How to Measure the Effectiveness of Your Leadership Team
Most would agree that a great leadership team can and should be a powerful competitive advantage for any organization. Unfortunately, great leadership teams are scarce – just ask employees in a lunch room or lobby about ‘the leadership team’ and responses are similar – ‘what team?’; ‘I wouldn’t really call them a team’; ‘they’re more like a dysfunctional group’. And most senior executives agree with these sentiments. In fact, a recent Center for Creative Leadership study revealed that only 18% of senior executives rated their teams as ‘very effective’ while 97% ‘agreed’ that increased effectiveness would have a positive impact on their organizations.[i]
What Does a Great Leadership Team Do?
So, what can be done to ensure that leadership teams have this desired positive impact? In our opinion it all starts with what it means to be a ‘team’ and there is no better definition than from team guru Jon Katzenbach – ‘a team is a small number of people with complimentary skills who are committed to a common purpose, performance goals, and an approach for which they hold themselves mutually accountable.’[ii]For the purpose of this article we will focus on three parts of this definition. Performance goals, common purpose, and mutual accountabilityprovide the foundation upon which a leadership team can measure its effectiveness. Specifically, a great leadership team has three primary roles that require them to hold each other accountable to a set performance goals and a common purpose. One role is to serve as the steward for their organization’s strategic direction. Another important role is to leverage the skills and experience of team members to focus on the most pressing issues facing the organization. A leadership team is also responsible for modeling and cascading desired behavioral expectations or culture throughout their organizations.
For a number of reasons, many leadership teams struggle to put these roles into practice. First, CEOs often inadvertently structure their teams as senior staff groups where the most meaningful business interactions are between the CEO and his departmental direct reports. Next, shaping a leadership team purpose and related goals is difficult and requires a team to go beyond simply assuming that their purpose is to execute the organization’s strategy. This assumption is insufficient for clarifying what a team must work on together and how it will do so. Another challenge is that CEO’s sometimes assume that talented senior executives know how to function as a team. In many cases, by the time executives have risen to the ranks of the senior team they have mastered individual accountability and frequently struggle to embrace their new enterprise roles and the concept of mutual accountability.
When leadership teams fail to play these important roles the rest of the organization eventually feels the impact. The bullet points below highlight some of these impacts.
Repeatedly missing big numbers – sales, margins, customer satisfaction, new product launches.
Departments working at cross purposes or duplicating efforts which negatively impacts productivity and collaboration and frustrates customers.
Continually shifting (and often unstated) priorities and a reactive operating rhythm.
Declining employee engagement and increasing turnover of the employees the organization wants to retain.
“Too much emphasis on results at the expense of healthy team dynamics will eventually jeopardize a leadership team’s ability to sustain results.”
Google’s seminal study to determine what makes a ‘perfect team’ revealed that ‘to build a successful team, you must find the right balance between results and culture.’[iii]This balanced approach is critical for addressing the types of challenges listed above. Specifically, too much emphasis on results at the expense of healthy team dynamics will eventually jeopardize the team’s ability to sustain results. The opposite is also true - a team that is hyper focused on building a great culture and takes its eye off of why the team exists will also hinder results. To ensure that this balance is maintained, leadership teams must build it into how they measure their performance.
The remainder of this article will describe a measurement framework that emphasizes the balance between results and culture. First, we will describe how great leadership teams view their stewardship, purpose and culture roles and provide a simple framework for measuring each role in a way that balances results and culture. We will then describe a pragmatic approach used by great leadership teams to establish the structural and relational foundation required to enhance the team’s likelihood of achieving desired results.
Effective leadership teams serve as stewards for their organizations – the board of directors, investors, employees rely on leadership teams to set direction, allocate resources, monitor progress and overcome roadblocks. Comprised of senior leaders of diverse functions leadership teams must work together to solve shared problems and ensure aligned action and collective responsibility for the organization’s performance. Stewardship success depends on the ability and willingness of each team member to address not just their individual functional or business unit responsibilities but also their collective responsibility for the company as a whole. Senior executives are uniquely positioned to take a global perspective on the business, recognize patterns, evaluate and assess risks and direct the organization to take necessary action. They don’t need to agree on everything, but they do need to be aligned and stand behind collective decisions.
Given the strategic nature of a leadership team’s stewardship role, measuring effectiveness requires a long-term perspective and can be challenging. From a business results perspective, great leadership teams take on mutual accountability for achievement of the strategic direction. Even in those cases where a functional leader might have limited input or influence, on great leadership teams the team wins only when key long-term targets are met such as market share, growth, earnings, etc. Great leadership teams also recognize that at times their ability to subordinate functional roles to enterprise roles, engage productively with each other on difficult challenges, and treat each other with integrity and respect will facilitate their ability to effectively play their stewardship role and help cascade a positive culture throughout their organizations. The table above provides a framework for measuring a leadership teams stewardship role.
“Gaining clarity of leadership team purpose drives consistency of approach and establishes a foundation for how the team will operate and behave as a unit.”
Great leadership teams have purpose beyond their stewardship role; one that leverages the collective experience and talents of each team member. While mission and strategy should certainly strongly inform a leadership team’s purpose, they do not provide adequate guidance for how the team should behave and operate as a unit. For example, without clarity a team that assumes its purpose is to execute the firm’s strategy to reduce customer concentration risk will likely deploy multiple and potentially competing approaches. Team members will often naturally focus on the parts of the strategy that relate to their areas of responsibility. Gaining clarity of leadership team purpose drives consistency of approach and establishes a foundation for how the team will operate and behave as a unit.
The criteria for establishing a leadership team purpose provide a good foundation for measurement of this important team role. A leadership team purpose must be consequentialand have impact on the lives and work of others and on the viability of the organization it serves. It should also be challengingand require members to exchange strategic information, coordinate organization wide initiatives, and make vital decisions on behalf of the organization. A leadership team purpose must also be clearand help the team maintain focus on its critical priorities. Finally, as the organization’s environment evolves (new competitors, economic challenges, changing customer requirements) the purpose of the leadership team must evolve. Similar to a leadership team’s stewardship role, execution of a common purpose requires leadership teams to maintain a sometimes-challenging balance of focus on business results and productive behaviors that will influence results. The table above provides a framework for measuring a leadership teams role in executing a common purpose.
Measuring Cultural Impact
Culture is a fancy way of describing “how things are done around here” – it is the accumulation of the beliefs, norms and values shared by employees up, down and across and organization. Culture is reflected in the behaviors and processes that are created to realize an organization’s strategic direction. Leadership teams are responsible for defining and refining the type of culture that will best serve their organizations and they play a pivotal role in shaping and maintaining desired culture.
Employees take their cues from how well their leadership teams interact and how effective they are at holding each other accountable. For culture to become more than platitudes and become part of the fiber of how employees operate, leadership teams must collectively and individually model the values, beliefs, norms and behaviors reflected in the culture. Most importantly, leadership team members need to hold each other accountable for living the culture as a team and help each other cascade this way of operating throughout their organizations.
Great leadership teams recognize that a good culture is not just the soft stuff but rather a critical element in achieving desired results. They view culture as a potential competitive weapon as they compete for employee and management talent, strategic partnerships, and customer loyalty. The table above provides a framework for measuring a leadership teams role in maintain a strong culture.
Measuring the Foundational Elements of Great Teams
Great leadership teams have a strong pulse on the basic blocking and tackling factors that enable them to focus on and achieve tangible business results. In the paragraphs below we will describe a framework that helps teams build, continually assess, and refine their structural and relational dynamics. This predictive framework provides leadership teams with a level of confidence that they are working on the right issues to strengthen team performance.
The interplay between a leadership team’s structural dynamics such as defined roles, metrics, and meeting rhythm and its relational dynamics which are those factors that influence how team members interact is an incredibly important dynamic that is often overlooked. When leadership teams are struggling, leaders will often take action to correct one or the other set of elements rather than look at the cause and effect relationship between them. Specifically, there is no doubt that insufficient structure can exacerbate relationships among team members. For example, misaligned incentive structures can inadvertently create competition that naturally puts pressure on relationships. On the other hand, bad relationships among team members can expose poor structural design as exemplified by a team that avoids debate about critical issues despite having well-planned meetings with great agendas.
Team Coaching International’s Team Diagnostic:A leadership team isn’t just a collection of individuals; it is a living, dynamic entity with its own personality, spoken and unspoken rules, vision, blind spots, even moods. It is because of this important context that we use Team Coaching International’s (TCI’s) Team Diagnostic which focuses on the team as a dynamic system where the team is more than the sum of its parts. With the Team Diagnostic a leadership team’s needs are explored independent of the needs of any single member. This shifts the attention and the work of the team to the team itself.
Using common everyday language, the Team Diagnostic assesses team performance from two perspectives: (1) What results is the team achieving? (Structure/Productivity) and (2) How is the team achieving these results? (Relationships/Positivity). The Team Diagnostic uses 7 productivity factors and 7 positivity factors and through increasingly detailed layers of analysis a comprehensive baseline is provided for taking specific action on a few important areas of improvement. From this baseline, performance can be assessed periodically from the perspective of the team itself, the Board, team members’ direct reports, among other stakeholder groups. The graphic below illustrates the specific dimensions assessed using the Team Diagnostic.
Leadership teams can be a force multiplier for their organizations and, as the Google study suggests, those teams that effectively balance a focus on business results with building a healthy and productive culture increase their organization’s likelihood for sustained success. Great leadership teams bring this balance into all of the work they do including serving as the steward for the organization’s strategic direction, leveraging team member talent and experience to integrate on important priorities, and embedding a desired culture throughout an organization. Deploying a leadership team measurement framework that reinforces the results / culture balance across these important roles will build a foundation for continual refinement and sustained success.
[i]Alice M. Cahill and Laura Quinn, “Are You Getting the Best Out of Your Executive Team?”, Center for Creative Leadership White Paper, 2017.
[iii]Charles Duhigg, “What Google Learned from its Quest to Build the Perfect Team,”New York Times, February 25, 2016.