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The Highly Effective Leadership Team

Friday, Dec. 2nd 2016

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As companies move from the start-up phase to the scale-up phase of their business, CEOs and founders often find that they can no longer lead their organizations by themselves. Many organizations, over time, develop a senior leadership team to help guide the organization.

While having a senior leadership team in place often does reduce the burden on the CEO or the founders, the reality is that these teams don’t always work well. One study by the University of Southern California found that just 6% of senior-level executives were a part of a “well integrated team.” Researchers also found that CEOs tended to be overly optimistic about the performance of their senior leadership team when compared to the evaluation of that senior team by other executives within the organization.

Part of the challenge here is that many CEOs operate from some shaky assumptions. They may believe that their executive team members, because they are smart and senior-level, will automatically work well together and make good decisions. They may feel that their senior team members don’t need guidance and coaching, because, after all, they are senior level. CEOs may believe that by calling their direct reports a “Leadership Team” that it magically is a team.

These assumptions are often wrong. Senior executive teams often do not work together well. They can (and do) make bad decisions. They need guidance and coaching. And they often don’t truly act like a real team.

CEOs and founders who understand these truths and want to improve how their senior team operates together can do so. After working with several senior leadership teams, I’ve come to find that there are foundational building blocks and leadership team practices that, once applied and implemented, can make a big difference in the effectiveness of their teams.

Foundational Building Blocks

There are three foundational building blocks to building effective leadership teams. CEOs and founders need to deliberately manage these three components. Based on my experience, their senior leadership team will not perform effectively if these foundational components are not managed well. They are:

A clear team charter. Whether it is called “a charter” or not, and whether it is on a piece of paper or not, effective senior leadership teams have a clearly defined purpose, ground rules, mutual accountabilities, a set of shared performance goals, and defined decision-making scope. Especially important to the senior leadership team charter is clarity on how the team will work together and how decisions will be made as a senior team.

The right team composition. The most effective senior leadership teams are comprised of leaders that bring a complimentary mix of perspectives and skills. That mix should be diverse enough that it allows the senior group to see things from a variety of perspectives. Research at Stanford University has shown that diverse leadership teams tend to have better performance related to creative activities such as entering new markets or product development.

One dimension to consider is the appropriate mix of “outsiders” and “insiders” that should be on senior teams. Externally-hired outsiders may bring new ideas and help break through preconceptions and the barriers of the past. But they may not know the organization as well and understand the culture and capabilities that have made it successful. In related interesting research, it’s been found that outsider CEOs tend to fail at twice the rate as insider CEOs, perhaps because they do not fully understand the capabilities and culture of the organization that they join. However, in organizations where there has been a recent history of poor performance or high company growth, outsider CEOs have performed better. I suspect that the same factors may be true for new outsiders added to the senior leadership team. A mix of both on the senior leadership team is probably most effective.

What is not as effective is placing a leader on the senior leadership team as a reward or as a way to retain them, ignoring fit and complimentary skill sets.

Both the performance and the fit of senior leadership team members are managed. One of the most difficult things I’ve seen for CEO’s is to hold their own direct reports on the senior leadership team accountable for performance and modeling the desired culture. CEO’s need to have direct coaching discussions with individuals on the senior team who are not delivering on their performance goals or modeling the desired culture and exit those leaders that choose not to change.

In addition to these foundational building blocks, I’ve found that there are three leadership team member practices that can dramatically improve the effectiveness of senior leadership teams. They are:

Demonstrating mutual accountability for decisions and results. Strong leadership team members hold themselves accountable for decisions made as a team, and don’t “bad-mouth” decisions made in that group outside of leadership meetings. They hold themselves accountable for their own decisions and results and don’t blame others on the team. When a decision is made and commitments are made to execute, team members leave the meetings and make things happen according those commitments. Outside of leadership meetings, no matter which leadership team member is asked, employees get the same answer for what decisions have been made and why. There is one voice coming out the leadership team meetings.

Investing effort in building relationships of trust with their fellow senior leadership team members. The best senior leadership teams I have worked with have members who collaborate and partner together well even outside of leadership meetings. They offer feedback to one another, help one another on key initiatives, and support each other as challenges arise. They are both personally worthy of trust and demonstrate trust in their fellow senior leadership team members.

Speaking the truth directly, even if it is painful to hear or creates conflict. I’ve had many conversations with leadership team members who said that they knew that a given business decision was not right—but did not bring it up in their Leadership Team meeting. Their desire to avoid conflict was greater than their desire to bring an important issue up for discussion. Senior leadership teams need to be able to speak plainly and truthfully, even if the message is difficult or creates conflict. That means that the team must be able to handle disagreement and conflict constructively and value having difficult conversations. If the leadership team is diverse in terms of the background, experience, and perspectives of the team members, conflict is a natural outcome. That conflict—and dissenting point of views—can be very helpful to force important discussions about the benefits and trade-offs of different decisions.

By applying these principles and practices, it’s been my experience that senior leadership teams can begin to move that needle closer and closer to that elusive goal of becoming a highly effective team.

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Leading People Partners

Leading People Partners, LLC
Email: todd@leadingpeoplepartners.com