4 Characteristics of an Effective Team

Building and managing an effective team is a competitive advantage in today’s fast-paced world.

According to a report by management consulting firm Deloitte, 71 percent (pdf) of professionals say focusing on teams to cultivate culture, agility, and diversity is vital to organizational success. But what does your team need to excel?

Here’s an overview of what characterizes an effective team and how to build one to achieve business goals and objectives.

What Makes a Team Effective?

Traditional teams have stable membership and one shared goal. Yet, those with conventional structures can fall short when faced with unpredictable circumstances, which are increasingly common in today’s business environment.

“We live and work in an increasingly VUCA world,” says Harvard Business School Professor Amy Edmondson in the online course Dynamic Teaming, which can be taken individually or as part of the Credential of Leadership, Impact, and Management in Business (CLIMB).

What characterizes a VUCA environment? According to Edmondson, it can be summarized as:

• Volatile: Rapid changes, big swings, and constant ups and downs
• Uncertain: An inability to predict future events or societal shifts
• Complex: Increasing interconnectedness of our world and work
• Ambiguous: Unsureness of the meaning behind certain events and signals

Operating in a VUCA world is difficult and often requires dynamic teams that are cross-functional by design. Your team’s effectiveness hinges on its agility and adaptability. Those qualities enable employees to maintain operational continuity, capitalize on opportunities, and respond to emerging threats in fast-evolving markets.

You can bolster your team’s adaptability through:

• Proactive learning: Constantly acquiring new skills and knowledge to stay ahead of changes
• Flexible processes: Adjusting strategies and workflows to respond to external pressures
• Resilience: Demonstrating persistence and bouncing back from setbacks
• Psychological safety: Encouraging participation without fear of negative consequences

Building adaptability also requires setting clear expectations, providing support, and practicing what you preach.

4 Characteristics of Effective Teams

To help you lead your employees more effectively through shifting circumstances, here are four characteristics of effective teams in the modern workplace.

1. Dynamic Teaming

As the world grows more unpredictable, one way to boost performance is through dynamic teaming—working in groups with fluid membership to navigate shifting circumstances and tasks.

In Dynamic Teaming, Edmondson describes how dynamic teams compare to traditional ones.

“Think about a routine dental visit,” Edmondson says. “The same dentist and hygienist team you’ve probably gone to for years is prepared to care for your teeth. They’ve practiced together and can move efficiently through their tasks with skill and expertise.”

But imagine you're visiting a new city, slip on a patch of ice, and knock out a tooth. You won’t have access to your regular dental practice. Instead, you’ll probably be rushed to the emergency room (ER).

“The hospital that will care for you is open 24 hours, and the doctors, staff, and nurses rotate through shifts, working in different teams and on different patients,” Edmondson continues. “You come to the ER with a set of unique and complex challenges that differ significantly from the patient before you and the patient after you. These caregivers might not see each other frequently or even know each other’s names, but they must coordinate to accomplish the shared goal of providing you the best care possible. Your missing tooth might not be a life-or-death emergency, but the same principles of dynamic teaming apply irrespective of the stakes or situation.”

While your industry may not have the same high-pressure environments that an ER does, that doesn’t mean dynamic teaming isn’t relevant in an office, warehouse, store, or laboratory.

For example, the rise of remote work (pdf) has fundamentally transformed team dynamics and introduced complexities not typically present in traditional office settings, such as differing time zones, cultural expectations, and communication barriers. With employees dispersed across locations, dynamic teaming can enable you to lead and manage remote teams better.

2. Psychologically Safe

According to Edmondson in Dynamic Teaming, psychological safety is “a shared belief that it's okay to offer opinions, suggest ideas, ask questions, raise concerns, speak up, and admit mistakes without fear of negative consequences. [It's] a group phenomenon that allows, even encourages, interpersonal risk-taking and candor within a team.”

Removing the fear of retribution or judgment can significantly improve the employee experience and fuel innovation. As a leader, you must create an environment where open dialogue is possible and expected. You can support this by promoting the four dimensions of psychological safety outlined in Dynamic Teaming:

• Willingness to help: Employees believe asking for help is appropriate, and their colleagues are willing to provide it.
• Inclusion and diversity: Employees feel included and that their diverse experiences and expertise matter.
• Attitude to risk and failure: Employees view mistakes and failures as acceptable in favor of learning.
• Open conversation: Employees perceive conversations as open, candid, and safe to contribute to.

“Part of your role as a leader is to eliminate the risk of silence by inviting participation from your team,” Edmondson says in Dynamic Teaming. “You can establish a formal process to require participation from your team, but there are also less structured ways of inviting participation.”

Edmondson suggests asking questions that reassure team members they’re safe to share their thoughts, such as:

• What do others think?
• What are we missing?
• What other options should we consider?
• How might a competitor approach this?
• Who has a different opinion?

If you’ve struggled with this in the past, request employees’ feedback on how you can create a psychologically safe environment for them.

3. Diversity

Recruiting employees with different backgrounds, experiences, and ways of thinking is crucial to team performance. Diverse teams are better equipped to understand and bridge different perspectives, which can help drive business growth and innovation. They’re also less prone to groupthink, which can inhibit creative problem-solving.

While discussions around diversity often tend to focus on factors like race, gender, sexual orientation, culture, or nationality, there are many other potential factors. Dynamic Teaming poses 12 unique dimensions of diversity you may want to consider as you build your team:

• Cultural differences
• Socioeconomic class
• Religion
• Education
• Accent or language
• Hierarchy
• Previous employment
• LGBTQIA+
• Disability
• Gender
• Caregiver status
• Age

Team diversity is particularly important if you work for an international business. Employees can bring insights critical to understanding different markets’ cultural nuances and preferences, allowing you to better identify and react to global trends and shifts.

4. Inclusivity

To build a more effective team, embracing diversity is only the first step. You must also consider the work environment itself and how it facilitates—or hinders—inclusion.

“Diversity can be created through the recruitment and hiring of talent,” Edmondson says in Dynamic Teaming. “But diversity doesn’t guarantee everyone feels a sense of inclusion or belonging.”

In fact, Edmondson notes that diversity, without meaningful efforts for inclusion, can backfire.

“When others in your organization don’t look like you, share your expertise, or come from your background, it can make it harder for you to feel you belong,” Edmondson says in Dynamic Teaming.

The solution? Practicing inclusive leadership by actively fostering a work environment where all team members feel valued, respected, and included—not in spite of their differences, but because of them.

Dynamic Teaming highlights the following skills as being an essential part of fostering inclusivity on your team:

• Resisting the urge to become defensive when you make a mistake that others perceive as insensitive or offensive
• Approaching interactions with curiosity, especially with those from different backgrounds
• Allowing yourself to be vulnerable and open to failure
• Challenging the assumptions you may unconsciously hold toward members of certain groups

Inclusion isn’t just ideal—it’s vital to your team’s success. By promoting it, your team can influence your company’s culture and business outcomes.

One way to foster an inclusive workplace is to involve team members in the decision-making process. This reinforces their value and ensures diverse perspectives contribute to your organization’s strategic direction.

How to Build an Effective Team

As you build your team, one way to develop your skills and showcase your leadership potential is by continuing your business education and completing an online course.

By enrolling in CLIMB or Dynamic Teaming, you can immerse yourself in an interactive learning experience alongside a global network of peers to explore team effectiveness and how to lead in a constantly evolving world.

Are you ready to build an effective team? Explore Dynamic Teaming, which offers unique strategies to foster trust and collaboration. You can take it independently or as part of the Credential of Leadership, Impact, and Management in Business (CLIMB). CLIMB consists of seven courses for leading in the modern business world. Download our CLIMB brochure to learn more about the curriculum, admissions requirements, and benefits.

This post was updated on May 27, 2025. It was originally published on May 2, 2024.