I have always been taught not to start a sentence with"She" what are the rules surrounding this?
Caroline felt the friction amongst her team was caused by the lack of communication recieved from management. She also said communications such as team movements and employee departures were never formally communicated.
I would personally replace the full stop with a comma.
Beginning a sentence with "She" is perferctly fine; however, given the context you've provided, it'd be best to keep Caroline present. Using "She" (a pronoun that expresses, the person not present during the conversation) places Caroline in the background, outside the conversation.
P.S. I'd be better to replace the full stop with a semi-colon. Wouldn't want to have a run-on sentence. A comma would work if there were more sentences; e.g., X, Y, and Z.