If your people can’t work across silos, you can’t compete as a modern digital business.

Think that’s an overstatement? Consider these current business trends, disciplines, and strategies:

• Advanced analytics
• Customer experience
• Account-based marketing
• Extended planning and analysis
• Enterprise risk management
• DevOps and DevSecOps
• IT/operating technology (OT) convergence

Each represents a new way to create value by combining skills, perspectives, or even whole departments. And in every case, the cross-disciplinary team is the primary organizing unit for getting started and getting the work done.

“Interdisciplinary collaboration is becoming more and more important,” says Tiziana Casciaro, professor of organizational behavior and HR management and the Marcel Desautels chair in integrative thinking at the University of Toronto’s Rotman School of Management. “Research reveals that companies that enable cross-silo collaboration perform far better.”

Yet most companies are bad at it.

Despite the importance business leaders place on the agility, innovation, and speed that working across functions can enable, few have developed silo-busting as a key organizational skill. Obstacles include traditional company structures rooted in industrial efficiency; reliance on ad hoc arrangements, with employees often adding this work on top of their formal job roles; and lack of training and process to support working closely with other departments. From managers to the functional experts participating in cross-functional work, most folks are winging it.

The benefits of small interdisciplinary teams suggest that even greater value can be achieved by scaling these approaches. A cross-functional working group is the seed for, say, building a center of excellence for analytics or continuous improvement. In a few companies, the drive for collaboration has even led to complete reorganizations that rethink roles, responsibilities, performance metrics, and rewards. Organizations that are able to support cross-boundary collaboration, even at the team level, increase their adaptability, resiliency, innovation, and effectiveness.

Business leaders get the potential but aren’t reaching it. The vast majority say collaboration and agility are critical to business success. However, two-thirds of organizations pursuing an agile transformation say their organizations are just treading water, taking no decisive action, and consequently achieving little or no business impact, according to a 2021 McKinsey Global Survey.

Time to fix that. Here are emerging insights on the ROI, obstacles, and best practices for growing cross-functional work as an enterprise capability.

Desperately seeking agility

The ROI of agility is well established. The most agile organizations are not just more responsive to external changes; they are more profitable and innovative. Their customers are more satisfied. Their employees are happier and more engaged. They are 2.3 times more likely to exceed financial targets, 11 times more likely to create a sense of belonging, 27 times more likely to engage and retain employees, and 13 times more likely to innovate effectively than less agile organizations, according to a 2022 report by The Josh Bersin Company, an HR research and advisory firm.

The opposite of organizational agility, however, is hierarchy. “No matter how well you design the hierarchy, it starts to get in the way,” Josh Bersin wrote in the report. “New products, projects, or initiatives cross over functional boundaries.”

Most current organizational structures are vestiges of an industrial era when the primary goal was to consolidate common resources into departments to produce repeatable outputs efficiently. Those de facto structures, layers, and silos now stand as obstacles to today’s demands of knowledge work, rapid innovation, and transformative change—all of which benefit from cross-functional teamwork.

“One of the biggest leverage points for driving change fast is to create a network of people working across silos,” says Shannon Lucas, co-CEO of Catalyst Constellations, which helps organizations increase their agility and responsiveness.

Some pundits predict a future without formal jobs and functions, which will be superseded by employees floating from project to project, banding and disbanding as necessary. This idea has some real-world trailblazers. For example:

• MassMutual eliminated all job titles in 2019 because the company said they did not accurately reflect employee contributions, and that getting rid of them would foster agility and innovation, provide broad career experiences, and reduce unnecessary bureaucracy.
• Bosch Power Tools, a division of the Bosch Group, blew up its six business units and central functions in 2015 and reorganized into more than 50 permanent cross-functional teams. Since the shift, teams are closer to customers and getting more frequent feedback, user testing in product development has increased, projects that don’t make sense are killed sooner, and employee satisfaction is up, according to a project lead for the transformation.
• Australian telecommunications company Telstra ditched rigid job descriptions and adopted agile ways of working in all parts of the business. In its dynamic organization model, people are deployed to projects—using talent marketplaces—that have specific deliverables and tasks. Once those outcomes are achieved, the team members move on to other assignments. The company says this model helps control costs, increase employee skills, and provide better outcomes faster.

Still, while almost every business leader says they want their organization to be more agile, few are radically rethinking their organizational models to enable greater cross-functional collaboration at the enterprise level.

“A lot of organizational structure is designed to bring together people who do the same things,” says Casciaro, “and we relax into it by inertia.”

The human cost of the ad hoc approach

In the meantime, interdisciplinary collaboration is happening anyway—because it must. But since most enterprises have not evolved to manage them well, these collaborations are often one-off efforts. Teams or initiatives are not given the necessary support and can fail to deliver their full benefits.

“I don’t think any organization of a certain scale and complexity does this well right now,” says Melissa Swift, U.S. transformation leader at human resources consulting firm Mercer. “There are large organizations with ambitions to do this, but they have to unpack a lot of things like organizational design to figure out how to structure it.”

As a result, employees tasked with working outside their functional groups can suffer from both overload and underappreciation. Their cross-functional participation is often on top of their formal job roles.

“We need to break down traditional silos, [but] many people are getting destroyed by over-collaboration,” says Swift, who hears from individuals that cross-functional work is something they do on nights and weekends. “That just epitomizes the way most organizations are set up.” Thus, talented employees who are making heroic efforts on cross-functional initiatives may be paying a price.

“Many organizations think of interdisciplinary work as something you do in your free time,” Casciaro agrees. “That’s exactly the wrong way to do it. It has to be designed as an integral part of what an organization does.”

In 2020, the SAP SuccessFactors research team began studying dynamic teams: cross-functional groups of employees that organically move from project to project, coming together to get work done and disbanding once the work is finished. The goal was to better understand how organizations were designing and deploying these teams—and how they might do so more effectively. A global survey of nearly 1,400 employees who had participated in or managed dynamic teams uncovered the upsides:

• Sixty-six percent of employees experienced a resulting positive impact on their careers.
• Sixty-six percent of employees experienced a resulting positive impact on their engagement.
• Sixty-five percent of employees experienced a resulting positive impact on their intentions to stay with their organizations.
• Roughly three-quarters of managers said having their direct reports participate in dynamic teams had a positive impact on the business, employee career development, and employee engagement.

However, that’s where the positivity ended. While employees and managers recognize the big picture benefits, their actual experience leaves much to be desired:

• Only 20% of employees said they were highly satisfied with their dynamic team experiences.
• Twenty-three percent of employees said they were motivated to join another dynamic team.
• Just 36% of managers said they’d encourage their direct reports to participate in dynamic teams.
• Conversely, 79% of managers expressed concern that their direct reports have less time to complete core job roles while participating on dynamic teams.
• Seventy-seven percent of managers worried that their direct reports may not be able to meet performance expectations when working on dynamic teams.

The SAP SuccessFactors research team interviewed HR leaders about their biggest concerns—with challenges spanning every phase of employee and team development. Because these teams tend to be thrown together informally based on social networks, they can lack diversity and critical capabilities that yield the best results; it’s about who knows who rather than what’s best for the team. When systems are designed around traditional roles, HR leaders can feel hamstrung in building any formal strategy around cross-functional work and collaboration. Limited structure and visibility make it difficult to measure performance or provide recognition and rewards.

“Figuring out organization, metrics, and rewards is difficult,” says Swift of Mercer. As one HR leader told the SAP SuccessFactors research team, “Employees may think they had a huge impact, but it can go completely unnoticed.”

Cross-functional collaboration as enterprise capability: Where to begin

The starting point is to get clearer and more deliberate about the dynamic teaming that is already happening in your organization. Consider emerging tactics and tools in the following areas.

• Sourcing cross-functional talent.
  Cross-functional teams are charged with some of the most important shifts taking place in an organization, yet they are often pulled together on the fly. Instead, team members should be selected based on their skills, experiences, and diversity of thought. Talent marketplaces, like those Telstra uses, match people to opportunities and potential roles based on their skills and interests. These tools can also catalog softer aspects such as preferred work and learning styles, providing insight on team members to promote a healthy work dynamic.
• Identifying and deploying “cultural brokers” or “change catalysts.” Every organization has employees who excel at connecting across divides. They are good at engaging with people that think differently, translating across roles and backgrounds, and creating connections.

Sujin Jang, an assistant professor of organizational behavior at INSEAD, calls these folks cultural brokers. Lucas refers to them as change catalysts. Whatever the moniker, they can play a critical role in interdisciplinary work situations.

• Upskilling for cross-silo success.
  For most people, working well as a functional representative on a diverse team is a learned skill. Organizations can provide training and mentoring to help participants understand how to, for example, ask questions in an open-ended, unbiased way, actively consider other points of view, and broaden their vision.
• Building trust and understanding. The SAP SuccessFactors survey found that few dynamic teams have access to necessary and useful information about their members—such as work style, communication style, and skills. The often temporary nature of cross-functional teams or collaboration can also make it difficult to build relationships over time, which is critical to good teaming behavior and performance. (This is probably why survey respondents reported more positive outcomes with teams that lasted a year or more, but the more common life span reported was six months or less.) Clear onboarding processes and tools to share more information about team members can help build trust faster. “It’s a whole organizational and cultural shift moving from silos to a more adaptive organization, and trust has to underpin it,” says Lucas.
• Creating structure. While it might seem antithetical to agility, structure is crucial. The best outcomes in the SAP SuccessFactors survey were associated with cross-functional teams having greater structure, including clearly defined roles, goals, and accountabilities. However, the vast majority (78%) of respondents said the teams they worked on were only a little or somewhat structured.
  
  
  Clarity enables agility,” says Swift of Mercer. Team charters can make goals, expectations, and responsibilities clear.

• Implementing meaningful metrics.
  HR leaders can also build processes and implement tools to link dynamic team performance to organizational key performance indicators and objectives. Deciding on clear outcomes from the start can help weed out what Swift calls “collaboration theater” from necessary collaboration. “In an environment where people are ever more burdened, it’s critical to eliminate performative work,” Swift says.
• Ensuring balance. Stop the burnout. Employees tapped for cross-functional opportunities need more flexibility in their core roles and support from their managers. “My best advice is around prioritization. If you’re going to do [more cross-functional work], what are you going to not do to carve out space for this?” says Swift. “You have to have reasonable expectations for your employees.”
• Sharing power and increasing autonomy. “Decentralizing power and giving people more autonomy is very important to these kinds of efforts,” says Casciaro, coauthor of the book Power, for All: How it Really Works and Why It Is Everyone’s Business. “You’re not going to get people to cooperate horizontally if you’re keeping them in a vertical line of authority. It’s impossible.”
  
  Having some say in cross-functional participation is also important. Respondents to the SAP SuccessFactors survey reported more positive outcomes when they participated in dynamic teams, yet the majority of the time they joined at the suggestion (40%) or requirement (35%) of their managers.
• Recognizing and rewarding cross-functional achievements. Recognition and rewards are key to motivation and engagement, but the SAP SuccessFactors survey found that most dynamic teams lack important talent management processes such as feedback, performance evaluation, and rewards. Companies seeking agility must create those processes across departmental boundaries.

Sometimes this requires radical change. In 2013, Microsoft chucked its much-maligned “stack ranking” evaluation system, which reportedly fostered competition instead of collaboration. Today employees must answer two questions for their performance reviews: how they contributed to the success of others and how their results built on the work, ideas, and effort of others. Similarly, at ING Netherlands, which eliminated full-time managers and embraced multidisciplinary squads, performance is now measured by team outcomes rather than individual ones.

As companies realize the importance of long-term agility and adaptability to successfully navigating a volatile, uncertain, and quickly changing business environment, understanding how to best support and sustain interdisciplinary collaboration will be key. They can begin by better supporting and structuring their dynamic, cross-functional efforts. Then they can explore how to make these capabilities more prevalent—and permanent—throughout the enterprise.

“The pressure is pretty strong to make this transition,” says Casciaro. “The best companies have been moving in this direction, and more are likely to join them. They’ve got to experiment and figure out what works. Ultimately, these will become baseline capabilities for good organizations.”