Have you ever felt like your organization functions in silos? Marketing is focused on entering a new vertical, while sales is aggressively trying to grow existing accounts, while customer success is stretched across multiple verticals, struggling to provide a tailored customer experience?
While the functions of each of these departments are inherently distinct, their goals should be consistent; otherwise, your organization will quickly work itself out of business, by stretching its precious resources in too many directions at once. The introduction of cross functional teams can promote cohesion across your organization, allowing you to optimize your efforts to achieve goals faster with less waste.
Learn how cross functional teams work, and why they could be the answer for any organization looking to grow with agility and speed.
By encouraging teams to identify, prioritize, and intentionally complete work items one at a time, Kanban can help combat the damaging effects of multitasking in a hyper-stimulated world.
View the eBook • Kanban 101Cross functional teams are groups consisting of people from different functional areas of the company – for example, marketing, product, sales, and customer success. These can be working groups, where each member belongs to their functional team as well as the cross functional team, or they can be the primary structure of your organization.
If you’ve ever called a company with a simple question – say an airline or a healthcare clinic, and found yourself being transferred from department to department, feeling no closer to your solution after twenty minutes than you did when you first made the call, you’ve felt what it’s like to experience an organization functioning in silos.
This is a frustrating experience for the customer, and a missed opportunity for your company to develop a lasting relationship. While an organization has many different functions, each of these functions exists to serve the customer, so they should work together to provide a comprehensive, positive customer experience.
Cross functional teams help organizations put their customers first, by encouraging effective communication across teams.
Bringing people together with different perspectives can improve problem solving and lead to smarter, more sustainable decision making. Instead of competing for resources, cross functional teams collaborate to optimize use of time, money, and effort to improve customer satisfaction while helping to meet organizational goals.
Cross functional teams are growing in popularity because of an increased demand from customers to provide consistently personalized, high-touch customer experience. Some of the benefits of cross functional teams include:
- Improved coordination across functional areas
- Increased innovation in product and process
- Reduced cycle times for key customer touchpoints
Improved coordination across functional areas
For many SaaS companies, coordination (or lack thereof) between marketing, sales, and product teams can make or break the business. Often, this is an issue of conflicting interests: If marketing is focused on landing enterprise customers to drive sustainable growth, while sales reps are motivated to win small sales quickly, the product team can’t create a product that will meet the needs of all of its customers.
Cross functional teams can help teams stay focused on corporate goals, so if the organization is trying to position itself as an enterprise tool, marketers can work with sales reps to identify ways to effectively market to enterprise executives. The product team can use insights gathered from sales performance and marketing research to prioritize features most valued by their target customer. A cross functional team of marketing, sales, product, and customer success representatives can work together on assigned accounts to provide enterprise customers with a customized, cohesive customer experience.
Increased innovation in process and product
When organizations operate in silos, it’s difficult to identify and implement improvements across the value stream. Cross functional teams can work to identify best practices for different processes, then cross-train other cross functional groups to promote cohesion and efficiency across the organization. Working together to find solutions for common problems, cross functional teams can find more innovative, more comprehensive solutions than each functional group could develop on its own.
Cross functional teams don’t only promote process innovation; they also promote more innovative products. Imagine if every product decision your company made included insights gleaned from marketing campaign data, UX focus groups, sales conversations, product usage data, and other rich sources of customer information from across the company. This is the power of cross functional teams – creating a forum where learnings from across the company can inform smarter decision making.
Reducing cycle times
Think again of the phone call example above, where a simple request took 20 minutes to resolve, not because of the complexity of the request, but because of the inefficiency of the company trying to resolve it.
Cross functional teams help organizations identify their inefficiencies, while improving their ability to find solutions that work. In this way, using cross functional teams can drastically reduce cycle times for any recurring pain point.
So instead of passing a customer request from silo to silo, the team can work together to resolve the request as quickly as possible, providing a far better customer experience. This is true of something small, like a customer request, as well as far larger projects, such as developing a new feature to meet customer demands.
Departmentalization, also referred to as departmentation, is the process of grouping teams or activities into departments or functions with specific objectives, goals, and outcomes to be achieved. It is a way of dividing an organization into separate parts (departments), each with its functions and responsibilities but all geared towards achieving the organization's overall goals.
Every employee in a department either performs similar tasks and shares a common goal or works within a multidisciplinary department with varied skills. Coordination among these employees is important, as is the ability to hold employees accountable for their actions.
Why do organizations need departmentalization?
At its core, departmentalization is dividing an organization into smaller, manageable parts. It helps managers run the organization more effectively and efficiently. There are several objectives of departmentalization, which include:
1. Grouping specialized activities
Departmentalization groups together employees who have specialized skills, knowledge, or tasks. Every employee in the department is tasked with defined duties and responsibilities. This grouping makes it easier for managers to assign tasks, coordinate activities, and supervise employees. It also allows managers to delegate authority more effectively.
2. Improving communication and coordination
Efficient communication and coordination are essential for any organization, regardless of its size. They allow managers to delegate tasks, give instructions, and provide feedback. They also allow employees to share information, resolve conflicts, and collaborate on projects.
Departmentalization helps improve these two critical aspects by grouping employees who share common tasks, functions, or skills or with varied skills in a multidisciplinary team. It also establishes a clear chain of command. Every employee in the department knows who their immediate supervisor is. This clear hierarchy makes it easier for managers to communicate with their subordinates and vice versa.
2. Establishing decision-making authority within the organization
Every organization has a certain degree of complexity. As the organization grows, so does its complexity. This growth can make it difficult for managers to control all the employees and activities within the organization.
Departmentalization helps managers maintain control by grouping employees into departments. This grouping makes it easier for managers to oversee the activities of their subordinates. It also allows managers to delegate authority more effectively and hold employees accountable for their actions.
4. Improving efficiency and productivity
Placing employees with similar skills, tasks, and knowledge in the same department can improve efficiency and productivity. Employees can share resources, knowledge, and expertise to collaborate on projects. This collaboration can lead to the development of new and innovative products or processes.
Departmentalization also allows managers to better utilize the talents and skills of their employees. By grouping employees with similar skills, managers can assign tasks that are better suited to their abilities. This helps improve employee morale and motivation.
5. Establishing responsibilities and improving accountability
During departmentalization, each department decides which tasks will be performed. This decision-making process helps establish responsibility and accountability within the organization.
Every employee within a department has a set of tasks or activities they are responsible for. This makes it easier for managers to reward and recognize employee efforts and outcomes.
What are the major forms of departmentalization?
There are five main types of departmentalization, each with its own unique characteristics. The type of departmentalization used by an organization depends on its size, industry, and business model, while the criteria that are established are important to guide the grouping of activities into the various departments.
1. Functional departmentalization
Functional departmentalization is the most common type of departmentalization. It groups together employees based on the functions they perform. The most common functional departments are finance, marketing, logistics, human resources, and operations.
Since all activities are similar in nature, a functional department often has the opportunity to optimize efficiencies given the similar nature of the tasks performed.
2. Geographic departmentalization
When an organization groups its employees based on the territory or geography they cover, it uses geographic departmentalization. This is common in organizations with widespread operations, such as retail chain stores, fast food restaurants, and banks. It helps managers effectively communicate with employees across different time zones and cultures.
3. Product departmentalization
Product departmentalization groups together employees based on all activities related to developing, manufacturing, and delivering a product. This type of departmentalization ensures specialized knowledge and expertise in each product line.
4. Customer/market departmentalization
Customer/market departmentalization is common in organizations that produce products or services for specific markets or customers. It helps managers better understand the needs and wants of their target market. Customer/market departmentalization is used when there is a great emphasis on efficient customer service and satisfaction.
5. Process departmentalization
Process departmentalization is when an organization groups its activities by the production process. This is common in manufacturing and production companies where there is a need for coordination between different processes. Process departmentalization helps managers effectively monitor and control the product or service quality.
What to consider when departmentalizing
While departmentalization can offer many benefits to an organization, there are also a few things to consider before implementation. The goal is to achieve the right balance of coordination and control while maximizing productivity.
- Specialization: For maximum efficiency and productivity, it's essential for specializations to be grouped intentionally. If an organization places different specializations together, it, therefore, should be done with a specific reason or purpose.
- Coordination: Activities have different levels of urgency and importance. When departmentalizing, it's essential to consider how different departments will coordinate with each other to avoid overlap and duplication of effort.
- Clear decision-making: There needs to be a balance between too much and too little control. Too much control can stifle creativity and innovation, while too little can lead to chaos. The goal is to find a happy medium that allows employees the freedom to be creative and productive.
The limitations of departmentalizing
Although there are many benefits of departmentalizing, it is also not without its limits. Departmentalization can:
- Create siloes if not well managed
- Result in ‘red tape’ if the process is not clearly defined
- Stifle creativity and collaboration
- Work better only within certain types of cultures.
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