Cross-functional Communication - Term Paper Example

?Running head: cross-functional communication. Management Organizational Communication Abstract Effective cross-functional communication sets ground for overall organizational improvement. It also has a profound impact on employee motivation and customer satisfaction. This study based on theory and research attempts to understand the link between cross-functional communication and the key organizational elements namely, people, process and customer. Strategic significance of cross-functional communication is studied. Various factors that impact cross-functional communication have been explored. The benefits of cross-functional communication and its limitations have been identified. The paper concludes with potential recommendations to the limitations and summary. How to improve communications in organization: A cross-functional communication perspective. Introduction Besides a natural phenomenon, communication is one of the vital management activities upon which most of its functions are based. This is a medium that links human resources and organization formally and informally through various channels/media. Successful organizations follow well-established modes of communication through which they prescribe and describe organizational policies, procedures, systems, and work processes; through these media, managers ensure organizational goals are accomplished through their employees; these communication modes also help in delivering organizational ideas to the customers and also in earning customers. However, these formal and informal modes of communication have specific functions in specific areas. Linking these specific functions to the benefit of all organizational areas is the aim of cross-functional communication, which has become extremely important for organizations to sustain and compete in contemporary business world that is driven by fast-paced communication processes and globalization. This study explores the need for cross-functional communication and the benefits it provides to the key stakeholders, people, process and customer. Factors that impact cross-functional communication will be explored followed by its benefits and limitations. Theoretical association of cross-functional communication to management: Basically, a business encompasses various organizational activities such as operations or production of gods/services, human resources management, marketing and sales activities, finance and budgeting, technology and systems development, and research and development. To perform these activities, management carries out five main functions namely planning, organizing, leading, and controlling in every organizational activity. Organizational success depends upon the amount of profits generated through employees’ contribution, effectiveness of technology, systems, procedures, marketing and sales activities. This means all organizational activities have to be efficient in order to achieved desired outcomes and profits. Moreover, each of these organizational activities is meant to complement each other in their objectives and work together so that overall organizational efficiency is constantly improved. In this sense, communication between different functions becomes strategically important for information sharing, understanding and providing feedback so that every function obtains information, uses relevant information from other departments and also improves upon developmental areas. From operations perspective, various operational activities within the function require cross-functional communication besides cross-functional communication with other departments. The theory of constraints (TOC) postulates that most of the constraints in organizational functioning originate from policies and not physical entities. The policies tend to create obstacles, which are hard to identify and/or break, unlike physical entities (Dettmer, 1997). In addition, the TOC emphasizes the need for clarity before attempting to identify causes and effects. Here, clarity refers to information gathered form various perspectives in order to avoid misunderstanding or misinterpretation of the situation. Here, communication plays the central role in cascading relevant information in a manner that the communicator and the receiver are fully aware of the situation, and understand the relevance of the information in order to apply to the situation. Lack of communication can cause information block, which could further affect the outcome or obstruct or delay the work. Cross-functional communication is strategically important for Human Resource Management (HRM). In his study, Waldman (1994) had emphasized the connection between organizational systems and individuals’ performance. A systems orientation, as emphasized by TOC, requires horizontal integration throughout the organization, which necessitates formation of cross-functional teams. Additionally, effective cross-functional teams also require empowerment and decision making authorities, which further necessitate data, information and hence cross-functional communication (Bowen & Lawler, 1992). Considering the viewpoint of strategic management, strategic integration of various management functions is crucial for effectiveness of strategic management. Strategic integration promotes continuous improvement and organizational sustainability through strategic fit of functions with organizational objectives and functional integration. This reinforces cross-functional working, which would be possible only through effective cross-functional communication and teamwork. The magnitude of cross-functional communication is further enhanced by the fact that key to effective plans and procedures is knowing what needs to be known and where knowledge can be found (Wang & Belardo, 2005, p.1). Implications at strategic and tactical levels: Cross functional communication can be referred to as horizontal communication. Strategically implemented cross-functional communication fosters collaboration, cooperation, problem solving, knowledge and information sharing, effective decision making, and has overall positive impact on organizational outcomes in terms of productivity and quality. For this, organizational strategies must support cross-functional communication through organizational practices, policies and tactical plans. Horizontal communication encourages employees to overcome barriers of hierarchy because it builds an infrastructure to communicate better across different functions without the involvement of senior management. Cross-functional communication supported by congruent organizational practices can be an effective strategy to enhance employee motivation and commitment; this model can also produce significant impact on customer satisfaction and retention; overall, it can enhance organizational profitability. Cross-functional communication can be an effective strategy to improve operational competence because it will improve accessibility to resources and information, which employees can use in a cost-effective manner through supportive tactical practices. For instance, effectiveness of Total Quality Management (TQM) at Toyota and many other companies is attributable to their cross-functional infrastructure supported by various communication channels that opens the workers’ accessibility to information, knowledge and resources. Implementation of practices such as TQM, Quality Circles, job rotation etc., needs effective cross-functional communication mechanisms. Decision making power, effective knowledge, access to information and resources are critical to employee motivation in knowledge organizations (Harris, 2002). Purposeful, meaningful and continuing communication across all levels and all functions in an organization, when carried out in a systematic fashion, can reduce ambiguity among employees, which can be provided through leadership support and also cross-functional teams. For instance, various organizational functions such as the human resources, operations, technology, marketing and sales, research and development have to work together to accomplish the main organizational goal through respective objectives; information and resources of one function could be of great use to other functions. People: Cross-functional communication fostered by cross-functional teams has a positive impact on employee motivation because cross-functional teams are greater empowered and have higher employee participation. Moreover, this setting literally improves communication, coordination and collaboration thereby making the employees participate, contribute, and thus, commit more towards their work and the organization. Very often, cross-functional teams are formed in organizations dealing with knowledge-based work, new product development, creative and innovative work. Such organizations also employ highly skilled and competent workforce that form cross-functional teams. These teams work on four guiding principles namely, functional competence, reciprocal understanding, cross-functional communication and trust (Douglas & Strutton, 2009). Cross-functional communication between human resources teams and operations and other functions has a profound impact on employee and organization performance because of the strategic importance of HRM team in the organizational setup. Human resource function is directly involved in formulating strategies and policies that are favorable to employees as well as organizational performance. Collaboration with other functions helps the HR team to understand various issues, perspectives, concerns, and challenges faced by employees. This helps in formulating policies and procedures congruent with employee needs. Further, cross-functional collaboration with managers of other functions will also help HR team to understand their respective business-related objectives, issues and challenges; this will help in confining the HR policies and procedures to organizational objectives as well. Such congruency requires effective strategic integration of HRM with all business functions, which, again, is based on effective cross-functional communication and collaboration. This strategic integration of HR with other organizational functions is more suitable for integrated and aligned processes, rather than separate processes (Armstrong & Baron, 2002). Process: Communication and information flow are the grounding principles of organizational advancement because all factors contributing to organizational advancement such as innovation, product development, customer satisfaction, knowledge transfer and resource allocation require effective communication between different groups and functions. For instance, effective capacity planning for managing operations includes capacity planning in terms of manpower allocation, budget, raw material, equipment, space, inventory etc, which are managed by different groups from different functions. Budget allocation happens in the finance team; manpower planning happens with collaboration between HR and operations teams; raw material supply, inventory and equipment planning happens at inventory management and supplier management teams. Layout and facilities planning is performed by facilities/infrastructure teams. Effective cross-functional communication is required for successful adoption and implementation of operational strategies such as Lean production system, as exemplified by Toyota (Morgan & Liker, 2006). Cross-functional communication is most effective when directed through a systematic framework. For example, Toyota’s Obeya system was major contributor to its success in cross-functional working. This system provides a strong framework to implement new product development and other projects that require similar levels of cross-functional working. In this, the team leaders from various functions meet the chief engineers regularly to take on collaborative work responsibilities. The chief engineers ensure all relevant information is constantly cascaded to the team members through various effective media. The information is then used by team leaders along with team members to make critical decisions in less time. At Toyota, employees are aligned to pre-defined goals and work at various levels such as individual, team, system and sub-system levels as well as horizontally with other functions (Morgan & Liker, 2006). New product development is critical to organization from business and sustainability perspective. This has to involve all key stakeholders of the organization in order not only to arrive at common consensus but also to derive maximum inputs, creativity and feedback to develop the most competitive product. For this task, Toyota uses Nemawashi, a process that communicates relevant data and information to appropriate product development members through informal discussions to decide design or discuss manufacturing challenges, customer requirement, and other issues (Morgan & Liker, 2006). This process is extended to include managers and even other members, if required, to arrive at the best possible solution. Customer: While contemporary organizations are facing enormous pressures of competition, costs due to globalization, many organizations are adopting rigorous practices such as TQM, Six Sigma, New Product Development (NPD), Quality Control (QC), Lean etc to remain competitive in business. Operating in such rigorous environment requires robust collaboration and coordination across different functions within an organization and across different locations and countries (Lovelace, Shapiro & Weingart, 2001). Toyota has achieved this through Obeya and Nemawashi. However, studies have indicated that customers’ perception of organizational brand image and product quality also impact employees’ commitment to product and service quality (Celsi & Gilly, 2010). This perspective establishes the need for cross-functional communication between marketing and operations, quality control and supplier management functions. For enhancing customer satisfaction, many organizations use information derived from customer relationship management in product development and improvement. This is done by the quality control department by collecting information from customers through surveys, feedback, focus groups as well as product data such as warranty, defective products etc and sharing the same with production and marketing departments (Christiano, Liker & White, 2003). Factors associated with cross-functional communication: The role of cross-functional communication in organizational setup is impacted by various factors some of which are, but can have a profound impact on cross-functional communication. Firstly, cross-functional communication is not just about communicating with people across other functions, but it is about acquiring information and knowledge which can be applied for further development of organization and/or self. For this leadership support is the most important factor. Literature indicates that leadership style is major contributing factor to successful cross-functional communication. For instance, democratic leadership style supports cross-functional teams that thrive on knowledge and continuous learning to accomplish organizational objectives such as new product development and/or achievement of TQM and application of lean methods (Sarin & McDermott, 2003). Secondly, infrastructure such as cross-functional teams, communication media/channels, organizational structure, culture etc foster cross-functional communication across organizations. Cross-functional teams are formed when organization is undergoing vast and critical change or during new product development, usually. Cross-functional communication can be supported with effective communication media/channels, especially across different locations and nations. Other factors such as gender, level of employee and sense of urgency have also been recently identified as contributing factors (Natarajan, Wyrick & Lindeke, 2010). Thirdly, cross-functional teams that have shared interests produce significantly higher positive outcomes than those that do not possess shared interests. For instance, marketing that operates for revenue and sales, whereas if operations focus on cost-cutting measures, then cross-functional communication will only create chaos, misunderstanding and no desired outcomes. In such scenario, cross-functional team that understands the significance of both objectives will be able to drive the respective teams towards desirable outcomes. The fourth factor includes volume of knowledge and information, which play a critical role in achieving desired outcomes and effective management. Considering the knowledge-based contemporary organizations that try to adopt various knowledge management mechanisms, it would still be impossible for all employees to understand and amass all relevant information and/or imbibe all available knowledge. Hence, cross-functional collaboration and communication helps in knowledge sharing and make relevant use of expertise present within the organization. For instance, a project manager, in a consultant’s role, will be able to bring together expertise from operations, quality, human resources, technology, and facilities. Such cross-functional collaboration will aid in making the most use of available knowledge without much effort and time (Arenas et al, 2007). Lastly, cross-functional communication also depends upon other organizational features such as organizational structure, culture, reward systems, and amount of formal and informal communication within the organization (Pagell, 2004). These factors can actually be termed as enhancing features of cross-functional communication. Flat organizational is more supportive of such communication; such structure also puts forth conducive atmosphere for communication across functions by setting an organizational culture that is open to learning and knowledge sharing. Reward systems motivate employees towards performance, and if their objectives are aligned to organizational goals through structure, systems, and culture that foster cross-functional communication, then employees will willingly engage in active cross-functional communication to achieve their objectives. Conventional and Emergent Practices: Conventional practices that supported cross-functional communication were formal involvement of managers in cross-functional activities and information cascade only when deemed utmost necessary. Other methods included publishing memos and reports about different functions. However, these formal communication methods are now accompanied by other formal methods such as problem-solving groups, think-tank, task forces, project meetings with other teams, peer-evaluation programs etc. At informal level, cross-functional communication is fostered through offsite and informal gatherings/outings, ad hoc teleconferencing and video conferencing, etc (Harris, 2002). More and more firms are adopting cross-functional teams as a means to speed up their businesses as well as production and service sectors, in the form of project teams. This approach has indeed been extremely useful in achieving desired goals in much lesser time than earlier. Cross-functional teams comprising of key members from various functions such as finance, marketing, operations, and human resources will accelerate the process of making key decisions related to costs, sales planning, production capacity and other aspects, and personnel competencies required. Moreover, these teams also minimize costs in terms of acquiring information and skills from outside or consultants in order to implement new project. Cross-functional collaboration also helps the key members to make decisions related to cross-training, job rotation, job redesign etc if required, which will avoid costs and time from external hiring, training etc. Such practices have been successfully adopted by companies like AT&T, Toyota, Ford Motor Company, Chase Manhattan Bank etc (Parker 2003, p.15). Advantages and Limitations Benefits of cross-functional communication: The main benefit of cross-functional communication is that employees across the organization are educated about organizational performance, challenges in different functions, and attaining an awareness of how other departments’ work and performance could influence a particular department. Secondly, cross-functional communication will have direct impact on product/service because it will expose critical information that may be used towards process improvement and to produce better outcomes. This will also help in eliminating erroneous work and rework, which could occur as a result of lack of information. Teams formed from diverse members from other teams tend to be innovative and the best practices can be shared across other teams if cross-functional communication is established (Ancona & Caldwell, 1990). Literature also indicates that using cross-functional teams as a means to establish cross-functional communication improves employee motivation and job satisfaction (Parker, 2003); however, this is debatable and applicable only to certain settings (Uhl-Bien & Green, 1998). Parker (2003, p.12) identifies six competitive advantages of cross-functional communication, such as speed in accomplishing tasks; reducing complexity of issues; better customer focus; increasing creativity; fostering better organizational learning through acquisition of better skills, best practice sharing and knowledge sharing; and single point of contact through cross-functional teams for information and decision making. Impediments to cross-functional communication: Implementing cross-functional communication has its own challenges at various levels and with various dimensions. For instance, cross-functional communication at local level would require involvement of senior management in the absence of cross-functional teams, which could hinder or slower the process than expected. In the absence of proper infrastructure to support this function, approvals of senior management and other such practices could affect work outcomes. The most important impediment in cross-functional communication emerges in cross-national setups, which usually function through cross-functional teams. Issues emerge in the form of differences in cultural background, organizational policies, regulations etc. Much earlier, Hofstede (1980) had proposed that national culture has a strong influence on communication, which could create misunderstanding in cross-national and cross-cultural communication processes. Lack of this awareness and knowledge could create misunderstanding and misinterpretation in communication in cross-functional teams operating from different locations. Moreover, national culture also has a profound impact on organizational policies and procedures. For instance, individualistic cultures such as the United States and United Kingdom encourage two-way feedback and self-evaluation, whereas this is not accepted in collectivistic nations like Taiwan and China. Expatriate managers from the US or UK in China or India have to be careful about such aspects; yet, these differences could create significant obstacles in the process of communication. At the outset, cross-functional links can affect strategy planning (Perreault & McCarthy, 2006). Individual functions have specific objectives and cross-functional working can have negative impact on one or other objectives. Promoting cross-functional communication through cross-functional teams is extremely difficult because managing cross-functional teams is difficult due to the diverse group of individuals in the team, with different backgrounds, cultural values, team-member styles, interests, as well as the leader’s style. Such teams cannot be managed with authority, yet results have to be achieved. Moreover, cross-functional communication across virtual teams with added impediments such as time zone differences, culture/language problems etc (Parker, 2003). Potential Resolutions: At local level, cross-functional communication can be supported by encouraging leaders at various levels to motivate their team members to work closely with other teams or approach other teams directly for seeking information, help etc. For this, leaders have to also empower their followers with the authority to take decisions related to seeking help or information from other functions. Cross-training team members by members/trainers from other functions in activities that are closely related to their work can be of great help to the process and also in establishing cross-functional communication. Organizational structure such as aligning all related activities to one management function will also help in establishing cross-functional communication. This will resemble the short-term project team model. Secondly, global leaders must possess sufficient knowledge about cultural influences on communication and other behavioral aspects of their cross-border colleagues. Employees that work in cross-functional teams across borders have to be trained on these aspects in order to avoid misunderstanding and misinterpretation. Moreover, this awareness will also help in establishing better communication and relationship with cross-border employees. Organizational processes that support cross-functional communication would have to be modified to suit the cross-national policies and processes in order to avoid chaos and mismatch of policies and objectives with culture. Lastly, it is recommended that in order to establish better cross-functional communication and working, without affecting strategy planning, the process of cross-functional communication has to be supported by a framework of tough and clear organizational goals, structures, and practices; but in itself, cross-functional communication may be meaningless and could create chaos and confusion. Summary and conclusions: To sum up, cross-functional communication is critical to organizational performance because it encourages faster communication, information sharing and knowledge transfer. Applying TOC, lack of information could be one of the impeding factors for better performance, which can be addressed by cross-functional communication. Strategic integration of various organizational practices with organizational objectives requires cross-functional communication supported by congruent organizational practices and policies. Strategically, organizational performance is advanced by people/employees, process and customers. Cross-functional communication has a significant impact on these three critical aspects. From people perspective, cross-functional communication helps in acquisition of information and in knowledge sharing, thereby equips employees with better information in order to make better decisions. From process perspective, information flow increases process pace and supports implementation of various operational strategies such as lean, quality circles, TQM tools and techniques etc. From customer perspective, cross-functional communication helps in educating employees about customer expectations, feedback and behavior; this improves their commitment to customer satisfaction. Cross-functional communication is impacted by leadership, organizational systems and structure, culture, shared interests, volume and type of knowledge and information, and levels of formal and informal communication in the organization. Cross-functional communication is encouraged by many organizations by forming cross-functional teams. This improves employee education on various organizational perspectives; provides better and more knowledge sharing and knowledge transfer opportunities; fosters innovation; and helps in achieving better outcomes in lesser time. However, this process can be impeded by too much involvement from management, cross-cultural influences, and incongruent strategy planning process and strategies. 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