Team-based organization design is often seen as a way to keep pace with the challenges of a fluid and unpredictable world. A team is in place when two or more people who have different roles or responsibilities interact dynamically and interdependently and share a common and valued goal.

Why are teams so popular? First, businesses are facing increased pressures and global competition. Using teams is one way to address these challenges because teams can include members from different parts of the world. Second, due to rapid changes in the environment, organizations need to be prepared to adapt and change quickly. Using teams provides greater flexibility because individuals can be rotated in and out of teams, based on needs.

Third, products and services are becoming very complex, requiring many people contributing their diverse talents to the same project. Teams are able to respond more quickly and more effectively to changes than can individuals working alone. Finally, many organizations have gone through downsizing and restructuring, which has led them to become flatter and has reduced the number of hierarchical levels. A team-based structure is more congruent to these changes compared to traditional hierarchical structures.

Although many organizations choose to structure themselves around autonomous work teams, and teams in general, team-based organizations do not necessarily outperform organizations that are not structured around teams. Including team performance as part of a performance management system is an extension of a system that has focused on individual performance only.