Newly appointed CEOs and executive leaders have a golden opportunity: selecting a leadership team or building one from scratch. Even if a leadership team is already in place in the organization or opportunities for changes to it are limited, a few new appointments will make the organization and its members more open to new ways of operating.
Our research reveals that a broad range of levers exist to help leaders build these teams effectively. Here are seven steps to start:
1. Set the team’s purpose. Begin by identifying a meaningful team purpose, one that clearly establishes why the leadership team is needed and provides team members with the motivation and energy to engage.
CEOs and executives are often vague about the purpose of a leadership team. Frequently, this purpose is confused with general goals, such as leading the organization, setting and accomplishing corporate objectives, driving corporate performance, or the company’s purpose.
Instead, the top team should have a dedicated purpose that clearly indicates why the team exists and sets out its specific contribution to the organization. Without a purpose, members of the team may not understand the need to be a team, might not get a sense of belonging, and may consider team meetings to be a waste of time. These situations lead to isolated decisions and actions, which may not fit in the overall picture and may create confusion and dysfunctional top teams.
As Kai Konola, CEO of Halton, explained to us:
Our team’s purpose is super important. Because it helps to clarify why we are here. And for us, it is that we want to expedite fast and furious growth for the organization. That’s the purpose of our team. All our tasks and priorities really flow from that.
A strong purpose, one that appeals to the individual team members, should be challenging and transformational rather than oriented toward the status quo, define a legacy for the team, and be strongly connected to, yet separated from, the organization’s mission and vision.
2. Create the right environment. For a leadership team to act on its purpose, CEOs must create an enabling environment. From our interviews with 100 CEOs and executives, we’ve identified these four crucial components:
• Trust: Do team members have the knowledge and competency to do what they promise? Do they have good intentions? Can they expose their vulnerabilities without being hurt or exploited?
• Psychological safety: Do team members feel they can ask for help or make mistakes without being penalized or losing the respect of others?
• Agreed-upon behavioral norms: Are the group’s behavioral norms clearly defined? Do they shape team members’ behavior?
• Commitment and accountability: Do team members make decisions that prioritize the good of the company over the interests of their own area of responsibility? Do members hold each other accountable?
3. Define structures and processes. CEOs and executives also need to define the leadership team’s structures and processes. This includes defining roles and responsibilities, what tasks belong to the team, how agendas are set and meetings are run, how decisions are made, how conflict is addressed, and how goals are established and measured.
Through setting these structures and processes, the leader defines the work to be done and how this work will be accomplished.
4. Manage the discussion. Good discussions are central to aligning individuals, coordinating activities, solving problems, and ensuring good decisions are made. Good discussions spell out the positions of individuals and clarify opposing arguments.
How can you make this happen? Hold constructive conversations, encourage civil disagreement, and debate the end game and course of action—all without making any of it personal. While issue-based conflict is productive, interpersonal conflict is often highly destructive and can derail a management team.
5. Determine how to make decisions. How the leadership team makes decisions should be tailored to the organization and its culture, not to the CEO’s preferences. Will the team’s approach be:
· Command-based: The CEO decides unilaterally, with little input from the leadership team.
· Advisory: The CEO decides with input from the leadership team.
· Collaborative vote: The leadership team decides by a majority vote.
· Collaborative compromise: The leadership team works toward a compromise solution (possibly followed by a majority vote).
· Collaborative consensus: Decisions are made unanimously by the leadership team.
6. Set the tone. As an aggregator, a leader keeps the organization together. But a leader also plays a central role in building the leadership team by role modeling and setting the tone.
As Laurent Freixe, CEO of Nestlé’s Latin America division, told us:
“The leader has a critical role to play because he sets the tone. How can you expect your people to be open about what is happening and share information if you do not do it yourself? If you want the team to be transparent, then you have to be transparent and collaborative. It is as simple as that. You have to create that trust platform.
I put in place a monthly meeting where I share key discussions and key decisions from the executive board with our senior leaders, so they know what the priorities are for the group and their expectations. This makes them feel that they are entrusted with important information and creates a trust platform for sharing.”
7. Invest in the team’s development. In business, we tend to think that top leadership teams are staffed with individuals with enough experience to do well under any circumstances. But this isn’t a realistic view of the situation or a realistic expectation, particularly in a world that’s changing rapidly.
As new expectations arise, senior leaders need to update their knowledge to perform their duties; this may be in the form of formal education and training or on-the-job coaching and support.
Similarly, leaders need to coach their teams to improve the group’s ability to fulfill its purpose. This may involve hands-on coaching by the team leader but could also involve developmental coaching by another member or an outside consultant.
While the tools and methods of development may differ, what’s important is that leadership teams as a whole, and their members as individuals, engage in a constant learning and development journey that keeps their knowledge and mindset up-to-date and attuned to the challenges of tomorrow.
