The Impact of Dysfunctional Teams on Organisational Performance
Dysfunctional teams do not always look dysfunctional. Meetings still happen. People may be experienced, capable and outwardly professional. There may be little visible conflict.
The dysfunction often shows up in recurring patterns instead. Decisions are made and then reopened. Difficult issues move into conversations outside the room. Information is shared selectively or too late. Accountability becomes blurred. Functions protect their own priorities rather than working towards a genuinely collective outcome.
Over time, these patterns affect more than the quality of relationships within the team. They can weaken decision-making, slow execution, reduce the effective use of expertise and make it harder for an organisation to learn and adapt.
This is particularly important in leadership and cross-functional teams, where members hold different information, responsibilities and perspectives and where the consequences of poor coordination can spread well beyond the team itself.
A frequently cited study of 95 cross-functional teams across 25 organisations found that nearly 75% were falling short against at least three of five performance criteria. This should not be interpreted as evidence that three-quarters of all workplace teams are dysfunctional, but it illustrates how difficult effective cross-functional working can be.
(Tabrizi, 2015)
What is a dysfunctional team (in the workplace)?
A team becomes dysfunctional when recurring patterns in how people work together interfere with its ability to achieve collective outcomes.
That does not necessarily mean that people dislike each other or that the team is constantly in conflict. Dysfunction can arise from interpersonal behaviour, but it can also sit in the way the team has been designed: unclear purpose, competing objectives, confused decision rights, weak information sharing, poorly managed dependencies or organisational incentives that pull members in different directions.
This distinction matters. Decades of research on team effectiveness suggest that outcomes depend on a combination of team composition, task and organisational context, structures and processes, rather than any single behavioural characteristic. Mathieu and colleagues' major review of team-effectiveness research, for example, describes team performance as the product of a much broader system of inputs, processes and emergent states.
(Mathieu et al., 2008)
Patrick Lencioni's Five Dysfunctions of a Team remains a useful practitioner framework for thinking about trust, conflict, commitment, accountability and collective results. It is best treated as one accessible lens, however, rather than a complete explanation of why teams struggle.
What makes a team dysfunctional?
There is rarely a single cause. Dysfunction usually develops through an interaction between how the team is structured, how its members behave and the organisational system around it.
Unclear purpose, priorities or decision rights. Teams struggle when members do not have a sufficiently clear collective purpose or when nobody knows where authority actually sits. What looks like a relationship problem can sometimes be a design problem: overlapping responsibilities, competing priorities or decisions that repeatedly fall between functions.
Information fails to travel across the team. One reason teams exist is to combine knowledge held by different people. A meta-analysis of 72 studies involving 4,795 groups found that information sharing was positively associated with team performance, cohesion, decision satisfaction and knowledge integration. A team can therefore contain excellent individual expertise while failing to use that expertise collectively. (Mesmer-Magnus & DeChurch, 2009)
People become reluctant to speak openly. When challenging an assumption, admitting uncertainty or raising bad news feels personally risky, important information is more likely to remain hidden. Psychological safety does not mean permanent agreement or comfort. It concerns whether people believe interpersonal risks such as questioning, disagreeing or acknowledging mistakes can be taken without disproportionate personal consequences. A substantial meta-analysis brought together 136 samples representing more than 22,000 individuals and nearly 5,000 groups. (Frazier et al., 2017)
Conflict is either avoided or becomes personal. The absence of disagreement is not evidence of a healthy team. Senior teams need to challenge assumptions and integrate competing perspectives. Problems arise when disagreement becomes interpersonal and corrosive, or when the team avoids necessary conflict altogether.
The wider organisation reinforces the behaviour. Incentives, reporting structures, power, resource competition and functional targets all shape what happens inside the room. A team may talk about collective accountability while its members are rewarded almost entirely for the performance of their individual functions.
What are the consequences of a dysfunctional team?
Dysfunctional teams can lead to various negative consequences, including:
1. Decision quality deteriorates
Effective teams bring together different information and perspectives before making collective choices. Dysfunction interferes with that process. People may withhold information, defend functional positions, defer excessively to authority or conduct the real debate outside the meeting.
Research on 116 top-management teams found that greater behavioural integration, including collaboration, information exchange and joint decision-making, was associated with higher-quality strategic decisions. The study also found relationships between behavioural integration, decision quality and organisational decline (Carmeli & Schaubroeck, 2006).
2. Execution becomes slower and less reliable
Dysfunction creates friction after the decision as well as before it. Decisions are revisited, responsibilities remain ambiguous, unresolved disagreements reappear during implementation and work gets escalated or routed around other members of the team.
This helps explain why the organisational cost of dysfunction is not confined to difficult meetings. It appears in delay, duplication, rework and initiatives that struggle to cross functional boundaries.
Tabrizi's research into cross-functional teams is useful here because the criteria on which teams struggled included schedule, budget, customer expectations and alignment with organisational goals, not simply how well team members said they got along.
3. The organisation fails to use the expertise it already possesses
Senior and cross-functional teams deliberately bring together people with different knowledge. But expertise only becomes organisationally useful when relevant information is surfaced, tested and integrated.
This creates an important paradox: a team can consist of highly capable individuals and still perform poorly collectively. The issue is not necessarily a shortage of talent. It can be the team's inability to convert individual capability into collective judgement and coordinated action.
4. Healthy challenge is replaced by avoidance or destructive conflict
Conflict is not inherently dysfunctional. Some disagreement is inevitable, and often valuable, where people hold genuinely different information, priorities and professional perspectives.
The problem is what the team does with that difference. At one extreme, people stop challenging each other and apparent harmony conceals unresolved disagreement. At the other, disagreement becomes personalised, political or focused on winning rather than learning. Both patterns reduce the team's ability to work productively with difference.
5. Learning and adaptation become harder
Teams need to notice what is changing, reconsider assumptions and adjust how they work. Dysfunction makes that harder. Bad news travels more slowly, mistakes become threatening, established positions become harder to challenge and attention shifts from solving the problem to managing relationships, status or blame.
This becomes particularly costly during periods of uncertainty or transformation, when organisations need senior teams to learn and adapt rather than simply execute a fixed plan.
Decreased Productivity:
Dysfunctional teams often struggle to work efficiently and cohesively, leading to delays in project completion and reduced productivity. This can hinder the organization's ability to meet deadlines and achieve its goals.
Poor Decision Making:
In dysfunctional teams, conflicts and lack of effective communication can impede the decision-making process. As a result, decisions may be biased, ill-informed, or delayed, which can have negative implications for the organisation's strategic direction and success.
Low Employee Morale:
Dysfunctional teams create a toxic work environment characterized by tension, mistrust, and negativity. This can lead to low employee morale, decreased job satisfaction, and higher turnover rates as team members may become disengaged and demotivated.
Communication Breakdown:
In dysfunctional teams, communication breakdowns are common, leading to misunderstandings, misinformation, and a lack of clarity in roles and responsibilities. This can hinder collaboration and effective teamwork.
Increased Conflict:
Dysfunctional teams experience higher levels of interpersonal conflict, which can be disruptive to team dynamics and hinder the achievement of common goals. Unresolved conflicts can escalate and create a hostile or even toxic work environment.
Lack of Innovation:
Dysfunctional teams often stifle creativity and innovation. When team members are not working collaboratively and open to diverse ideas, the organization may miss out on valuable insights and creative solutions to problems.
Missed Opportunities:
Dysfunctional teams may fail to recognise and capitalize on opportunities for growth and improvement. This can hinder the organization's ability to adapt to changes in the market and stay competitive.
Reputation Damage:
The presence of dysfunctional teams can harm an organisation's reputation both internally and externally. Negative team dynamics can become widely known, leading to decreased trust and credibility among stakeholders.
High Employee Turnover:
Dysfunctional teams can contribute to higher employee turnover rates as team members may seek more positive and supportive work environments elsewhere.
Financial Losses:
The combined effects of decreased productivity, poor decision making, and low employee morale can lead to financial losses for the organisation.
Take a closer look
Recognising a pattern is useful. Understanding what may be behind it is more useful.
The Leadership Team Performance Diagnostic takes a few minutes and helps you look at where your senior team may be working well, and where alignment, challenge, decisions or accountability may be getting in the way.
Why dysfunction in leadership teams matters more
Dysfunction in a senior leadership team has a wider organisational reach because the team is not only responsible for its own performance.
Its members allocate resources, set priorities, interpret strategy and shape the expectations experienced by teams below them. When the senior team cannot integrate different perspectives or resolve competing priorities, those tensions tend to travel downwards into the organisation.
Different functions may receive conflicting messages. Decisions that appear settled at executive level are reopened further down. People learn which conversations can safely happen in formal meetings and which need to happen afterwards.
Recent research by Thomas Keil and Marianna Zangrillo, based on interviews with more than 100 CEOs and senior executives over several years, identified recurring patterns of leadership-team dysfunction including political infighting, conflict avoidance and complacency. Their work reinforces an important point: senior-team dysfunction is not simply an interpersonal inconvenience. It can become a barrier to strategy execution and organisational performance (Keil & Zangrillo, 2024).
What is the leader’s role in team dysfunction?
Leaders have a disproportionate influence over the conditions in which a team operates, but it is too simplistic to assume that every dysfunctional pattern has been caused by the team leader.
Leaders do, however, send powerful signals about what is safe, rewarded and expected. People notice what happens when someone admits a mistake, challenges the prevailing view, disagrees with the leader or raises a problem before they have a solution.
A leader can unintentionally reinforce dysfunction by modelling certainty rather than curiosity, rewarding superficial agreement, allowing important decisions to remain ambiguous, tolerating behaviour from powerful individuals that would be challenged in others, or stepping in so quickly that accountability never develops between team members.
Equally, effective leadership cannot compensate indefinitely for structural problems. If objectives conflict, decision rights are unclear or incentives encourage functional optimisation, the team may need changes to its operating environment as well as changes in behaviour.
The useful leadership question is therefore not simply “How do I fix these people?” It is “What am I, the team and the wider system doing that allows this pattern to continue?”
In Lencioni’s model, dysfunction isn’t primarily a “team personality problem” - it’s treated as a leadership-conditioned environment. The first dysfunction (absence of trust) is driven by a fear of vulnerability, and that fear is often rational: people are watching what happens when someone admits a mistake or challenges the room.
Your job as leader is to set the conditions for trust, conflict, commitment, accountability, and results. Practically, that means you “go first” on the behaviours you want repeated. Lencioni is explicit that leaders set the stage for vulnerability-based trust by being genuinely vulnerable (e.g., sharing failure stories, publicly admiring others’ strengths, letting others teach them).
Where leaders unintentionally create dysfunction:
They model invulnerability: the team stays polite, guarded, and politically “safe,” which reinforces the absence of trust (fear of vulnerability).
They reward artificial harmony: disagreement becomes dangerous, so the team avoids the productive conflict needed for good decisions (Lencioni describes “artificial harmony” as stifling productive ideological conflict).
They allow ambiguity to linger: unclear decisions and mixed messages erode commitment and make accountability feel personal rather than contractual.
They tolerate “learning risk” being punished: people stop surfacing problems early. Edmondson’s research on psychological safety focuses on how leaders can help teams manage interpersonal risk so learning and speaking up actually happens (Edmondson, 1999).
Zooming out, this is also culture work. Schein’s position is blunt: “the only thing of real importance that leaders do is to create and manage culture (Schein & Schein, 2017) .” Schein and Schein's work also reminds us that these repeated team behaviours gradually become cultural signals. What leaders tolerate, reward, avoid or repeatedly pay attention to helps shape what the team learns is normal.
What are early warning signs of a dysfunctional team?
Leaders often wait for obvious conflict before concluding that there is a problem. Earlier signs are usually less dramatic.
Meetings multiply but decisions do not stick. The same issues return in slightly different forms. People agree in the room and challenge the decision afterwards. Escalations increase because ownership is unclear. Important information arrives late. People become increasingly careful about what they say and to whom. Work starts being routed around the team. Functional loyalties consistently outweigh collective priorities.
Another warning sign is silence. A team can become quieter as it becomes less healthy. Fewer questions, fewer challenges and fewer visible disagreements can sometimes indicate that members have learnt that speaking up is not worth the interpersonal cost.
None of these signs proves that a team is dysfunctional. Repeated patterns, rather than isolated incidents, are what matter.
Looking at this in more succinct list includes:
Meetings multiply, but decisions don’t stick
The same issues recur in slightly different forms
People “agree” in the room but don’t follow through
Escalations increase because ownership is unclear
Your employee survey scores for your team/organisation drift or crash
Turnover increases, people quietly leave
Silence increases (sometimes even quiet quitting): fewer challenges, fewer questions, fewer risks taken
Work gets routed around the team (“I’ll just handle it myself”)
You may even see more drama increasing, a pattern of behaviours that can occur, particularly when heightened emotions are present.
Not every struggling team is dysfunctional
“Dysfunctional” is an easy label to apply to a team that is not performing as expected. It is not always the most useful diagnosis.
Sometimes the issue is unclear strategy. Sometimes the people described as a team do not actually have enough interdependence to require collective work. In other cases, decision rights, resources, governance or incentives make effective collaboration unnecessarily difficult.
A team may also contain an individual performance or capability issue that should not be disguised as a team-development problem.
This distinction matters because different problems require different interventions. Better relationships will not repair badly designed governance, just as a new process will not necessarily resolve entrenched mistrust.
Before asking how to make a dysfunctional team work better, it is worth asking what is actually producing the behaviour we are seeing?
Conclusion: The Impact of Dysfunctional Teams On Organisational Performance
Team dysfunction does not just make meetings harder.
You see it in decisions that do not stick, conversations that happen afterwards, functions pulling in different directions, and issues that keep coming back because they were never really resolved.
But often there is more going on: people are not clear who decides what, priorities compete with each other, the team is poorly set up, tensions have been left unresolved, or the wider organisation is rewarding the very behaviour everyone says they want to change.
That is why it is worth looking underneath the behaviour before deciding what to do next.
If some of these patterns sound familiar, Transforming Dysfunctional Teams: Practical Strategies That Actually Work looks at how they can be addressed.
You can also use the Leadership Team Performance Diagnostic to reflect on where a senior team may be getting stuck.
And where the issues are persistent, difficult to shift from inside the team, or starting to affect wider performance, you can explore my Leadership Team Coaching approach.
A useful next step
If you’re recognising some of these patterns in your own leadership team, see what working on them could involve.
The Leadership Team Coaching page explains the kinds of situations I work with, how the work is structured, and what we would look at together. You can get a feel for the approach before deciding whether a conversation would be useful.
FAQ: The Impact of Dysfunctional Teams on Organisational Performance
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It’s a team that struggles to work together cohesively and effectively, often showing Patrick Lencioni’s five dysfunctions: lack of trust, fear of conflict, lack of commitment, avoidance of accountability and inattention to results.
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They drive decreased productivity, poor decision-making, low morale, communication breakdowns, increased conflict, reduced innovation, missed opportunities, reputation damage, higher turnover and ultimately financial losses.
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Research cited in the article (Behnam Tabrizi’s HBR study across 95 teams in 25 organisations) indicates that up to 75% of teams are dysfunctional.
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Persistent misunderstandings, recurring conflict, unclear roles and responsibilities, delays and rework, disengagement or attrition spikes, and decisions that stall or lack follow-through.
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Build trust and psychological safety, set clear goals and roles, create healthy conflict and feedback norms, use accountability routines (e.g., 360s and team reviews), and invest in team coaching to reset behaviours and ways of working.
📚 References
Carmeli, A. and Schaubroeck, J. (2006) ‘Top management team behavioral integration, decision quality, and organizational decline’, The Leadership Quarterly, 17(5), pp. 441–453.
de Wit, F.R.C., Greer, L.L. and Jehn, K.A. (2012) ‘The paradox of intragroup conflict: A meta-analysis’, Journal of Applied Psychology, 97(2), pp. 360–390.
Edmondson, A.C. (1999) ‘Psychological safety and learning behavior in work teams’, Administrative Science Quarterly, 44(2), pp. 350–383.
Frazier, M.L., Fainshmidt, S., Klinger, R.L., Pezeshkan, A. and Vracheva, V. (2017) ‘Psychological safety: A meta-analytic review and extension’, Personnel Psychology, 70(1), pp. 113–165.
Keil, T. and Zangrillo, M. (2024) ‘Why leadership teams fail’, Harvard Business Review, September–October. Available at: https://hbr.org/2024/09/why-leadership-teams-fail (Accessed: 27 September 2026).
Lencioni, P.M. (2002) The Five Dysfunctions of a Team: A Leadership Fable. San Francisco, CA: Jossey-Bass.
Mathieu, J.E., Maynard, M.T., Rapp, T. and Gilson, L.L. (2008) ‘Team effectiveness 1997–2007: A review of recent advancements and a glimpse into the future’, Journal of Management, 34(3), pp. 410–476.
Mesmer-Magnus, J.R. and DeChurch, L.A. (2009) ‘Information sharing and team performance: A meta-analysis’, Journal of Applied Psychology, 94(2), pp. 535–546.
Schein, E.H. and Schein, P.A. (2017) Organizational Culture and Leadership. 5th edn. Hoboken, NJ: Wiley.
Tabrizi, B. (2015) ‘75% of cross-functional teams are dysfunctional’, Harvard Business Review, 23 June. Available at: https://hbr.org/2015/06/75-of-cross-functional-teams-are-dysfunctional (Accessed: 27 September 2026).
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