5 Different Types of Teams & Their Role in the Organization

The modern business world lets us organize our work in multiple ways. We can work temporarily or on a permanent basis. We can work from home or from the office. We can work with people who have the same level of expertise and skills, or with people whose field of specialization totally differs from ours.

Such a variety of work forms suggests that there should be different types of teams that would ensure efficiency in each individual case. In this article, we will discuss the main team types, providing examples and describing their pros and cons.

Types of teams

Teams are categorized into several types, based on how they organize themselves. We cannot say that one is better than another because each type of team organization can be a good fit for a particular situation. There are five main team types:

1. Functional teams

Functional teams are the most traditional corporate units that are typically represented by departments, as all the team members belong to the same department. A functional team consists of people who have similar professional expertise, which means it's homogeneous. The roles and responsibilities in functional teams are assigned by a leader to whom team members report.

These teams are usually permanent.

Examples: a quality assurance team or a financial department.

Advantages:

1. Easier task allocation. When team members are organized by their specialization, it helps management assign tasks.
2. Operational speed. Specialized problems are handled fast because the people working on them have relevant knowledge and experience.
3. Coordination. The work of a functional team is strictly controlled and coordinated by a manager. Each person is in charge of their portion of duties.
4. Skill growth. Focusing on their specific responsibilities, team members get a chance to constantly improve. 

Disadvantages:

1. Segregation. Members of functional teams focus on their narrow areas of expertise, which makes them isolated from the rest of the company’s teams. This way, they may not see a broad perspective, lacking the understanding of how their work supports the organization.
2. Slower decision-making. In a company that consists of functional teams, making a decision takes longer since it requires heads of different units to meet and find a solution.
3. Decision-making is the prerogative of the leader, not individual contributors. Such an authoritative approach can be very demotivating, as it doesn’t take the opinions of team members into account, this way making them feel less important.  

2. Cross-functional teams

A cross-functional team is composed of representatives of various departments that have diverse functional expertise and skills but still work on the same objectives. Their main purpose is to break silos in the organizational structure. Like functional teams, cross-functional ones are homogeneous, as their members belong to the same hierarchical level.

Examples: a project team or a marketing team.

Advantages:

1. Diversity of perspectives. Each team member is an expert in a particular area, which helps a team see various sides of the problem and look for unconventional solutions.
2. Organizational alignment. Cross-functional work lets employees understand how departments are connected and affect each other, this way helping them share a common vision.
3. Accountability. When something does not go as planned, traditional functional teams tend to put the blame on other departments. This is not the case with cross-functional teams.
4. Diversity of abilities. A cross-functional team is able to handle different types of projects.

This helps to create well-rounded people throughout the organization that can think through complex problems more critically, and allows them to adjust their perspective of the product’s development by considering how it affects others. – Donald Grim, Lead Agilist, Fifth Third Bank

Disadvantages:

1. Problems with team cohesion. It takes time for the members of cross-functional teams to work smoothly.
2. Conflicts caused by clashes of opinions.
3. Risk of decreased efficiency. Cross-functional teams may have difficulties trying to provide quality and meet standards since they have to deal with different processes and tools.

3. Self-managed teams

A self-managed team is a group of employees who work collaboratively and take full responsibility for both work processes and the final result. They work autonomously, without the supervision of a manager. This means that besides creating products or services, they also perform basic management functions - organizing, planning, leading, and controlling.

In self-managed teams, the decision-making power is distributed horizontally among team members. People make commitments to each other rather than to a leader.

Examples: Buurtzorg, Morning start, FAVI.

Advantages:

1. Higher motivation. Decision-making autonomy empowers employees to be active participants of business development. This encourages them to contribute more and make a difference, which makes such teams high-performing.
2. Focus on customers. Self-managed teams seek to satisfy the customer, not the leader. This way, they look for opportunities to enhance their product or service.
3. Adaptability. Since there is no traditional organizational hierarchy, such a team is more adaptable and ready to react in unstable situations.
4. Cost-effectiveness. A company doesn’t have to hire managers and, consequently, spend money on that.

Disadvantages:

1. They are hard to implement. For most of us, self-management can seem too unusual. We’re familiar with the old model of vertical management, where there is a manger on top of the hierarchy who gives directions and controls subordinates. To build a successful self-managed team, employees need special training.
2. Leadership problems. Without one specific leader, the chances are that more ambitious people will try to become informal leaders. That challenges the idea of self-management, because members of self-managed teams have equal power by default.   
3. They won’t work for teams that are not self-sufficient. Self-management empowers – but having opportunities doesn’t mean you will use them. People may need someone who would encourage them to improve. In a self-managed team, people are busy with their own development, while in a traditional team, there is a manager who probably knows and keeps track of your strengths and weaknesses, and takes time to help you move in the right direction.

A “tragedy of commons” effect can happen – if everyone is responsible for engagement, no one will feel accountable for it. – Fabian Schumann, a managing consultant at Gallup

4. Virtual teams

These teams, also called remote or geographically dispersed, are teams the members of which work remotely, not being physically present. This has been made possible thanks to technological development. The Covid-19 pandemic caused the outburst of virtual teams – people had to work from home, but even after the pandemic, the trend of remote work still stays with us. 

One of the secret benefits of using remote workers is that the work itself becomes the yardstick to judge someone’s performance. – Jason Fried, the co-founder and CEO at 37signals

As a subtype of virtual teams, we can mention teams who work in asynchronous environment – which is, not only from different places, but also from different time zones. While working remotely still presumes you’re supposed to attend real-time meetings and answer email within specific time frames, working asynchronously gives you a chance to communicate the way that works for you, using alternative methods, like recorded briefings. Organized properly, asynchronous work environments can be very productive.

Examples: freelance teams, service (client support) teams, network teams.

Advantages:

1. Decreased costs, for both employers and employees. Employers don’t have to pay rent for office buildings and utilities, and employees can save money otherwise spent on travel expenses.
2. They allow recruiting a wider range of talent. It’s easier to find qualified employees when your choice is not geographically limited. 
3. A better work-life balance for employees. Working from home, you don’t have to spend time on traveling to the office and back. This way, you get a chance to spend this time the way you’d like – sleeping more or spending time with family. Flexibility provided by virtual teams also lets you plan your time the way it works for you, so you can visit a doctor or solve administrative issues in the morning, and then continue work in the evening.

Disadvantages:

1. It takes longer to make decisions.
2. Working virtually may negatively affect team culture. Without real-life communication, team members may feel disconnected. It can also create trust issues, and hinder building a respectful workplace. Besides, leadership may have trouble trying to develop cultural values and get people to pursue the same company goals.
3. Some people have difficulties with personal time management. This is not only about missing deadlines – after all, deadlines are often missed at the office, too. For people with poor time management skills, working in virtual teams can be challenging as it requires you to schedule your time yourself.

5. Team of teams (multiteam system)

This is a team that comprises various departments of the same organization. It’s larger than a typical team but smaller than an organization. The purpose of a team of teams is to solve complex problems that require coordination.

In this team model, power is decentralized. It encourages a sense of partnership, urging people to work on the same goal. The model is based on meritocracy – the idea that you get recognized by what you do.

The concept is closely described in a 2015 book “Team of Teams”, written by retired US Army General Stanley McCrystal. The book proves that even in a highly hierarchical organization like the US military, it’s possible to create a well-aligned “team of teams” that gives people at the frontline (in the case of McCrystal, literally at the frontline) the authority to make independent decisions, and makes people adaptable to the requirement of the changing environment.

Empowered execution is one of the two factors of adaptability McCrystal mentions. The second one is shared consciousness – a “holistic awareness” of the situation and a sense of shared purpose. These two factors are not self-sufficient and work only in pairs.

McCsrystal also points out that leading such a team can be challenging:

Leading a team of teams is a formidable task – much of what a leader must be, and do, has fundamentally changed. The heroic “hands-on” leader whose personal competence and force of will dominated battlefields… has been overwhelmed by accelerating speed, swelling complexity, and interdependence.  

Examples: emergency response teams (which could hypothetically consist of police, firefighters, medical technicians, emergency surgeons, and a recovery team,) Task Force teams

Advantages:

1. Working in a “team of teams” helps you gather many perspectives and find the most optimal solution. Cross-functional teams share diversified knowledge and practices, which can stimulate innovation and help gain a competitive advantage.
2. Adaptability. The absence of bureaucratic decision-making lets people find solutions quickly before it’s too late. 

Disadvantages:

1. Problems with alignment. When team members fail to synchronize their work, they risk having issues with priorities, deadlines, and task accomplishment. This will negatively influence team effectiveness and the speed of the teams’ work.
2. Conflicts and trust issues. For a team of teams to be productive, the teams within it must trust each other. At the beginning of their collaboration, teams may have a prejudiced attitude toward each other. This creates tension, and tension creates work-related stress. These are not features of a healthy environment.

Besides the types of teams we've mentioned, there are several more - problem-solving teams (temporary teams built to solve a specific issue,) leadership teams (those consisting of leadership,) contract teams (teams hired to work on a part of a project,) operational teams (teams that don't work on any projects but support others, like Human Resources,) and other teams.

How to choose a team type for your organization

You may like some team types more than others, but your personal preference should not be the only factor influencing your choice. Before making a decision, consider the following:

• Is it going to be a temporary or permanent team? If it’s temporary, you could opt for a cross-functional team, or a virtual one, as an experiment.
• Are your people independent and self-sufficient enough to work autonomously? When employees are immature and not ready to take a risk, they should probably not get decision-making power.
• Do you have enough resources? Multiteam systems and self-managed teams will require resources to work autonomously. If your resources are limited, you’d better control them by yourself as a manager.
• What skills are required to complete the tasks and achieve the mission? If people on a functional team lack the knowledge, you could organize a cross-functional team – or even invite virtual team members.     
• What is your team size? If your company is large enough, you can try implementing the multiteam system or the cross-functional type, while the virtual model may not work.
• Which stage of team development are your employees at? If your team is at the peak of their productivity, it's probably not the best time to change everything and start from scratch.

Formulate your goals, analyze your team, and pick the team type that would help your people unleash their potential. Try something new, if you can afford it. Maybe it will be a breath of fresh air that your organization needs so much.