Home » Blog » Organization Design » What are the most common business team types?

What are the most common business team types?

A business team—or “work group”—is a group of people that works together to complete a common goal. Every business team type is defined by three common attributes: where they work; who they work with; and what their work accomplishes. These are known as location, function, and role.

Organizations that clearly define these work groups can more clearly articulate their business strategy, and then align it with their talent strategy. That alignment is at the core of talent optimization as a discipline. 

In this article, we’ll cover the following topics:

  • What are the different types of teams in a business?
    • Team types by location
      • In-person teams
      • Virtual teams
      • Hybrid teams
    • Team types by function
    • Team types by role
      • Project teams
      • Operational teams
      • Leadership teams
    • Special business team types
      • Contract teams
      • Problem-solving teams
      • Matrix teams
  • How to optimize your teams for better performance

What are the different types of teams in a business?

Each type of team in a business has its strengths: Some are fast-paced and innovative, while others are careful and deliberate. To keep your organization high-performing, it’s important to know which teams you need for which situations. To make the right determination, you need to take each common attribute—location, function, and role—into account.

Join 10,000 companies solving the most complex people problems with PI.

Hire the right people, inspire their best work, design dream teams, and sustain engagement for the long haul.

Team types by location

In-person teams

When several people work in the same room, office, or building, they’re known as an in-person team.

In-person teams have been around for as long as people have been working, and for good reason. Close contact can simplify and accelerate communication: Instead of waiting for an email, in-person teams can exchange information with their coworkers directly and immediately. This improves both coordination and group cohesion.

The downside? When you hire for an in-person team, you can draw from a smaller pool of candidates. Where remote teams can theoretically incorporate anyone from across the globe, in-person teams are often limited to hiring employees from their immediate geographic area.

Virtual teams

Unlike in-person teams, virtual teams operate from locations that may be hundreds or even thousands of miles apart. Virtual teams often work from home, though they may also work from dedicated co-working spaces. Increasingly, virtual teams are being replaced by a hybrid model.

Virtual teams have the advantage of being able to access the best talent. When you bring together groups of employees that are highly effective in their roles, you get highly effective teams. Additionally, 51% of employees would prefer to work in a remote or virtual environment. Meeting that preference improves morale and retention.

However, virtual teams may struggle with communication and sharing information. Also, while working from home can improve morale, feeling disconnected from your team doesn’t. Without team building, virtual employees may become disengaged.

Hybrid teams

Hybrid work mixes virtual and in-person teams: These employees typically spend several days of the week at home, and several in the office. At many companies, this can include flexibility to choose remote or in-person work, too. While some hybrid members might split time between home and the office, others might choose one or the other.

Hybrid teams have the advantage of being able to cater to all your employees at once. While some behavioral profiles prefer remote work, not all do. With a hybrid model, employees that crave variety and regular in-person interaction can come in once a week, several times a week, or every day. This benefits morale and retention.

However, in a hybrid model, employees that come to the office may receive networking opportunities that remote employees don’t. This can cause tension within the team, which makes managing hybrid teams complex. However, when managed well, hybrid teams have exceptional benefits.

Team types by function

Functional teams

When a team only supports a certain part or parts of the organization, it’s called a functional team. For example, sales teams are usually functional: Every member of a sales team either sells to clients or supports the people who do. Likewise, sales teams don’t usually interact as often with other departments. Functional teams typically exist within a single department.

Functional teams are one of the most common business team types. They’re best at focusing on specific projects with narrow goals.

Cross-functional teams

Cross-functional teams help several parts of the organization at once. They sometimes include members of several different departments, but they don’t have to. For example, an IT team only exists within the IT department, but it’s cross-functional because it supports every other team in the organization.

Cross-functional teams are best at tackling broad projects whose shared goal benefits several different departments.

Self-managed teams

Self-managed teams can be thought of as an organization within an organization: They inform other departments about their progress, but make their own decisions about what to work on and what constitutes success. This can make them more motivated, since they’re bound by common interests. 

Often, self-managed teams have flat or fluid hierarchies. In other words, there’s not necessarily one ‘boss’ who tells everyone else what to do. Early stage start-ups are a classic example of self-management.

Without highly motivated and skilled team members, self-management doesn’t work. When staffed properly, though, self-managed teams can achieve breathtaking results. They excel at visionary work, like R&D or product development.

Team types by role

Project teams

Project teams operate at the most basic level: They have a specific objective with a clear endpoint. For example, a marketing department might form a project team to plan and run a new TV campaign. Almost every department has at least one project team at any given time.

Project teams can either be long-term or short term. For instance, a human resources department might form a hiring team for only a few months to ramp up staff for the holidays. On the other hand, an engineering department might form a production team that develops, tests, and releases a new product across several years.

Project teams usually have the simplest organizational structure, often with a single team leader. Likewise, they’re more likely to be functional than other team roles.

Operational teams

Unlike project teams, operational teams don’t have clear endpoints. For example, an operational marketing team might be tasked with posting on the company’s social media accounts twice per day. Since this is ongoing work that never truly ends, it’s considered operational.

Operational teams are almost always long-term, if not permanent. They often support other departments, which sometimes means a complex organizational structure. For instance, a customer support team might report to both sales and engineering.

Leadership teams

Leadership teams operate at the highest level. Several leaders across the organization, each from different departments, work on broad objectives. Ideally, those objectives become clearer as they map to agreed-upon goals. Organizations use leadership teams when they need to make decisions that affect the whole company. For example, a company might form a leadership team to decide on a new vision for their brand that aligns with their already-established mission and culture.

Leadership teams can be long-term or short-term, but are almost always cross-functional, since each leader tends to be in charge of a department. Leadership teams shine in high-level, decision-making processes.

Special business team types

Contract teams

When an organization brings in a group of temporary employees to help with a specific problem, it’s called a contract team. Often, they’re consultants on the payroll of a completely different organization (sometimes known as vendors), or independent contract workers, such as freelancers. 

Contract teams can have any of the normal team type attributes: They can be in-person, virtual, or hybrid, depending on project needs. They can work functionally or cross-functionally, and in rare cases, may even be self-managed. Finally, they can work at any level of the organization, from projects to leadership.

Contract teams excel at short-term projects with concrete goals. For example, a company might hire a group of lawyers to help with a one-time lawsuit. Contract teams usually aren’t cost effective over long periods of time.

Problem-solving teams

Problem-solving teams are like a contract team within an organization. When an emergency happens, a company will temporarily form a problem-solving task force to solve the issue. Once the immediate issue is resolved, the problem-solving team often disbands. Like contract teams, problem-solving teams can have any of the other team attributes. 

Problem-solving teams work best with short-term problems. For example, if a natural disaster disrupts a company’s operations, a problem-solving team of department leaders might be formed to figure out a response and implement interim processes or solutions.

Matrix teams

Teams with more than one supervisor are referred to as matrix teams. They’re usually cross-functional. Since they’re accountable to multiple supervisors, matrix teams are never self-managed.

In most matrix teams, the first supervisor is the head of a department, while the second supervisor is a project manager from a different department. Having more than two supervisors is rare. 

Organizations use matrix teams when it’s important for resources and information to flow freely between several departments. However, matrix teams can also make reporting more complex. Also, if there’s tension between the two supervisors, team management becomes difficult. As a result, they should only be used when necessary.

Join 10,000 companies solving the most complex people problems with PI.

Hire the right people, inspire their best work, design dream teams, and sustain engagement for the long haul.

How to optimize your teams for better performance

Different business situations call for different teams. When you have an emergency, you bring on a problem-solving team. When you need long-term support, you bring on an operational team. But how do you make sure it’s a good team?

Everyone knows that certain people are suited to certain jobs. Salespeople tend be more extraverted. Engineers tend to be more introverted. As a result, tools like the Predictive Index Behavioral Assessment™ are often used to make sure individuals are a good fit for their roles. What most people don’t know? You can use that knowledge to optimize teams, too.

The behavior of a team is guided by the behavior of its team members. In other words, if a team is full of risk-taking people, the team will be more inclined to take risks. If a team is full of careful people, the team will do careful, diligent work. With PI Design™, you can take advantage of these insights, and build Dream Teams that trust each other and excel at their objectives.

The difference between a failing business and a soaring enterprise? It’s not just about having the best teams. It’s also about choosing the right team for the job. By knowing the strengths and weaknesses  of each business team type, you can optimize your organization for success.


Robbie is a technical and content writer at PI. You can find him walking by Lake Michigan or plotting his next DnD campaign.

View all articles
Copy link