When working with leaders and teams, one question often gets asked: "what is the optimal number of people to have in a team to maximise performance?"

This was first explored by social psychologists over a century ago, and remains a crucial challenge for modern organisations as they look to maximise productivity and innovation.

The Magic Number: 5 to 7

Research consistently shows that smaller teams, typically ranging from 5 to 7 members, strike the right balance between diversity of thought and ease of communication. This size is small enough to minimise coordination issues yet large enough to make sure we get a variety of perspectives and skills.

Alongside this, research from the early 20th-century highlighted a phenomenon known as "social loafing," where individual effort decreases as team size increases. This often occurs because individuals feel less accountable and believe their contributions are less noticeable in larger groups​​. So, as teams grow beyond a certain size, productivity per member can diminish.

Communication and Cohesion

A more modern interpretation of this idea comes from Amazon CEO Jeff Bezos, who popularised the "two pizza rule". That is, if a team can't be fed with two pizzas, it's too big to function effectively. 

This heuristic highlights a critical point: smaller teams can communicate better and make quicker decisions. In contrast, larger teams often suffer from communication breakdowns and unnecessary complexity. The more people involved, the more communication links there are to maintain, increasing the likelihood of misalignment and inefficiency​ when working on key projects. This can lead to delays, misunderstandings, and a dilution of responsibility. 

Task and Team Composition

But it's not as simple as smaller being better. Optimal team size can depend on the nature of the task and the required coordination. For example, a sales team where members work relatively independently might function well with more members. However, for tasks requiring high interdependence and collaboration, smaller teams might be preferable​.

Wharton management professor Jennifer Mueller advises considering the type of task, the skills needed, and the degree of interdependence required when forming a team. Effective team composition should consider what is needed to achieve the goal we’re working towards - and isn’t the only thing we should consider when it comes to team performance.

The Role of Leadership

Regardless of how big our team is, the quality of leadership and communication significantly impacts how effective we are. 

Research shows that leaders who are engaged and competent help to maintain high levels of productivity and morale, even in larger teams. In fact, research by Gallup shows that about 70% of an individual’s engagement at work is influenced by their manager. Thus, strong leadership can mitigate some of the challenges associated with larger team size.

Conclusion

While there is no one-size-fits-all answer to the optimal team size, a range of 5 to 7 members is often ideal for balancing collaboration and communication. However, context, task requirements, and leadership are also key when thinking about this question. 

By understanding and applying these principles, we can form more teams capable of even higher levels of innovation and even better results.