Organizations that develop cross-disciplinary, diverse teams perform better – but lack of “inclusive leaders” hinder success

December 12, 2013

An overwhelming majority (84%) of business executives say that their organization’s ability to develop and manage teams will be essential for future competitiveness, according to a global EY survey.

Those who rate their companies as “excellent” at building diverse teams are much more likely to have achieved earnings before interest, taxes, depreciation and amortization (EBITDA) growth of greater than 10% over the past year.

The same correlation is true for companies with teams that have become more geographically dispersed over the past three years and increased EBITDA growth levels.

Yet, half of the 821 respondents to The power of many: How companies use teams to drive superior corporate performance do not have the leaders with the ability to manage and motivate these teams. This is despite 85% deeming “inclusive leadership”, or the ability to encourage teams to voice diverse perspectives and dissent, to be an effective means of improving performance.

With core fundamentals in place to support technology M&A, 33% of technology executives surveyed expect to pursue an acquisition, compared with 20% a year ago. This 65% improvement in the number of companies expecting to pursue acquisitions resonates from the notable increase in the last 12 months in an improvement in the number and quality of opportunities and the likelihood that deals will close.

Many companies also struggle to resolve the dilemma of the need for cross-border, cross-functional teams, and the preference of employees for face-to-face meetings over other forms of communication.

Sixty-five percent say that the extent to which teams are facilitated by technology rather than face-to-face interaction has increased over the past three years, but face-to-face communication is the clear leader as the most valued method of communication.

Mike Cullen, EY’s Global Managing Partner – Talent, says:

“Increasingly, a company’s ability to form, lead and nurture high-performance teams will be critical to its long-term success. To achieve superior performance, tapping into the full range of diverse skills and expertise at their disposal is essential. High-performance teams have a shared commitment to quality and results. They focus on achieving the highest standards and the best outcome, and are aligned behind achieving this goal.”

Dina Pyron, EY’s Global Director of Human Capital, says:

“You have to know when to make a decision and that takes leadership. A collaborative approach enables you to know directionally where you need to go, but someone has to take the decision. You also need accountability to ensure that everyone understands their role and responsibility. If one member is consistently dominant and the other team members feel subordinate to him or her, the team is unable to make use of the diverse skills and experience that it possesses.”

The findings reveal effective team leaders demonstrate the following actions:

  • Provide clear direction and leadership
  • Create an open and inclusive team culture
  • Empower
  • Develop and coach

Three broad characteristics are also highlighted that high-performance teams are likely to demonstrate:

  • A shared vision
  • The right mix
  • Commitment to quality and results

Cullen adds:

“It’s crucial for companies to define what they mean by high-performance teams and then to embed that in a more consistent way, transferring best practice from one team to another so that it evolves into a high-performance culture. By setting a minimum baseline and then a set of aspirational goals for teams around the world to reach, you can define what ‘best in class’ looks like and move towards that globally.”

Read more: How companies use teams to drive performance

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