Types of Teams

Many types of teams can exist within organizations. The easiest way to classify teams is in terms of those created as part of the organization’s formal structure and those created to increase employee participation.


Formal teams are created by the organization as part  of the formal organization structure. Two common types of formal teams are vertical and horizontal,  which typically represent vertical and horizontal structural relationships. These two types of teams are illustrated  in Exhibit 14.3. A third type of formal team is the special-purpose team.

Vertical Team. A vertical team is composed of a manager and his or her subordi- nates in the formal chain of command. Sometimes  called a functional team or a command team, the vertical team may in some cases include three or four levels of hierarchy within a functional department. Typically, the vertical team includes a single department in an or- ganization. The third-shift nursing team on the second floor of St. Luke’s Hospital is a vertical team that includes nurses and a supervisor. A financial  analysis department,  a qual- ity control  department,  an accounting department,  and a human resource department  are all vertical or command teams. Each is created by the organization  to attain specific goals through members’ joint activities and interactions.

Horizontal Team. A horizontal team is composed of employees from about the same hierarchical  level but from different areas of expertise.16  A horizontal team is drawn from several departments,  is given a specific task, and may be disbanded after the task is completed. The two most common types of horizontal  teams are cross-functional  teams and committees.

As described in Chapter  7, a cross-functional team is a group of employees from different departments formed to deal with a specific activity and existing only until the task is com- pleted. Sometimes called a task force, the team might be used to create a new product  in a manufacturing organization or a new history curriculum  in a university.  Georgetown  Pre- paratory School created a task force made up of teachers, coaches, administrators, support staff, and outside consultants to develop a preparedness plan to address the threat of sea- sonal influenza and other potentially  devastating epidemics.17  When several departments are involved, and many views have to be considered, tasks are best served with a horizontal, cross-functional team.

A committee generally is long-lived and may be a permanent  part of the organization’s structure. Membership on a committee usually is decided by a person’s  title or position rather than by personal expertise. A committee  often needs official representation, com- pared with selection for a cross-functional  team, which is based on personal qualifications for solving a problem. Committees typically are formed to deal with tasks that recur regu- larly. For example,  a grievance  committee   handles employee  grievances;  an advisory committee  makes recommendations  in the areas of employee compensation  and work practices; and a worker-management  committee  may be concerned with work rules, job design changes, and suggestions for work improvement.18

As part of the horizontal structure of the organization,  cross-functional  teams and committees offer several advantages: (1) They allow organization  members to exchange information; (2) they generate suggestions for coordinating the organizational units that are represented; (3) they develop new ideas and solutions for existing organizational prob- lems; and (4) they assist in the development of new organizational practices and policies.

Special-Purpose Team. Special-purpose teams, sometimes called project teams, are created outside the formal organization structure to undertake  a project of special importance or creativity. Special-purpose teams focus on a specific purpose and expect to disband after the specific project is completed.19  Examples include the team that developed the first IBM  ThinkPad and the project team for the Motorola RAZR cell phone. A special-purpose team still is part of the formal organization and has its own reporting struc- ture, but members  perceive themselves  as a separate entity.20

Many of today’s companies are using special-purpose  teams to dramatically speed up devel- opment of a special product  or execute  a highly important  project. These fast-cycle teams, as described in Chapter 8, are set up to work on projects that top management deems highly important. They are provided  the freedom and resources to bring projects to closure quickly.21


Employee involvement through  teams is designed to increase the participation of workers in decision making and the conduct of their jobs, with the goal of improving performance. Employee involvement started out simply with techniques  such  as information sharing with employees or asking employees for suggestions about improving the work. Gradually, companies moved toward greater autonomy for employees, which led first to problem- solving teams and then to self-directed teams.22

Problem-solving  teams typically  consist of 5 to 12 hourly employees from the same department who voluntarily meet to discuss ways of improving quality, efficiency, and the work environment. Recommendations are proposed to management for approval. Problem- solving  teams usually  are the first step in a company’s  move  toward greater employee participation. The most widely known application is quality  circles, first used by Japanese companies, in which  employees focus on ways to improve quality in the production process. USX adopted this approach in several of its steel mills, recognizing that quality takes  a team effort. Under the title All Product Excellence program (APEX), USX set up APEX teams of up to 12 employees who met several times a month  to solve quality problems.23

As a company matures, problem-solving  teams can gradually evolve into self-directed teams, which represent  a fundamental  change in how work is organized. Self-directed teams enable employees to feel challenged, find their work meaningful, and develop  a strong  sense of identity with the company.24 Self-directed teams typically  consist of 5 to

20 multiskilled  workers who rotate jobs to produce an entire product or service or at least one complete  aspect or portion of a product  or service (e.g., engine assembly, insurance claim processing). The central idea is that the teams themselves, rather than managers or supervisors, take responsibility  for their work, make decisions, monitor their own perfor- mance, and alter their work behavior as needed to solve problems, meet goals, and adapt to changing conditions.25  For example, at Ralston Foods plant in Sparks, Nevada, which pro- duces cereals, production  workers are divided into teams of about 10 people. Some of the teams function  entirely without designated leaders and handle all issues and problems that arise in their areas, including hiring and firing, scheduling, budgeting, quality, and disci- plinary problems. Other teams have leaders assigned by management as they continue  to learn how to work in a team environment,  but the teams that have progressed to total self- direction actually outperform  teams with assigned leaders.26

Self-directed  teams are permanent teams that typically include the following elements:

  • The team includes employees with several skills and functions, and the combined skills are sufficient to perform  a major organizational task. A team may include members from the foundry, machining, grinding, fabrication, and sales departments,  with members cross-trained to perform one another’s jobs. The team eliminates barriers among depart- ments, enabling excellent coordination to produce a product  or service.
  • The team is given access to resources such as information,  equipment, machinery, and supplies needed to perform the complete task.
  • The team is empowered with decision-making authority, which means that members have the freedom to select new members, solve problems, spend money, monitor results, and plan for the future.27

In a self-directed  team, team members take over managerial duties such as scheduling or ordering materials. They work with minimum supervision, perhaps electing one of their own as supervisor, who may change each year. The most effective self-directed  teams are those that are fully empowered. In addition to having increased responsibility  and discre- tion, empowered teams are those that have a strong belief in their team’s capabilities, find value and meaning in their  work,  and recognize the impact  the team’s work  has on custom- ers, other stakeholders, and organizational  success.28

Managers create the conditions that determine whether self-directed  teams are em- powered by giving teams true power and decision-making  authority,  complete informa- tion, knowledge and skills, and appropriate rewards. The manager to whom the team and team leaders report, sometimes referred to as the external  leader, has a tremendous impact on the team’s success. In addition to creating conditions for empowerment, effec- tive external   leaders  serve as an active link between the team and the organization, building constructive relationships and getting the team what it needs to do its best work.29  An  interesting example of the use  of self-directed   teams  is the Orpheus Orchestra of New York City.

The Orpheus Orchestra has found that using self-directed  teams provides a number of advantages. The greater information flow and diverse artistic input contributes to a superb performance. In addition,  members typically feel a high degree of commitment, and turn- over is quite low. One business organization that succeeds with teamwork is Consolidated Diesel’s engine factory in Whitakers, North Carolina. In its 20 or so years of operation  as a team-based organization, the plant has had higher revenues, lower turnover,  and signifi- cantly lower injury rates than the industry  average. In addition,  while most plants average 1 supervisor for every 25 workers, Consolidated  Diesel has 1 for every 100 employees because the plant workers themselves handle many supervisory duties. The difference yields a savings of about $1 million a year.30


Some exciting new approaches to teamwork  have resulted from advances in information technology, shifting employee expectations, and the globalization of business. Two types of teams that are increasingly being used are virtual  teams and global teams.

Virtual Teams. A virtual team is made up of geographically or organi- zationally  dispersed members who are linked primarily through advanced information and telecommunications technologies.32    Although some virtual teams may be made up of only organiza- tional  members, virtual  teams often include contingent workers, members of partner organizations,  customers, sup- pliers, consultants,  or other outsiders. Team  members use e-mail, instant mes- saging,  voice mail, videoconferencing, Internet and intranet technologies, and various types of collaboration  software to perform their work, although they might also sometimes meet face to face. Many virtual  teams are cross-functional teams that emphasize solving customer problems  or completing specific  proj- ects. Others are permanent self-directed teams. A  new kind  of  virtual team predicts  certain  outcomes, as shown in the following example.

With virtual teams, team leadership is typically shared or rotated, depending on the area of expertise needed at each stage of the project.33  In addition, team membership in virtual teams may change fairly quickly,  depending on the tasks to be performed. One of the primary  advantages of virtual teams is the ability to rapidly  assemble the most appropriate  group of people to complete  a complex project, solve a particular problem, or exploit  a specific strategic opportunity.

Virtual teams present unique  challenges. Managers as team leaders should consider these critical issues when building virtual teams:34

  • Select the right team members. The first step is creating a team of people who have the right mix of technical and interpersonal skills, task knowledge, and personalities to work in a virtual environment.  Interviews with virtual  team members and leaders indicate  that the ability to communicate  and a desire to work as a team  are the most important per- sonal qualities for virtual team members.35
  • Manage socialization. People need to get to know one another and understand the ap- propriate behaviors and attitudes. Smart team leaders establish team norms and ground rules for interaction early in the team’s formation.
  • Foster trust. Trust might be the most important ingredient in a successful virtual team. Teams that exhibit high levels of trust tend to have clear roles and expectations of one another, get to know  one another  as individuals, and maintain positive action-oriented attitudes.
  • Effectively manage communications. Frequent communication is essential. Team  leaders need to understand when and how to use various forms  of communication to best advan- tage. Some experts suggest regular face-to-face  meetings, whereas others believe virtual teams can be successful even if they interact only electronically. One time when face-to- face communication might be essential is when misunderstandings,  frustrations,  or con- flicts threaten the team’s work.36

Global Teams. Virtual teams are also sometimes global teams. Global  teams are cross-border work teams made up of members of different nationalities whose activities span multiple countries.37   Generally,  global teams fall into two categories: intercultural teams, whose members come from different countries or cultures and meet face-to-face, and virtual global teams, whose members remain in separate locations around the world and conduct their work electronically.38  For example, global teams of software developers at Tandem  Services Corporation  coordinate their work electronically   so that the team is productive around the clock. Team members in London code a project and transmit  the code each evening to members in the United States for testing. U.S. team members then forward the code they’ve tested to Tokyo for debugging. The next morning, the London team members pick up with the code debugged by their Tokyo colleagues, and another cycle begins.39  The trend toward creating virtual teams that cross geographical boundaries has grown tremendously in recent years. In some organizations,  such as open-source  soft- ware maker MySQL, discussed on the previous page, most employees are scattered around the world and never see one another face-to-face.

Global teams present enormous challenges for team leaders, who have to bridge gaps of time, distance, and culture. In some cases, members  speak different languages, use different  technologies, and have different  beliefs about authority, decision making, and time orientation. For example,  some  cultures,  such  as the United States,  are highly focused on “clock time,” and tend to follow rigid schedules, whereas many other cultures have a more relaxed, cyclical concept of time. These different cultural attitudes toward time can affect work pacing, team communications,  and the perception of deadlines.40

Members from different  countries may also have varied attitudes about teamwork itself. Multinational organizations  have found that many team phenomena are culture-specific. Some countries,  such as Mexico,  value high power  distance, as described in Chapter 3, meaning that differences in power and status are seen as appropriate  and desirable. This viewpoint conflicts with the American idea of teamwork, which emphasizes  shared power and authority. Thus, the acceptance and effectiveness of team-based systems can vary widely  across different  cultures, which makes implementing  and evaluating teams quite complex.41

Organizations  using global teams invest the time and resources to adequately educate employees. Managers  make sure all team members appreciate and understand cultural differences, are focused on goals, and understand their responsibilities to the team. For a global team to be effective, all team members must be willing to deviate somewhat from their own values and norms and establish new norms for the team.42 As with virtual teams, carefully  selecting team members, building trust, and sharing information are critical to success.

Source: Daft Richard L., Marcic Dorothy (2009), Understanding Management, South-Western College Pub; 8th edition.

2 thoughts on “Types of Teams

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