Fast changing market dynamics and business environment worldwide have forced businesses to focus on rapid innovation to grow their market share and customer base. Businesses are also focusing on redesigning themselves in order to maintain their competitiveness. Apart from the decentralization of authority and moving towards being a customer driven company, businesses are also focusing on forming networks of highly empowered teams that communicate and coordinate in a superior manner compared to the traditional organizations. A large number of companies have already moved away from the functional structure.
Team based organizational structures offer some unique advantages including rapid flow of information and stronger communication. The needs of organizations are changing with changing market dynamics. The same traditional approach or a functional structure does not afford the same flexibility and agility as the modern team-based approach. Companies have already started moving away from functional structures due to their disadvantage in terms of adaptability. According to a Deloitte survey, the team-based structure has found high popularity among the tech businesses. The survey results showed that only 38% of all organizations were having a functional structure and only 24% organizations in the tech industry. It shows that organizations are now ready to adapt and change their structures to suit the changing demands.
What is a team based organizational structure?
A team based organizational structure is an organizational structure where several teams work together towards a common goal while also performing their own specialized tasks. Due to being less hierarchical such structures offer more flexibility, and reinforce problem solving, team work and decision making. The flexibility that comes with team based organizational structures brings several additional advantages.
A company with a team based organizational structure may have a CEO and several department leaders like CMO, CFO and others. The departments are made up of teams with team leaders and team members. These teams work together towards a common goal. However, the individual teams are also working according to their overall role within a project.
Advantages of team based organizational structure:
Superior communication flow:
One of the leading advantages of a team based organizational structure is a superior communication flow. Faster and superior communication happens when organizations adopt a team-based structure. Moreover, organizations following this structure do not always need to use formal channels of communication. They can always adapt and use different channels for communication between team members. The flow of information between teams in such organizations is also much faster compared to the organizations following a hierarchical structure.
Apart from everything, the growth of digital communication channels has made it easier for teams and team members to communicate with each other and share information. Teams can use websites or mobile apps to share common goals, stay up to date on customer interactions, communicate about product quality and brand related issues as well as to build a common culture. When the structure is less hierarchical, there are less obstructions to the flow of communication making it easier to share information. Faster flow of communication also leads to faster workflow.
Higher efficiency and productivity:
Since communication flows faster inside organizations following a team-based structure, there efficiency is also generally higher compared to the other structures. It is easier for teams to collaborate with each other and cross functional collaboration is also generally much easier inside such organizations. It leads to faster completion of projects and a faster flow of ideas among teams. The result is that such organizations enjoy growth in productivity, sales and customer satisfaction. With multiple teams collaborating together on multiple projects, the business can complete several projects simultaneously. It is also easier to improve the quality of work and output inside such organizations.
Higher accountability, flexibility and learning:
Team based organizational structures generally offer higher flexibility in various terms. The level of individual accountability among team members is generally higher. Apart from that, team-based structures allow people from different backgrounds and different skillsets to come together and learn from each other. Employees can learn new skills from other team members which can allow them to get into new roles and improve their chances of growth and success. When employees get to learn new skills and work on new types of projects, it improves employee satisfaction. People can be moved into new teams to become part of projects that can teach them new skills.
Organizations following a team-based structure empower their employees. These organizations follow a decentralized approach which allows higher control and decision-making authority in the hands of individual employees. Performance management of employees is also simpler in such organizations. Managers can seek input from the other team members easily. The employees support each other. Employee empowerment is key to employee satisfaction and improved productivity. Following a team- based approach allows organizations to manage the performance of individual employees and empower them with higher efficiency.
Fast paced innovation:
While there are several advantages of team based organizational structure, the leading advantage is the higher flexibility it offers. With higher flexibility, companies find it easier to adapt to a fast-changing industry environment. Not just that, but with superior flow of communication, ideas flow faster inside an organization from one corner to another. Team members can share insights with each other and new ideas can take the form of new products and services inside organizations faster. Innovation is not just a necessity in the current industry environment, but unless companies focus on being innovative, it can become impossible for them to stay competitive. It is why several companies switch to the team-based business structure in order to improve the pace of innovation inside their organizations . Such organizations can also bring disruptive ideas to the market faster.
Improved team work inside the organization:
Team work is essential inside an organization to grow its productivity and to improve the level of innovation. However, companies that want to make it a part of their organization focus on developing a culture of team work. To do that, companies must adopt a structure that drives team work. Team work is known to bring results faster. Many leading organizations in the tech industry have made collaboration a part of their culture. Its first major benefit is improved output. With higher collaboration, the level of organizational productivity and output is also higher. When companies adopt a team-based structure, half of the job is already done. The industry environment has continued to grow more competitive and challenging. Teamwork has become essential to handle the challenging situation and grow organizational competitiveness.
Build a sense of community among employees:
One important advantage of having a team-based structure is that it allows businesses to foster a sense of community among its people. It also has a positive impact on the company culture. People should understand that they are working towards a common goal and that being a part of the team, everyone’s contribution to the goal matters. It helps bring higher equity at an organizational level. It also improves employee-employer relationships when people understand how their success and the company’s success are interrelated. When people working inside the same organization are bound by a feeling of community, there is higher accountability in team members.
A few last words:
Across every industry sector, the level of competition has continued to grow and the market environment has become more challenging for businesses. Companies are trying all types of changes to achieve higher competitiveness and faster growth. Companies are redesigning their structure and processes, and changing their cultures to foster an innovative mindset throughout the organization. However, how an organization is structured has a significant impact on its productivity and how successfully it handles competitive and other challenges. While there are several types of organizational structures and based upon their needs, companies can adopt any of them, when it comes to efficiency, flexibility, competitiveness and innovativeness, companies need to adopt a team-based structure. There are several advantages of this approach including improved communication, which is key to improved productivity, and a solid sense of community and collaboration among employees. Overall, a team based structure helps overcome the various shortcomings of the functional and other organizational structure types.
Suggested Reading: Nine Elements of Communication