The executive team is the most important unit in the company. CEOs and their executive teams have a symbiotic relationship, with mutual cooperation required for any organization to achieve success. Yet it's the CEO's job to build the right team in the first place and lead it effectively.
Here are three mistakes CEOs make with their executive teams and how to avoid them.
1. Not Having the Right People on the Team
Too many: According to an article published in Management Science--"Who Lives in the C-Suite?"--the number of direct reports for the average CEO has doubled to 10, up from five in the 1980s. Writing for Harvard Business Review, Jacques Neatby advises no more than seven members of the executive team.
I believe CEOs should never have more than 10 direct reports. Leading a team with more than 10 people becomes too unwieldy and creates conditions for unhealthy conflicts as well as disengagement.
The wrong composition: As far as composition goes, the right functions should be represented, including marketing, finance, and R&D. Often-neglected functions that I think should always report to the CEO include customer experience, human resources, and chief technologist or strategist.
Customer experience. CEOs should have an executive focused on customer satisfaction, free of any revenue goals. Every customer should know whom to call when they need assistance, and those employees must be empowered at the highest level to resolve almost any issue. This is a valuable differentiator in the marketplace.
This executive should not be responsible for any sales effort. The head of sales cannot represent the customer effectively and still worry about closing revenue. Many companies make the mistake of expecting salespeople to maintain the relationship with the customer. The problem with this approach is that customers never fully trust salespeople because of the nature of the sales job. In addition, salespeople are often not available to assist customers when they need it.
Human resources. Because people are so important to the success of an organization, the head of HR should have a close relationship with the CEO. Too many organizations bury the HR function under a CFO or other executive. They often treat HR as a cost function instead of an area for strategic competitive advantage.
Chief technologist/strategist. Another role that I see underutilized in the C-suite is that of chief technologist or strategist, depending on the nature of the business. Intel and some other companies have "futurists." The purpose of this role is to have someone focused on future developments in the industry. The executive team members are often so involved in the day-to-day operation of the business that they are unable to see changes coming in the market until it is too late.
Having a deep thinker on the team who is anticipating future advances is critical to your efforts to adapt to the next major trend. In some companies, this executive is also responsible for ensuring execution of the strategy. However, I believe that if you have the right leaders in place and have done a good job of aligning strategy with group goals, good execution should not consume the chief strategist's time.
2. Not Treating Everyone Fairly
Playing favorites: Find a way to spend quality time with each member of your executive team, not just one or two. This will help head off departmental rivalries before they develop, and executives will trust you and each other more. They will be more likely to raise concerns that you need to hear or to address conflicts that you need to help resolve.
Not ensuring the executive team is #1: Guide each executive to prioritize the executive team and place his or her functional group second. Otherwise, fiefdoms can develop where the department's needs are elevated above the company's. Executives who cannot remove their functional hats and put on their company hats probably don't belong in the C-suite.
Not meeting regularly: Ensure that the entire team meets on a regular basis to encourage discussion between executives and address issues as a team. Facilitate open discussion with everybody in the room, where people feel comfortable raising concerns and recognizing problems. This will help you be seen as impartial. It will also help you make better decisions across departments.
3. Not Actively Managing Conflict and Tradeoffs
Not teaching executives to bring cross-departmental conflicts to you: Some conflict in an organization is natural and even healthy. The question for the CEO is how she handles this tension when it develops. I have found that one of the hardest things to teach new executives is to immediately escalate any cross-departmental conflicts to me. Top performers often think it is their responsibility to solve these issues without involving the CEO.
Not addressing cross-departmental conflicts: The problem is the CEO is the only person who can mediate conflicts and balance scarce resources--especially capital and people--across the organization. If a conflict can be resolved quickly and easily through collaboration and cooperation between departments, great! But often, executives end up with an uneasy détente in which neither side is happy. When that happens, the fundamental issue remains unresolved and can fester.
Failure to act quickly: It is your job to make difficult decisions and tradeoffs quickly, in a way that creates buy-in and trust. Too many CEOs bury their heads in the sand when it comes to making judgments between departments. The faster you resolve these conflicts, the better for all.
How you build your executive team and direct your time, energy, and focus in leading them will have a big impact on your organization. Avoiding these mistakes will improve the health of your team, the quality of the decisions you make, and the results you achieve together.