The Untapped Opportunity of Cross-Functional Teamworking
Summary: In this article we argue that cross-functional teamwork is a significant opportunity for organisations to generate value, improve performance, and enhance sustainability in a fast-changing world. The article explains how cross-functional teams can leverage the concept of “Social Energy©”, which is the force formed between social connections within an organisation, to collaborate effectively and innovatively across functions, processes, and stakeholders. The article also discusses how cross-functional teams can help organisations comply with the EU Corporate Sustainability Reporting Directive (CSRD), which comes into force in January 2024 and requires companies to report on environmental, social, and governance (ESG) matters. The article suggests that organisations need to build new capabilities and train internal change agents to facilitate cross-functional teaming and align the entire organisation for a sustainable future. It also highlights the role of Xenergie in supporting this transition.
The Untapped Opportunity of Cross-Functional Teamworking
How often have you seen teams working within their “silos” and not really knowing what is happening across the organisation, or in the wider business ecosystem? The American Management Association report that 83% of executives observe silos in their organisations and 97% think it is having a negative impact on performance. So why do teams keep doing it?
Cross-functional teamwork presents a significant opportunity for organisations to generate substantial value gains. Evidence from our work in Xenergie confirms that such initiatives present substantial opportunities for performance gains through joined up thinking and action, which sets organisations of all sizes on a trajectory for more agility in a fast-changing world. Cross-functional team development also importantly aligns key stakeholders to "face the music" of a different future and come together to generate thrust - by optimising the "Social Energy©" - for moving forward together.
"Social Energy©" is the force formed between social connections within an organisation. It’s “the space” between people as they interact with each other in processes, places, functions, technologies and strategies across your value chain. This includes a greater focus on how organisations work with their supply chain partners, distributors, influencers, regulators and other touch points between themselves and their customers. In the fast-paced and competitive landscape of today's business world, the Social Energy© within an organisation can be used as powerful competitive advantage.
Enabling ESG & Sustainability Directives
Importantly, leveraging cross-functional teams and optimising social energy also aligns with the expectations set by the EU Corporate Sustainability Reporting Directive (CSRD), which comes into force in January 2024 and can play a pivotal role in not only meeting the expectations but making it meaningful at the same time. The new social directive emphasises transparency, accountability, and a holistic approach to corporate sustainability and future preparations, seeking material evidence of meaningful approaches to behaviour change, leadership succession and social contribution, inside and outside the organisation, in addition to the better recognised environmental concerns which have been top of agenda in recent years. It calls for aligning all stakeholders and with the intention of "leaving no-one behind". Whilst it is an EU-first move, similar directives are expected and in preparation elsewhere in the world in 2024.
Importantly, cross-functional teaming can support this quest, by inviting teams to question and reflect on their work and roles with more insight and to collaborate generatively in seeking more sustainable, value-adding ways of contracting and working with one another for better results and to innovate and discover with new opportunities and technologies available.
The main message is to get ready for change.
Build Understanding and Be Prepared
One of the primary aspects of the latest addition to the CSRD is the need for companies to report on social, and governance matters. This is more than a tick-box exercise and whilst compliance is not expected to be immediate, progress and preparation is expected to be actioned and reported on by 2025, so taking preparatory steps in 2024 makes sense.
Cross-functional teams, comprised of individuals with diverse skills and expertise, can contribute to a more comprehensive understanding and management of ESG issues, which include the importance of being future-ready and aligning the entire organisation for new economic and environmental times. With AI and digital strategies likely to be part of many future solutions, not to mention a more diverse and demanding workforce, ESG is far more than about the environment. It is a whole organisation realignment and highly strategic - it is about the future of your company. Arguably, you need to do this anyway!
Bringing together a cross-functional team that includes members from sales, marketing, finance, operations, R&D and risk departments to collaboratively assess the ESG impact of business operations and devise strategies is also a superb opportunity to prepare future leaders, manage succession and consult at multiple levels through the organisation - aiming for true joined up thinking and increased agility through involvement, not just at the Board level, but through the functions.
Making it Work
However, getting out of the way of the current habits, politics and sacred cows and creating a clear mandate is usually the first hurdle to make space for this. It is simply not enough to convene a group or a council, it needs a process and development to become a team that feels it has a common purpose and interests that matter, and this is best facilitated to create the space for this to happen. This hurdle is, in itself, a stage and the first step in the journey of cross-functional teaming It entails generating awareness, mindset shift and placing an urgency and authority behind the initiative. Top team involvement is key, but it should not dominate, this is about participation.
A key task of a change coach, therefore, is to create spaces and places of psychological safety and equity, where people can explore their own thinking, responses and human process in change. This facilitation and coaching takes experience and profound awareness which needs to be developed over time - it is a professional capability - and the sooner organisations begin to embed and utilise these capabilities strategically, the better prepared they will be.
Building such new capabilities for cross-functional teaming is crucial to address the evolving landscape of corporate sustainability. This involves not only technical skills but also a deep understanding of sustainable practices and the psychology of preparing for a different future and facilitating people through new thinking, along with the business acumen to help shift ways of operating and ethical considerations in leading this change.
At Xenergie, we emphasise on developing internal change agents in their understanding of 'Social Energy©' and associated facilitation and strategy skills for transformational work. We believe that developing an internal approach enhances scalability and opportunity for customisation to your unique DNA, allowing practices to permeate throughout the company. However, these facilitators do need professional training and recognition for this role, and they need the support of external advisory themselves, to maintain their objectivity, enhance their skills and wellbeing. In some professions, this is called "professional supervision" and is mandatory for health and safety reasons. However, appointing internal facilitators can significantly keep costs manageable and enable scale, orchestrating new ways of working for the future, which inevitably result from the cross-functional teamwork and value-add.
Recognising Human Right to Development - "Leaving No-one Behind"
Moreover, recognising the human right to receive development is also integral to this thinking and indeed the ethos of sustainability and inclusion is written into the CSRD. (The reference to "leaving no-one behind" in the CSRD is linked to the United Nations' 17 Sustainable Development Goals, one of the sources on which this legislation was based).
From an employers' perspective, this also links to increasing due diligence on diversity and inclusion and places an onus on the employer to ensure that all employees receive development and management support to cope with a changing context, in which the role and contract between employer and employee is morphing.
This can be much more easily supported by a culture of cross-functional teaming and management practices that build teaming as a mindset. People learn best and cope with change in the crucible of a trusting relationship, and teams provide such an opportunity. In such a setting, the onus of development in change is both on the employee AND the employer - it is an opportunity to reflect on the meaning of change and develop new understandings together, thereby reducing risks of litigation, absenteeism, and attrition.
As organisations embrace sustainability, therefore, it is essential to ensure easy access to development. However, this presents extra cost and with personal development there is a question as to who should pay for it and how it is valued. There are many shifts in the training industry at present with the explosion of online training and coaching which make the cost more affordable, however many question how meaningful online training is - many staff complain that it is transactional and lacks the warmth of the human connection in which learning best happens. The question therefore, is about how to organise this in a meaningful, cost effective way and make it valuable.
Learning Rises in Strategic Value and Priority as a Change Enabler
At Xenergie, we see this is an opportunity for shared investment in a future, a new conversation about the value, place, accessibility and way of training and learning as a currency of change and value creation. Cross functional teaming is at the heart of this and brings to light the importance of personal and organisational commitments to learning relationships and managing expectations and generating results from it. What gets measured gets managed.
As solution providers, our role has shifted to helping companies make this transition and putting the strategic value add into supporting internal change coaches in organising and developing capabilities with cross-functional team strategies a core component of this.
Generate Results that Shift the Dial
In summary, cross functional teams provide excellent vehicles for generating results that shift the dial on changing definitions of performance. Sustainable development is about developing a more circular stakeholder-driven economy of inputs and outputs, enabled with the right conversations and agreements that uplift resources and results. Teams can become advocates for positive change impact within the organisation and actively addressing issues that need attention.
Additionally, cross-functional collaboration can enhance corporate governance by fostering open communication and collaboration among different departments. This aligns with the CSRD’s emphasis on transparency and accountability, as cross-functional teams work collectively to ensure that sustainability goals are met and reported accurately.
By building new capabilities in cross-functional teaming and training change agents, organisations can navigate the sustainability landscape successfully, ensuring a sustainable future while leaving no one behind.
To find out more about developing cross-functional teaming and strategies for readying your organisation for the Social Aspects of the Corporate Sustainability Reporting Directive, discover Xenergie Social Energy Ignite and our Advanced Diploma in Systemic Transformation for developing change facilitators.