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Designing Team-Based Organizations

Susan Albers Mohrman, Susan G. Cohen and Allan M. Mohrman · 1995

In a sentence

A research-based guide to designing the entire organization—its structures, processes, and systems—to successfully support high-performing teams in complex knowledge work.

While many organizations have embraced teams to improve performance, most find the transition daunting because simply creating teams is not enough. 'Designing Team-Based Organizations' argues that to truly succeed, the entire organization must be redesigned with a new, lateral logic. Drawing on over fifteen years of research and consulting with leading companies like Honeywell, HP, and Pfizer, the authors provide a field-tested, five-step framework for designing the structures, integration mechanisms, management roles, and support systems necessary for teams to thrive, particularly in complex knowledge-work settings. This practical guide moves beyond team dynamics to tackle the fundamental organizational design challenges, offering a systematic roadmap for managers, consultants, and leaders who are serious about building a truly effective team-based organization.

The four lenses

  • Science
  • Statistics
  • Systems
  • Strategy

The model

This model, derived from Figure 2.6 in the book, outlines how key organizational design features, when appropriately matched to the organization's strategy and task, create the behavioral and psychological conditions (facilitators) necessary for effective team and business-unit performance in knowledge-work settings. It posits that the organizational context is the primary lever for improving team effectiveness.

Organizational Strategycontextual condition

The organization's overarching plan for competing in its environment, including its mission, goals, and logic for how it will apply resources to deliver value to customers and gain a competitive advantage.

Nature of Taskcontextual condition

The inherent characteristics of the work being performed, including its degree of routine vs. non-routine nature, interdependence, uncertainty, complexity, and knowledge-intensiveness, which dictate information processing needs.

Team Attributesdesign lever

The structural characteristics defining a work team's composition and boundaries. This includes the mix of skills and disciplines, the dedication of members, their physical co-location, and their reporting relationships within the organization.

Multiteam Linkagesdesign lever

The set of formal integrating mechanisms established to manage interdependencies and facilitate coordination between different teams. Examples include liaison roles, overlapping membership, cross-team integrating teams, and representative councils.

Management Structure and Rolesdesign lever

The design of hierarchical and lateral authority, including the definition of formal managerial roles (e.g., team manager, functional manager), team leadership roles, and the extent to which self-management functions are vested in teams.

Integration Processesdesign lever

The set of established practices and actions through which direction is set (e.g., goal alignment), information is shared and communicated, and decisions are made to integrate the work of various individuals, teams, and units.

Performance Management Processesdesign lever

The cycle of activities and systems used to manage the performance of individuals, teams, and business units. This includes practices for defining work, developing capabilities, reviewing performance, and rewarding outcomes at multiple levels.

Lateral Integration and Coordinationbehavioral pattern

The degree of effective and timely coordination, communication, and collaboration among individuals and teams whose work is interdependent. It is the behavioral manifestation of a well-designed lateral organization.

Timely Decision Makingbehavioral pattern

The ability of teams and the broader organization to make necessary operational and strategic decisions without undue delay. It reflects the organization's capacity to process information and resolve issues efficiently.

Team Efficacypsychological state

The collective belief and confidence shared among team members in their capability to successfully perform their tasks, overcome obstacles, and achieve their goals. It is a key psychological state for empowered teams.

Team Performanceoutcome metric

The extent to which a team's productive output (product, service, or decision) meets or exceeds the standards of quantity, quality, and timeliness of its internal and external stakeholders (customers, managers).

Business Unit Performanceoutcome metric

The overall effectiveness of the larger organizational unit (e.g., program, division) in which teams are embedded, measured by metrics like cost-effectiveness, quality, customer satisfaction, speed, and innovation.

Organizational Learning and Improvementoutcome metric

The extent to which the team and business unit enhance their capabilities, learn from experience, and generate sustainable improvements in their work processes, products, services, and organizational design over time.

Member Satisfactionoutcome metric

The degree to which team members experience personal satisfaction, growth, commitment, and fulfillment of their needs through their work in the team and the broader organization.

How they connect

  • team attributes influences lateral integration
  • multiteam linkages influences lateral integration
  • management structure and roles influences timely decision making
  • integration processes influences lateral integration
  • performance management processes influences team efficacy
  • lateral integration predicts team performance
  • timely decision making predicts team performance
  • team efficacy predicts team performance
  • team performance influences business unit performance
  • team efficacy predicts member satisfaction
  • performance management processes influences team performance
  • organizational strategy moderates lateral integration
  • nature of task moderates lateral integration

The story

The reader A manager, consultant, or human resources specialist whose organization has committed to using teams but is struggling to make them effective, feeling frustrated that the promise of higher performance is being blocked by the complexity of the transition.

External problem

The organization has formed teams, but they are underperforming due to coordination problems, conflicting priorities, and a lack of support from the existing hierarchical structure and systems.

Internal problem

The reader feels exhausted, cynical, and overwhelmed, believing in the potential of teams but feeling like their efforts are being undermined by a system that isn't designed for collaboration.

Philosophical problem

It's just plain wrong for organizations to adopt a superior way of working like teams but fail to create the necessary conditions for success, leading to wasted potential and disillusionment.

The plan

  1. Step One: Identify Work Teams based on an analysis of work processes, deliberations, and interdependencies.
  2. Step Two: Specify Integration Needs and design mechanisms (like cross-teams and liaisons) to link teams.
  3. Step Three: Clarify the new Management Structure and Roles required to support teams.
  4. Step Four: Design the critical Integration Processes for direction setting, communication, and decision making.
  5. Step Five: Redesign Performance Management processes for defining, developing, reviewing, and rewarding at the team and individual levels.

Success

  • The organization becomes a dynamic, laterally-oriented system where teams are highly effective and empowered.
  • Performance dramatically improves in speed, cost, quality, and innovation, creating a significant competitive advantage.
  • The reader feels competent and successful as a leader who has guided a complex but rewarding organizational transformation.

At stake

  • The team initiative fails, with teams being 'chewed up and spit out' by the old bureaucracy.
  • Cynicism grows, performance stagnates, and the organization remains stuck in an outdated model, unable to compete effectively.
  • The reader's belief in a better way of working is extinguished, replaced by frustration and burnout.

Questions this book answers

How do you design an entire organization where teams are the core performing units?
What organizational structures and systems are necessary to support teams in complex, non-routine knowledge work?
What are the new roles and responsibilities for managers, leaders, and team members in a team-based organization?
How do you effectively manage performance, set direction, and make decisions in a laterally-oriented organization?
How can an organization manage the multi-year transition to a team-based design as an iterative learning process?

Glossary

Organizational Strategy
The organization's plan for applying its resources to compete in its environment, accomplish its mission, and deliver value to customers. It provides the overarching direction that guides all design choices.
Nature of Task
The inherent characteristics of the work being performed, including its degree of programmability (routine vs. non-routine), interdependence among contributors, environmental dynamism, and knowledge-intensiveness.
Team Attributes
The structural characteristics of a work team, including its composition (the mix of skills, disciplines, and experience), the dedicated vs. part-time assignment of its members, their physical co-location, and their formal reporting relationships.
Multiteam Linkages
The set of formal mechanisms established to manage interdependencies and facilitate integration among different teams. These structures are designed to handle coordination needs that cannot be contained within a single team.
Management Structure and Roles
The design of hierarchical and lateral authority, including the definition of formal managerial roles (e.g., team manager, functional manager), team leadership roles, and the extent to which traditional management functions are vested in the teams themselves.
Integration Processes
The set of established practices and actions through which direction is set, information is shared, and decisions are made to integrate the work of various individuals, teams, and units, creating a shared context for collaboration.
Performance Management Processes
The cycle of activities and formal systems used to manage the performance of individuals, teams, and business units. This includes practices for defining work, developing capabilities, reviewing performance against goals, and rewarding outcomes.
Lateral Integration and Coordination
The degree of effective and timely coordination, communication, and collaboration that occurs between individuals and teams whose work is interdependent. It is the behavioral outcome of a well-designed organization.

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