A study published in Harvard Business Review revealed that about 75% of formally-created cross-functional teams are dysfunctional. Getting people from different departments to work together toward a shared goal sounds straightforward, but the reality is far more complex.
Companies that fail to work effectively across functions are slower to innovate, less adaptive to market shifts, and less efficient with their resources. Only 65% of executives feel confident that different departments within their organizations work well together. Senior leaders struggle to collaborate with their peers and are equally uncertain about the ability of lower-level teams to do so. Yet when collaboration works, the rewards are substantial.
Consider, 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 the company solve complex operational challenges while ensuring every employee's voice was heard, regardless of role or location.
When cross-functional collaboration works at this level, organizations see clearer communication, faster decision-making, and streamlined execution because teams avoid duplicate work and identify blockers earlier.As this story demonstrates, successful cross-functional collaboration requires several key elements. Above all, it depends on leadership alignment.
Organizations struggle to align leadership and foster cross-functional collaboration while managing an increasing number of competing projects. Driving innovation, expanding profit margins, and focusing on future growth are all essential, but they frequently compete with one another. This competition makes it difficult for executives to prioritize the broader goals of the business over the objectives of their individual divisions.
These breakdowns are often system problems, not people problems. Common structural barriers include unclear ownership of outcomes, conflicting goals across departments, siloed information that limits visibility, and a lot of shared metrics for success. Addressing these barriers requires deliberate effort at the leadership level.
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.
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. This is especially true in remote and hybrid environments, where employees can more easily fall into the trap of looking only at their own tasks or immediate team objectives without seeing how their work connects across functions.
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 of this alignment were remarkable:
Cross-functional collaboration: Survey scores increased by 21%.
Individual impact: 97% of associates reported understanding how their actions impacted the broader culture.
Communication: Favorability for open and direct communication rose by 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.
Once executive alignment is in place, leaders must create open communication channels where cross-functional teams can contribute their expertise directly to the organization's highest-priority 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 need several elements in place:
An executive sponsor who oversees and takes responsibility for the overall outcome
Shared goals that incentivize employees to help one another and offer resources where they are needed most, whether that means time, access to technology, or capital
Common metrics so every team uses the same definition of success rather than measuring progress against competing benchmarks
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.
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.
Departments often have unique cultures and priorities that can create friction:
Sales: Often values speed and immediate results.
Research: Typically prioritizes thoroughness and deep analysis.
Communication: Varied jargon and styles can lead to misunderstandings.
Although it’s tempting to dive right into the work, investing time upfront in team building pays off. Leaders who act as proactive bridge-builders across departments create environments where open communication becomes the norm. 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 best approaches share a few qualities:
They encourage listening and open communication among team members
They illuminate the advantages of diverse backgrounds and problem-solving styles
They 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. Teams that build this foundation surface diverse perspectives faster, make better decisions, and move more quickly from problem identification to solution.
Organizations that build leadership alignment, define shared goals, and select team members with demonstrated collaborative behaviors consistently report stronger cross-functional outcomes. The next step is measuring whether those conditions exist today — and identifying where listening data can close the gaps.
Cross-functional collaboration happens when people from different departments work together toward a shared goal. Instead of passing work down a chain, team members from functions like sales, operations, and HR tackle problems together from the start. Research shows about 75% of formally created cross-functional teams are dysfunctional, which means most organizations have real room to improve how their departments work together.
When cross-functional teams work well, organizations typically see:
Faster decisions — the right people are already aligned, so approvals move quickly
Better innovation — diverse perspectives surface ideas that single-function teams miss
More efficient resource use — teams avoid duplicating work and allocate talent, technology, and budget where they matter most
Stronger employee engagement — people understand how their contributions connect to company-wide goals
Faster response to change — aligned teams adapt to market or operational shifts without waiting on siloed approvals
The Encova Insurance example in this article reflects these benefits directly: after building leadership alignment following a merger, cross-functional collaboration scores rose 21% and communication favorability improved 26 percentage points.
Most barriers fall into a few categories:
Competing priorities — departments focus on their own goals instead of company-wide ones
Unclear ownership — no single person or team is accountable for the shared outcome
Information silos — teams lack visibility into what other functions are working on
Cultural and communication differences — departments use different jargon, work at different paces, and define success differently
Low trust — teams that rarely work together are slower to share resources or take risks together
Most of these are system problems, not individual ones. They require clear shared goals, executive sponsorship, and consistent listening mechanisms to surface and address the root causes.
The four main types are:
Team collaboration — people within the same team work together on shared tasks and day-to-day work
Cross-functional collaboration — people from different departments work toward a common company-wide goal
Community collaboration — groups with shared professional interests work together, often across organizational boundaries
Network collaboration — loosely connected individuals share knowledge or resources toward a broader purpose
For most organizations, cross-functional collaboration has the largest effect on business performance and is also the most difficult to get right consistently. It requires leadership alignment, shared accountability, and regular feedback loops to keep teams moving together.