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This page is a work in progress, part of a multi-year effort to capture and share learnings, frameworks, tools, and processes to run organizations. See Running Organizations for more.
What Is a Leadership Team?
A Leadership Team or Executive Team is the team at the top of the organization, made up of the highest-ranking executives in the organization. Leadership teams are brought together to share information and make decisions in an effort to accomplish the mission, vision, and strategy of the organization.
Leadership Teams Link Money & People
The Leadership level is where budgets link with people. Leadership Teams allocate resources to accomplish the organization's goals. Leadership Teams are, as Peter Drucker said, "the bottleneck at the top of the bottle."
"You have two critical resources: money and people. Getting the people who manage those resources in the same room with you is the only effective way for you to link the company’s financials with the people who produce them." (Source: Talent Wins)
Leadership Teams make decisions that impact everyone in the organization - this makes Leadership Teams the highest-leverage group in any organization.
Building An Effective Leadership Team Is a CEO Priority
Delaying on building a Leadership Team is a common mistake in early-stage companies. This often happens because a CEO wants to retain control of many aspects of the business, or because they delay in hiring executives until they feel they have the size/need for big salaries.
The former case delays the maturity of functions and can keep the organization and its people from growing. The latter starves the organization of the key leadership that’s necessary to scale.
Creating a Leadership Team
Define A Team Purpose
A Unique Purpose Highlighting Interdependencies
Every team exists to accomplish something, and the leadership team is no different - it needs a purpose unto itself. The purpose of the Leadership Team can't simply be to achieve the organization's objectives or serve the mission of the organization. Everyone in the organization needs to be responsible for achieving the objectives and serving the mission.
The Leadership Team needs to articulate an explicit purpose that no other team in the organization can serve.
"The team's purpose is not merely the sum of the individual members' contributions, nor is it the purpose of the organization. And it's not a broad, abstract, pie-in-the-sky phrase such as 'serving customers' or 'creating value for the firm'...The team's purpose highlights the interdependencies among team members, and it orients the team toward its objective, helping members make intelligent judgments among alternatives as they lead the enterprise forward." (Source: Senior Leadership Teams)
Clarifying Purpose
- What do we need each other for?
- What are the most critical challenges facing the business?
- Does the team have a collective strategy for addressing those challenges?
- How well is our strategy working?
After probing those questions, try to deduce the core theme of the collective responsibilities of the group. More than just a list of all of the projects, tasks, and functional efforts that each of the individuals are working on, what's the theme of the group?
"The work of a truly effective executive team should be focused on key strategic and tactical issues that affect the enterprise. Certainly, the team must occasionally dip into the mundane. But for the most part it should focus on broader, more significant organizational issues that directly advance the team's purpose." (Source: Senior Leadership Teams)
Sharing information is just a small part of a high-performing Leadership Team. Building a Leadership Team with a purpose like "Make Leaders Better Informed and Aligned" will usually result in a loosely-formed working group rather than a true team (for more on teams, see Effective Teams).
- Defining or modifying the organization's strategy
- Acquiring and deploying capital
- Building organizational capability (for example, by improving the operating model or the succession pipeline)
- Managing mission-critical initiatives (such as the acquisition and implementation of new production or service technologies)
- Monitoring the organization's performance
- Integrating major acquisitions
Leadership Team Purpose Examples
Build a Real Team That Makes Decisions
A Real Team
A real team shares information, makes critical decisions, and coordinates initiatives across the organization. A "working group" is a group of individuals who come together to share information, engage in dialogue, and usually "report" to the CEO, usually on a monthly or project basis.
Being on a real Leadership Team is a tough mental shift for some leaders to make. Leaders are thrust into a position where they share ultimate responsibility for the organization but still own accountability for one (or more) major piece(s) of it. Without a shared purpose, it’s easy for leaders to default to defending, advocating for, and politicking for their department instead of seeing and advocating for the bigger picture.
A Team That Makes Decisions
You want a Leadership Team that makes big decisions as a group. This is the only way to create a high-leverage, aligned team. If individuals on a team only advocate for their own positions, with the CEO as the decision-maker, the team won't act like a team, but a group with varying agendas.
"It is decision-making teams that result in the largest changes in the power dynamics among your senior leaders." (Source: Senior Leadership Teams)
Who's On The Team?
Who Can Fulfill The Purpose?
In very small organizations, the Leadership Team might be comprised of every person who reports to the CEO. In larger organizations, the leaders of departments, or the "Director" level usually form the Leadership Team. In even larger organizations, the team is built based on the established team purpose, and the roles and skills of the people available to serve that purpose.
Keep the team small. A group of more than eight is unwieldy and difficult to be productive with, especially when it comes to decision-making.
Don't sacrifice team chemistry to follow some sort of arbitrary rubric for who should be on the team. Don't make job titles like "Director" an automatic ticket to the team. Don't, by default, make every functional leader a member of the Leadership Team. Choose the team based on the team purpose you've created.
"Team membership is not about status, hierarchy, or inclusiveness. Nor should it be an entitlement based on role or tenure. Instead, you should select the best, most appropriate members for the team purpose you have in mind." (Source: Senior Leadership Teams)
Leaders Who Think & Who Share Chemistry
Find conceptual thinkers who can take ideas from disparate sources and apply them to the specific context you're operating in. Not every executive can think conceptually - many are linear thinkers who focus on the next actions. Without a conceptual thinker on the Team, you're likely to under-think big decisions and move too quickly to act.
Look for leaders who can speak universally and holistically about the organization and the operation. Can they only think about their own function, or can they lend insight to the bigger picture?
Choose leaders who are a strong core values match. The "3 Cs of hiring" says to choose people of character, competency, and chemistry. Your managers should already display character and competency, so choosing leaders for your Leadership Team comes down to chemistry. Chemistry is about core values and interpersonal fit.
"Strong chemistry fit means individuals are a personality fit, understand the values, and possess the working style that matches with your organization's culture." - Dee Ann Turner (Source: Bet On Talent)
Building Team Chemistry
Master The Five Dysfunctions
Patrick Lencioni's The Five Dysfunctions of a Team explains how Leadership Teams come together to produce high performance. I recommend reading the book or this summary. Here are the five dysfunctions, and my keys to avoiding them:
- Trust - Be vulnerable, starting with the CEO, and then the rest of the Team
- Conflict - Be real, and speak up instead of seeking harmony
- Commitment - Hold space for dialogue, ensuring that everyone is heard. Commit in the midst of disagreement
- Accountability - Hold one another accountable to purpose, to core values, and to any other operating principles you've decided on. Demand action and excellence
- Results - Focus on team purpose and team goals/objectives over own personal goals and department goals
Start With Trust
Competence & Character
There are two types of trust. One is competence - do I believe you're competent enough to contribute? That means you know what you're doing. Don't take this for granted - very competent managers can be incompetent executives. The harder component to trust has to do with character. Can I trust that you care about me, about the team, about the organization, or are you just out for yourself?
Willingness to Be Vulnerable
Trust starts with individuals being vulnerable with one another. The CEO must go first. My favorite early trust-building activity as President, with a new team, was to put together a presentation about myself - my childhood, my family, my interests, my mistakes and failures, and the successes and traumas that have shaped me. This helped my team to understand who I was as a person, but more than that, it was a display of vulnerability.
Work Together
Trust only happens through doing things together and making decisions together. I'm a big fan of making decisions as a group, with the CEO as a tie-breaker. If the team can decide by consensus, there will be a greater commitment to the decision. If the Team can't develop a consensus, at least everyone will have been heard in the process.
"The most practical path to building a team at the top, then, lies not in wishing for good personal chemistry, but in finding ways for executives to do real work together." (Source: The Wisdom of Teams)
Increase Dialogue
Seek Out Conflict
The best teams aren't the ones always in agreement and aren't the ones that dig their heels in on issues. The best Leadership Teams are able to have healthy conflict, which means that they can debate effectively and move on when the conversation is over.
The CEO must draw out the conflict and ensure that everyone voices their concerns, rather than sweep disagreement under the rug.
Frame Issues, Generate Options, Evaluate Options, Repeat
Framing an issue, generating options, and evaluating those options are three different modes of dialogue at the Leadership Team level. The CEO who can effectively facilitate those three modes, and help the Team move swiftly between those three modes will have a high-performing team.
"Run a disciplined process of going round the loop, moving from the framing of the question itself, through option generation, to option evaluation, and back to reframing the question. It is a characteristic of high-performance teams that they go round the loop more quickly and reframe more often than average ones." - Stephen Bungay (Source: The Art of Action)
Create Commitment
For most decisions, you need staff to buy in. Most people don't need to believe to execute. With a Leadership Team, you need to seek commitment, or else you run the risk of key decisions being undermined. Whether leaders consciously undermine or not, it's their dedication to the outcome that is seen by their teams. Leaders simply influence more people and small decisions along the way. This is why teams like Intel and Amazon used the stated principle of "Disagree and Commit."
Holding Others to Account
Tracking, measuring, and reporting on input metrics (KPIs) is critical to accountability. Reviewing progress on goals, key projects and initiatives is another key area.
It's up to the leader at the top of the organization to model the kind of accountability behavior appropriate for the team. The CEO needs to call out bad behavior and slipping standards when they see it.
Focusing on Results
Conflict and accountability are two of the hardest issues in Teams. If we keep results in mind, those things get just a little bit easier. Results are a reminder of why we engage in teaming and don't go it alone. Celebrate when you win, and celebrate progress on the way to the big wins.
Evaluate the team as a team, not as individuals.
“I'm not evaluating on what they say individually. None of them would be on this team if they didn't have some fantastic attributes. I'm only evaluating us collectively as a team. Are we able to authentically communicate, and are we able to build on each person's capabilities to the benefit of our organization?" (Source: Satya Nadella, Chief of Microsoft, on His New Role)
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