A CEO’s job is immensely complex and multicentric. It sometimes requires pursuing two or more courses that require a leader to act in ways that seem to send inconsistent messages and that is the case with leading team building and culture change at the same time. CEOs who take over troubled companies, or just organizations with shrinking or plateaued market share, and those who start new companies, often find themselves in the position of having to build an effective management team and lead a major culture change at the same time. Of course, team building is part of culture change, but the two often require leaders to act in very different ways.
An important part of every CEO’s job is team building, melding the members of the management committee into a group in which each member feels individually empowered, participates in full and frank discussion at the management committee meetings, and is open to other members challenging their assumptions and expressing different views about the proposed course of action. Each member should recognize and embrace their interdependence and be willing to help the other members succeed.
Among the essential elements for the CEO in making a true team of a management committee of strong and independent executives are clear communication of goals for the company and of the expectations for each executive committee member, clarity on delegation of authority to act, and open discussion.
Trust is the lynch pin of a well-functioning team. Trust runs in three directions and is intimately related to communication of goals and expectations, delegation, and full and frank discussion.
The CEO must trust the team members with the authority that has been delegated to them and fully accept that if they are innovators, they may not always succeed. Teams must feel that they will not be punished or humiliated by failure in a well-designed, good faith effort to try something new.
In turn, the members of the team must trust that the CEO has been candid and clear about the goals for the company as a whole and about expectations for each member of the team. Team members must feel that the CEO has their backs when appropriate and that the CEO listens and values their views about strategic issues and the major decisions facing the company that only the CEO can decide, even if those views are not adopted.
Finally, the members of the team must trust each other, be open with the group about their goals and intentions and discuss well in advance any action that will significantly affect a function overseen by another member of the team. Each should be open to discussion and criticism of their ideas. assumptions and plans and should feel an obligation to challenge the ideas, assumptions and plans of other members of the team. Each should be willing to share the root cause and lessons learned when they have fallen short.
Team building requires a considerable amount of restraint on the part of the CEO. The CEO must make clear to each member the kind of decisions they can make without prior consultation, the decisions they can make only after advance notice or discussion with the CEO, and the decisions that only the CEO should make. Needless to say, no CEO likes being surprised when they first learn of a serious problem that has been percolating in the shadows. There is no cookie cutter formula for defining those categories, and the allocation of authority will vary from company to company and function to function. But not having those discussions with each member of the group is a recipe for misunderstanding and potentially serious problems.
CEOs have to take those three categories very seriously and abide by them. Not doing so is disempowering and impedes growth for the team member; it also sends a negative message. A better alternative when the CEO learns that a bad decision is to be made is to talk to the team member and coach him or her in a better direction – not by telling them what to do, but by asking questions that will lead them to a better outcome. If the team member’s subpar decision or action is not known until it is in the course of implementation, unless it is a real threat to the company or an important initiative, it should be treated as a learning experience for the team member.
Now, suppose that the CEO has taken over a troubled company that is heavily siloed and has a toxic culture – or a relatively new company with a still-unformed culture. Team building and culture change (or creation) are both essential. As noted above, team building requires delegation, mutual trust and sometimes requires a CEO to remain “hands-off” when otherwise dying to jump into the middle of a challenge. It often begins with a written list of values and standards that is quintessentially the province of the CEO. They should be in writing and discussed by the CEO at every opportunity. (See the linked article for Chief Executive magazine: https://chiefexecutive.net/codifying-culture-for-operational-consistency/ by Robert Kohlhepp). But writing them down and talking about them in speeches is not enough. In reality, organizational culture is the product of hundreds and sometimes thousands of messages that are either articulated or are reflected in the decisions and actions of the leaders.
The decisions and actions of the CEO and of the management team and the processes they follow send a message to everyone else at the company about how they should work, how they should treat those who work under them, how much to cooperate or to compete with their peers in other parts of the company, how to treat their customers and each other, how much legal, regulatory, and reputational risk they should be prepared to take and a myriad of other behaviors. It is composed of thousands of interactions, of compromises, of decisions, of actions and failures to act, of hiding or being accountable for failures, of who gets promoted, celebrated and well-paid, and who is fired and why. Each sends a message to everyone in the company. Those messages add up to a statement of “who we are, what we value, what standards we follow and what we will do and not do to best our competition – the organization’s culture.” And those messages are immensely more powerful than the written list of standards and values.
Making the values and standards real on a day-to-day basis in the company is every leader’s job, so the CEO must be constantly asking subordinate leaders at all levels about the reasons for their decisions and actions. Culture change and culture creation in a young company simply will not happen without the CEO’s constant questioning and unless every leader is constantly asking themselves whether a proposed course of action is consistent with the company’s culture. The CEO needs allies throughout the management structure who will tell him or her when things are going off track. Surveys of employees and customers are also useful.
That process inevitably draws the CEO into the nitty gritty of the business – how are customers treated, how are factory workers treated, is there gender discrimination or racial or ethnic bias in employment, promotion, or compensation, where is the balance point between profit and quality, is excellence in performance and product really valued and recognized, and so forth?
The CEO’s involvement at the nitty gritty level, although critically important, creates tension with the trust, delegation of authority to make decisions, and “I’ll have our back” elements of the team-building process, which are all about creating autonomy and empowerment.
There is no easy answer to this tension. Asking questions is an essential part of the CEO’s role. That is especially true in a personal service business where there are fewer objective measures of the quality of the “product” than in manufacturing. The CEO must constantly reiterate that asking questions is not a reflection of lack of trust but simply an effort to understand what is actually going on at the company. Whenever practical, questioning should not result in second-guessing. The CEO should not step in and decide on a course of action where authority has been delegated simply when one thinks they know more, or have better judgement, or can do a better job. When a decision or action is identified that the CEO believes is inconsistent with the new culture, it should be discussed with the decision-maker or his or her manager in the context of the corporate culture and whether a deviation was really justified.