Leading Teams:!

Designing the Team for Excellence!

Scott DeRue, PhD!
Associate Dean and Professor!

Team Design Framework!

Composition

How big is the team?

Who is on the team?
Demographics
Personality
Values
Abilities

Goals and
Reward Structures

Goals
SMART
Goal difficulty
Goal commitment

Rewards
Team or individual rewards
Cooperative or competitive

Task and Role

Structures

Next session.

Todays Quiz!
1. Do you want a large team or a small team?!
2. Do you want similar or different personalities !
on your team?!
3. Do you want similar or different abilities on your team?!
4. Do you want similar or different values on your team?!
5. Should team goals be specific and measurable?!
6. Should rewards be tied to individual performance or!
overall team performance?!

How big is your team?!

The Benefits and Costs of Team Size!

Why Larger Teams are Preferred!
More capabilities
More resources
More information and input
More ideas and possible solutions

Why Smaller Teams are Preferred!

More cohesive
Higher member satisfaction
Faster decision making, consensus
More effective individual contribution

Can both be true?!

Why Care? Team Size and Innovation!

Based on a sample of 24 unique studies covering 1,359
different teams!
Impact on Team Innovation
0.3
0.2
0.1
0
-0.1
-0.2
Team size

Job-relevant
diversity

Goal
Task
Team longevity
interdependence interdependence

Source: Hulsheger et al., Journal of Applied Psychology, 2009

Background
diversity

Why Care? Team Size and Firm Performance!

In tech startups, founding team size positively
predicts new venture growth and net cash flow.
Source: Haleblian and Finkelstein, AMJ; Ensley and Hmieleski, Research Policy

With firm performance assess via

both market and accounting based
measures of performance.

Impact of Board Size on Firm Performance

0.25
0.2
0.15
0.1
0.05
0
Board size

Board size (Large firms)

Board size (Small Firms)

Source: Dalton et al., Academy of Management Journal, 1999; Eisenhardt and Schoonhoven, Administrative Science Quarterly, 1990

Too big? Too small? Just right?!

At an Amazon offsite retreat:
Manager: employees should start communicating more with each
other.
Jeff Bezos: No, communication is terrible!
According to Bezos, the ideal is the two-pizza team: if a team
couldnt be fed with two pizzas, it was too big.

Too big? Too small? Just right?!

So is small team size the optimal number, 4.6.
Jerry Useem, Fortune, 2006
Among other findings, the study suggests that the group size which leads to
optimal satisfaction of group members i.e., between 4 and 5 people is not
the size which leads to maximal effectiveness; both smaller and larger groups
performed more effectively than did 4- and 5-person groups
Richard Hackman, DTIC Scientific Report, 1971
Source: Hackman and Vidmar, 1970

Surface-level Diversity
The observable characteristics of a person.
Gender
Age
Race and nationality
Educational background
Deep-level Diversity
The non-observable characteristics of a person.
Personality
Values
Abilities
Beliefs and motives
Both matterbut as teams work together, the
effects of deep-level diversity become greater.
Source: Harrison et al., AMJ, 2002

Reflect on your own team for a moment

How much surface-level diversity do you have in your team? Does that
surface-level diversity help or hurt your team? How so?
How much deep-level diversity do you have in your team? Does that deeplevel diversity help or hurt your team? How so?

Why Care? Diversity and Innovation!

Based on a sample of 24 unique studies covering 1,359
different teams!
Impact on Team Innovation
0.3
0.2
0.1
0
-0.1
-0.2
Team size

Job-relevant
diversity

Goal
Task
Team longevity
interdependence interdependence

Source: Hulsheger et al., Journal of Applied Psychology, 2009

Background
diversity

Surface-level Diversity and Innovation!

Based on a sample of 199 banks in the United States!
Impact on Total Innovation: Technical and Administrative
0.2
0.15
0.1
0.05
0
-0.05
-0.1
-0.15
Age (mean)

Age (var)

Tenure (mean) Tenure (var)

Note: Controls for bank size, geographic location and team size.
Source: Bantel and Jackson, Strategic Management Journal, 1989

Education
(mean)

Education (var)

Functional
Background
(var)

Surface-level Diversity and Innovation!

more innovative banks are managed by more
educated teams who are diverse with respect to
functional areas of expertise.

Note: Controls for bank size, geographic location and team size.
Source: Bantel and Jackson, Strategic Management Journal, 1989

WAIT: Not Just About Level of Diversity!

Group #

Member A

Member B

Member C

Member D

Diversity

Faultline
Strength

White
Male
20
Sales

White
Female
30
Sales

Asian
Female
25
Sales

Asian
Male
20
Sales

Very low

Weak

White
Male
50
Maintenance

White
Male
55
Maintenance

Black
Female
31
Plant mgr.

Black
Female
35
Plant mgr.

Lowmoderate

Very strong

White
Female
20
Unskilled

Indian
Male
30
Supervisor

Black
Female
65
Executive

Asian
Male
50
Machinist

Maximum

Very weak

Source: Lau and Murnighan, Academy of Management Review, 1998

WAIT: Not Just About Level of Diversity!

Group #

Member A

Member B

Member C

Member D

Diversity

Faultline
Strength

White
Male
20
Sales

White
Female
30
Sales

Asian
Female
25
Sales

Asian
Male
20
Sales

Very low

Weak

White
Male
50
Maintenance

White
Male
55
Maintenance

Black
Female
31
Plant mgr.

Black
Female
35
Plant mgr.

Lowmoderate

Very strong

White
Female
20
Unskilled

Indian
Male
30
Supervisor

Black
Female
65
Executive

Asian
Male
50
Machinist

Maximum

Very weak

Source: Lau and Murnighan, Academy of Management Review, 1998

Map Your Teams Demographic Faultlines!

Group #

Member A

Member B

Member C

Member D

Diversity

Faultline
Strength

White
Male
20
Sales

White
Female
30
Sales

Asian
Female
25
Sales

Asian
Male
20
Sales

Very low

Weak

White
Male
50
Maintenance

White
Male
55
Maintenance

Black
Female
31
Plant mgr.

Black
Female
35
Plant mgr.

Lowmoderate

Very strong

White
Female
20
Unskilled

Indian
Male
30
Supervisor

Black
Female
65
Executive

Asian
Male
50
Machinist

Maximum

Very weak

Source: Lau and Murnighan, Academy of Management Review, 1998

Do Faultlines Affect Team Functioning?!

Faultline
Strength

Cohesion

Conflict

-.31**

.21*

Ability

-.08

-.02

Personality

.13

-.10

Demographic

Also evidence suggesting that demographic

faultlines create stronger sub-group
formation and cohesion among subgroups
Source: Molleman, Group Decision and Negotiation, 2005

Yes, but it depends on

the type
Demographic faultlines
have a negative effect
Ability and personality
faultlines have a lesser
effect [based on this one study]

TMT Faultlines and Foreign Expansion!

Variable

Effect Size

No. of employees

-.06

ROA

.49

International experience

.28*

Team size

-.02

% with degree

-.28

Tenure diversity

.03

Tenure overlap

-.02

Educational diversity

-.01

Weak faultline

-.02

Strong faultline

-.25*

Novelty of foreign investment =

one metric of TMT innovation.
The more international experience in
your TMT, the MORE likely to invest in
novel foreign territories.

The stronger the demographic faultline

in the TMT, the LESS likely to invest in
novel foreign territories.

Source: Barkema and Shvyrkov, Strategic Management Journal, 2006 > N = 2,159 expansion decisions among 25 Dutch firms

Firm Profitability

TMT Faultlines and Firm Performance!

20
15
Low Shared
Objective

10
5

High Shared
Objective

0
Weak
Strong
Faultline Faultline

Note: Sample includes 42 top management teams from UK manufacturing firms

Source: Van Knippenberg et al., Human Relations, 2010

Important: Shared
Vision and Goals!
Strong demographic faultlines
have a severe negative effect
when your team lacks a shared
objective

Be Careful! Demographic Faultlines!

Group #

Member A

Member B

Member C

Member D

Diversity

Faultline
Strength

White
Male
20
Sales

White
Female
30
Sales

Asian
Female
25
Sales

Asian
Male
20
Sales

Very low

Weak

White
Male
50
Maintenance

White
Male
55
Maintenance

Black
Female
31
Plant mgr.

Black
Female
35
Plant mgr.

Lowmoderate

Very strong

White
Female
20
Unskilled

Indian
Male
30
Supervisor

Black
Female
65
Executive

Asian
Male
50
Machinist

Maximum

Very weak

Source: Lau and Murnighan, Academy of Management Review, 1998

Be Careful! Demographic Faultlines!

Group #

Member A

Member B

Member C

Member D

White
White
Asian
Asian
Male
Female
Female
Male
-CONCLUSION
20
30
25
20 -diversity
has both
SalesDemographic
Sales
Sales
Sales pros
White
Male
50
Maintenance

Diversity

Faultline
Strength

Very low

Weak

and cons.
Pros = diverse
backgrounds
White
Black
Blackand inputs.
Male
Female probability
Female
Cons = increased
of conflict. Low55
Maintenance

31
Plant mgr.

35
Plant mgr.

moderate

Very strong

Be careful of strong faultlines, esp. if your team lacks pro-diversity beliefs,

White
Indian
Black
Asian
norms
for
open
communication,
and/or
shared objectives.
Female
Male
Female
Male
20
30
65
Source:
Wit
and
Greer,
Academy
of
Management,
Unskilled
Supervisor
Executive2008

Source: Lau and Murnighan, Academy of Management Review, 1998

50
Machinist

Maximum

Very weak

Personality in Teams!

Susan Cain, Quiet

The Big Five:

Extroversion | Conscientiousness | Agreeableness
Openness to Experience | Emotional Stability

Map Your Teams Personality Profile!

Group

Member A

Extraverted?
Open to Exp?
Conscientious?
Agreeable?
Emotionally Stable?

Member B

Source: Lau and Murnighan, Academy of Management Review, 1998

Member C

Member D

Diversity

Team Avg.
High or Low?

High or Low?

On each
dimension.

0.6
0.4
0.2
0
-0.2
-0.4
Low Task
Conflict
High Openness

High Task
Conflict
Low Openness

Team Performance

Team Performance

Team Personality and Conflict!

0.4
0.2
0
-0.2
-0.4
Low Task
Conflict
High Emo Stab.

High Task
Conflict
Low Emo Stab.

Note: Sample is 117 teams (4.8 members) composed of undergrad business students working together over 13 weeks.
Source: Bradley et al., Journal of Applied Psychology, 2013

6
5.5
5
4.5
4
0

No. High on Extraversion

Low Confidence

High Confidence

Team Creativity

Team Creativity

Team Personality and Creativity!

7
6
5
4
0

No. High on Openness

Low Confidence

High Confidence

Note: Sample is 169 3-person teams composed of undergrad business students working on a new product development task.
Source: Baer et al., Journal of Creative Behavior, 2008

Personal and Cultural Values in Teams!

Source: Bardi and Schwartz, 2003; Hofstede, 1984; Schwartz, 1992

Personal and Cultural Values in Teams!

Power Distance
(High or Low?)
Individualism
(or Collectivism)
Masculinity
(or Femininity?)
Uncertainty Avoidance
(High or Low?)
Long-term Orientation
(or Short-term?)
Source: Bardi and Schwartz, 2003; Hofstede, 1984; Schwartz, 1992

Map Your Teams Value Profile!

Group

Member A
Power distance?
Individualism?
Uncertainty
avoidance?
Masculinity?
Long-term
orientation?

Member B

Source: Lau and Murnighan, Academy of Management Review, 1998

Member C

Member D

Diversity

Team Avg.

High or Low?
High or Low?

On each
dimension.

Person-Team Fit: Perceived Congruence!

Low

Moderate

High

You dont have much in

common with your
coworkers, and their
work ethic is very
different from your
own.

You have a good

working relationship
with your coworkers,
but dont socialize with
them outside of work.
Although they are
about your age, you
dont have many
common interests.

Your coworkers are all

about your age and
have similar interests.
You also have a good
working relationship
with your coworkers,
often socializing
together outside of
work.

Source: Kristof-Brown et al., Journal of Applied Psychology, 2002

Think of the team you are working in currently,

or worked in most recently
What are the team goals?
Are the team goals effective? Why or why not?

Specific
______________
Measurable
______________

Goal:
Increase Sales

Agreed Upon
______________
Reasonable
______________
Time Bound
______________

Team Performance

Specific Goals in Teams: Whats the goal?

Learning or Performance!
1
0.5
0
-0.5
-1
-1.5
Simple Task
Specific Learning Goal

Complex Task
Specific Perf. Goal

Source: Nahrgang et al., Organizational Behavior and Human Decision Processes, 2013

Conclusion
Specific learning goals in teams focus
individuals attention on narrow elements
of their tasks, thus reducing coordination,
communication and teamwork resulting
in missed opportunities for learning and
innovation.

Goal Difficulty and Job Performance!

140

Conclusion

130
120

Performance

110
100

Goal Accepted

90
80

Control

70
60

For accepted goals,

performance increases
linearly and significantly
with goal difficulty
(p<0.01)

50
1

Objective Goal Difficulty

Source: Erez & Zidon, Journal of Applied Psychology, 1984. See also: Hollenbeck and Klein (1987), Latham et al. (1978), Locke and Latham (1990).

0.6
0.4
0.2
0
-0.2
Easy Goals

Difficult
Goals

High Learning Orientation

Low Learning Orientation

Source: Lepine, Journal of Applied Psychology, 2005

Team Adaptation

Team Adaptation

What happens in teams? !

Depends on goal orientation of the team.!
1
0.5
0
-0.5
Easy Goals

Difficult
Goals

High Perf. Orientation

Low Perf. Orientation

Goal Difficulty and Job Performance!

140

Conclusion

130
120

Performance

110
100

Goal Rejected

90
80

Control

70
60

For rejected goals,

performance decreases
linearly and significantly
with goal difficulty
(p<0.01)

50
1

Objective Goal Difficulty

Source:. Erez & Zidon, Journal of Applied Psychology, 1984; See also: Hollenbeck and Klein (1987), Latham et al. (1978), Locke and Latham (1990)

Team Performance

Goal Commitment in Teams!

6
5
4
3
2
Low
High
Commitment Commitment
High Interdependence
Low Interdependence

Source: Aube and Rousseau, Group Dynamics, 2005

Conclusion
High goal commitment improves team
performance, especially when individual
team members are interdependent and rely
on each other.

Think of the team you are working in currently,

or worked in most recently
How are people rewarded in the team?

E.g., are rewards individual-based or team-based?

E.g., are rewards focused on competition or cooperation?

Are these rewards effective in your team(s)? Why or why not?

Addressing Folly A/B!

qUnderstand what behaviors you are rewarding
qReward systems should reinforce desired behaviors
qAlter the reward system
______________

Want: teamwork
Reward: individual performance

Team Performance

Cooperative vs. Competitive Rewards!

Conclusion
Do you need quantity (speed) or
quality (accuracy)?

0.6
0.4
0.2
0
-0.2
-0.4
-0.6
Competition
Speed

Cooperation

The effectiveness of competitive and

cooperative reward structures
depends on the dimension of task
performance: quantity or quality.

Accuracy

Source: Beersma et al., Academy of Management Journal, 2003; Johnson et al., Academy of Management Journal, 2006

Recap: Designing Your Team!

Team size: Too big, too small or
just right??!
Surface- and deep-level diversity!
Demographics, personality, and values!
Perceived person-group fit!
Demographic faultlines!

Team goals !
Team reward structures!