Getting the Most from Management Teams
Chief executives have an overly optimistic view of how their senior management teams are performing, says Fred Adair, a Boston-based partner at Heidrick & Struggles (HSII), the executive search firm. Adair was co-author of a recent study of 124 CEOs and more than 570 other top executives that revealed a sharp gap in how CEOs rate the effectiveness of their teams and how the teams themselves rate their performance. He argues that many of these CEOs and their teams need outside coaching services such as those provided by his firm. Here are edited excerpts from a conversation:
Does your study suggest that CEOs are out of touch with their own management teams?
The way I would frame it is that there is a significant gap between what CEOs perceive is going on and what the teams perceive is going on. Many CEOs feel as if they are in great touch with their teams, but it's the teams who are doing the filtering. They don't feel totally comfortable, for whatever reasons, in sharing their point of view about how things are going. Some CEOs have a style that discourages debate. Equally, there may be inhibitions on the part of team members because of their own career ambitions or their concerns about the impression they would make on others. They're not completely forthright.
How did you conclude that there is a gap in perception between CEOs and their teams?
We asked people a range of questions about the purpose and function of top management teams and how effective their top management team is. We discovered that CEOs had a far rosier view of team performance than other members of the team. Generally, CEOs and other members of the team felt the same things were important: building a common culture, formulating strategy, solving problems, and leading change. But the CEOs as a group tended to think their teams were much more effective than non-CEOs did.
How does a CEO avoid this trap of having the information that reaches him or her be filtered by a management team?
There are a number of things thoughtful CEOs do. They recognize, as they look around the table at all the members of the team, that there is a lot more going on in those heads than is getting out on the table. Then they ask: "How do I get the best that each person has to offer so that 1 plus 1 equals 3?" After all, why get together if you can't make something happen as a group that you can't accomplish as individuals?
What practices do CEOs use to bring out the best interaction?
Two things we found in the research: The biggest contributor to overall effectiveness is the team process—how it works together, its decision-making patterns, how it manages conflict, how effective the team is in responding to changes in their environment. Thoughtful CEOs are realizing these are the key levers in working with the team directly and often getting the help of facilitators who aren't on the team.
You mean consultants?
Sometimes external consultants, sometimes internal consultants. Somebody who is not on the team is a great aid in making the team perform better because they have no stake in the content of any of the discussions. It's the same way you think of a coach for an athletic team.
If a CEO and team need a coach, isn't that a sign of dysfunction?
No. If you're a CEO, you weren't promoted to that position because first and foremost you're an effective coach. You've been promoted because you've gotten business results. You understand the external market. You've been aggressive in introducing new products or expanding into new geographies. There are many ways to be successful in a job without having created a high-performance team, especially if people have only two- or three-year tenures. Even the best teams, the teams in the National Basketball Assn. playoffs, need somebody who is not out there on the court, who knows when to call a timeout, reset the plays, make key substitutions, speed up the game or slow it down.
Which CEOs are best at creating teams?
A wonderful example is General Electric (GE). In last year's letter to shareholders, Jeff Immelt talked about major investments GE is committed to making in building team-based performance. Google (GOOG) is another example of an organization oriented toward doing things in teams.
Who doesn't have well-functioning management teams?
You've got to be cautious about saying whether companies you see in the press have a good senior management team or not. Can you say that the reason leaders of major Wall Street firms lost their jobs was because of ineffective team performance? You can't say that. You can have people at the top of an organization who play well together, but in effect they are fiddling while Rome burns.
What specifically should CEOs do to build the best teamwork?
The first step might seem paradoxical, but it is to ask: "What am I good at when it comes to leading this team?" Every coach in the sports world would start this way. Are you good at fostering robust conversation and getting conflict out on the table? Are you good at the selection of people? If you can't do something, get it done through others.
Step Two is understanding the right structures and processes. What I mean by structures are the composition of the team, definition of roles, decision rights, and rewards that shape individual behavior in a team context. Processes are how you manage conflict and the mechanics of managing a meeting. How do we operate together interpersonally?
What's the average size of these management teams?
Over the years in the literature about teams, people have wondered what the right size is. Our research found that's not really a meaningful line of inquiry. People said it was irrelevant. I've seen six-, eight-, and dozen-person teams. Size is far less important than being sure you've got the right people and that you've got diversity in terms of skill and opinion.
Diversity helps make better decisions?
Yes, diverse teams are generally better. There is a more balanced consideration of different perspectives, and I'm using the word "diversity" in the broadest sense—diversity of personality, of opinion, of decision-making style.
The caveat is that when teams are in crisis and their business is in crisis, and you need a monocular focus on an issue or two, diversity in opinion and decision-making can get in the way of moving quickly.
If CEOs are sometimes captive to their senior management teams, should they simply end-run their own teams?
The best CEOs are always engaged at the ground level. It doesn't necessarily mean you're working at the call center or checking in regularly with first-line supervisors. It means you're engaged in making the business happen in a granular way. The best CEOs are never without dirt under their fingernails. The goal is not to do an end run on their team but to work toward one of the requirements of being a CEO, which is to have a perspective on the distant future, not just today.
How can CEOs create the right culture on these teams?
If you say something, mean it. To get the best out of your people, you have to establish directness and candor. Then you have to put together a process that makes that happen. You have to understand how to make real conversations happen—and if you don't understand how to do that, get help.
Again, I ask, if a CEO can't communicate properly with his or her own team, shouldn't that CEO be fired? How can you tolerate a CEO who can't communicate?
You shouldn't tolerate a CEO who can't communicate. On the other hand, creating a high-performance team is about a lot more than just communicating. We all know people who give very good speeches and are very good in talking to the press. But they may still need help in creating a high-performance group.
Is this coaching work a growth business for Heidrick, moving you beyond the traditional business of recruiting and search?
It is. Finding top talent is Step One. But giving the talent assistance in performing is the adjacent space to our traditional business. We're deeply involved in helping CEOs think about what they're seeing and not seeing, and in helping high-performance teams. It's still all about talent.