Transcript of How to Measure the Effectiveness of Your Leadership Team
Well, it's three o'clock. Welcome to all of you who have joined we got a good turnout today. My name is Jack Guinness and I'm managing partner at Relationship Impact of consulting firm, with exclusive focus on working with the executive teams of growing companies and help their CEOs build great leadership teams. So today's webinar, Episode 14 in our Great Leadership Teams webinar series is focused on the CEOs role in building a great leadership team. This is obviously a pivotal discussion because the CEO, as we'll find out during the course of the webinar is critical in terms of shaping the effectiveness of a great leadership team.
So just a couple words on logistics. Those of you who have participated in the past feel free to raise your hand, use the chat feature during the course of the discussion. If you have questions you want to stop me. Secondly, as you'll see, in this slide deck, there's a lot of content in here, the slides are kind of thick, so I apologize for any of those of you who are kind of are distracted by the amount of content, but that's I kind of do that on purpose, so that when I distribute these out afterwards, or post them out afterwards, you have a good amount of content to draw from.
So with that in mind, I'd love to get started. Again, CEOs role in building a great leadership team. And so from our perspective, the challenge of building a great leadership team starts with just the fact that, you can't just assume that a leadership team is going to come together and you're going to build a great one that's highly functioning by accident. From our perspective, and you could say that we're kind of bias because it's the work that we do. But our experience suggests that it requires some nurturing to build a great leadership team and particularly on the part of the CEO, to kind of establish the conditions for the team to be able to thrive.
And as I'm sure many of you have seen in some case, in some way, shape or form, that leadership teams sometimes can actually become impediments to progress in organizations, what we call they sort of get in their own way. Sometimes, by default unintentionally and other times, there's some tough people on the team, let's just put it like that. This webinar is all about how CEOs can set up their teams for success.
A couple stats that ... I'm writing an article that's along with this, and I'm about to submit it to Chief Executive magazine this week. And so I found some interesting stats on this challenge. There have been some recent studies by Team Coaching International McKinsey, and the Center for Creative Leadership, among others, I'm sure, but that have surveyed executives and found that greater than 75% in each of these surveys of executive surveys said their executive teams are ineffective. The same types of surveys I think, have indicated that those same surveys, same executive survey have indicated that 95% of them believe that if their teams were even a little bit more effective, it would have a dramatic impact on the organization's performance. So that sort of gives you a backdrop on why believe that it is a challenge to build a great leadership team and it doesn't happen by accident.
And we believe that there's a view on faulty assumptions that provide the construct for why many teams, many executive teams are not as effective as they could be. And the first is that CEOs assume that just by bringing a group of good talented leaders together that it's going to be sufficient build a great leadership team. In our experience that is the case. You bring your direct reports together, your functional or your department leaders together and you assume that they're going to be able to work together well. And there's a there's a few things that get in the way of that. Senior executives often struggle to balance the need to run their functional roles or departmental roles with their roles as enterprise leaders.
Prior experience on teams is not necessarily a determinant of how well a group of executives is going to work together. The external demands are often greater for the executive team. The move, like we said, from functional to enterprise role, and balancing those two is challenging. Sometimes, the visibility is heightened of being on a leadership team, both internally and externally and those challenges are often not insignificant. That assumption of just being bringing together a group of talented leaders and they're going to work well together as an executive team is what we've seen is sometimes a faulty assumption.
Number two. Team members assume that their previous experience and their current skill base are going to be sufficient for them being great leadership team members. And that is sometimes the case. We see that team members had a collaborative mindset to them. And that's a great thing, but also, as we talked about, as I just mentioned, earlier the demands of being on an executive team sometimes create different expectations and different pressures on team members that they're not used to experiencing. And that gets in their way. Just to give you an example of, I moved from being on executive team now, and not only do I have to play this functional role or this line of business role, but I also have an enterprise role, which we'll talk about a little bit later in the discussion. And that the balance of those two things and how I'm I getting incented and what's most important, can be sometimes a stressful construct. Again, assuming that your previous experience and skill base are going to be sufficient to work on a executive team is sometimes a faulty assumption.
And the third point here on this risky assumptions slide is from our experience in what we see, and also some research suggested as well. Most senior teams are structured by default as vehicles for sharing information and reporting out on functional progress and hearing decisions made by the CEO or the COO. And so, that construct, we're not claiming or suggesting that, that's a wrong construct. But if you're trying to build a leadership team that has a focus of running the organization beyond just the CEO, then that construct of how a leadership team is set up to share information report on functional progress is potentially the wrong construct.
And those are some assumptions. So these are some common frustrations. And if any of you guys have seen any of my previous webinars I think we used to use in the past as well, but some common frustrations these are kind of bad of the mouth of some of the CEOs we work with. Each team member is extremely talented, but they don't seem to be on the same page without me inserting myself. So and most times we see that the CEO is saying, "Well, how come they're not working together?" And sometimes the CEOs reason there, the CEO gets in the way. Which we'll talk again a little bit about as we go through the discussion today.
Our leadership team meetings are stale. We've poured out functionally, we don't challenge each other or push for innovation or to continually get better. And again, those assumptions on the previous page, I think, contribute to this type of frustration. While we all seem to like each other is very rare that team or subsets of the team get together to address important enterprise-wide issues without me in the room. And again, they the faulty assumptions that we had talked about in the previous page sometimes get lead to these types of frustrations for sure. The good news is that building a strong effective what we call a great leadership team that is resilient, that learns from each other, is laser focused on results, on the business results the organization is looking for can have some serious benefit to an organization.
I'll give you a couple other stats that, you get the benefit of my research that I did when writing this article. Couple of important stats. One, research by global consulting firm McKinsey suggested executives are five times more productive when working as part of a high performing leadership team than they are when working as part of an average one. The research also indicates that aligned leadership teams have a 1.9 times increased likelihood of having above median financial performance. So there is some data that suggests that highly functioning executive teams can have a significant impact on organizations. We rely on some anecdotal evidence in the work that we do.
I did come across a really cool study by McKinsey a few years back, it's like in the 2011-12 timeframe, that really did a very thorough analysis of financial performance and how executive teams rated themselves and how they were rated by their organizations that had strong correlation between financial performance and team performance. So that was more like Fortune 100 type companies. So the good news is that, taking the time, putting some focus on building a great leadership team can have some significant payoff. And we see that both indirectly and directly in the work we do every day.
So, what does it take for a CEO to make ... Really do the hard work necessary to build a great team? Well, we believe there's a bit of a mindset shift. If you go back to just the third assumption, the construct may be incorrect, and the natural construct that we see most CEOs falling back on is that really looking at the executive team as a staff group versus a leadership team. So what we're suggesting is to really build a great leadership team you have to think through what is it that you want the team to be? What type of team are you looking for? Do you [inaudible 00:13:11]? Do you rely on yourself as the CEO, as the conduit for all, focus on all strategic initiatives and all decisions? Or are you relying on an executive team leadership team to leverage that team so that you are not the one that has to do all the heavy lifting?
Our experience suggests that this is not an easy shift for a lot of CEOs? And I'll give you a couple of examples. And this is kind of bold statement. Forgive me for being this bold, but I've seen many CEOs who feel like they have to have all the answers. In today's world, that's almost impossible. Moving from a situation where you have all the answers to tap into the collective wisdom of a team. That is sometimes a tough shift for CEOs, they feel like they have to be involved in everything, particularly young growing companies where they were in fact involved in everything. And now they're moving to a place where they have to delegate and rely on others.
From lead problem solver to facilitator, and I'm not suggesting they shouldn't be involved in problem solving, but not all problem solving. From refereeing and minimizing conflict, to fostering what we call productive dialogue, basically being the ability to folks to challenge debate and have important conversations productively about the most important stuff that the organization is facing. And finally, our argument is that the shift has to really be about moving from managing a senior staff group to leading a leadership team. So that's the mind shift we're talking about.
So what are the things that CEOs role in building and maintaining a great leadership team. We've kind of narrowed them down into three important but related buckets. These are not necessarily distinct buckets of stuff. But they're, in order to talk about them, we've separated into three buckets. The first is moving from staff to a leadership team. Which we'll talk about in a couple seconds here. Modeling a few important behaviors to demonstrate that I am going to do the work that needs to be done myself to build a great team. So that you're demonstrating to those on the team that things are going to be a little bit, maybe different, maybe evolved a bit.
And then finally, if any of you've seen, listened to any of our other webinars, you've heard us talk a good deal about shaping a leadership team purpose. And admittedly, I have had a difficult time conveying this concept over the last year or so, I think I'm getting better at it. I've engaged the help of my partner Gil to ... And we've debated this up and down. But I think we've gotten better at it and it really is an important element for a CEO to build a great team, that has to have something to work on together.
So let's talk about each one of these from moving from staff to a leadership team. What does that really mean? I guess the big thing here is, is moving from a group of individual, functional department lines of business leaders to a team that's working on things together. That's really important things, not just things, but important issues, strategic imperatives together. That's the overall concept. So moving from individuals focus, with a focus solely on their functional department roles to individuals having to balance their enterprise and their functional roles.
Moving from where meetings are progress reporting and information sharing, to meeting meetings are forward looking and focus mostly on what the team needs to work on together. Not forgetting the fact that there are functional roles that people have to play and lead. But what we're talking about here is, what is it that this team needs to work on together to gain the collective wisdom of the talented folks on the team. Problems are resolved by individual functional leads in conjunction with the CEO to priorities and problems are addressed by the team. Not all priorities and problems but those that the teams decides to work on together.
And goals and priorities are established by individual functional leads, and moving to goals and priorities established by the team. And not all goals and priorities. But the goals and priorities that are most important for the leadership team to drive the strategic imperatives that it chooses to work on together. So we'll get into that a little bit more. This came to life to me a couple weeks ago. I'm working with a [inaudible 00:19:11] leadership team of a pharmaceutical company. And I won't bore you with all the details, but there's one woman that I met with, who is the head of a therapeutic area group and has to rely on some of her leadership team colleagues to do the work that she does.
And it became very clear to me that she's not getting the support she needs from her executive team colleagues, not because they don't want to help her and not because they're not nice people, because they have developed their own set of priorities and her priorities are not theirs. And they hadn't even discussed what the team's main priority should be. So by default, each functional leader will establish a set of priorities and deploy resources accordingly. So our bias and our point of view is that, herd this team and we're moving towards that the how to herd this team and win this team, gets together and gains agreement on what its purpose is collectively, and what it's going to focus on together, that therapeutic area lead may or may not get, you know, support from her colleagues. But at least they'll have had a discussion about, why if that makes sense.
This is a concept about moving from senior staff focus to a leadership, team focus. And we really believe that the benefit of this, is that it really leverages the experience, the talent, the wisdom of the senior staff, and that experience, talent, wisdom can be squandered. And opportunities for greater innovation can be lost with a senior staff model if there's not a collective focus. We also believe that when an organization's senior leaders collaborate on important priorities, and hold each other accountable for collective individual actions, they can be a tremendous downstream impact in the organization. Another study that I'll quote and that's 'cause it's quoted for years now is an A on global best practice, or best employer research report.
Basically suggests, I won't read the jargon here but basically suggests that managers and staff are watching how the leadership interacts with each other. From my perspective, not so much, they're not watching to see if they go out to beers together, to go to baseball games together. How do they interact with each other? And how are they holding each other accountable to the most important things that the organization should be focused on. And so, basically what that says is a great team, from our perspective, can have a dramatic impact downstream on an organization because everyone's watching how they interact, particularly again in small growing organizations. This is our concept around moving from staff to team.
Modeling a few behaviors. It's more than a few but and then basically, these behaviors fall into ... I don't have a slide that talks about this but falls into three buckets. Self awareness, productive dialogue, and accountability. Self awareness is critical, Really important, CEO wants to build a great leadership team. He or she has to understand what they're doing that's helping to construct a great leadership team and what they're doing that's potentially getting in the way of creating a great leadership team. A couple of those things are, are you open to other people's perspectives? Truly, no, do you say it? Or do you really mean it?
And when people have divergent points of view, or maybe outlandish points of view? Do you dismiss them either by your body language or outright? Or do you have a sense of curiosity too. God, what's that all about? I mean, that came in the left field, I wonder where they're coming from with that. Are you receptive to feedback? From again and thinking about being self aware. Am I my receptive to feedback? To saying, I don't want feedback and then when I get it, I dismiss it. Or am I actually open and listen to it? Really important.
So self awareness is really important. There's two parts of self awareness is how you see yourself. And then you got to ask people how do they see you? Those two things jibe with each other. And particularly those things like understanding other people's perspectives or at least listening to them, being receptive to feedback, giving feedback well, setting clear expectations. Those types of behaviors that are really important. Do you do that well? Because those are really important in building a great team. Or are you challenged by that? And if you are challenged by that, as a CEO, it will be very difficult to build a great team. It just will. Can you build a great team? You can, but it means that the folks that work for you on that team will have to work around you, in my opinion, in our opinion.
So that's a self awareness part of this. The second part is productive dialogue. We believe that productive dialogue is perhaps the thing that holds leadership teams back the most. And what we mean by productive dialogue is very simple. Is the environment at the executive team and leadership team one where members can challenge, debate, confront each other on the most important priorities, most important things that are driving the organization in a way that moves the issues forward and leaves minimal relational damage or scars or whatever? And promoting that requires all the things that we talked about under self awareness.
But it also requires an ability for the CEO to get out of the way sometimes and not be the one that's managing all the conflicts, or problem solving for two executives that are at each other's throats. Not suggesting they can't help. But when your first reaction is, "I'm going to get in and resolve that problem. Because these two guys aren't getting along with each other." You're exacerbating and extending a potential serious problem. So your job is to back off say, "Hey, you guys figure this out. If you need my help, I'll help you figure it out." So creating productive dialogue and promoting open challenge and debate. When folks see you doing that as a CEO, they will be more likely to step in. Maybe not the first time, but step in and do some of that as well.
And the third bucket, I would characterize as the few key behaviors is accountability. Modeling accountability is huge. And so that can be the soft stuffed accountability. So I commit that I'm going to be receptive to feedback, I'm going to listen to other people's perspectives, I'm going to not walk over people during meetings, that type of thing, and when I don't I want to hear, "Tell me what I'm not doing." That's one type of accountability. The other one is that, I've committed to doing X, Y or Z. That's really important to helping you in your functional role, movement issued forward for example, and never show up to do it, or on lead or whatever, I get in the way or I take over. Those types of things. When you demonstrate that you are accountable to the individuals on the team, and it's not just them being accountable to you, then the tables turn that. And so these behaviors are critical and again, we've kind of grouped them into self awareness, from the CEO's perspective, creating an environment where productive dialogue can thrive and demonstrating that you are holding yourself accountable, as well as holding the team accountable. And so those behaviors are huge and critical. I I hope you're getting the connection between the modeling of the behaviors and the shift from what we're calling the management staff group to leading a team.
Next, shaping team purpose. And this is summary for some of you, I've noticed some of you have participated in a couple of our webinars. So this would be a summary for some of you, but really important. There's no question that a team can help create leadership team purpose, but it really is the CEOs job to make that purpose and to facilitate the development of that purpose and to hold yourself and the team accountable for executing on it. So, leadership team purpose is simply making sure that the team is focused on those issues that require the team's collective cross boundary expertise. Such as, strategic imperatives, or cross organizational resource allocation, or how to capture synergies across business units. Those important strategic imperatives that only the 10 people on the executive team can really focus on and drive.
And it should steer clear of anything that can be handled by individual departments. That really shouldn't be the focus of the executive team. You hire good people, you let them lead their units and you make sure there's a process for monitoring checking in. That they're doing that. Then what we're talking about here is, what are the things, the most important things, priorities that the executive team needs to focus on to drive the organization's most important priorities? And, from our perspective, purpose establishes foundation for how a team will operate and behave as a unit. It creates clarity of focus, crystallizes priorities and enhances efficiencies. Without it, it's really hard for the members of the team to understand what their enterprise role is. And again, it falls back to maybe there is no enterprise role. Maybe it's just a staff, a group of staff people, which can work, I'm not suggesting it can't work. But if you're trying to create a great leadership team, the staff model is insufficient from our perspective.
So elements in team's purpose has to be consequential. It has to be something that's meaningful, important, that drives the organization strategy and mission. Has to be challenging. If it's just some simple task that can be obviously, you probably delegate it, potentially most important, it has to be really clear to all. It's clear, what it is we're working on, and what the outcome will be when we're finished working on it. And evolving is perhaps ... So those three consequential, challenging and clear come from the book called Senior Leadership Teams by Ruth Wageman. And we've added a fourth one, which is called evolving. And what we mean by that is that leadership team purpose is not stagnant. It's at least 12 to 18 months slightly. It really changes based on the environment that you're working in, the organizational construct, the financial environment. All of those factors, and so it should be an evolving construct as well.
What are some simple steps for creating purpose? There's three here, I'm going to add four through. As I was writing this article, I decided that there's really a fourth step here as well. First is working as a team to identify the most critical strategic imperatives. And obviously, you start if you have a strategic plan, you start with that. And what are the most critical strategic imperatives that are facing the organization right now? And what are the ones that require integration among at least a quorum or most of the executive team members? Identify the interdependencies among those functional areas. Really important, and again, this is one of those things where the process you go through is almost as important as the outcome. Having the discussions about how we integrate and how are we interdependent is really important. And then narrowing those interdependencies down to a critical few is basically prioritizing.
And finally the fourth step that I'll argue is that the CEO really gets to decide. Once that work is done, then it's up to you to say, "Yeah, I've taken this, I've massaged it, or I agree 100% with everyone but this is now our purpose as a leadership team, and this is what we're going to focus on for the next 12 to 18 months." So the stuff on the right side of the slide is important as well, it gives you some examples of not necessarily what a purpose statement looks like, 'cause again, we're not so much focused on the wordsmithing of a purpose statement, but what are some example contexts for creating a purpose? And here's a few from our client base. The Young Professional Services firm that's grown beyond a highly concentrated customer, basically makes 75% of their revenues, one client. And that obviously is a challenge. So that is obvious, is the executive team had to mobilize around that challenge, basically come up with one go-to market strategy.
10-year old construction contractor scaling very fast and running into service and productivity issues. They've stepped back, they are still growing very fast. But now there's some organization to how they're growing. They have an upward three-person operations team as a subset of their executive team, that meets weekly to make sure materials management and project management and the installation crews are well organized and they're dealing with the issues that any construction contractor has to deal with. Service challenges, lost materials in the warehouse, not getting the right stuff out to the sites, all that kind of stuff. So there's a major focus on that.
The startup of a medical device company with the recent FDA approval and a large injection of growth capital. How do we get the company to really focus on, we just got approval for this product, we just got a lot of capital, how do we not waste the capital? And how do we get this product to market as quick as we can? And so those are some examples of what a compelling challenge might be. I would ask you to ask yourselves what is your most compelling challenge? And are you approaching this challenge as a staff or as a team? It's a annoying question. But it's, it's critical and important one, when you ask yourself the question, and you understand what we're talking about in terms of managing a senior team versus managing a leadership team, I think you'll get the concept.
Finally, the CEOs role. We again, we believe this in all our hearts that leadership teams are critical to the efficiency and health, long term efficiency and health in our organization. And the best teams, evolved ones where individuals feel accountable to the team, the leader serves as the coach rather than the primary source of accountability and the team becomes competent at holding itself accountable. That is hard to get to. So that's what the CEOs role, our aspiration, that's where the role goes to, but the there's a lot of heavy lifting to step back and get a team to really be high performing as effective as they possibly can be. And from our perspective, it requires, the role requires three things. First, making the decision to move from managing a staff group to a leadership team, modeling a few important behaviors, and then creating a compelling, organizing, leadership team purpose that helps the leadership team figure out what's most important for it to work on, to drive the organization's most important priorities.
So that's the webinar today. I hope you have enjoyed it. You'll be the first to get a link to the draft article that we're submitting this week to Chief Executive magazine that will summarize in probably a little bit greater detail the presentation we gave today. But if there's any questions, please don't hesitate to raise your hand or send me an email.
And with that, that is end of today's webinar. I appreciate your participation. I will send out a link to a page on our website that has the slides from today, a transcript from today, a link to our article. Again, I hope you enjoyed today's discussion. I hope you participated on our next one, which will be in the third week of April. Haven't come up with the topic yet, but I will be doing that in next few days. And again, I appreciate your participation. And I look forward to seeing you on our next edition of great leaders build great leadership teams webinar series. Take care.