Org structure

How to Design and Create a Cross-Functional Org Chart

By: Tim Brewer

Many innovative companies have scrapped the traditional lines of reporting and dividing employees into various departments.

Instead, they are creating cross-functional teams to speed up product development. These cross-functional teams are common in startups and tech companies that need to bring products to market rapidly and continue to iterate.

In a cross-functional organization, employees are less organized by departments with a traditional top-down hierarchy. Cross-functional teams bring together groups of diverse talent with multiple responsibilities. Workers are assigned tasks as part of a project.

For example, workers that would normally be separated into marketing, product, sales, and customer success may work together on certain projects such as a new product launch. Cross-functional teams can be working groups or the primary structure for an organization.

What Is a Cross-Functional Org Chart?

A cross-functional org chart, sometimes referred to as a matrix organizational chart, shows how employees are organized into a team by projects or products. While workers may still report to a functional manager, such as a department head, they have other reporting lines that show their accountability to project leads.

Team members may still be accounted for in a traditional organizational hierarchy, such as by departments, but may show up in multiple places in a cross-functional org chart to indicate their responsibilities for various projects or products. In these organizations, team members with cross-functional skills are especially valuable.

Matrix Structure (Accountabilities) inside Functionly's online environment

Functionly-Matrix

Pros and Cons of Cross-Functional Org Charts

One of the biggest challenges in companies these days is that information and knowledge often reside in siloes.

Have you ever called a company with a question and when you finally get through to someone, you‘re transferred to other people within the organization that may - or may not - have the answer? When information isn’t shared, or teams don’t work cross-function, this is common.

The Benefits of Cross-functional Teams

Cross-functional teams are becoming more common in organizations for several reasons:

  • Provide a consistent customer experience
  • Improve coordination among functional areas
  • Increase product and process innovation
  • Reduce production cycle times
  • Expand knowledge base for team members
  • Better alignment of company goals and objectives
  • When cross-functional teams are working effectively, they are typically more innovative.
  • By bringing together people from multiple disciplines, a collaborative environment is established which benefits from multiple viewpoints.
  • Cross-functional teams are also better positioned to pivot when needed, tackle challenges, and even self-organize and add the resources needed to attack problems.

There are, however, challenges to cross-functional orgs and they start with leadership.

The Challenges of Cross-functional Teams

Cross-functional organizations that have a commitment from the top perform better than ones that don’t.

When projects have a single high-level executive that champions and guides a project, the success rate can be as high as 75%, according to a study by the Harvard Business Review (1). However, when commitment doesn’t come from the top or there isn’t an exec commitment, the success rate drops to just 19%.

In fact, the study shows that 75% of cross-functional organizations are dysfunctional and fail.

Challenges include:

  • Poor communication
  • Lack of collaboration
  • Lack of accountability

A study by Salesforce found poor alignment in 97% of the cases they studied. This lack of alignment on key goals leads to poor performance in multiple areas, including:

  • Meeting strategic budgets
  • Meeting timetables
  • Following specifications
  • Meeting consumer expectations

Here’s the bottom line of cross-functional org structures. When it works, it’s a powerful way to approach business. When it’s not managed properly, it can produce poor performance in cross-functional areas.

It takes a strong - and consistent - culture to make cross-functional organizations work effectively.

Companies that Typically Use Cross-Functional Org Structures

Many companies successfully implement cross-functional org structures for great success. They may be the foundation for the overall organization, created to work on specific product development teams, or assembled ad hoc to work on projects.

Apple used a cross-functional approach when it created and launched the iPhone. Employees across the organization were pulled together, and everyone understood this would be a groundbreaking new product.

Northwestern Mutual Life is another good example. Interdisciplinary collaboration and cross-functional teams are baked into their product design. For example, designers, team teams, writers, and financial planners work together to workshop app functionality for better customer experiences.

Cisco changed from a traditional org structure to deploying cross-functional teams in some areas of their business. For example, a collaborative approach to HR strategy involves employees, managers, and top executives collaborating to determine employee programs.

How to Create a Cross-Functional Org Chart

Effective cross-functional organizations consistently execute on these four specific approaches:

  1. Team Building: For a successful cross-function organization, you need to bring together your internal and external partners to build consensus on a common set of goals that will guide you.

  2. Align Key Stakeholders: Alignment must go beyond the team itself. Key stakeholders within the organization must be on board with goals and objectives.

  3. Detailed Processes: Process can’t be left to chance. Assign clear ownership for each step in the process, identify transaction points, and create specific rules for when and how communication will occur.

  4. Empower Teams: Provide mechanisms for accountability, but empower teams to make decisions and provide them with the time and technology they need to fulfill their missions.

Employing these four strategies will help guide you as you develop your cross-functional org chart.

Most org charts are one-dimensional with the boss at the top and subordinates underneath. They may be organized by companies, departments, or areas. A matrix structure, such as a cross-functional org chart, can organize teams in multiple ways. Employees can have cross-area reporting assigned along with changing roles, responsibilities, and accountabilities.

Here’s a short video from the team at Functionly that shows one way to create a cross-functional org chart as part of your organization.

[Youtube link]

Designing Your Cross-Functional Org Chart

Designing your cross-functional org chart requires defining several key factors, including identifying groups and linkages. Start at the project or team level and define the roles and responsibilities you need. Identify linkages between groups.

You’ll also want to ensure accountability and governance within your cross-functional teams. This requires a team lead, manager, or defined leadership roles within your group, including their direct-report responsibilities.

Building Your Cross-Functional Org Chart

One classic approach to creating a cross-functional org chart is to show both traditional lines of reporting and project responsibilities.

For example, the top line may show department heads and may show team members underneath, stacking them vertically. Project teams are listed horizontally with project leads having reporting lines from employees across departments or functional areas.

Another approach is to ignore departmental assignments and only focus on projects or cross-functional teams. In this case, employees are organized by project assignments and may show up in multiple places on the org chart as defined by team leads.

Org charts can get complicated quickly, especially in highly functioning teams that have multiple responsibilities. If you’re not careful, you’ll have arrows pointing all over the place.

You also need a way to move team members and projects in and out of the active list. As projects are completed, teams may be dissolved and team members reassigned. If you don’t have an easy way to update your org chart, it can be a difficult task.

Functionly-icon: Intelligent Org Design

Want to create your own cross-functional org charts to help employees better understand how you want to run your business?

Functionly lets you get started right now to create your org structure for free.

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Source:

1. 75% of Cross-Functional Teams Are Dysfunctional, B. Tabrizi, Harvard Business Review, 23 June 2015

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