Types of Teams - Principles of Management

There are many types of teams in organizational settings, most of which are summarized in Figure below. Some employees work in departmental teams , such as the accounting and finance departments, where a supervisor coordinates the work flow. Traditional manufacturing and service operations organize employees into production teams, which produce a common product or service or make ongoing decisions.

Advisory teams provide recommendations to decision makers. Task forces also make recommendations, but they are usually temporary and focused on a specific issue. Skunkworks are unusual teams that exist in somecompanies; they are relatively free from the corporate hierarchy and are usually located away from the company’s physical operations to create a product or develop a service. Two other types of teams that exist in many other organizations are self-directed teams and virtual teams. These team structures are becoming so important that we look at each of them in more detail next.

Types of Formal Teams in Organizations

Types of Formal Teams in Organizations


Whole Foods Market organizes its employees not just into teams, but into self-directed teams. Self-directed teams are similar to production/service teams in that team members typically have diverse competencies and are organized around a common product or service, but they differ from traditional production/service teams in several ways.

First, self-directed teams complete an entire piece of work, whether it’s a product, a service, or part of a larger product or service. Team members at Whole Foods are responsible for the entire processes in their areas, such as food preparation, display, inventory, and some purchasing.

Second, the team—not supervisors—assigns tasks that individual team members perform. In other words, the team plans, organizes, and controls work activities with little or no direct involvement of someone with higher formal authority. Harley-Davidson has taken this highautonomy approach to such an extreme that there are no supervisors at all at its assembly plant near Kansas City, Missouri.

Instead self-directed teams of 8 to 15 employees make most daily decisions through consensus. An umbrella group, representing teams and management, makes plantwide decisions. “There’s a lot of work being done to empower the workforce,” says Karl Eberle, vice president and general manager of Harley-Davidson’s Kansas City operations. “But there are very few examples of where they’ve taken the workforce to run the factory. And that’s what we’ve done.”

Third, self-directed teams control most work inputs, flow, and output. At Whole Foods, for instance, some self-directed teams work directly with suppliers, and all are responsible for their work processes and interacting directly with customers on the output side. Fourth, self-directed teams are responsible for correcting work flow problems as they occur.

In other words, the teams maintain their own quality and logistical control. Fifth, self-directed teams receive team-level feedback and rewards. This recognizes and reinforces the fact that the team—not individual employees—is responsible for the work, although team members may also receive individual feedback and rewards.

Surveys estimate that somewhere between one-third and two-thirds of the medium-sized and large organizations in the United States use self-directed team structures for part of their operations. In addition, almost all of the top-rated manufacturing firms rely on these teams.

This popularity is consistent with research indicating that self-directed teams potentially increase both productivity and job satisfaction. For instance, one study found that car dealership service shops that organized employees into self-directed teams were significantly more profitable than shops where employees worked without a team structure. Another reported that both short and long-term measures of customer satisfaction increased after street cleaners in a German city were organized into self-directed teams.

Success Factors for Self-Directed Teams If self-directed teams are so wonderful, why doesn’t every organization have them? Self-directed teams probably would add value in most organizations, but they are not easy to put in place. In addition to managing the team dynamics described later, corporate leaders need to ensure the following:

  1. Responsible for an entire work process: Self-directed teams work best when they are responsible for making an entire product, providing a service, or otherwise completing an entire work process. For instance, the seafood team at a Whole Foods store would be responsible for the entire process of ordering, preparing, and serving food items in this area of the store. This organization around a work process keeps each team sufficiently independent that it can change its work process and content without interfering with, or having interference from, other work units. It also gives employees a sense of interdependence and cohesiveness by working toward a common goal.
  2. Sufficient autonomy: Self-directed teams should have sufficient freedom from management control to organize and coordinate work. This autonomy allows self-directed teams to respond more quickly and effectively to client and stakeholder demands. It also motivates team members through feelings of empowerment. Many high-performance teams have failed because managers were reluctant to hand over some of their power or employees did not feel comfortable with their increased responsibilities.
  3. Technology-supported team dynamics: Self-directed teams are successful when technology is implemented in a way that supports coordination and communication among team members and increases job enrichment. Too often management calls a group of employees a “team”; yet the work layout, assembly-line structure, and other technologies isolate employees from each other. For example, automakers have referred to groups of employees along an assembly line as teams, but assembly-line technology does not lend itself to effective team dynamics because team members at one end rarely see coworkers at the other end of the line.


PricewaterhouseCoopers (PwC) employs 190 training professionals in 70 offices across the United States. These professionals, along with many more consultants and academics who provide employee development services, routinely form virtual teams for new projects.

“Virtual teaming is the norm for us,” says Peter Nicolas, a PwC learning solutions manager in Florham Park, New Jersey.

PricewaterhouseCoopers makes better use of its human capital by creating virtual teams. Virtual teams are teams whose members operate across space, time, and organizational boundaries and are linked through information technologies to achieve organizational tasks.

Virtual teams differ from traditional teams in two ways:

  1. They are not usually colocated (they do not work in the same physical area), and
  2. due to their lack of colocation, members of virtual teams depend primarily on information technologies rather than face-to-face interaction to communicate and coordinate their work efforts.

Virtual teams are one of the most significant developments in organizations over the past decade. “Virtual teams are now a reality,” says Frank Waltmann, head of learning at pharmaceuticals company Novartis. One reason for their popularity is that the Internet, intranets, instant messaging, virtual whiteboards, and other technologies have made it easier than ever before to communicate and coordinate with people at a distance.

The shift from production based to knowledge-based work is a second reason why virtual teamwork is feasible. It isn’t yet possible to make a product when team members are located elsewhere, but most of us now make decisions and create ideas. Information technologies allow people to exchange this knowledge work, such as software code, product development plans, and ideas for strategic decisions.

Information technologies and knowledge-based work make virtual teams possible, but knowledge management and globalization are two reasons why they are increasingly necessary.

Virtual teams represent a natural part of the knowledge management process because they encourage employees to share and use knowledge when geography limits more direct forms of collaboration. Globalization makes virtual teams increasingly necessary because employees are spread around the planet rather than around one city. Thus global businesses depend on virtual teamwork to leverage their human capital.

Invensys PLC is a case in point. A few years ago the British process and control engineering firm became a global leader by merging companies with offices in several countries.

To make the best use of this far-reaching talent, the company introduced information technologies whereby employees could participate in specialized projects at a moment’snotice without flying around the world. “Our development projects operate in a virtual mode and [gather] people from multiple sites based on project needs,” explains Joe Ayers, a manager at Invensys’s process simulation unit in Lake Forest, California. “It is common for projects to utilize developers from three different time zones in a ‘follow the sun’ development mode.”

Success Factors for Virtual Teams Virtual teams have all the challenges of traditional teams as well as the vagaries of distance and time. Information technology plays a critical role for virtual teams to exist and work more effectively, but so far no technology completely solves the distance problem. Fortunately management researchers have been keenly interested in virtual teams, and their studies are now revealing ways to improve virtual team effectiveness. Here are three of the clearest recommendations:

  • Virtual team competencies: Virtual team members require competencies beyond those needed in traditional teams. They should have the ability to communicate easily through technology, strong self-leadership skills to motivate and guide their behavior without peers or bosses nearby, and higher emotional intelligence so they can decipher the feelings of teammates from e-mail and other limited communication media. “On a call, I use subtle listening,” explains Karim Ladak, a Procter & Gamble executive whose virtual team members live in at least six cities around the world. “I listen for a quiver or a pause.And even then I know that I can very quickly miss something.”
  • Flexible information technologies: Researchers have found that corporate leaders like to impose technology on virtual teams rather than letting them adopt technology that suits their needs. The best situation occurs when virtual teams have a toolkit of communication vehicles (e-mail, virtual white boards, video conferencing,and so on), which gain and lose importance over different parts of the project.
  • Occasional face-to-face interaction: This may seem contrary to the entire notion of virtual teams, but so far no technology has replaced face-to-face interaction for high-level bonding and mutual understanding. This direct interaction is particularly valuable when virtual teams form. For instance, when IBM recently formed a virtual team to build an electronic customer access system for Shell, employees from both firms began with an “all hands” face-to-face gathering to assist the team development process. The two firms also made a rule that the dispersed team members should have face-to-face contact at least once every six weeks throughout the project. Without this, “after about five or six weeks we found some of that communication would start to break down,” says Sharon Hartung, the IBM comanager for the project.

24-Hour Virtual Team Service Invensys PLC is a global leader in process and control engineering with offices in several countries. To make the best use of this far-reaching talent, the company introduced information technologies whereby employees could participate in specialized projects at a moment’s notice without travel.

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