes for transparent communication will significantly improve team collaboration and the ultimate success of the team.

Why do employers want cross-functional skills?

Regardless of your career or industry, cross-functional collaboration is inevitable. Having the right skills to work collaboratively with a team other than your own makes you highly marketable. Employers typically want people who have the capacity to work seamlessly with others in different capacities.

People who have cross-functional skills can talk, value, and listen to the opinions of others constructively. They also understand the priorities of others and how their objectives tie in with the team’s shared goals and outcomes. 

Additionally, they can navigate sticky situations, conflict, and difficult team members. As a manager, cross-functional skills also allow you to better manage people in varying roles.

All of this translates to better productivity, reduced conflict, a happier workforce, and an organization that’s optimized to achieve its goals.