Managing project teams in an age of complexity

Hans J. Thamhain, PMP, PhD
Bentley College

Abstract

An ongoing field study of over 60 complex technology-based product developments in 12 companies identifies specific barriers and drivers to effective team performance and examines the leadership skills necessary for successful implementation of complex projects. The results show that effective team management of complex projects involves an intricate set of variables related to task, people, organizational environment and work process. Specifically, these team leaders must be capable of more than just understanding the work process and management tools. They must also understand the infrastructure of their organization and deal with the complex social, technical and economic issues that determine the culture and value system of the total project team and its interfaces in order to manage the work and people relations across diverse organizational and cultural boundaries, including support functions, suppliers, sponsors and partners. Suggestions for enhancing cross-functional linkages, involvement, commitment, communications and decision-making are being made.

Introduction

Effective teamwork is critically important to project performance. There is little disagreement (Groysberg & Abrahams, 2007; Ferrante, Green & Foster, 2006; Nellore & Balachandra, 2001; Shim & Lee, 2001). Yet, building and sustaining high-performing project teams in today’s dynamic and culturally diverse environment is a daunting task. Most challenged seem to be managers in complex and technology-intensive situations characterized by high speed, high change and high uncertainty (Cutler & Smith 2007; Shim & Lee 2001, Zhang, Keil, Rai & Mann 2003). These team leaders must be both technically and socially competent, an argument supported by an increasing number of managers and researchers who point at the human side as the most challenging part. In fact, research shows consistently that challenges on complex projects involve largely management, behavioral and organizational issues, far outweighing technical difficulties (Belassi and Tukel 1996, Hartman & Ashrafi 2002, Whitten 1995). Critical success factors (CSF) span across a wide spectrum of technological, organizational and interpersonal issues that involve gaining and maintaining cohesiveness, commitment, technology transfer, self-directed teams, rapidly changing technology and requirements, resource limitations, innovation and demands for flexibility and speedy implementation. In these contemporary business environments, traditional models of management and team leadership are often not effective, and can be even counter-productive.

Yet, complex projects can be managed! Evidence is the large number of successful projects – ranging from product developments to disaster relief programs and election campaigns – that delivered great results on time and budget, even under extremely tight time and resource constraints. Furthermore, project performance is not random. Some organizations deliver complex projects more successfully and predictably than other. What do have these project organizations, their teams and leaders have in common that makes them so uncommonly successful? We should be able to learn some lessons from the field. Yet, in spite of considerable research, conclusions emerge only slowly (Graen, Hui & Taylor 2006; Nellore & Balachandra 2001). Empirical evidence seems to build, however, pointing at two specific sets of variables, (1) team leadership and (2) team environment, as being strongly associated with project performance (Thamhain 2004). Yet, relatively little is known about the specific leadership criteria conducive to high team performance, especially in complex and technology-intensive project environments, an area targeted in this field study.

What We Know About Project Teams

Teamwork is not a new idea. The basic concepts of organizing and managing teams go back in history to biblical times. However, it was not before the beginning of the Twentieth Century that work teams were formally recognized as an effective device for enhancing organizational performance. Specifically, the discovery of important social phenomena in the classic Hawthorne studies (Roethlingsberger & Dickinson, 1939), led to new insight on group behavior and the benefits of work group identity and cohesion to performance (Dyer, 1977). In today’s more complex multinational and technologically sophisticated environment, the group has reemerged in importance as the project team (Fisher, 1993; Nurick, 1993; Thamhain & Wilemon, 1999). Supported by modern information and communication technologies, and consistent with the concepts of stakeholder management (Newell & Rogers, 2002) and learning organizations (Senge, 2001), the roles and boundaries of teams are expanding toward self-direction, within more open and organizationally transparent processes. Work teams play an important role not only in traditional projects, such as new product developments, systems design and construction, but also in implementing organizational change, transferring technology concepts and in running election campaigns. Whether Yahoo creates a new search engine, Sony develops a new laptop computer, or the World Health Organization rolls out a new information system, success depends to a large degree on effective interactions among the team members responsible for the new development. This includes support groups, subcontractors, vendors, partners, government agencies, customer organizations, and other project stakeholders (Armstrong, 2000; Barkema, Baum & Mannix, 2002; Dillon, 2001; Gray & Larson, 2000; Karlsen & Gottschalk, 2004; Thamhain, 2003; Zanomi & Audy, 2004). Globalization, privatization, digitization, and rapidly changing technologies have transformed our economies into a hyper-competitive enterprise system where virtually every organization is under pressure to do more things faster, better and cheaper. Effective teamwork is seen as a key success factor in deriving competitive advantages from these developments. At the same time, the process of team building has become more complex and requires more sophisticated management skills as bureaucratic hierarchies and support systems decline.

All of this has strong implications for organizational process and leadership. Not too long ago, project managers could ensure successful integration of their projects by focusing on properly defining the work, timing and resources, and by following established procedures for project tracking and control. Today, these factors are still crucial. However, they have become threshold competencies, critically important, but unlikely to guarantee by themselves project success. Today’s complex business world requires fast and flexible project teams who can work dynamically and creatively toward established objectives in a changing environment (Bhatnager, 1999; Jasswalla & Sashittal, 1999; Thamhain, 2002). This requires effective networking and cooperation among people from different organizations, support groups, subcontractors, vendors, government agencies, and customer communities. It also requires the ability to deal with uncertainties and risks caused by technological, economic, political, social, and regulatory factors. In addition, project leaders have to organize and manage their teams across organizational lines. Dealing with resource sharing, multiple reporting relationships and broadly based alliances is as common in today’s business environment as email, flex-time and home offices.

Complexity Theory

Exhibit 1. Complexity Theory

Because of these complexities and uncertainties, traditional forms of hierarchical team structure and leadership are seldom effective and are being replaced by self-directed, self-managed team concepts (Barner, 1997; Thamhain & Wilemon, 1999). Often the project manager becomes a social architect who understands the interaction of organizational and behavioral variables, facilitates the work process and provides overall project leadership for developing multidisciplinary task groups into unified teams, and fostering a climate conducive to involvement, commitment and conflict resolution.

Method

The Objective of this paper is to explore the principle factors that influence team performance in complex projects, with focus on technology-based environments. Because of the complexities, and the absence of specific theories or constructs, an exploratory field research format has been chosen for the investigation, consistent with the concept of complexity theory. This concept developed by Dubin (1978) and others provides a useful framework for conducting empirical research on complex organizational systems and their behavior which is being used in this field study. A brief description of this complexity theory is provided in the text insert, Exhibit 1.

Framework for Current Investigation

The basic model for probing the relationship between work environment and team performance is shown in Exhibit 2. It graphically summarizes several classes of variables that were consistently found in previous studies as influences on project team performance (Bhatnager, 1999; Fisher, 1993; Nellore & Balachandra, 2001; Thamhain, 1996, 2001, 2002, 2003; Thamhain & Wilemon, 1999). They are broken down into four sets of (1) physical, (2) psychological, (3) value and (4) leadership variables of the enterprise environment. Although additional sets of variables have been identified by other researchers (Belassi, 1996; Karlsen & Gottschalk, 2004), the variable sets shown seem to represent a baseline of influences on project team performance and a good starting point for the research design of this investigation. Specifically, data were captured between 2002 and 2006, from 27 high-tech product development teams of large Fortune-500 corporations. For each of the 27 team organizations, the research was conducted in three stages. In the first stage, interviews with project leaders and project team personnel, together with hands-on participant observations, helped to (1) understand the specific nature and challenges of the product development process within the company, (2) prepare for the proper introduction of the questionnaire, and (3) to design the follow-up interviews. During the second stage, data were collected as part of a management consulting or training assignment, by questionnaire, observation, and expert panel. The third stage relied mostly on in-depth retrospective interviewing, providing perspective and additional information for clarifying and leveraging the data captured in stage one and two. As part of the action research, the data collection included other relevant source material, such as project progress reports, company reports, design review memos, committee action reports, financial statements, and information from the public media. These sources were especially helpful in designing questionnaires, interviews and validating observations.

Team Environment-Performance Mode

Exhibit 2. Team Environment-Performance Model

The principle method of information gathering is action research, including participant observation and in-depth retrospective interviewing. The purpose of this combined data collection method was to cast the broadest possible information-gathering net to examine the processes involved in effective project team leadership in technology-based enterprises. This combined method is particularly useful for new and exploratory investigations, such as the study reported here, which is considerably outside the framework of established theories and constructs (Glaser & Strauss, 1967; Eisenhardt, 1989). The format and process of the specific questionnaires and in-depth semi-structured interviews used in this study, was developed and tested in previous field studies of R&D management, similar in context to the current investigation (Kruglianskas & Thamhain, 2000; Thamhain, 1996, 2000, 2002, 2004, 2006; Thamhain & Wilemon, 1996, 1999).

Data

The unit of analysis used in this study is the project. The field study, conducted between 2003 and 2006, yielded data from 76 project teams with a total sample population of 895 professionals such as engineers, scientists, and technicians, plus their managers, including 16 supervisors, 76 project team leaders, 18 product managers, 8 directors of R&D, 7 directors of marketing, and 11 general management executives at the vice presidential level. Together, the data covered over 80 projects in 27 companies. The projects involved mostly information system developments, rollouts or installations and other RD&E in the areas of high-technology product/service development. Project budgets averaged $1,200,000. All project teams saw themselves working in a high-technology environment. The 27 host companies are large technology-based, multinational companies, mostly of the “FORTUNE-500” category. The data were obtained from three sources, questionnaires (variables as shown in Exhibit 3), participant observation and in-depth retrospective interviewing.

Results

The findings of this field study are organized into two sections: First, the characteristics of a high-performance team environment is analyzed and discussed. Second, the managerial implications are discussed in Section IV, together with specific recommendations for effective team leadership in technology based project environments.

Characteristics of High-Performance Team Environments

One of the consistent and most striking findings from the field study is the need for increasing involvement of all project stakeholders throughout the organization and its external partners. Managers point out, that for today’s technology-based undertakings, project success is no longer the result of a few expert contributors and skilled project leaders. Rather, project success depends on effective multidisciplinary efforts, involving teams of people and support organizations interacting in a highly complex, intricate, and sometimes even chaotic way. The process requires experiential learning, involving a great deal of trial and error and risk taking, as well as the cross-functional coordination and integration of technical knowledge, information, and components. Most managers see technology-intensive project work as a fuzzy process that often cannot be described objectively or planned perfectly, nor can its results be predicted with certainty. Furthermore, project performance itself is difficult to define and measure. Yet, in spite of all these challenges, many project teams work highly effective, producing great results within agreed-on budget and schedule constraints. This suggests that technology-based projects can be managed, given the right team environment. This proposition is further explored and supported with this field study.

Using Kendall’s Tau rank-order correlation, Exhibit 3 summarizes the association among factors of the organizational environment and project team characteristics, listed in order of importance to overall team performance. The presence and strength of these organizational variables was measured on a five- point scale as a perception of project team members, while project performance was measured as a perception of senior management which was discussed in the method section of this paper. As indicated by the two strongest correlations, factors that fulfill professional esteem needs seem to have a particularly favorable influence on project team performance. The five most significant associations are: (1) professionally stimulating and challenging work environments [τ=.45], (2) opportunity for accomplishments and recognition [τ=.38], (3) the ability to resolve conflict and problems [τ=.37], (4) clearly defined organizational objectives relevant to the project [τ=.36], and (5) job skills and expertise of the team members appropriate for the project work [τ=.36]. These influences appear to deal effectively with the integration of goals and needs between the team member and the organization. In this context, the more subtle factors seem to become catalysts for cross-functional communication, information sharing, and ultimate integration of the project team with focus on desired results. The other favorable factors in Exhibit 2 relate to overall directions and team leadership [τ=.35], trust, respect and credibility among team members and their leaders [τ=.30], and business process, as reflected by cross-functional cooperation and support [τ=.27], communications [τ=.27], clear project plans [τ=.25], clearly defined authority relations, and sufficient autonomy and freedom of actions in line with the managerial expectations and accountabilities [τ=.23]. To a lesser degree, opportunities for career development and advancement [τ=.12], as well as job security [τ=.12], seem to have a positive influence. All associations are significant at p =.1 or better, with the most significant correlations (p = .01 or stronger) shown in bold italics. It is interesting to note that the same conditions, which are conducive to overall team performance, also lead to (i) a higher ability of dealing with risks and uncertainties and (ii) a stronger personal effort and commitment to established objectives, and their team members, as shown in the correlation table. Furthermore, the field data analysis supports certain “performance projections.” Specifically, project teams that are perceived by their management as effective, are also seen as (iii) creative problem solvers and (iv) effectively utilizing time and resources. In fact, a high degree of cross-correlation exists among the set of three performance variables, as measured via Kruskal-Wallis analysis of variance by rank. The test shows that managers agree on the ranking of team performance factors in Exhibit 2 at a confidence level of 98%. That is, managers who rate the team performance high in one of the three performance variables are likely to give high ratings also to the other variables.

In addition to the thirteen most significant factors reported in Exhibit 3, it is interesting to note that many other characteristics of the work environmental, that were perceived by managers as important to effective team performance, did not correlate significantly as measured by a p-level threshold of .10. Among the factors of lesser influence to project team performance are: (1) salary, (2) time-off, (3) project visibility and popularity, (4) maturity of the project team, measured in terms of time worked together as a team, (5) project duration, (6) stable project requirements with minimum changes, (7) stable organizational structures and business processes which result in minimal organizational changes, such as caused by mergers, acquisitions and reorganization, (8) technological interdependencies, such as caused by the dependency on multiple technologies, technological disciplines and processes, and (9) project size and project complexity, arguing that project scope, size and implementation challenges, by themselves do not necessarily translate into lower team or project performance. It is further interesting to see that several of these weaker influences actually seem to have opposite effects to those popularly held by managers. For example, it appears that increasing stability of the project requirements, decreases overall team performance. While these correlations are non-significant from a statistical point of view, they shed some additional light on the subtle and intricate nature of project team performance in technology-intensive environments. They also raise new questions for future research.

From a different perspective, it is interesting to observe that influences derived from satisfying intrinsic professional needs show a strong favorable performance correlation, while the findings give only weak support to the benefits of “extrinsic influences/motivators,” such as salary increases, bonuses, time-off, and metrics-related factors, such as team tenure, project duration and changes, in spite of the fact that all influences in were perceived by most managers as critically important to team performance. This finding suggests that managers are more accurate in their perception of team members’ intrinsic, rather than extrinsic needs. It also seems to be more difficult to assess the performance impact and influence of project parameters, such as size, duration and complexity, than the impact of human factors on project performance.

Strongest Drivers Toward Project Team Performance (Kendall's Tau Rank-Order Correlation)

Exhibit 3. Strongest Drivers Toward Project Team Performance (Kendall's Tau Rank-Order Correlation)

Implications and Recommendations

The empirical results presented in this paper show that specific conditions in the team environment appear most favorable to project team work. These conditions serve as bridging mechanisms, helpful in enhancing project performance in technology-based organizations. Considering the exploratory nature of this study, an attempt is being made to go beyond the obvious results of the statistical data and to integrate some of the lessons learned from the broader context of the field research. The interviews and observations conducted in support of methodology and questionnaire development and the in-depth retrospective interviewing were especially useful in gaining additional perspective and insight into the processes and challenges of teamwork. They also helped in gleaning lessons for effective technical project management.

Leadership – The Art of Creating a Supportive Work Environment. An important lesson follows from the analysis of these field observations. Managers must foster a work environment supportive to their team members. As shown by the statistical correlation, factors that satisfy personal and professional needs seem to have the strongest effect on the project team performance. The most significant drivers are derived from the work itself, including personal interest, pride and satisfaction with the work, professional work challenge, accomplishments and recognition. Other important influences include effective communications among team members and support units across organizational lines, good team spirit, mutual trust and respect, low interpersonal conflict, plus opportunities for career development and, to some degree, job security. All of these factors help in building a unified project team that can leverage the organizational strengths and competencies effectively, and produce integrated results that support the organization’s mission objective. Creating such a climate and culture conducive to quality teamwork involves multifaceted management challenges which increase with the complexities of the project and its organizational environment. No longer will technical expertise or good leadership alone be sufficient, but excellence across a broad range of skills and sophisticated organizational support is required to manage project teams effectively. Hence, it is critically important for project leaders to understand, identify and minimize the potential barriers to team development. Leading such self-directed teams can rarely be done “top-down,” but requires a great deal of interactive team management skills and senior management support. Tools such as the Project Maturity Model and the Six Sigma Project Management Process can serve as a framework for analyzing and fine-tuning the team development and management process.

Managing Team Formation and Development. No work group comes fully integrated and unified in their values and skill sets, but needs to be carefully nurtured and developed. Managers must realize the organizational dynamics involved during the various phases of the team development process. They must understand the professional interests, anxieties, communication needs, and challenges of their team members and anticipate them as the team goes through the various stages of its development. Many of the problems that occur during the formation of the new project team or during its life cycle are normal and often predictable. However, they present barriers to effective team performance. The problems must be quickly identified and dealt with. That is, team leaders must recognize what works best at each stage, and what is most conducive to the team development process. Tools such as focus groups, interface charts and the Four-Stage Model of Team Development (originally developed by Hersey and Blanchard), can help in identifying the leadership style and organizational support needed in facilitating effective and expedient team developments.

Developing and Managing Work Processes. Many influences to project team performance are derived from the organizational processes, which have their locus outside the project organization, and are controlled by senior management. They include the project management system, plus a wide spectrum of other enterprise sub-systems, such as estimating, forecasting, progress measurements, purchasing, bid proposals and technology transfers, cross-functional communications and general managerial controls. All of them affect the project environment in such critical areas as organizational stability, availability of resources, management involvement and support, personal rewards, stability of organizational goals, objectives and priorities, and therefore either help or hinder team performance. Project team leaders must work with senior management to ensure an organizational ambience conducive to effective team work. Effective project leaders create a sense of community across the whole enterprise. That is, they understand the various business processes of the enterprise and the factors that drive team performance. They can also influence and fine-tune these processes to be least disruptive and most supportive to the project team and its efforts toward desired results.

Conclusion

This field study identifies some of the most significant influences to team performance in complex project environments. Many of these influences have strong behavioral implications. Specifically, organizational conditions that satisfy personal and professional needs of team members seem to have the strongest effect on (a) commitment, (b) the ability to deal with risk and contingencies, and (c) overall team performance. Most significant are those influences that derive from the work itself. Interestingly, people who find their assignments professionally challenging, leading to accomplishments, recognition and professional growth, also seem to function more effectively in a complex and technology-intensive team environment. Such a professionally stimulating ambience also lowers communication barriers, increases the tolerance for conflict and risk taking, and enhances the desire to succeed.

Other influences to project team performance are derived from organizational processes, which have their locus outside the project organization, and are controlled by senior management. These processes affect the team in terms of organizational stability, availability of resources, management involvement and support, personal rewards, stability of organizational goals, objectives and priorities. To be effective, project leaders must work with senior management, to ensure an organizational ambience supportive to effective team work.

Succeeding in today’s ultra-competitive word of business is not an easy feat. No single set of broad guidelines guarantees success. However, project success is not random! A better understanding of the criteria and organizational dynamics that drive project team performance can help managers in effectively integrating project teams with the enterprise, fostering a climate of active participation, accountability and result-orientation.

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© Hans J. Thamheim
Originally published as part of proceedings PMI Global Congress 2007 – Atlanta, GA

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