Executive teams serve two critical roles within an organisation, each of immense importance. The first is evident: they provide strategic and operational leadership, setting goals, crafting strategy, and ensuring its efficient execution. However, the second role, which may be less obvious, is equally vital. The executive team serves as the organisational and cultural DNA for the company. How effectively the executive team functions and interacts becomes the model for teams throughout the organization to follow.
Assessing Executive Team Effectiveness
While there’s a wealth of literature on strategy and operations, the second role of executive teams often receives less attention. Yet, it can be the foundation of a significant competitive advantage for companies that excel in this aspect.
In a recent survey of senior executives, a concerning trend emerged. 65% indicated that their executive teams were grappling with a clash between functional and enterprise accountabilities. However, fewer than 1 in 5 rated their executive teams as “very effective.”
Remarkably, almost all executives agreed that improving the effectiveness of their executive team would have a positive impact on organizational results. In essence, when the executive team functions better, the entire organization follows suit.
The Three Pillars of High-Performing Executive Teams
The most successful executive teams share three essential characteristics that underpin their actions and decisions:
1. Strategic Focus
Effective executive teams establish a clear vision for the organization and invest significant time and energy in strategic thinking. They strike a balance between risk and innovation, anticipate future needs and opportunities, and work to ensure the organization’s long-term sustainability.
2. Collective Approach
Top-performing executive teams collaborate closely, adopting an enterprise-wide perspective of their individual and team functions. They set an example for the entire organization by breaking down silos and collectively solving business challenges. Individuals within these teams prioritize the interests of the organization over personal gains.
3. Team Interaction
The best executive teams place great emphasis on intentional interactions. They value their differences, engage in active listening and effective communication, seek input from each other, and cultivate trust and mutual respect. These behaviors not only enhance team effectiveness but also serve as a model for the rest of the organization.
Building a High-Performing Executive Team: Five Keys
Building an exceptionally effective executive team is a critical task for every CEO. However, the qualities that typically earn senior executives a place on the executive team are necessary but not sufficient for peak performance within that team. Here are five keys to achieving this:
1. Accurate Diagnosis
The CEO or top leader should understand what motivates individual executive team members and what fosters or hinders their group dynamics.
2. Leadership Mental Model
Executive team members must share a clear understanding of what it means to lead at the enterprise level, realizing that their role extends beyond functional responsibilities.
3. Growth Mindset
Executives should view the executive team as a new challenge that requires continuous learning and development. They should encourage the same perspective among their direct reports and peers.
4. Interaction Rules
Establish explicit “interaction rules” that guide how team members engage with one another. Transparency, vulnerability, public learning, and strong communication skills are essential components.
5. Diffusion Rules
Executive team decisions, thinking, and behaviors must quickly permeate the broader organization. This ensures that the positive actions and values of the executive team can be emulated by other teams throughout the enterprise.
In conclusion, your company’s executive team plays a pivotal role in shaping its strategic direction and organisational culture. By focusing on these key principles and continually assessing and improving executive team dynamics, you can unlock the full potential of your executive team, thereby driving organisational success.