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Here’s the thing. Companies hit inflexion points at particular stages of their growth journey. At around 30 staff, an executive team emerges. Maybe there’s someone in the group whose job it is to do HR or Marketing. They’re not senior leaders, but they report to you as CEO. Then you get to 100 staff, and the management team grows too. Maybe the first people in are still on the Executive team. You might have hired a few more people on senior salaries who join them.
We meet clients who are on the journey from 100 to 300 staff. Sometimes they have 12 or more people on their executive teams. Every head of a function is there. And, in our experience, they’re not well-matched human beings. There’s a mismatch of skills. And getting anything done is like wading through treacle.
When executive teams top 12 people, they start to resemble the United Nations or your local council. It’s leadership by committee. You articulate for your constituents when the microphone eventually makes it to you. Your turn to speak is so limited that you don’t question; you just say your bit. The discussion is more advocacy and less inquiry.
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We see this so often in the Executive teams we coach. We’ll be doing some strategy work, and everyone has an opinion they feel they need to share. The discussion gets broader and broader. There’s no depth or detail. And there’s no time to say, ‘Why do you think that? Can you tell me more?’
People attend executive team meetings with their PowerPoint decks and present for twenty minutes—the meeting drones on for three or four hours. People start to lose the will to live. And this is how every session is run. It becomes a habit that’s hard to break. No wonder they’re not making any progress.
One solution is to have fewer leaders reporting to you as CEO. When clients hit around 100 staff, we suggest they set an aspiration to move towards splitting senior managers into an executive team and an extended leadership team. I like this terminology. There’s no separation between ‘leaders’ and ‘managers’. You are all leaders. It’s just there’s a core team and a broader team.
Get your current senior team to collaborate on this. Ask them to work through a future org chart showing a clear separation between these two teams. Say to them, ‘We’re planning to grow 20% annually, so we’re going to double the business in the next three years. How many people are we going to have in the top roles? What will the Executive Team look like?’
Get them to work out how many people you need on the team. Reinforce to them the effectiveness of a small group. At that point, everyone in the room will assume they will make the cut. Then say, ‘How would it make sense for us to group the functions? Finance, HR, Ops? Maybe Innovation? Do Marketing and Sales roll into Ops? Do you need a Chief Revenue Officer instead?’ Ensure the conversation focuses on the roles, not who will be in them. Then you gradually move towards that model over time.
Often, we find two important meetings that aren’t happening or aren’t being managed correctly.
Firstly, strategy meetings. Have you got the right people in them? If you have a small Executive team, you may find that not everyone is natural at strategy. That’s not a failing. They’re probably excellent at execution. We use Patrick Lencioni’s ‘Working Genius’ tool to profile each member of our clients’ Executive teams. Not all of them are likely to have the combination of ‘Wonder’, ‘Invention’ and ‘Discernment’ necessary to think strategically.
If you’re trying to do strategy with a group of 12, it won’t work. The non-strategic people will just want to plan. The strategic people will get frustrated. Far better for the strategy to be decided separately and then a road map for planning. Otherwise, it’s a recipe for stagnation.
You may have strategic thinkers on the Extended Leadership team. Then gather the people who score highly for strategy skills to form a strategy group. Get them to meet monthly or fortnightly with no agenda. The aim is to think about what the future looks like for your company and chat about it.
Ask the team, “who do you trust to sort out the strategy on behalf of the whole team?” Tell them they cant pick more than 4 or 5 from the extended leadership team plus the CEO. You will get the team to the correct answer without the CEO having to pick anyone.
Typically with a smaller executive team, all the people management is now getting done at the XLT level. So the second important meeting that often doesn’t happen is an off-site between the executive team and XLT. At least once every quarter, they need to spend a day together working through stuff. This is how you ensure DNA transfer throughout your leadership team and ensure everyone’s in sync.
It’s essential to make sure you’re consistently implementing your values and behaviours. Particularly if you’re growing fast. It’s too easy to skip over this, but if you want to build the right culture, it’s crucial. We’re working with clients who are growing between 30% and 100% a year. With that level of change, it’s too easy for the culture to shift. Unless you’re deliberate about transferring behavioural norms, you’ll end up with the culture you deserve rather than the one you want.
There’s no doubt that navigating the expectations of senior executives is tricky. And you may need to have some challenging conversations. When you change reporting lines, egos kick in, and elbows emerge. One way around this is looking to the future and succession planning.
I interviewed Michael Cahill for my Melting Pot podcast recently. He suggested that CEOs should persuade their staff to refer differently to their roles. As soon as possible, get people to say, ‘I’m CURRENTLY occupying the role of X, Y or Z.’ You’re trying to get away from people identifying too closely to their job titles and linking them to their self-worth. It reminds me of the daemons in Philip Pullman’s book, ‘His Dark Materials’. Tearing them apart from their human hosts caused a massive schism. You don’t want that in your business!
One of the ego things is proximity to you as CEO. If someone used to report directly to you and is now one step away, this can ruffle feathers. A solution is to put in place skip meetings. Maybe you do these every month so that contact is still there. Also, the DNA transfer meetings where the Executive and XLT meet regularly will help alleviate this.
It’s important to grasp the nettle and not to pander to egos. Too often, CEOs avoid tricky conversations. If they’re not careful, they create an organisation where everyone knows that the org chart isn’t right, but nobody’s sorted it out. This becomes the culture for everyone.
It’s not a culture that’s going to meet your organisational objectives. As CEOs add more members to their top team, each fighting to see his or her priorities prevail, conflict at the top becomes more visible. With a lack of collaboration at the top, staff below are less likely to collaborate across functions. You must consider the cultural repercussions of these problems with your Executive team.
Author: Dominic Monkhouse
Written by business growth coach Dominic Monkhouse. Find out more about his work here. Read his book, ‘F**k Plan B’ here.
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