The Cost of Dysfunction: How Your Ineffective Team May Be Undercutting Your Organization's Success

We recently worked with a newly-hired leader, Luis, who had his hands full. Although well-equipped with a track record of success in his industry, Luis entered his new role with a critical challenge: he had inherited a team that was dysfunctional with a capital “D”. 

Luis’ team had been trapped in an unhealthy pattern for years. They didn’t trust one another, couldn’t resolve conflicts constructively, and, as a result, were ineffective and inefficient in meeting even the most routine goals. The group missed deadlines, made several poor decisions, and lost more than one top performer along the way.

Luis knew that changes needed to be made. And when he began unpacking the situation, he discovered that the flawed group was costing the organization more than any of them realized.

The Cost of Underperforming Teams

Highly engaged teams are the heartbeat of any organization—from multinational corporations with thousands of employees to a small business with less than a dozen. Big or small, the key to those hard-working teams lies in how well they interact with one another. When there is friction, however, the costs are staggering: a Harvard Business Review study estimated that businesses lose an average of $15.5 million per year on poor team performance. Let’s look at just a few of the reasons:

Decreased Productivity

Sluggish productivity--a hallmark of dysfunctional teams--brings organizational growth to a standstill. Conflict that is not managed constructively leads to divisiveness; according to the CPP Global Human Capital Report, 67% of employees believed that their productivity was impacted negatively by unresolved conflicts.

In Luis’ case, team members lacked focus due to disagreeing viewpoints. With more time spent on water cooler gossip than new initiatives, their deadlines were missed, and critical goals went unmet.

Wasted Resources

Because of their inability to work together effectively, dysfunctional teams waste resources. Gaps in direction, unclear next steps, and lagging task completion due to unresolved decisions cause an organization’s resources to leak like a sieve.

Although studies such as the MIT Sloan Management Review have shown that high-quality decisions are 50% more likely to occur among teams with effective communication, this was not the case regarding two members of Luis’ team. When they unknowingly spent three months duplicating work on the same initiative, time on the clock turned into time wasted.

Missed Opportunities

Due to their inability to collaborate effectively with one another, dysfunctional teams are slow to innovate. According to ZipDo’s Essential Workplace Communication Statistics in 2023, 29% of respondents named poor communication as the top reason projects failed. 

True to their history, a lack of trust and an unhealthy degree of competitiveness caused Luis’ team to stop communicating and begin working in silos. As a result, positive change that could improve the functioning and overall results of the business was virtually nonexistent, hurting the team, and the organization’s future.

Flagging Team Morale

Dysfunction within a team is a guaranteed morale-buster. According to statistics gathered by TeamStage, 33% of HR Professionals reported that employee morale decreased when teams struggled to collaborate. 

When teams are not functioning optimally, engagement is low, absenteeism is high, and quiet quitting is the modus operandi. To his dismay, Luis’ team members had adopted the mindset of doing as little as possible to complete a task, and it didn’t take long for a plethora of angry customer phone calls to reflect the results.

Increased Turnover

It’s no surprise that prolonged periods of dysfunction within teams will wear down even the most committed of employees. A 2019 SHRM study, “High Cost of a Toxic Workplace Culture,” revealed that a poor work environment will cause one out of five employees to leave their job.

When bad behavior goes unchecked, most likely it will be star performers who jump ship first, resulting in recruiting, onboarding, and transition costs. What’s more, too much turnover gives an organization the appearance of instability. Luis’ team provided a clear example of this, demonstrated by three anchor clients lost when one of Luis’ top achievers left the company out of sheer frustration.

The Ripple Effect of Team Dysfunction

Anyone who has been part of a dysfunctional team knows firsthand how stressful the experience can be. The resulting drop in morale impacts all areas of team effectiveness, and members who see no relief in sight have no choice but to find a better environment in which to work. For an organization, this means lost revenue, lost customers, and lost market share.

Fortunately for Luis, after identifying the high-level dysfunction within his team he was able to take quick action to open up better communication channels, improve conflict management, and foster a culture of cohesiveness. Most importantly, he modeled the behavior he requested. By the end of the quarter, the word “team” once again fit his group, and a jump in their overall results reflected it.

Are dysfunctional teams taking a toll on your company’s bottom line? Book a discovery call today for help, or find support at our next monthly Profusion Leaders Forum, a lively and relevant virtual discussion with like-minded top-tier leaders.