What Every CEO Wants To Know:
Six Conditions To Create An
Effective Top Team
HCI White Paper
December 13, 2007
By Sara Palifka
INTRODUCTION
plish the company's objectives, and that collectively
can respond decisively and swiftly to the challenges
The typical CEO deals with many complex issues that a business faces," says Ruth Wageman.
on a daily basis. Talent is scarce and spread around
the globe, outsourcing is both normal practice and This paper will reveal the findings of the nine-year
a management challenge, and exchange rates and study, and discuss six key issues that CEOs face
global stock markets affect revenue and profitabili- when creating a top team and six conditions that
ty. CEOs must lead organizations with a global can be put in place to enable their success.
reach, synthesize increasingly complex information, and make critical decisions promptly. To put THE RESEARCH & THE TEAM
it simply, leading a company has become too complex for one person.
The core research team consisted of:
This is where a leadership team comes to play and can help the CEO with these critical functions.
Some argue that there is no such thing as a "leadership team"; that true leaders have their own ideas, often strong personalities, and they make poor collaborative team-members. It's true that leading a
team of leaders can be daunting to any CEO.
Research presented during a recent Human Capital
Institute webcast revealed some of the unique challenges a CEO faces when leading a top teams. The
research is based on a nine-year collaborative study
between academics and consultants (CEOs) who
work with top teams, and was presented by Ruth
Wageman, Visiting Scholar at Harvard University
and Director of Research at Hay Group, and Debra
A. Nunes, Vice President of Hay Group McClelland
Center for Research and Innovation.
-
Ruth Wageman, Visiting Scholar at Harvard
University, and Director of Research at Hay
Group
Debra A. Nunes, Vice President of Hay
Group McClelland Center for Research and
Innovation
James A. Burruss, Vice President of Hay
Group McClelland Center for Research and
Innovation
Richard Hackman, Professor of Social
Psychology at Harvard University
The research team worked with over 120 top teams
around the world in eleven countries, covering a
wide range of industries. They interviewed and surveyed every member of these leadership teams to
assess and quantify anything that might impact the
leadership capability of the top team, including the
structure and purpose of the teams, the kinds of
The research shows that a great leadership team is support they received, and the characteristics of the
not just about the soft stuff, like relationship build- team members. In addition, they observed each of
ing. It's much more strategic.
these teams to evaluate the effectiveness of team
dynamics and the actions of their leaders.
"We are talking about creating a leadership team
that can help a CEO to formulate and to execute a The research conducted was rigorous, with a rich
coherent strategy, that can help the CEO accom- mix of quantitative and qualitative assessments of
2
the teams. Between twelve and sixteen experts
rated each team, assessing to what degree they were
reaching their goals, their performance effectiveness as leadership teams, and checking for signs of
increased capability or decreased capability as
teams over time.
The research team synthesized the best features and
actions of the top performers, and showed how
these conditions could be put in place to answer the
key challenges faced by CEOs in leading their top
teams.
CHALLENGE 1: DO I WANT A TEAM?
Overall, the study showed that only 21% of the
leadership teams were outstanding performers; and
over 75% were mediocre to poor (see Figure 1).
Figure 1
The first challenge a CEO faces is answering the
question, "Do I want a team?" and then "How many
teams and what for?", and "How will they interrelate?"
There are many reasons a
CEO might need a top
team: to help formulate
and execute a strategy, to
help him reach company
objectives, or to assist in
quickly responding to
market conditions (see
Figure 2).
The study shows there
are four types of teams:
Figure 2
o Information sharing
(or alignment) team
Four Kinds Of Leadership Team s
Decision -m aking team
Coordinating team
Consultative team
Inform ation -sharing (alignm ent) team
o Consultative team advises the CEO on specific topics
o Coordinating Team which deals with company-wide issues, and
focuses on execution of
the company's strategy
3
o
Decision-making team - which focuses on
concerns of the whole organization
Condition 1: You must have a real team
operational one is adequately addressed. The
research suggests the way forward for CEOs is to
form multiple teams for separate functions, create
teams that are interlocking rather than hierarchical.
In order to create an effective leadership team, the CHALLENGE 2: WHAT'S THE PURPOSE OF
team must be bounded, stable and interdependent. THE TEAM?
Creating a bounded team means that it is clear who
is, and who is not on the leadership team. An
unbounded team is one in which each member has
a different perception of who is on the team (see
Figure 3). The study found that only 11 of over 100
teams were clearly bounded. . In addition, the team
must be stable, meaning the members are kept in
place for some length of time, without turnover;
and the members must be interdependent and
share accountability for a common purpose.
It's not unusual for CEOs to have a hard time
explaining to their leadership team what its purpose is. Why is it so difficult? The purpose of the
team may not be immediately apparent to the team,
or to the CEO. A leadership team's purpose is not
the same as the purpose of the organization, and it's
not just an exercise in execution. Nunes describes
a conversation with CEO. When asked what he
wanted from his leadership team, he reiterated
what the goals of the company were, and then said,
"Deb, you notice I have just said everything I've told
It is interesting to note that when teams are large you before because I know we should be doing
there may be more than one team trying to act as something different, but for the life of me I don't
one. For example CEOs often include members know what the purpose of my team is!" According
who are primarily concerned with the company's to Nunes, this is not uncommon.
operation on the broader decision making team.
As a result neither the strategic agenda nor the The CEO must find a way to express to the team
what its unique value-added purpose is. They
Figure 3
could, for example, be involved
with a branding campaign,
choosing a potential acquisition target, or helping to bring
new products to market. One
mining products company that
was part of the study wanted to
expand and offer mining services including consulting in
addition to the mining supplies
it already offered.
This
required either an acquisition
of new skills for the whole
4
skills for the whole organization, or development of
these skills in house. At the same time, the company was undergoing global expansion, and there was
some fear that if both efforts were not managed
closely, the company would fail. In this case, the
leadership team was charged with researching and
developing a strategy for the company to expand
into mining services, and determine the best way to
acquire the skills needed to reposition the company.
Of the teams surveyed, most felt their work was
very important (rated 4.5 on a scale of 1 to 5), felt it
was relatively challenging, but were unclear about
the purpose of the team (see Figure 4). According
to Wageman, one of the leaders they worked with
expressed the dilemma this way: "So what we do as
a team is really, really important. It's going to be
enormously difficult to accomplish it. If only we
knew what it was!"
One way to communicate a clear purpose to the
Condition 2: A Compelling Purpose
leadership team is to provide a short list of missioncritical issues that need to be tackled.
The research team found that great leadership According to Nunes, a common myth is that top
teams have three key components to their purpose: teams only deal with strategic issues. In fact, it's
quite common for top teams to deal with tactical
o
The purpose is clear - they must be able to issues that are critical to the organization such as
envision what the company looks like when expanding in Asia.
they have reached their goal
o
The purpose is challenging - it must be a CHALLENGE 3: WHO SHOULD BE ON MY
stretch to achieve, but not impossible
TEAM?
o
The purpose is consequential - it must have
a vital impact on the company
So why do CEO's end up with the wrong people on
their team?
Figure 4
First, they assume their direct
reports should be on the team.
However, this study found that
the best performing top teams
consist of leaders who are there
because they can contribute to
the team purpose, not because
they are a direct report of the
CEO.
Secondly, some CEOs feel "held
hostage" by star individual performers. Although these shining
stars may appear to be the best
5
choice for top teams, they often have a mindset of
looking out for their own division, rather than having the company-wide vision that is necessary for
contributing to a leadership team.
During the research process, Burruss asked the
CEO of a very successful company to what he
attributed his company's success. The CEO told
him the health care company he headed had been
successful because he was able to not only build an
effective leadership team, but he was also able to
make some tough decisions about the members of
the team. He removed a very successful head of a
large hospital from his top team. Nunes says, "This
person was actually running counter to their integrated strategy and would not have allowed the
team to come together." That the CEO named this,
of all the events in his career, as the most memorable contributor to his success is testimony both to
the importance and to the emotional challenge of
making those hard calls about who is-and is not-in
the team.
Figure 5
Condition 3: The Right People
The third essential condition is for CEOs is to get
the right people on the team, and get the "de-railers" off. It requires making the tough decisions and
having some hard conversations. Wageman and
Nunes suggest looking for people who can take an
enterprise perspective, and not focus solely on their
own area of responsibility. They also suggest looking for people who can work collaboratively and
with integrity.
How does a CEO know if there are de-railers on the
team? Watch for team members who seem to have
difficulty in seeing other people's perspectives. Derailers undermine others, bring out the worst in
other members of the team, and often lack integrity. However, CEOs need to use caution when labeling someone a de-railer. A person is not a de-railer simply because they have a differing opinion, or
they create conflict in the team. Team members
can often display conflict behavior if the mission of
the team is not clear or there are great challenges to
be overcome; this does not mean they are de-railers. Never assume that a leadership team will operate smoothly
and with little debate. In fact, it's
good for a leadership team to
have "confrontational, robust,
passionate and heated debate
about important issues", according to Wageman.
CEOs should expect their team
members to be involved in all
the issues brought to the table,
and this expectation should be
addressed when on-boarding
members of the leadership team.
6
These first three conditions make up the three
essentials for any leadership team, and they are all
inter-related: create a real team, make sure it has a
compelling purpose, and make sure the right people are on the team (see Figure 5, above). If one
changes, it's likely the others must change.
Wageman states that if a CEO can not do these
three things to a reasonable degree, then it's better
to not have a team at all.
comes are clear, and members are prepared to discuss and make decisions. Nothing is more frustrating to leaders than spending hours, or even days in
a meeting, only to emerge with few or no decisions
having been made.
Condition 4: Sound Structure
Creating a sound structure for teams is an enabler
to success. Three ways to create a sound structure
CHALLENGE 4: MEMBERS THINK MEET- include:
INGS ARE A WASTE OF TIME
o
Keep the team as small as possible; in the
The fourth challenge CEOs face in directing top single digits
teams is when members think that meetings are a
waste of time. This usually occurs when either the o
Ensure the agenda is meaningful and linked
group is too large or the tasks members are asked to to the purpose of the team
do as a team are trivial relative to their individual
leadership roles.
o
Establish norms of conduct - members
must understand what is always done, and what is
When planning an important meeting, the CEO not done during meetings and outside
should be sure the agenda is clear, the intended out
Figure 6
The research team
found that these
three qualities are
the norm for outstanding leadership
teams (see Figure
6).
Poor teams
have less sound
structures. A leadership team that
spends 45 minutes
discussing where to
hold the holiday
party is not participating in a meaningful and vital dis-
7
cussion. Only the outstanding teams had clear
norms and knew precisely what was and wasn't
acceptable behavior in the team.
especially financial data in a format they
can use.
-
The CEO can ensure meetings are an effective use
of time by following a few simple steps: choose the
agenda items, set the norms of preparation, and ask
members to distribute materials in advance of the meeting. These simple steps can save a lot of
wheel-spinning and downtime during critical
meetings.
CHALLENGE 5: THE GROUP IS NOT PRODUCTIVE TOGETHER
What gets in the way of a team's productivity?
o
o
o
The team lacks useful data
Rewards that undermine collaboration
Logistics: Poor space, or little time
Condition 5: A Supportive Context
Education: Provide any consultation or
training needed to build their expertise or
knowledge base.
Material Resources: Provide administrative
support, space, and the time needed to be
effective.
The CEO's challenge is to think about what obstacles the team has to working effectively, both within a meeting context and outside the meetings, then
to come up with solutions that help the team interact and work more effectively. One CEO decided
the workspace was not conducive to collaboration,
and he restructured the whole executive suite in
order to create an environment that fostered the
kind of teamwork he wanted from his team.
CHALLENGE 6: THE TEAM IS STUCK
Great CEOs create a context that supports rather How does a CEO know when the team is stuck?
than undermines the team's productivity. The
research team found there are four basic compo- When all other conditions are in place, and there is
nents to a supportive context:
little or no progress in the kinds of challenges the
team can take on, or there are signs of wheel-spinRewards for team excellence: Rewards
ning, the team could be stuck. If this is the case the
alone do not create collaborative behavior, research showed that providing all the individual
but the study found that if used the wrong team members with a coach will not markedly
way, rewards can actually undermine the
improve the effectiveness of the team. CEOs make
team's effectiveness. Rewards should not be the mistake of thinking that if the individuals are
used in a way that creates competition
being coached, the team will get better. Not so-they
amongst team members. This fosters mis
need to be coached as a team.
trust amongst team members.
Sometimes teams get stuck because the initial conInformation: Provide needed information,
ditions set at the formation of the team have
8
changed, such as the purpose of the team, or perhaps even the members of the team have changed.
At that point, it could be beneficial to bring in a
team coach. This study found that CEOs generally
do not take the time to coach the team (see Figure
7), and sometimes hiring an external coach who is
skilled in working with executive leadership teams
can make the difference. "It is hard to be both an
Figure 7
active member of a team, and the coach at the same
time", says Nunes.
Condition 6: Expert Team Coaching
Three conditions that can be put into place when a
team is stuck are:
o
Team coaching - as an entity
o Use an external
coach who is skilled in
working with leadership teams
o Place the same
importance on leading
the top team as you
would in interacting
with every other constituency
Figure 8
When a CEO brings an
external coach to the
team, he must be clear
about the purpose for
bringing in the coach,
and ensure the coach
does not become a
facilitator of meetings,
but rather focuses on
coaching the team.
Task-focused intervention is an effective
practice used by team
coaches. Historically, a
lot of coaching has
been focused on relationship-building
9
rather than task-focused coaching. However,
research has shown that the relationship-oriented
coaching has little or no effect on task performance,
except in cases where it actually had a detrimental
effect. Wageman explains that during relationship
coaching, the team can sometimes become so
involved in the process of relationship-building
that they neglect the purpose for which the team
was brought together in the first place. "One of the
cool things about task-focused interventions and
helping a team perform more effectively is that one
of its great side effects is relationships get
better…people actually come to like each other better and develop better relationships when they are
accomplishing great things together," says
Wageman.
and for the CEO to place priority on leading the top
team.
These last three conditions are enablers that accelerate top team development, and avoid the team
getting stuck. Having a sound structure, providing
a supportive context, and engaging team coaching
help leadership teams succeed (see Figure 8,above).
CONCLUSION
Leadership teams can be effective, contrary to some
beliefs. They can not only be effective, but critical
to a company's success. The challenges a CEO faces
in leading a team of leaders are surmountable, and
the time commitment well worth the investment.
The key success factors that a CEO needs to keep in
Nunes adds that CEOs tend to pay exquisite atten- mind are to have a real team, with clear boundaries,
tion to preparation when dealing with boards, or the right people, and a compelling direction. Good
analysts, or key customers, but if one group suffers CEOs enable their top teams to succeed by providfrom a lack of CEO attention, it is the leadership ing a supportive context with includes useful inforteam. It's a matter of the CEO making the leader- mation, administrative support, and time for them
ship team a priority. The way forward for teams to do their work. They also provide a sound structhat are stuck is to consider external team coaching, ture, by keeping team membership relatively stable
and establishing norms of conduct for how team
members are to engage with each other inside
Figure 9
meetings and out. And
lastly, they bring in
external team coaches
when needed (see
Figure 9). According to
Wageman, a good CEO
asks the question:
"What is getting in the
way of our ability to
work together effectively?" He also acknowledges that he can't
always fix leadership
10
team issues on his own. Calling on a team coach is build the capability of their teams to effectively exeone way to ensure leadership teams actually get the cute the companies' strategy. This includes entering
job done.
new markets, integrating major acquisitions and
the divesting significant holdings. In addition she
The details of the study summarized in this paper has assisted companies in developing the leadership
are available in the book, Senior Leadership Teams capability necessary to align the organization and
- What it Takes to Make Them Great, planned for implement their strategies. She has also partnered
release on January 24, 2008.
with senior HR leaders to enhance the skills of HR
professionals to support the development of their
companies' leaders and their teams. She has worked
Based on the Human Capital Institute webcast, with companies in Asia, the Pacific, Europe, Africa
What Every CEO Wants to Know: Six Conditions to and the Americas.
Create and Effective Top Team, December 13, 2007
MODERATOR
PRESENTER AND PANELIST
Joy Kosta
Ruth Wageman
Director, HCI Communities
Visiting Scholar, Harvard University
As Director of the Talent Development Community
Director of Research
at The Human Capital Institute, Joy brings twentyHay Group
five years of experience in multiple facets of organiProfessor Wageman received her Ph.D. from zational development, human resources and busiHarvard University's Joint Doctoral Program in ness management with an emphasis in customer
Organizational Behavior in 1994. She received her satisfaction, service quality, process improvement,
Bachelor's degree in Psychology from Columbia and applying the Malcolm Baldrige Criteria for
University in 1987, and returned there to join the Performance Excellence. As founder and President
faculty of the Graduate School of Business, making of Performance Partners in Health Care, a compaher the first female alum of Columbia College to ny dedicated to building better patient experiences,
join Columbia's faculty. She then joined the faculty she has authored several curriculums in leadership
of the Amos Tuck School of Business, Dartmouth and staff development, and co-authored with
College in 2000, and Harvard in 2005.
Harold Bursztajn, MD Senior Clinical Faculty
member, Harvard Medical School, Building a
Debra Nunes
Treatment Alliance with Patients and Families.
Vice President
Hay Group McClelland Center for Research and ACKNOWLEDGEMENTS
Innovation
Debra has consulted to global companies for more This White Paper is made possible by HayGroup,
than 20 years. She has partnered with CEOs to sponsors of HCI's Top Team Impact Track.
11
ABOUT HAYGROUP
Hay Group is a global consulting firm that works
with leaders to transform strategy into reality. We
develop talent, organize people to be more effective, and motivate them to perform at their best.
With 88 offices in 47 countries, we work with over
7,000 clients across the world. Our clients are from
private, public, and not-for-profit sectors, across
every major industry and represent diverse business challenges. For over 60 years, we have been
renowned for the quality of our research and the
intellectual rigor of our work. We transform
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clients breakthrough perspectives on their organization and we do it in the most efficient way to
achieve the desired results. Our focus is on making
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please visit: www.haygroup.com
ABOUT THE HUMAN CAPITAL INSTITUTE
The Human Capital Institute is a catalyst for innovative new thinking in talent acquisition, development and deployment. Through research and collaboration, our programs collect original, creative
ideas from a field of top executives and the brightest thought leaders in strategic HR and talent management. Those ideas are then transformed into
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