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  • Statements on Management Accounting

    L E A D E R S H I P S T R A T E G I E S & E T H I C S

    C R E D I T S

    T I T L E

    This statement was approved for issuance as aStatement on Management Accounting by theManagement Accounting Practices Committee and itsSubcommittee on SMA Promulgation. The Institute ofManagement Accountants extends appreciation to theSociety of Management Accountants of Canada (SMAC)for its collaboration, and to Victor M. Rocine, CMC ofChangeMASTERS, who drafted the manuscript.

    Special thanks go to Randolf Holst, SMAC Manager,Management Accounting Guidelines, for his continuingoversight during the development of the Statement,and to the members of the focus group that providedadvice and counsel, including MAP Subcommitteemembers Dennis Daly and Richard Berk.

    Managing Cross-Functional Teams

    Published byInstitute of Management Accountants10 Paragon DriveMontvale, NJ

    IMA Publication Number 94295

    Copyright 1994 in the United States of America by Institute of ManagementAccountants All rights reserved

    ISBN 0-86641-232-8

  • Statements on Management Accounting

    T A B L E O F C O N T E N T S

    Managing Cross-Functional Teams

    L E A D E R S H I P S T R A T E G I E S & E T H I C S

    I. Rationale . . . . . . . . . . . . . . . . . . . . . . . 1

    II. Scope . . . . . . . . . . . . . . . . . . . . . . . . . 1

    III. Defining Cross-Functional Teams . . . . . . .2

    IV. Objectives of Cross-Functional Teams . . . .3

    V. The Role of the Management Accountant .3

    VI. Implementing Cross-Functional TeamGuidelines . . . . . . . . . . . . . . . . . . . . . . .3Providing Top Management Championshipand Support . . . . . . . . . . . . . . . . . . . . . .4Choosing and Defining the Right Project .4Selecting the Appropriate Team Members .5Supporting Development of a Team Charter . . . . . . . . . . . . . . . . . . . . .7Ensuring an Effective Team Start-Up . . . .8

    VII. Task-Oriented Tools and Group ProcessTechniques . . . . . . . . . . . . . . . . . . . . . .12Task-Oriented Tools . . . . . . . . . . . . . . .13Group Process Techniques . . . . . . . . . .14

    VIII. Dynamics of Cross-Functional Teams . . .16Barriers to Effective Team Performance .16

    Stages of Team Development . . . . . . . . .17

    IX. Individual and Organizational Implications 21The Individual Perspective . . . . . . . . . .21The Organizational Perspective . . . . . . .22Evaluating Team Performance . . . . . . . .24

    X. Why Cross-Functional Teams Can Fail . . .25

    XI. Conclusion . . . . . . . . . . . . . . . . . . . . .26

    Appendix: Cross-Functional Team Rating Form27

    Bibliography . . . . . . . . . . . . . . . . . . . . . . . .29

    ExhibitsExhibit 1: Task-Oriented Tools and Group

    Process Techniques . . . . . . . . . .12

    Exhibit 2: Stages of Team Development . . . .18

  • I . RAT IONALEThe power of the microchip, a developing globaleconomy, and a consumer revolution in expecta-tions are driving unprecedented change and forc-ing acceptance of a new competitive order. To sur-vive, organizations must deliver value. Private andpublic organizations face the challenge to befaster, cheaper, better, more reliable, moreresponsive and more convenient. Success todayis no indicator of future success, or even survival.

    The challenges of this new competitive orderdemand a full view of processes, new thinkingand integrated solutions implemented withgreater speed. Success in the new competitiveorder requires cooperation and partnerships withcustomers, suppliers, employees, unions, share-holders, and even traditional competitors.Managing complexity becomes a prioritybecause no single function, unit, or departmentcan have authority or control over the final prod-uct or service. Traditional organizational struc-tures are unable to respond quickly and under-stand the interdependencies between processesand the multiple, simultaneous changes requiredto achieve the desired outcome, change, orimprovement. For example, functional decisionsmay be made without adequate managementaccounting participation.

    Continuously creating value for customers andother stakeholders increasingly requires cross-ing functional, program, organizational, techno-logical, and even industrial boundaries. Itrequires making the most effective use of anorganizations resources, particularly its people.Teams of varying types are being increasinglyused to conduct research, to design better prod-ucts and services, to bring them to market, to re-engineer processes, to improve operations, toidentify and solve problems, and to createwealth. The capability of organizations to contin-

    ually and effectively organize, deploy, and inte-grate cross-functional teams is becoming a best-in-class differentiator.

    While most organizations find such teams worth-while, many are not using them to their greatestpotential. Other organizations suffer team over-use, unnecessary meetings, an inability to sus-tain team initiatives, and problems with account-ability and ownership. Experience may castdoubt on the usefulness of cross-functionalteams. This waste and lack of realized potentialhave caused some organizations to greatlyreduce their use of cross-functional teams.

    I I . SCOPEThis guideline will be of value to organizations ofall sizes, types, and industries that are consider-ing, or already have implemented, cross-functionalteams. It will help organizations understand:l the value and benefits of cross-functional

    teams;l the prerequisites for high-performing cross-

    functional teams;l guidelines and best practices for planning,

    organizing, building, maintaining, and evaluat-ing cross-functional teams;

    l basic group problem-solving tools and therequirements for effective group process anddecision making;

    l the importance of accommodating and balanc-ing individual, team, and organizational needs;

    l why cross-functional teams can fail; andl the contribution management accountants can


    This guideline will also assist the cross-functional teams themselves, including helpingthem achieve a well-defined mandate, with spe-cific, meaningful expectations and time lines.


    L E A D E R S H I P S T R A T E G I E S & E T H I C S

  • I I I . DEF IN ING CROSS-FUNCTIONAL TEAMSA cross-functional team is a small group of indi-viduals that cross formal departmental bound-aries and levels of hierarchy. The group is com-mitted to a common purpose or goal of improve-ment; it acts and works as a unitcommunicat-ing frequently, cooperating and providing mutualsupport, coordinating activities, drawing uponand exploiting the skills and capabilities of theteam while considering the needs of individualmembers.

    Cross-functional teams are typically formed onthe assumption that a small group is better ableto accomplish a purpose or goal than either indi-viduals acting alone or in a large, permanentlystructured group. Results should be better usingcross-functional teams, both in the quality of theoutcome and in the commitment to carry out theassociated changes and improvements.

    There can be a variety of cross-functional teamscovering:l a range of subjects and issues (e.g., customer

    service, research, product design, productlaunch, business strategy, internal manage-ment practices);

    l different periods and frequencies (disbandedafter a one-time project or meeting togetherregularly);

    l different levels or degrees of complexity (e.g.,networks of linked cross-functional teams,each team working on a distinct aspect of acomplex undertaking); or

    l varying degrees of delegation or empowerment(e.g., authorized only to analyze problems andmake recommendations, or established as aself-managed work team).

    Besides recommending action, such teams areincreasingly responsible for implementation

    (e.g., design of complex new products or servic-es, which include design, engineering, markettesting, development or manufacture, systemsdelivery, and even marketing and sales).

    Above all, cross-functional teams are units ofperformance. This guideline uses the followingideal of a high-performing team:l a common, compelling purposeAll team

    members are committed to achieving a sharedvision, the shape of which they have influenced;

    l shared leadership roles and role flexibilityTeam members share responsibility for teamprocesses, development, and outcomes;

    l individual and mutual accountabilityIndividuals are accountable for individual con-tributions and the team shares mutualaccountability for the teams collective performance;

    l a common, agreed work approachThe teamdiscusses and decides how it will proceed andhow each member will contribute to the teamsefforts;

    l trust, respect and opennessMembers sharemutual respect and caring; communication isopen and honest; they explore various ideasand encourage an active problem-solvingapproach;

    l dedication to performance and implementa-tionThe team is dedicated to enhancing theorganizations performance, for example byimproving productivity, quality, value to the cus-tomer, and employee satisfaction;

    l measurable performance goalsThe teammeasures its own performance by assessingcollective work products and progress towardits mission; and

    l supportive organizational structures, systems,and practicesCross-functional teams cannotmeet these measures on their own; nor canthey be sustained in organizations that are


    L E A D E R S H I P S T R A T E G I E S & E T H I C S

  • unfriendly to the team concept or that havetraditional bureaucratic cultures, systems, peo-ple management processes, and practices.

    Appendix A includes a High-Performing TeamRating Form, based