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In the corporate service environment high performing teams are nearly always the key to productivity. “We don’t make a product. We don’t make widgets. We are a people-based organisation – so, any deliverable really has to be a team effort,” says Sally Melbourne, head of strategic people initiatives at consulting firm KPMG. “It’s not one person that’s going to be able to deliver.” Part of the appeal of working this way is the camaraderie and mutual support for team members, she believes. “They like the different pieces that people can bring to a team environment so we actively encourage team collaboration.”
Regardless of industry sector, a high-performing and engaged team is considered a vital link to productivity for most managers. And two recent research projects have suggested the key to building effective teams lies in their social makeup.
Having friends on a team matters, according to research published in the Review of Economic Studies. In the paper, Social Incentives in the Workplace, Wharton economist Iwan Barankay and co-authors Oriana Bandiera of the London School of Economics and Imran Rasul of University College, London, reveal that fruit pickers are more productive if they have friends in their team. What’s more, “some workers are willing to sacrifice earnings and others are willing to exert effort when working with colleagues they are socially connected to”. The researchers, who explored the efforts of teams working on soft fruit farms in the UK, found social incentives can “reinforce or countervail classic incentive mechanisms such as pay for performance …”. However, working with friends can be a productivity plus and minus. The research found that when team members worked with friends who were less able at the task at hand, they were significantly less productive than when they worked with friends who were more able than them.
Working with high performers definitely affects outcomes, indicates research by professor Kevin Fox, head of economics at the Australian School of Business and Ross Milbourne, vice-chancellor of the University of Technology Sydney. By examining the research output of academic economists, Fox and Milbourne show that having a group of high performers in a faculty can raise the quality and quantity of team output. Their paper, Is it Harder to Soar with Eagles When You Work with Turkeys?, concludes: “… there are human capital externalities so that an increase in the human capital of any individual also raises, at the margin, the productivity of others”. This research builds on the work of Nobel Laureate economist Robert Lucas who modelled how workers’ productivity was affected by the performance of their colleagues. “We found evidence showing that, if you yourself want to be productive, it’s important to have highly productive colleagues around you,” reports Fox. “One productive superstar or a small group of highly successful people is enough to raise the group performance.”
However, the complexity of the job is also important in considering the role work relationships and social networks play in generating productivity, suggests associate professor Julie Cogin, head of organisation and management at the Australian School of Business. “In cases where the job provides little opportunity for challenge or intrinsic motivation, friends at work become an important ingredient for satisfaction and productivity. In other contexts, this is secondary because there are other sources of motivation,” Cogin says.
In the corporate world, indications are that social networks in teams may be a major driver of productivity. So, should companies be looking more closely at this as an incentive? Jason White, principal at Aon Hewitt, has no doubt that peers affect team members. For example, when a new team member joins a group where the informal leaders are high performers and have the “loudest” voices, the newcomers tend to mirror and replicate those people, he notes. “But, on the whole, quality of leadership and manager effectiveness tend to be the key to high-performing teams,” White says. And manager effectiveness can be as basic as providing feedback and having open, honest conversations with team members.
Cogin agrees that relationships with peers and the “work climate” in a team drive productivity to some extent, but she believes there’s evidence that this can work in reverse – productive and engaged employees actively cultivate strong team relationships. “The two most important levers of employee engagement are the ability of an employee to see the connection between their work and the organisation’s strategy, and the connection between their job and the organisation’s success.” She says leaders and direct managers are more likely to be able to drive discretionary effort and productivity in an employee. They can foster employee engagement more directly than peer relationships, which may then develop as a consequence of effective management. “An outcome of an engaged employee is that they will frequently help others with heavy workloads, build team relationships, volunteer for other duties and consistently look for ways of doing their jobs more effectively,” Cogin says.
At National Australia Bank (NAB), one of Australia’s big four banks, strong leadership is key to high-performing teams, and social cohesion is, in effect, a byproduct of this. “One of the things that we focus on is how we can build strong leadership. And that includes setting a clear direction and having a great team culture where people work together and support each other,” says Carmel Speer, general manager of organisational capability at NAB.
NAB’s essential leadership program for its middle managers focuses on how effective teams are established and evolve. The program uses the now traditional forming, storming, norming and performing model of team development created by US psychologist Bruce Tuckman in 1965. In the forming stage, group members come together and generally individuals look to be accepted into the group. They seek to make friends and may exchange personal details. Goals are agreed on, but not much conflict occurs. The storming stage is when ideas are exchanged and conflict may ensue. Some team members may find this stage difficult. At the norming stage a mutual plan is agreed and strategy developed. Some team members may give up their initial ideas in favour of group strategy. And the “performing” stage is when the work of the team is carried out. In 1977, Tuckman added an adjourning stage (also known as the mourning stage) when the work of the team is finished and a postmortem on the team’s outcomes can take place.
“We work with leaders on the skills to work with their teams in each of these stages of team development,” says Speer. “We also provide leaders with insights and tools for working with ‘engaged teams’, using the concepts of enablement and engagement through NAB’s employee opinion survey.” The strategy is similar at KPMG. “Our belief is without strong leadership, teams will not be effective,” reports Melbourne. “Our work in team building involves creating a collaborative team – one that’s able to function with a high degree of openness. They must be able to communicate to a level that allows individuals to constructively challenge each other.” This demands trust – if not all-out friendship – between those individuals, Melbourne points out. “Friendships in the greater organisation environment add a fantastic network support component,” she observes. “And relationships that establish professional rapport and trust help to create an atmosphere where there is open collaboration, but members of effective teams don’t need to be best friends.”
Team design is the vital emphasis, insists Phillip Ralph of The Leadership Sphere, a Melbourne-based consultancy with clients worldwide, “because often organisations get the construction of the team so wrong”. Ralph was formerly head of consulting and program delivery at banking group, ANZ, where he oversaw delivery of its Breakout cultural transformation program undertaken by 27,000 bank personnel. Companies are often unrealistic when putting teams together, he notes. The leaning to inclusivity and “stakeholder consultation” often leads teams to burgeon to unworkable sizes when small tight teams are more effective. “I keep being sent add-ons for a team I’m working with next week,” says Ralph. “When I asked about the additional people, I was told, ‘they occasionally come to meetings’. There’s no clear boundary around who’s actually in this team and who’s not, let alone clear roles and responsibilities.” Stakeholders may need to be kept in the picture, but not necessarily in the team. Outstandingly, a team needs a purpose. When asked: “What is the purpose of the team?” Most people erroneously regurgitate the organisational mission, Ralph says.
There’s an optimal team number for each objective, suggests Greg Doyle, associate partner at technology consulting firm IBM’s strategy and transformation practice. “I see many clients confuse stakeholders groups and teams and this creates a lot of problems,” says Doyle, who consults on organisational strategy to financial services and resources companies. “Teams are being put together to oversee or influence projects and, in some cases, every person and his/her dog are put on the team. That’s confusing teams with communication and information flows. A team has to have a particular mandate – some sort of measurable objective.”
High performing teams also need strong incentives as social cohesion or friendship alone is not the magic bullet for effectiveness. In some instances, high performers raise the level of team performance, but Cogin argues that they may also have the opposite effect. “When a high performing employee perceives they are investing more effort and performing at superior levels than their peers, they may attempt to restore equity by reducing their effort or even by leaving the team,” Cogin says. Incentives to achieve are clearly part of the productivity strategy, but how do they work in a team environment where incentives may differ? Individual needs should be considered in the incentive strategy because– as the research suggests – motivators differ widely. What gives an individual a stake in the output of the team can be as diverse as the individuals in the team itself, Doyle concludes. “The challenge for managers in trying to establish – or optimise – a team is to create the right balance between the motivations of individual team members and the desired outputs of the team as a group,” he says.
Published : October 19, 2010 in [email protected] School of Business
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