Understanding Groups and Managing Work Teams



Describe the major

concepts of group



Discuss contemporary

issues in managing




Discuss how groups

are turned into effective teams.

Define a group and describe the

stages of group

development. p.242



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Imagine working for an organization that employs more than 2,700 individuals with each one having the identical focus.1 Imagine, too,

that company managers in this organization want you to work hard and be the best at what you do. If you’re employed by

Ferrari S.p.A., such realities aren’t hard to imagine. When most people hear the name Ferrari, they

think of expensive, super-fast sports cars. That repu- tation for speed is why Ferraris continue to be well-

known and respected in racing groups around the world. The Italian company was founded by Enzo Ferrari in

1928, and even in its early days, racing was an important part of the Ferrari legend. Today, Luca Cordero (photo on

right), president and managing director of the company, believes that his employees truly make a difference in pro-

ducing one of the world’s greatest sports cars. He recognizes that to be the best, he needs employees who understand how

to work together and how to achieve common goals. At Ferrari, employee teams combine their ef- forts to produce an outstanding automobile, with quality befitting its iconic reputation. You won’t find

traditional assembly lines in the Ferrari factory, nor will you find production quotas. With prices for a Ferrari starting at $140,000, auto assembly time isn’t measured in seconds. Rather, team tasks often last

more than 90 minutes for each portion of a car. Then the team proudly passes its finished work to the next team so its work can begin. Average time to manufacture one car: three days. The company produces around

6,000 Ferraris in any one year, although the company hopes to boost that number to 10,000 cars by 2010. To achieve that goal, the company is expanding current capacity although its singular focus on quality and

teamwork won’t change. Employees at Ferrari truly enjoy being part of a team. They say that working toward a common goal is one

of the most satisfying elements in their jobs. They also appreciate what the company does for them. They enjoy a state-of-the-art fitness center, annual physicals at the company’s on-site clinic, an employee cafeteria, and

home-based training for employees to learn English. They feel as if Cordero and his team treat them as associates, not just as cogs in the Ferrari wheel. As one employee stated, “For many of us working for Ferrari is like working

in the Vatican.” Recently, the company won an award for Best Place to Work in Europe. The prize resulted from the company’s “Formula-1-inspired workplace initiative called Formula Uomo,” which took the principles of Ferrari’s success

in Formula 1 racing and applied them to the workplace. The main thrust was recognizing its people as the “fulcrum of the company’s work system.”

Is the team concept at Ferrari working? By all accounts, yes. The company has achieved over $2.3 billion in sales. And more importantly, the car still retains its appeal as one of the best and most desired in the world. Although profits have been nominal dur-

ing the global economic downturn, there are always going to be customers who want to own the car with the rearing-horse logo.

Up to Speed



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Define a group and describe the

stages of group



• Command groups—Groups that are determined by the organization chart and composed of individuals who report directly to a given manager.

• Task groups—Groups composed of individuals brought together to complete a specific job task; their existence is often temporary because when the task is completed, the group disbands.

• Cross-functional teams—Groups that bring together the knowledge and skills of individuals from various work areas or groups whose members have been trained to do each other’s jobs.

• Self-managed teams—Groups that are essentially independent and that, in addition to their own tasks, take on traditional managerial responsibilities, such as hiring, planning and scheduling, and evaluating performance.

EXHIBIT 9-1 Examples of Formal Work Groups

Like company executives at Ferrari, managers today believe that the use of teams allows

their organizations to increase sales or produce better products faster and at lower costs.

Although the effort to create teams isn’t always successful, well-planned teams can reinvig-

orate productivity and better position an organization to deal with a rapidly changing


You’ve probably had a lot of experience working in groups—class project teams, maybe

an athletic team, a fund-raising committee, or even a sales team at work. Work teams are one

of the realities—and challenges—of managing in today’s dynamic global environment. Many

organizations have made the move to restructure work around teams rather than individuals.

Why? What do these teams look like? And how can managers build effective teams? These are

some of the questions we’ll be answering in this chapter. Before we can understand teams,

however, we first need to understand some basics about groups and group behavior.

What Is a Group and What Stages of Development Do Groups Go Through? Each person in the group had his or her assigned role: The Spotter, The Back Spotter, The Gorilla, and the Big Player. For over 10 years, this group— former MIT students who were members of a secret Black Jack Club—used

their extraordinary mathematical abilities, expert training, teamwork, and interpersonal skills to take millions of dollars from some of the major casinos

in the United States.2 Although most groups aren’t formed for such dishonest purposes, the success of this group at its task was impressive. Managers would like

their work groups to be successful at their tasks also. The first step is understanding what a group is and how groups develop.

What Is a Group? A group is defined as two or more interacting and interdependent individuals who come together to achieve specific goals. Formal groups are work groups that are defined by the organization’s structure and have designated work assignments and specific tasks directed at accomplishing organizational goals. Exhibit 9-1 provides some examples. Informal groups are social groups. These groups occur naturally in the workplace and tend to form around friendships and common interests. For example, five employees from different departments who regularly eat lunch together are an informal group.


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Stage I Forming

Stage II Storming

Stage IV Performing

Stage III Norming

Stage V Adjourning

EXHIBIT 9-2 Stages of Group Development

What Are the Stages of Group Development? Research shows that groups develop through five stages.3 As shown in Exhibit 9-2, these five stages are: forming, storming, norming, performing, and adjourning.

The forming stage has two phases. The first occurs as people join the group. In a formal group, people join because of some work assignment. Once they’ve joined, the second phase begins: defining the group’s purpose, structure, and leadership. This phase involves a great deal of uncer- tainty as members “test the waters” to determine what types of behavior are acceptable. This stage is complete when members begin to think of themselves as part of a group.

The storming stage is appropriately named because of the intragroup conflict. There’s conflict over who will control the group and what the group needs to be doing. When this stage is complete, there will be a relatively clear hierarchy of leadership and agreement on the group’s direction.

The norming stage is one in which close relation- ships develop and the group becomes cohesive. There’s now a strong sense of group identity and camaraderie. This stage is complete when the group structure solidifies and the group has assimilated a common set of expecta- tions (or norms) regarding member behavior.

group Two or more interacting and interdependent individuals who come together to achieve specific goals.

storming stage The second stage of group development, which is characterized by intragroup conflict.

forming stage The first stage of group development in which people join the group and then define the group’s purpose, structure, and leadership.

Sibyl Goldman, a Yahoo! entertainment group vice president, leads an “omg” Web site meeting at Yahoo!’s offices in Santa Monica, California. This meeting is an example of the performing stage of group development. With an established strong sense of group identity and camaraderie, the group focuses on its task of presenting celebrity news stories in a light and positive way along with galleries of photos and exclusive videos. For permanent work groups such as the “omg” staff, performing is the last stage in the group development process.

norming stage The third stage of group development, which is characterized by close relationships and cohesiveness.


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Describe the major

concepts of group




The fourth stage is performing. The group structure is in place and accepted by group members. Their energies have moved from getting to know and understand each other to working on the group’s task. This is the last stage of development for permanent work groups. However, for temporary groups—project teams, task forces, or similar groups that have a limited task to do—the final stage is adjourning. In this stage, the group prepares to disband. Attention is focused on wrapping up activities instead of task performance. Group members react in different ways. Some are upbeat, thrilled about the group’s accomplish- ments. Others may be sad over the loss of camaraderie and friendships.

Many of you have probably experienced these stages as you’ve worked on a group project for a class. Group members are selected or assigned and then meet for the first time. There’s a “feeling out” period to assess what the group is going to do and how it’s going to be done. This is usually followed by a battle for control: Who’s going to be in charge? Once this issue is resolved and a “hierarchy” agreed on, the group identifies spe- cific work that needs to be done, who’s going to do each part, and dates by which the as- signed work needs to be completed. General expectations are established. These decisions form the foundation for what you hope will be a coordinated group effort culminating in a project that’s been done well. Once the project is complete and turned in, the group breaks up. Of course, some groups don’t get much beyond the forming or storming stages. These groups may have serious interpersonal conflicts, turn in disappointing work, and get lower grades.

Does a group become more effective as it progresses through the first four stages? Some researchers say yes, but it’s not that simple.5 That assumption may be generally true, but what makes a group effective is a complex issue. Under some conditions, high levels of conflict are conducive to high levels of group performance. There might be situations in which groups in the storming stage outperform those in the norming or performing stages. Also, groups don’t always proceed sequentially from one stage to the next. Some- times, groups are storming and performing at the same time. Groups even occasionally regress to previous stages. Therefore, don’t assume that all groups precisely follow this process or that performing is always the most preferable stage. Think of this model as a gen- eral framework that underscores the fact that groups are dynamic entities and managers need to know the stage a group is in so they can understand the problems and issues that are most likely to surface.

What Are the Major Concepts of Group Behavior? The basic foundation for understanding group behavior includes roles, norms and conformity, status systems, group size, and group cohesiveness. Let’s take a closer look at each of those aspects.

What Are Roles? We introduced the concept of roles in Chapter 1 when we discussed what managers do. Of

course, managers aren’t the only individuals in an organization who have roles. The concept of roles applies to all employees in organizations and to their lives outside the organization as well.

A role refers to behavior patterns expected of someone who occupies a given position in a social unit. Individuals play multiple roles, adjusting their roles to the group to which they belong at the time. In an organization, employees attempt to determine what behaviors are expected of them. They read their job descriptions, get suggestions from their bosses, and watch what their coworkers do. An individual who’s confronted by divergent role expec- tations experiences role conflict. Employees in organizations often face such role conflicts. The credit manager expects her credit analysts to process a minimum of 30 applications a week, but the work group pressures members to restrict output to 20 applications a week so that everyone has work to do and no one gets laid off. A newly hired college instructor’s col- leagues want him to give out only a few high grades in order to maintain the department’s reputation for high standards, whereas students want him to give out lots of high grades to

percent of workers said their teams were not given enough resources.

percent of Fortune 1000 companies used team- or group-based pay to some

degree in 2005.

percent of respondents identified teams as a key ingredient to organiza-

tional success.

percent of females wanted more face-to-face group meetings.

percent of males wanted more face-to-face group meetings.

to 12: the average num- ber of production workers per team.

percent of senior execu- tives said that meeting deadlines was the most

important characteristic of a good team player.

percent of workers feel more productive in a small group.


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enhance their grade point averages. To the degree that the instructor sincerely seeks to satisfy the expectations of both his colleagues and his students, he faces role conflict.

How Do Norms and Conformity Affect Group Behavior? All groups have established norms, acceptable standards that are shared by the group’s members. Norms dictate output lev- els, absenteeism rates, promptness or tardiness, the amount of socializing allowed on the job, and so on. Norms, for example, dictate the dress code of customer service representatives at a credit card processing company. Most workers who have little direct customer contact come to work dressed casually. How- ever, on occasion, a newly hired employee will come to work dressed in a suit. Those who do are teased and pressured until their dress conforms to the group’s standard.

Although each group has its own unique set of norms, com- mon classes of norms appear in most organizations. These norms focus on effort and performance, dress, and loyalty. Probably the most widespread norms are related to levels of effort and per- formance. Work groups typically provide their members with explicit cues on how hard to work, what level of output to have, when to look busy, when it’s acceptable to goof off, and the like. These norms are extremely powerful in affecting an individual employee’s performance. They’re so powerful that performance predictions based solely on an employee’s ability and level of personal motivation often prove wrong.

Some organizations have formal dress codes—even describ- ing what’s considered acceptable for corporate casual dress. How- ever, even in the absence of codes, norms frequently develop to dictate the kind of clothing that should be worn to work. College seniors, when interviewing for their first postgraduate job, pick up this norm quickly. Every spring, on college campuses around the country, students interviewing for jobs can be spotted; they’re the ones walking around in the dark gray or blue pinstriped suits. They’re enacting the dress norms they’ve learned are expected in professional positions. Of course, acceptable dress in one organiza- tion will be different from another’s norms.

Few managers appreciate employees who ridicule the organization. Similarly, profes- sional employees and those in the executive ranks recognize that most employers view persons who actively look for another job unfavorably. People who are unhappy know that they should keep their job searches secret. These examples demonstrate that loyalty norms are widespread in organizations. This concern for demonstrating loyalty, by the way, often explains why ambitious aspirants to top management positions willingly take work home at night, come in on weekends, and accept transfers to cities in which they would otherwise prefer not to live. Because individuals desire acceptance by the groups to which they belong, they’re susceptible to conformity pressures. The impact of group pressures for

Right orWrong?

You’ve been hired as a summer intern in the events planning department of a public relations firm in Dallas.After working there about a month,you conclude that the attitude in the office is “anything goes.”Employees know that supervisors won’t discipline them for ignoring company rules. For example, employees turn in expense reports, but the process is a joke. Nobody submits receipts to verify reimbursement and nothing is ever said. In fact,when you tried to turn in your receipts with your expense report,you were told,“Nobody else turns in receipts and you don’t really need to either.”Although the employee handbook says that receipts are required for reimbursement,you know that no expense check has ever been denied because of failure to turn in a receipt.Also, your coworkers use company phones for personal long-distance calls even though that’s also prohibited by the employee handbook. And one of the permanent employees told you to “help yourself” to any paper, pens, or pencils you might need here or at home.What are the norms of this group? Suppose that you were the supervisor in this area. How would you go about changing the norms?

adjourning stage The final stage of group development for temporary groups, during which groups prepare to disband.

role Behavior patterns expected of someone who occupies a given position in a social unit.

norms Standards or expectations that are accepted and shared by a group’s members.

performing stage The fourth stage of group development, when the group is fully functional and works on the group task.


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conformity on an individual member’s judgment and attitudes was demonstrated in the classic studies by Solomon Asch.7 Asch’s results suggest that group norms press us toward conformity. We desire to be one of the group and to avoid being visibly different. We can generalize this finding to say that when an individual’s opinion of objective data differs sig- nificantly from that of others in the group, he or she feels extensive pressure to align his or her opinion to conform with those of the others (see our previous discussion on group- think, p. 72). The “From the Past to the Present” box has additional background informa- tion on Asch’s contributions to group theory.

What Is Status and Why Is It Important? Status is a prestige grading, position, or rank within a group. As far back as scientists have been able to trace human groupings, they’ve found status hierarchies: tribal chiefs and their followers, nobles and peasants, the haves and the have-nots. Status systems are important factors in understanding behavior. Status is a significant motivator that has behavioral con- sequences when individuals see a disparity between what they perceive their status to be and what others perceive it to be.

From the Past to the Present• • Does the desire to be accepted as a part of a group leave one susceptible to conforming to the group’s norms? Will the group exert pressure that’s strong enough to change a mem- ber’s attitude and behavior? According to the research by Solomon Asch, the answer appears to be yes.6

Asch’s study involved groups of seven or eight people who sat in a classroom and were asked to compare two cards held by an investigator. One card had one line; the other had three lines of varying length. As shown in Exhibit 9-3, one of the lines on the three-line card was identical to the line on the one-line card. The difference in line length was quite obvious; under ordinary conditions, subjects made errors of less than 1 percent. The object was to announce aloud which of the three lines matched the single line. But what happens if all the members of the group begin to give incorrect answers? Will the pressure to conform cause the unsuspecting subject (USS) to alter his or her answers to align with those of the others? That’s what Asch wanted to know. He arranged the group so that the USS was unaware that the experiment was fixed. The seating was prearranged so that the USS was the last to announce his or her decision.

The experiment began with two sets of matching exer- cises. All the subjects gave the right answers. On the third set, however, the first subject gave an obviously wrong answer—for example, saying “C” in Exhibit 9-3. The next subject gave the same wrong answer, and so did the others, until it was the unsuspecting subject’s turn. He knew that “B” was the same as “X” but everyone else said “C.” The decision confronting the USS was this: Do you publicly state a perception that differs from the preannounced position of the others? Or do you give an answer that you strongly believe to be incorrect in order to have your response agree with the other group members? Asch’s subjects conformed in about 35 percent of many experiments and many trials. That is, the subjects gave answers that they knew were wrong but were consistent with the replies of other group members.

For managers, the Asch study provides considerable in- sight into group behaviors. The tendency, as Asch showed, is for individual members to go along with the pack. To diminish the negative aspects of conformity, managers should create a climate of openness in which employees are free to discuss problems without fear of retaliation.


EXHIBIT 9-3 Examples of Cards Used in Asch’s Study


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Status may be informally conferred by characteristics such as education, age, skill, or experience. However, anything can have status value if others in the group admire it. Of course, just because status is informal doesn’t mean that it’s unimportant or that there’s disagreement on who has it or who doesn’t. Members of groups have no problem placing people into status categories, and they usually agree about who’s high, low, and in the middle.

It’s important for employees to believe that the organization’s formal status system is congruent. That is, there should be equity between the perceived ranking of an individual and the status symbols he or she is given by the organization. For instance, incongruence may occur when a supervisor earns less than his or her employees or when a desirable office is occupied by a lower-ranking individual. Employees may view such cases as a dis- ruption to the general pattern of order and consistency in the organization.

Does Group Size Affect Group Behavior? The size of a group affects that group’s behavior. However, that effect depends on what criteria you’re looking at.8

The evidence indicates, for instance, that small groups complete tasks faster than larger ones. However, if a group is engaged in problem solving, large groups consistently get better marks than their smaller counterparts. Translating these results into specific numbers is a bit trickier, but we can offer some parameters. Large groups—with a dozen or more members—are good for gaining diverse input. Thus, if the goal of the group is to find facts, larger groups should be more effective. On the other hand, smaller groups are better at doing something productive with those facts. Groups of approximately five to seven members tend to act more effectively.

One of the more disturbing findings is that, as groups get incrementally larger, the con- tribution of individual members often tends to lessen. That is, although the total productivity of a group of four is generally greater than that of a group of three, the individual produc- tivity of each group member declines as the group expands. Thus, a group of four will tend to produce at a level of less than four times the average individual performance. The best explanation for this reduction of effort is that disper- sion of responsibility encourages indi- viduals to slack off; a behavior referred to as social loafing.9 When the results of the group can’t be attributed to any single person, the relationship between an individual’s input and the group’s output is clouded. In such situations, individuals may be tempted to become “free riders” and coast on the group’s efforts. In other words, efficiency is reduced when indi- viduals think that their contributions cannot be measured. The obvious con- clusion from this finding is that man- agers who use work groups should also provide a means by which individual efforts can be identified.

status A prestige grading, position, or rank within a group.

social loafing The tendency for individuals to expend less effort when working collectively than when working individually.

Group cohesiveness, the degree to which group members are attracted to each other and share goals, was high for the cast and crew of Wushu: The Young Generation. Everyone involved in the film, from the executive producer and kung fu star Jackie Chan to the young actors, was focused on the goal of introducing an authentic representation of wushu, a martial arts form that combines exercise, the performing arts, and competitive sports. Authenticity included filming the movie in a real martial arts school in China today and presenting the skills of the young actors, all of whom are martial arts students who perform the action scenes themselves. Shown here at a press conference for the film are Chan with the film’s production team members and the young actors and actresses.


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Discuss how groups are turned

into effective teams.


Are Cohesive Groups More Effective? Intuitively, it makes sense that groups that experience a lot of internal disagreement and lack of cooperation are less effective than are groups in which individuals generally agree, cooperate, and like each other. Research has looked at group cohesiveness, the degree to which members are attracted to one another and share the group’s goals. The more that members are attracted to one another and the more that a group’s goals align with each in- dividual’s goals, the greater the group’s cohesiveness.

Previous research has generally shown that highly cohesive groups are more effec- tive than are those with less cohesiveness, but the relationship between cohesiveness and effectiveness is more complex.10 A key moderating variable is the degree to which the group’s attitude aligns with its formal goals or those of the larger organization.11

The more cohesive a group is, the more its members will follow its goals. If these goals are favorable (for instance, high output, quality work, cooperation with individuals out- side the group), a cohesive group is more productive than a less cohesive group. But if cohesiveness is high and attitudes are unfavorable, productivity decreases. If cohesive- ness is low and goals are supported, productivity increases, but not as much as when both cohesiveness and support are high. When cohesiveness is low and goals are not supported, cohesiveness has no significant effect on productivity. These conclusions are summarized in Exhibit 9-4.

How Are Groups Turned into Effective Teams? When companies like W. L. Gore, Volvo, and Kraft Foods introduced teams into their production processes, it made news because no one else was doing it. Today, it’s just the opposite—the organization that doesn’t use teams would be newsworthy. It’s estimated that some 80 percent of Fortune 500 companies have at least half of their employees on teams.

And over 70 percent of U.S. manufacturers use work teams.12 Teams are likely to continue to be popular. Why? Research suggests that teams typi-

cally outperform individuals when the tasks being done require multiple skills, judgment, and experience.13 Organizations are using team-based structures

because they’ve found that teams are more flexible and responsive to changing events than are traditional departments or other permanent work groups. Teams have the abil- ity to quickly assemble, deploy, refocus, and disband. In this section, we’ll discuss what a work team is, the different types of teams that organizations might use, and how to develop and manage work teams.



Low A

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en t

o f

G ro

up a

nd O

rg an

iz at

io na

l G o

al s

Strong increase in productivity

Moderate increase in productivity

No significant effect on productivity

Decrease in productivity

High Low

EXHIBIT 9-4 Group Cohesiveness and Productivity


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Aren’t Work Groups and Work Teams the Same? At this point, you may be asking yourself: Aren’t teams and groups the same thing? No. In this section, we clarify the difference between a work group and a work team.14

Most of you are probably familiar with teams especially if you’ve watched or participated in organized sports events. Work teams do differ from work groups and have their own unique traits (see Exhibit 9-5). Work groups interact primarily to share information and to make deci- sions to help each member do his or her job more efficiently and effectively. There’s no need or opportunity for work groups to engage in collective work that requires joint effort. On the other hand, work teams are groups whose members work intensely on a specific, common goal using their positive synergy, individual and mutual accountability, and complementary skills.

These descriptions should help clarify why so many organizations have restructured work processes around teams. Managers are looking for that positive synergy that will help the organization improve its performance.15 The extensive use of teams creates the potential for an organization to generate greater outputs with no increase in (or even fewer) inputs. For example, until the economic downturn hit, investment teams at Wachovia’s Asset Management Division (which is now a part of Wells Fargo & Company) were able to significantly improve investment performance. As a result, these teams helped the bank improve its Morningstar financial rating.16

Recognize, however, that such increases are simply “potential.” Nothing inherently magi- cal in the creation of work teams guarantees that this positive synergy and its accompanying pro- ductivity will occur. Accordingly, merely calling a group a team doesn’t automatically increase its performance.17 As we show later in this chapter, successful or high-performing work teams have certain common characteristics. If managers hope to gain increases in organizational per- formance, it will need to ensure that its teams possess those characteristics.

What Are the Different Types of Work Teams? Teams can do a variety of things. They can design products, provide services, negotiate deals, coordinate projects, offer advice, and make decisions.18 For instance, at Rockwell Automation’s facility in North Carolina, teams are used in work process optimization projects. At Arkansas-based Acxiom Corporation, a team of human resource professionals planned and implemented a cultural change. And every summer weekend at any NASCAR race, you can see work teams in action during drivers’ pit stops.19 The four most common types of work

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