In 2001, the IT company Cisco radically restructured from a traditional corporate hierarchy to a team-based system. Responding to the rapid developments of the IT sector, Cisco set up cross-functional teams to improve company-wide collaboration and foster creativity, according to tech firm Cascade. Cisco’s decision met with resounding success: It has since risen to the top of the communications technology and smart IT hardware industries.
Team-based structures forgo a strict top-down approach — a chain of command from CEO to managers to rank-and-file employees — for one in which decision-making is distributed among different groups. Stakeholders with a variety of skill sets hold a degree of authority and work together. Countless companies are adopting the same route as Cisco and opting for team structure to boost agility and break down departmental silos.
Implementing an optimal team structure is crucial for organizations looking to improve collaboration, align on goals, and boost productivity However, introducing a new structure and managing it effectively can be a major challenge In this comprehensive guide, we’ll explore how to successfully introduce a team structure, manage and optimize it for maximum impact.
Why Team Structure Matters
An organization’s structure essentially defines how its teams will work together to achieve objectives, The right structure brings many benefits
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Improves communication – Clarifies reporting lines and relationships between teams,
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Aligns efforts – Helps focus all teams on the organization’s overall goals.
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Optimizes efficiency – Reduces duplication and makes collaboration seamless.
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Empowers employees – Provides clarity on roles to empower decision making.
Meanwhile, a poorly designed org structure leads to confusion, silos, and limited productivity. Introducing and managing an intentional structure is key.
Choosing the Right Team Structure
With so many options, from functional to matrix to flat structures, how do you determine the best fit? Key factors to consider include:
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Company size – Structures like flat and circular work for smaller groups, while larger enterprises need more hierarchy.
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Goals and values – Optimize the structure to focus teams on goals and embed company values.
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Communication needs – Flatter and more connected structures improve communication flow.
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Leadership style – Hierarchical structures consolidate authority, while circular and matrix disperse it.
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Growth plans – Position the structure to easily accommodate future expansion.
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Work processes – Arrange teams to maximize efficiency of critical workflows.
Analyzing these elements will point towards structures that play to the organization’s unique needs and environment.
Introducing a New Team Structure
Rolling out a new org structure requires thoughtful change management for smooth adoption. Useful strategies include:
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Get leadership aligned – Ensure executives and managers understand and buy into proposed changes.
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Involve team leads early – Get insights from team leads on optimizations and enlist them as champions.
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Communicate the “why” – Explain the rationale for change and new structure to all employees.
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Share org charts – Visuals help everyone see reporting lines and how teams fit together.
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Train managers – Prep managers to lead effectively within the realigned structure.
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Phase in implementation – Pilot with certain teams first to work out any kinks.
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Solicit feedback – Check in with employees regularly to address concerns and gather input.
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Refine as needed – Be open to revisiting and tweaking the structure over time.
With an inclusive rollout, employees will understand and embrace the benefits of the new team setup.
Keys for Managing Team Structures Effectively
Once implemented, focus on managing the team structure for optimal performance. Critical success factors include:
Maintain Clear Boundaries and Reporting Lines
- Keep org charts updated and visible.
- Clarify roles and responsibilities for each team.
- Establish primary reporting lines and decision-making authority.
Facilitate Cross-Team Collaboration
- Identify dependencies between teams.
- Provide tools to improve team communication and visibility.
- Incentivize collaborative behavior through goals and metrics.
Align Teams to Overall Strategy
- Connect team goals and priorities to organizational objectives.
- Evaluate teams on contributions to strategic goals.
- Realign as corporate strategy pivots.
Optimize Team Processes
- Analyze team workflows to identify inefficiencies.
- Standardize and document processes for consistency.
- Look for ways to simplify complex cross-team hand-offs.
Check-in on Organizational Health
- Survey employees regularly on org issues.
- Be attentive to signs of misalignment, friction and declining morale.
- Quickly resolve structural problems exacerbating dysfunction.
Allow Flexibility and Evolution
- Recognize that structures have lifecycles and may require eventual overhaul.
- Make incremental tweaks to realign with changing internal and external conditions.
- Revisit to ensure the structure still provides a strategic advantage.
With robust management focus, the team structure can enhance performance well into the future.
Functional Team Structure
The functional structure is one of the most common options organizations choose. In this approach:
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Teams are divided by specialized functional areas like IT, Marketing, Operations.
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Hierarchy flows vertically within each function.
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Single leader oversees each function.
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Executive team coordinates functions at the top.
Pros
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Groups employees by skillsets.
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Enables specialized expertise.
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Simplifies role definitions.
Cons
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Can create departmental silos.
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Slow and complex cross-functional work.
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Individual functions may dominate.
Best For
Midsized to large companies, specialty focus, traditional industries.
Divisional Team Structure
The divisional structure organizes by product lines, geographies, or consumer types.
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Self-contained divisions align to categories.
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Each division has its own resources and leadership.
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Executive team oversees budgeting and shared services.
Pros
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Accountability within divisions.
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Agility to adapt offerings for segments.
Cons
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Inefficiencies from redundancy across units.
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Conflicting priorities across divisions.
Best For
Large conglomerates, multinational companies, varied customer segments.
Matrix Team Structure
A matrix structure has dual reporting relationships.
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Employees report to functional manager and product manager.
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Balances influence between functions and products.
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Uses cross-functional teams on projects.
Pros
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Promotes flexibility and collaboration.
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Allows focus on specific products.
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Shared authority speeds decisions.
Cons
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Complex dual management relationships.
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Power struggles can develop.
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Resource conflicts between projects.
Best For
Large multinationals, complex initiatives, changing priorities.
Flat Team Structure
Flat organizations have minimal management layers.
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Spans of control are wide at each layer.
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Few tiers separate executives and frontline.
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Decentralized decision-making authority.
Pros
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Promotes direct communications.
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Faster responses to emerging issues.
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Empowerment boosts morale and productivity.
Cons
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Can overwhelm managers with large teams.
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Executive visibility into operations reduced.
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Individual team member direction suffers.
Best For
Startups, entrepreneurial cultures, creative teams.
Circular Team Structure
A circular structure has a central leadership team overseeing concentric circles of gradually wider spans of control.
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Inner circles contain executive leaders.
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Progressively larger outer circles house more junior staff.
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Members communicate across circle connections.
Pros
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Creates team interconnectivity.
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Allows flexibility within circles.
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Leaders can oversee many employees directly.
Cons
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Spans of control can get too wide.
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Outer circles may feel neglected.
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Hard to maintain cohesion at scale.
Best For
Small entrepreneurial teams, startups, creative collaborators.
Network Team Structure
This structure links together separate business units or satellite divisions into networks.
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Semi-independent groups act as nodes.
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Nodes connect via structured links or hubs.
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Leadership team coordinates network.
Pros
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Local autonomy with shared purpose.
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Leverages expertise across nodes.
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Robust and agile when needs shift.
Cons
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Ensuring cooperation can be difficult.
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Weak overall company culture.
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Communication and alignment challenges.
Best For
Global companies, conglomerates, dispersed work units.
Hybrid Team Structures
Hybrid structures blend aspects of multiple approaches. Some options include:
Functional Matrix: Functional groups that use matrix on complex projects.
Divisional Matrix: Self-contained divisions with matrix within each.
Flatarchies: Minimal hierarchy with some functional grouping.
Holacratic Circles: Self-governing circles sitting within higher circles.
Best For
Seeking specific benefits of several structures. Balancing flexibility and alignment.
Optimizing Your Team Structure
Evolving business needs and strategies will likely necessitate changes to your org structure over time. Some best practices for optimizing include:
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Conduct periodic structure reviews to ensure it still aligns to company goals.
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Identify pain points like communication breakdowns and duplicative work that may indicate structural weaknesses.
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Be willing to reshape structure as needed; significant changes may require outside consultants.
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Phase in major realignments gradually with input from affected teams.
Benefits of Team-Based Organization Structure
Why are team-based organization structures so much more effective than traditional hierarchy in today’s business environments? Team structures maximize efficiency in several ways:
- They foster communication between people with complementary skills and experience. Thoughtfully chosen teams allow for a high degree of communication between people with different strengths and expertise.
- They are quicker to respond to changes in the environment. As the Feld Group Institute observes, we are no longer in the industrial age, when a slower, top-down decision-making model made more sense; now, “market cycles are measured now in weeks to months.” Contemporary companies need agile teams to detect and respond to problems in real time, without having to relay information up and down chains of command.
- They are more social. By creating space for group cooperation, team-based companies inculcate a friendlier culture. A more convivial workplace enhances quality of life for workers. In a culture where young professionals typically spend less than three years in their job (according to Recruiter.com), creating a satisfying and fun workplace is essential for retaining talent and reducing turnover costs.
What Is Team Structure?
Team structure is what encourages cross-departmental collaboration by emphasizing relationships between teams and colleagues, rather than separating departments under a single authority. Teams, sometimes without internal hierarchy of their own, work together toward the company’s common goal. Teams should be composed of members who complement one another’s knowledge and abilities.
Team structure relies on an atmosphere of openness, trust and collegiality. As Best Practice Institute CEO Louis Carter said in an interview with Dropbox, “Structure … helps create culture, and when the culture is such that people love being together in the workplace, incredible things happen.” Though lack of traditional hierarchy may go some way toward creating a culture of collegiality, team leaders and executives should cultivate this quality to ensure effective collaboration.
3 ways to create a work culture that brings out the best in employees | Chris White | TEDxAtlanta
What are the different types of team structures?
Here are the four common types of team structures: The self-directed team model encourages team members to create their own short-term goals. While they may still work toward the goals outlined by management, self-directed teams have a considerable amount of autonomy for planning and executing their tasks.
What is a team based structure?
1. What is a team-based structure? A team-based structure is a management approach where work is organized around teams rather than individual roles or departments. Each team is responsible for specific tasks or objectives, and members work collaboratively to achieve them.
How do I create a team structure?
There are several ways to go about creating a team structure and supporting a team, with specific methods that are effective for different kinds of groups. Increase meeting engagement and productivity with a collaborative agenda that the whole team can contribute to. Try using a tool like Fellow!
What makes a good team structure?
Well-designed team structures align team members’ skills and areas of expertise to tasks and objectives. Common team structures include functional teams grouped by expertise (e.g., engineering, marketing, IT, etc.), cross-functional teams with diverse skills, and self-directed teams where members manage their work.
