It's widely acknowledged that cross-functional collaboration can be challenging. A study published in Harvard Business Review revealed that about 75% of formally-created cross-functional teams are dysfunctional!
The business consequences of poor collaboration are equally profound. Companies that fail to effectively work across functions are less likely to innovate, respond quickly and adaptively, or utilize their resources efficiently.
The challenges are so stark that only 65% of executives feel confident that different departments within their organizations work well together. This highlights a significant issue: senior leaders struggle to collaborate effectively with their peers, and they are equally uncertain about the ability of lower-level teams to do so. Yet when it’s done well, the rewards can be great.
The Power of Collaboration Across All Levels
Take, for example, this success story drawn from one large retail customer’s integrated employee listening program. When launching their unified strategy in 2018, they recognized that employee listening with Perceptyx would be crucial to their success and to support the company's value of “relentless improvement.” To be effective, they also had to consider the company’s four unique brands which spanned various regions and sales channels. Stakeholders from multiple departments provided input and helped ensure that the survey was aligned to their strategies, goals, and visions.
This collaborative approach enabled the organization to gather insights across all levels and turn them into action — from retail leaders implementing new communication strategies redesigned to reach all their people, to managers creating targeted improvement plans for their teams. Their listening program helped unlock the power of collective intelligence to solve complex operational challenges while ensuring every employee's voice was heard, regardless of role or location.
As this story demonstrates, successful cross-functional collaboration requires several key elements. Above all, it depends on leadership alignment.
The Mandate for Leadership Alignment
Organizations struggle to align leadership and foster cross-functional collaboration while managing an increasing number of projects in a rapidly changing business environment. These efforts — such as driving innovation through new products and services, expanding and protecting profit margins, and focusing on future growth — are often essential, but frequently compete with one another. This competition can make it difficult for executives to prioritize the broader goals of the business. The roles they play in shaping the future of the company also make it more challenging to put the needs of the business over the objectives of their individual divisions or functions.
To foster collaboration, organizations need to clearly define their top priorities and ensure they are well-communicated and understood across all levels. This starts at the executive level, by ensuring that the company’s most senior leaders understand what initiatives are most vital to driving success and what “secondary” goals (often relating to their specific functions or departments) can be placed on hold for the time being in support of putting the overall success of the enterprise first. As one executive aptly said, this means “making sure everyone is rowing in the same direction.”
Alignment is particularly important when allocating finite resources, like talent or technology, to initiatives that will have the greatest impact on the organization. Building this alignment is key to protecting the scarcity of time and resources and setting up employees at all levels to execute with a greater sense of purpose.
Collaboration Starts from the Top
Building leadership alignment often requires shifting the mindset that different areas of the business are in “competition” with one another. Instead, the focus should be on defining success at the company level rather than within individual functions. In order for executives to foster a culture of collaboration, they need to demonstrate it themselves and that often begins with establishing a shared sense of purpose and a clear outcome.
A powerful example of leadership alignment driving successful collaboration comes from Encova Insurance. When Motorists Insurance Group and BrickStreet Mutual Insurance Co. joined forces in 2017, they faced the complex challenge of merging two distinct corporate cultures into one cohesive organization. Rather than allowing departments to remain siloed or compete with one another, Encova's leadership team prioritized building a unified culture from the top down.
Their approach centered on creating what they called the "Culture Playbook," an initiative spearheaded by the senior leadership team that clearly defined shared values and expectations across the organization. Managers used these guiding principles to shape their daily operations, inform hiring practices, and align team objectives with the company's broader mission. The results were remarkable — survey scores for cross-functional collaboration increased by 21%, and an impressive 97% of associates reported understanding how their individual actions impacted the broader culture. Open and direct communication across the organization saw a dramatic improvement as well, with favorability rising 26 percentage points.
The success of this alignment was particularly evident in how the organization handled critical decision-making. Rather than allowing individual departments to pursue competing priorities, Encova's leadership team focused on creating clear, company-wide objectives. This unified approach contributed to the post-merger organization’s ability to achieve profitable growth during challenging economic conditions, demonstrating how strong leadership alignment can drive organizational success even in difficult times.
Maintain a Balance Between Shared Goals and Individual Accountability
Once alignment at the top is established, it’s essential to create open communication channels where key players across functions can contribute their expertise and knowledge to tackling the company’s most pressing goals.
Organizations that excel in this area are intentional about establishing interdepartmental working groups and touchpoints focused on achieving shared goals. For these working groups to be effective, they require an executive sponsor who oversees and takes responsibility for the overall outcome.
Having shared goals is particularly important when it comes to incentivizing employees to work together. If success relies on collective goals, employees are more likely to look for ways to help others and offer resources where they are needed most — be it in terms of their time, access to technology, and even capital.
Additionally, every team member must clearly understand their role, the value they bring from their area of the business, and how their contributions support the collective outcome. In short, the goals of the working groups must be shared, but accountability has to remain with each member and align with what they will bring to the broader group.
Foster Trust and Understanding Through Team Building
When building cross-functional teams, while technical skills and functional expertise are essential criteria, it's equally important to select team members who demonstrate strong collaborative capabilities. For example, if you use 360 feedback, look for employees who have been rated highly by their colleagues for helpfulness. Potential team members may be talented in their specific area of expertise, but do other people enjoy working with them? If a prospective team member lacks the willingness to be helpful or prefers to work solo, they may derail efforts that require close collaboration across functions.
Once assembled, team members may have limited understanding or appreciation of other departments and their expertise and challenges. Departments often have unique cultures that can make collaboration challenging. For instance, sales may value quick results, while research may prioritize thorough analysis. At the most basic level, different team members often have different communication styles and jargon, which can lead to misunderstandings.
Although it’s tempting to dive right into the work of the cross-functional team, it’s useful to invest time upfront in team-building activities. Team building can take many forms, including structured games during initial team meetings, casual get-togethers outside the office, or even off-site events such as community service. The ideal team-building strategy will encourage listening and communication among team members, illuminate the advantages of embracing the diversity of various backgrounds and approaches to problem-solving, and highlight the benefits of consensus-based decision-making.
This approach may be counterintuitive in a world that values quick results and fast action. But successful team building will lead to a spirit of cooperation and create a lively back and forth where people share their perspectives and listen to one another. This allows the team to access the power of collective intelligence that can lead to creative innovation.
By building leadership alignment and creating shared priorities and goals, it is possible to create high-performing, cross-functional teams that yield increased value for the organization. When every team member understands their role and feels a sense of camaraderie and trust, the real work can begin and the team can leverage the skills and talents of all its members.
To learn how an experienced listening partner like Perceptyx can assist with collaboration efforts across the organization, schedule a meeting with a member of our team.