Squadification – Creating high performance teams through self-organisation

The modern executive demands sustained product agility, particularly in environments leveraging frameworks like the Scaled Agile Framework (SAFe) or managing large, complex Value Streams. While many organisations successfully adopt the mechanical aspects of Agile – such as iterative planning and regular events – they frequently encounter systemic bottlenecks caused by deeply ingrained organisational silos and centralised decision-making. The squadification exercise, defined here as the large-scale implementation of team self-selection, addresses this core challenge. It is not a human resources exercise but a critical strategic lever designed to decentralise team formation, minimise unnecessary handoffs and team-to-team dependencies, and unlock the full potential of intrinsic motivation within the workforce.

I. The Strategic Imperative: Why Leaders Must Enable Self-Organisation

The success of a scaled system of work hinges on the flow of value. When executives attempt to apply a decentralised operating model – where teams are expected to self-organise around complex problems – using a traditional, centralised approach to team composition, inherent friction is created.

A. Moving Beyond Mechanical Agility to Organisational Flow

Executives and senior managers often struggle to achieve full agility outcomes due to the persistence of organisational silos developed through an insistence at crafting functional teams reporting to functional managers. These structures aren’t optimised for the flow of value. They are optimised for management control through task delegation and ensuring people are working efficiently.

Value, though, is rarely delivered by a single team; it flows across multiple cross-functional teams within a product’s value stream.¹ The core principle for maximising value creation requires actively minimising handoffs between these teams.¹ To effectively manage complexity – a foundational tenet of scaled agility – decision-making must be decentralised to the source of information, which is the teams doing the work.²

Allowing people to form their own teams through self-selection is the single most powerful and visible mechanism for executives to show their support for empowerment.² If management trusts employees to solve highly complex delivery problems, they must also trust them to solve the allocation problem of team formation itself. Failure to enable self-selection perpetuates a command-and-control culture, which fundamentally undermines the cultural shift necessary for an organisation to truly adapt its ways of working based on employee feedback.²

B. Quantifying the Gain: The Return on Investment of Empowerment

For executives, the investment in squadification yields measurable, tangible performance gains that directly impact the bottom line. Empirical studies on teams that have undergone self-selection demonstrate a significant increase in output and productivity, often showing an improvement of approximately 20% compared to teams chosen through traditional, manager-assigned methods.⁴ This gain provides a direct financial return on the organisational design choice.

Furthermore, the environment created by self-managing teams – which requires strong leadership support and coaching to sustain – amplifies these gains. Organisations that offer leadership training combined with focused executive coaching experience substantial behavioural shifts, often correlating with an 88% increase in productivity.⁵ These qualitative benefits, such as enhanced leadership effectiveness, improved employee engagement, and reduced burnout, are measurable drivers of financial ROI.⁶ Investing in squadification is thus a crucial investment in sustained competitive advantage, translating organisational health into superior measurable performance outcomes.⁷

C. The Leadership Shift: From Manager to System Architect

The shift to self-managing squads necessitates a redefinition of managerial authority. Managers, particularly those who fear losing power and influence ², must be supported in transitioning their roles. Executive leadership must define the manager’s new function: moving from being a controller of resources to a system architect, coach, and strategic guide.

In this model, the executive prescribes the boundaries for self-management:

• The strategic goals – the north star.
• The purpose motive (the “what” and “why”).
• The guardrails for delivery – most often described through operating models like Scrum™ and the Scaled Agile Framework®

The teams, through self-selection and self-organisation, define the how – the day-to-day operations and execution.⁸ This approach strengthens the organisation’s capacity for change leadership, enabling resilience in navigating market complexity and improving the retention of critical talent.⁶

II. The Psychological Lever: Autonomy, Purpose, and Identification

The superior performance of self-selected teams is grounded in Self-Determination Theory (SDT), which posits that intrinsic motivation – the internal drive to engage in activity for its inherent satisfaction – is fuelled by the fulfillment of three innate psychological needs:

• Self-direction – the key to fostering autonomous motivation.
• Competence (Mastery) – clear expectations are essential for feeling competent (the need to feel effective and master challenges), as one knows precisely what successful outcomes look like.
• Relatedness (Purpose)⁴ – the sense of belonging, being an important member of a team, and feeling that one’s efforts are significant and worthwhile to others (the collective).

Intrinsic motivation is essential for the complex, innovative problem-solving that defines modern product development.¹⁰

A. Foundation in Self-Determination Theory

Traditional, compliance-driven environments rely on extrinsic motivation. Agile practices, by their very nature, emphasise self-organising teams, thereby inherently supporting the need for self-management.¹⁰ Continuous feedback loops, regular inspections, and retrospectives reinforce competence by promoting a culture of learning and growth.¹¹

The self-selection event is designed to maximise the fulfillment of these needs simultaneously. Autonomy allows teams to experiment, adjust, and refine their workflows without rigid, top-down constraints.⁷ This independence accelerates decision-making and sparks the creativity and innovation essential for maintaining a competitive edge.⁷

B. Self-Management and Ownership: The Resilience Factor

When team members choose their projects and their peers, they regain their sense of self-direction,¹² ensuring alignment with roles that match both their competencies and personal interests, maximising motivation and engagement.¹²

Furthermore, this exercise of choice profoundly reduces resistance to change. When teams are self-selected, the ownership stake is immediate and powerful. If the team encounters scaling difficulties, technical debt, or internal friction, the members’ commitment to resolve the issue is stronger because they proactively chose the team (i.e, “I made a choice to be part of this team”).¹² This psychological commitment builds internal resilience, shifting accountability from external managerial assignment to internal, collaborative problem resolution.

C. Identification and Relatedness: Harnessing Social Capital

The process of self-selection is highly effective because it leverages existing social dynamics. Studies show that individuals tend to self-select based on their social networks, and these teams subsequently exert higher effort towards the shared task.¹³ This choice immediately facilitates relatedness – the need for a positive workplace where interpersonal relationships are valued and employees feel a strong sense of belonging.⁹ This social foundation accelerates the team’s path through the typically slow “storming” phases of team development.²

However, social grouping must be deliberately transformed into organisational identification. The self-selection process, combined with clear Value Stream objectives, unites employees around a compelling, shared mission.⁹ The intentional post-event steps, such as creating a Team Charter, solidify this social bond into a professional agreement, reinforcing commitment and contributing to collective well-being.⁹

Table 1: Strategic Drivers for Self-Selection (The ROI of Empowerment)

III. Phase I: Strategic Preparation for Squadification (Pre-Event)

Success in large-scale squadification is fundamentally proportional to the quality and rigor of the preparation phase, often requiring a substantial investment of time before the execution of the event.² This phase focuses on defining the necessary constraints and communicating transparently to mitigate key executive risks, such as the formation of non-viable or homogeneous teams.

A. Defining the Playing Field: Setting Constraints and Guardrails

Executive control shifts from assigning work to people to defining the structural boundaries, or guiding principles, that govern the selection process.² Constraints are vital because they enable self-organisation by providing a baseline structure upon which teams can improvise and interact freely.¹⁶ These constraints ensure business viability and prevent the creation of teams that are unbalanced or dysfunctional.²

Before the event, the teams’ purpose, mission, business objectives, technical challenges, and expected lifespan must be clarified.² The guiding principles must explicitly address managerial concerns by:

• Prescribing optimisation criteria, e.g. enforcing a balanced distribution of key competences.
• Ensuring minimum domain knowledge coverage, ensuring the team is cross-functional.
• Defining requirements for experience and diversity (e.g., specific ratio of seniors to juniors).²

Setting these mandatory boundaries is the primary way executive leaders manage organisational risk during the transition.

B. Step 1: Readiness, Communication, and Logistics

The readiness checklist must confirm that all foundational elements are stable. This includes:

• Completing a Readiness Check.
• Securing explicit permission and commitment from all layers of management.
• Defining the precise teams.
• Determining the products and/or value steams that participants can self-select into.¹⁷

For a large group, running a small-scale trial selection event is highly recommended to test the facilitation logistics and rules, serving as a controlled experiment before scaling.⁴

The first mandatory step – setting the date and ensuring comprehensive understanding – requires extensive socialisation and communication well in advance.¹⁷ Executives must address fears and doubts by clearly explaining what squadification is, what the selection process entails, and what the expected outcomes are.

This proactive approach ensures transparency and addresses anxieties about the process.¹⁹

Table 2: Pre-Event Readiness Checklist and Risk Mitigation

C. The Skill and Desire Matrix: Transparency and Balancing Risk

To provide participants with the data necessary to form balanced teams, the group must co-create and openly publish a Skill/Desire Matrix.² This matrix visualises two key dimensions for critical domains and skills across all participants:

1. Competence Level: Ranging from “Beginner” (needing coaching) to “Master” (leading authority).²
2. Desire Level: Ranging from “Totally uninterested” to “Super-passionate”.²

The strategic utility of this matrix is twofold:

• It provides transparent data on existing capability, allowing facilitators to enforce minimum constraints (Competence).
• It highlights employee passion (Desire), allowing teams to form around areas where motivation is highest, which activates Purpose.⁴

The executive decision must recognise that favouring high desire, even if it requires tolerating a manageable initial skill gap, is a worthwhile investment. The intrinsic motivation stemming from purpose-driven selection often drives the team to close that competence gap faster than traditional training methods.²⁰

IV. Phase II: The Squadification Event (Self-Selection Execution)

This phase is the critical workshop where the iterative self-selection process takes place, typically lasting up to about 4.¹⁸

A. The Mission Pitch (Aligning Choice with Strategy)

The event must begin with a structured pitch phase, during which Product Owners clearly articulate the mission, scope, strategic objectives, and the required skill profile for each potential squad.¹⁸ This 45 to 60-minute segment ensures that participants make informed decisions based on explicit organisational need, activating their sense of professional Purpose and aligning their choices with the product and value stream’s strategy.

B. Step 2: Self-Selection Rounds

The selection process is iterative and driven by transparency, designed to allow the group to self-correct and meet organisational constraints.

1. Initial Placement: Participants place their individual information (e.g., photos or skill cards) on the team board they choose, an initial exercise of Autonomy.¹⁸
2. Checkpoint Review: After each round, facilitators (“Location Captains”) assess the composition of every potential team against the predefined constraints: checking for size limits, required skill sets, and balance.¹⁸
3. Gap Announcement: The results, including any violations of mandatory constraints or identified skill gaps, are announced publicly to the entire group.¹⁸ This radical transparency is essential. By demonstrating that decisions are governed by objective rules (the constraints) and business needs, the organisation prevents the emotional risk of the process degrading into a subjective popularity contest or a “pseudo reality show where some people are being ‘voted of the island’”.²
4. Rinse and Repeat: Based on the announced gaps, participants adjust their placements. The process continues through multiple rounds until all teams are filled, all constraints are met, or the placement stabilises.¹⁸

C. Managing the Final Constraints and Conflict

The inherent tension in self-selection is the conflict between social dynamics (Relatedness) and business necessity (Competence and Heterogeneity). Individuals often prioritise forming teams with people they know ¹³, which can lead to homogeneous teams lacking necessary diversity or skills.² The iterative, constraint-driven approach forces the group to collaboratively manage this conflict, using the public skill data to ensure that social choice is balanced by the need for team viability. Any outstanding problems or individuals who cannot be placed must be handled through facilitated negotiation, ensuring that the organisational structure is optimised for maximum flow across the value stream.

What occurs when people fail to self nominate? Managers will allocate those individuals into teams themselves.

Table 3: Example Squadification Workshop Agenda (4 Hours)

V. Phase III: Formalising the Squad and Integrating the Flow (Post-Event)

Once the composition of the squads is finalised, the organisation must solidify the structure to ensure these groups function as high-performance teams integrated into the overarching value stream structure. This includes internal and external boundary definition.

A. Step 3: The Team Charter – Naming Ceremony and Social Contract

The newly formed squad must immediately engage in a chartering process. The team charter serves as a shared commitment to how the team will work, defining communication norms, roles, and collaboration practices.²²

This process includes a formal “Naming Ceremony,” which solidifies the team’s identity and reinforces the sense of Identification established during the selection process.¹⁴ Key components of the charter include:

• Defining Team Values: Identifying core values (e.g., collaboration, integrity) that will guide decision-making.¹⁴
• The Social Contract: Establishing a detailed working agreement – the agreed-upon set of guidelines for the team to follow, covering topics like meeting cadence, decision protocols, and conflict resolution.²⁴

This intentional design of team culture provides the baseline structure necessary for psychological safety – the confidence that team dynamics support individual well-being and allow for the freedom to express concerns without fear of negative consequences.¹⁵

B. Optimising Flow Across the Value Stream: Cross-Team Agreements

In a scaled enterprise, optimising flow requires more than just internal team cohesion. The organisation must bridge silos and minimise handoffs across the Value Stream.¹ Therefore, the teams must extend their chartering process to define explicit cross-team Working Agreements.²⁵

These agreements map out and optimise cross-team relationships, defining how the new squad will interact with adjacent squads, shared services, and external stakeholders.²⁵ By proactively establishing boundaries and communication protocols between the newly formed squads, the organisation ensures that the team structure optimises continuous value delivery and anticipates friction points within the larger value stream environment.

C. Step 4: Presentation of Team Identity back to the Value Stream

The final step in the formalisation is the presentation of the new squad identities. Each team formally presents its name, mission, key values, and established working agreements (both internal and external) to the broader value stream stakeholders and the Agile Release Train community. This step socialises the new structure, securing necessary buy-in and establishing transparency about who is responsible for what across the delivery pipeline. This ceremony ensures organisational awareness and predictability, supporting subsequent collaborative activities like Planning Interval (PI) events.

VI. Sustaining the Gain: Managing Competence and Culture

Squadification is the beginning of a sustained cultural transformation. Executive leadership must commit to managing competence development and proactively nurturing the cultural gains to ensure long-term effectiveness.

A. Proactive Skill Gap Management

While self-selection often places people where their passion lies, leaders must recognise that organisational needs continuously evolve. The risk of skill gaps remains, particularly if self-selected teams trend toward homogeneity.¹³ Leaders must continually evaluate business needs against the knowledge, skills, and abilities (KSAs) within the new squads.²⁰

If skills are lacking, the organisation must provide the dedicated time and space for development. Skill gaps can foster a culture of blame if individuals fear revealing their shortcomings.²⁶ To mitigate this, executives must ensure regular assessments and feedback loops are implemented, followed by tailored development strategies.²⁶ This may involve targeted technical training sessions for hard skills or workshops focused on critical soft skills like effective communication and conflict resolution. This continuous investment ensures that the team’s Competence (Mastery) evolves alongside its Autonomy.²⁰

B. Nurturing Psychological Safety and Feedback

Psychological safety is the bedrock of high-performing teams, encompassing the freedom to express concerns and the confidence that individual well-being is supported.¹⁵ To track this crucial cultural metric accurately, executive leadership must adopt rigorous measurement methodologies.

Relying solely on immediate, cross-sectional, self-reported survey measures can be problematic due to social desirability bias – the tendency for respondents to answer in a way they perceive as socially acceptable.²⁷ To obtain a holistic understanding of how psychological safety develops and influences outcomes, longitudinal data collection and alternative methodologies (such as behavioural observation by coaches) are necessary.²⁷ A commitment to comprehensive, long-term feedback collection confirms that the cultural shift is genuinely taking hold, supporting continuous organisational improvement.

C. The Executive Mandate: Avoiding the Return to Control

A core risk to self-organisation is the managerial impulse to take back control when challenges arise, often rationalised by the perception that a team is “too junior” to self-organise.⁸ If a squad struggles, the appropriate response is coaching and training, not managerial dictates.⁸

The executive’s primary control mechanism post-squadification is defining the strategic goals and objectives – the what and why. Leadership must actively resist intervening in the how – the day-to-day operations and team practices.⁸ By supporting this change through a coaching culture, leadership leverages a superior model for behavioural and organisational transformation, which has demonstrated a profound positive impact on productivity and employee retention.⁵

VII. Conclusion: A Healthier Culture, Greater Effectiveness

The squadification exercise is a powerful strategic investment that directly addresses the organisational friction inherent in complex, scaled environments. By systematically empowering up to 100 individuals to self-select their teams, the organisation achieves decentralised decision-making in team formation, which is crucial for reducing unnecessary handoffs and dependencies across the Value Stream.

The systematic fulfillment of the core psycho-social needs – Autonomy, Purpose, and Relatedness – activates intrinsic motivation, yielding a direct and measurable improvement in productivity and throughput (up to 20% gains).⁴ The rigorous execution plan, defined by mandatory constraints and radical transparency, mitigates the risks associated with unbalanced teams while safeguarding psychological safety.²

For executive leadership, the outcome is clear: the process results in stronger team dynamics, a healthier team culture characterised by ownership and proactive problem-solving, and increased retention of top talent.⁶ This organisational resilience and superior customer responsiveness ultimately lay the groundwork for enduring competitive advantage, confirming that the investment in truly autonomous teams is foundational to achieving sustainable business agility in volatile markets.³

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