How to make sure teams work effectively with each other

Editor's note: Team performance is critical to an organization's success, but many teams feel they're not performing as well as they should be. Poor team performance, especially among teams that work across departments or functions, tend to breed silos, competing agendas, turf wars, and indecision; high performance produces organizational coherence and focus. McKinsey & Company's Organization Practice has researched the performance and attitudes of teams, those that are successful and those that are struggling, to identify the behaviors, attitudes, and organizational principles that make for effective teams. This is the third in a series of posts, based on the findings of that research, on building better teams.

In previous posts, we've discussed the importance of having the right people on a team and getting the team to focus on tasks where they can really be effective. A final critical area is making sure that team members are working effectively together towards common goals that benefit the whole organization, and not focusing exclusively on individual agendas. When dysfunctional dynamics appear on a team, it's important to deal with them as soon as they appear, lest team performance suffers.

Here are three examples of how poor dynamics depress performance:

The top team at a large mining company formed two camps with opposing views on how to address an important strategic challenge. The discussions on this topic hijacked the team’s agenda for an extended period, yet no decisions were made.

A team at a Latin American insurance company was completely demoralized when it began losing money after government reforms opened up the country to new competition. The team wandered, with little sense of direction or accountability, and blamed its situation on the government’s actions. As unproductive discussions prevented this team of senior executives from taking meaningful action, other employees became dissatisfied and costs got out of control.

The top team at a North American financial-services firm was not aligned effectively for a critical company-wide operational-improvement effort. As a result, different departments were taking counterproductive and sometimes contradictory actions. One group, for example, tried to increase cross-selling, while another refused to share relevant information about customers because it wanted to “own” relationships with them.

Team leaders can take several steps to remedy problems with team dynamics.

The first is to work with the team to develop a common, objective understanding of why its members aren’t collaborating effectively. There are several tools available for the purpose, including team surveys, interviews with team members, and 360-degree evaluations. The CEO of the Latin American insurance company used these methods to discover that the members of his top team needed to address building relationships and trust with one another and with the organization even before they agreed on a new corporate strategy and on the cultural changes necessary to meet its goals.

One of the important cultural changes for this team was that its members needed to take ownership of the changes in the company’s performance and culture and to hold one another accountable for living up to this commitment.

At the mining company, the CEO learned, during a board meeting focused on the team’s dynamics, that his approach—letting the unresolved discussion go on in hopes of gaining consensus and commitment from the team—wasn’t working and that his team expected him to step in. Once this became clear, the CEO brokered a decision and had the team jump-start its implementation. Stepping in isn't always easy, as it may go against the cultural norms that have developed within the organization. But, like any skill, it can be learned, and coaching is often helpful for the team leader.

Coaching for this type of intervention focuses on helping team members have non-emotional, courageous conversations that explain clearly that the intervention is not a personal attack or criticism, but a dialogue essential to helping the organization do better. At some companies, team members adopt rituals or totems that signal to everyone involved that the conversation is constructive, even if it may sound critical. At one company, people talked about a problem as "the elephant in the room," and so to help start courageous conversations they brought along a small elephant statue, to help break the ice. While some people reacted with a guarded cynicism at first, for most people these rituals helped to lower their apprehension about initiating difficult conversations.

Often more than a simple intervention is needed. Once the CEO at the financial-services firm understood how poorly his team was aligned, for example, he held a series of off-site meetings aimed specifically at generating greater agreement on strategy. One result: the team made aligning the organization part of its collective agenda, and its members committed themselves to communicating and checking in regularly with leaders at lower levels of the organization to ensure that they too were working consistently and collaboratively on the new strategy. One year later, the top team was much more unified around the aims of the operational-improvement initiative—the proportion of executives who said the team had clarity of direction doubled, to 70 percent, and the team was no longer working at cross-purposes. Meanwhile, operational improvements were gaining steam: costs came down by 20 percent over the same period, and the proportion of work completed on time rose by 8 percent, to 96.3 percent.

Finally, organizations may need to change their performance metrics to make sure they support not only the individual’s contribution but also the efforts of the team or teams they are part of. At the insurer, for example, the CEO saw to it that each top-team member’s performance indicators in areas such as cost containment and employee satisfaction were aligned and pushed the team’s members to share their divisional performance data. The new approach allowed these executives to hold each other accountable for performance and made it impossible to continue avoiding tough conversations about lagging performance and cross-organizational issues. Within two years, the team’s dynamics had improved, along with the company’s financials—to a return on invested capital (ROIC) of 16.6 percent, from –8.8 percent, largely because the team collectively executed its roles more effectively and ensured that the company met its cost control and growth goals.

How have you dealt with dysfunctional teams at your organization? How do you keep teams focused and moving towards common goals? Does your organization have a unique way to deal with "courageous conversations"?