Designing and Building a Balanced Senior Management Team
Posted by Dr. Earl R. Smith II in Advisory, tags: adviser, advisory board, angel investor, board of directors, CEO, chairman, coaching, consulting, director, earl r smith ii, earl smith, Executive Coaching, federal circle, federal contracting, funding, Governance, government contractor, investing, investment, investor, Leadership, leadership assessment, leadership coaching, leadership development, leadership styles, management assessment, managing partner, Personal Growth, the federal circle, turnaround, Turnaround Management, Venture CapitalDr. Earl R. Smith II
Managing Partner, The Federal Circle
DrSmith@Dr-Smith.com
Dr-Smith.com
The idea that a senior management team should be balanced is far more easily intellectually accepted than effectively deployed. In my coaching practice, I regularly encounter teams which obviously have been patched together out of ‘what was available at the time’. This situation most often is the result of an urgency to get something going and a narrowed vision. But it is important to regularly revisit the question: “Do I have the right people in the right places to maximize the chances of success?”
A Balanced Team
The process of designing a balanced team begins with a thoroughgoing assessment of the needs of the company if it is going to thrive in its space. In other words, determining what the team should look like if the company is going to leverage its competitive advantages and beat out its competition. This is a process of determining, given the company’s history, resourcing and condition, what would be ideally the right people with the right skills, experiences, and connections in the right slots at the right time.
I believe that this assessment should properly begin with the evolution of a new corporate vision statement and proceed through the development of a substantially revised or completely new strategic plan.
It is at this point that the team leader sometimes objects. “I know my business and what it needs. Why can’t I just go out and fill those needs?” Why indeed? In my coaching practice one of the constants has been the weak vision statement that a team leader has for their company. It is, at best, a general and diffused vision and sometimes an ineffective and none-functional one.
A short example might help. Recently one of my clients began the process of developing a new vision statement. His company was growing but more recently slowly than he wanted. Its focus was narrowed on a value proposition that had mostly run its course. Additional progress was possible but growth was going to be limited.
At first the process went slowly … it was difficult for the CEO to see beyond the current focus of his company. We kept at it. Then one morning came the breakthrough … a new vision for the company. We are now in the process of developing a new strategic plan. As a direct result of this process, the definition of what his team needs to be has come into sharp focus and has been expanded. The way ahead is now much clearer.
The Process of Design
Once a vision statement and strategic plan are in place, a comprehensive process is undertaken which is designed to provide the team leader with a framework for making decisions based on an organization’s vision statement, strategic plan, mission, budgetary resources, and a set of desired combined team member skill sets.
This process involves an assessment of present team member competencies; an identification of skill sets required; a comparison of the present team strengths and weaknesses with future needs; identification of gaps and excesses; preparation of plans for building the new management team; and a monitoring and evaluation process to assure that objectives are being met.
Effective team development planning requires strong leadership; a clearly articulated vision and mission, and strategic objectives; and by-in by all present members of the management team. It also requires a carefully and realistically designed budgeting process which takes into consideration the resources available to accomplish the mission. This budgeting process needs to allow for the funding for team growth. Once skill sets needed have been defined they must be acquired in a timely fashion. That means that they need to not only be found but also paid for.
The design of the management team is grounded in the needs of the company. A design for a well balanced and resourced management team provides the existing team with a strategic basis for making team expansion and modification decisions. It allows them to anticipate change rather than being surprised by events or disadvantaged by misalignment.
Some components of the new team will be an expansion of those skill sets presently available within the team. A solid design for team expansion provides more a refined basis for building on existing competencies. Other skill sets will be new to the team. Such a plan will facilitate the integration of those skill sets into the over all management team.
Make no mistake about it; success depends on having the best people with the highest competencies in the right slots and at the right time. Team planning provides a leader with the means of identifying the competencies needed both in the present and also in the future. It provides a reliable guide for developing an effective senior management team.
One more point should be made. Team planning allows a founder to systematically and effectively address issues that are driving change in the company’s space. The overall benefits of team planning, then, are to allow the founder to more effectively build a senior management team and improve the chances that that team will succeed in growing the company.
What’s In a Plan?
A team development plan should include a management assessment, competency assessments, gap and surpluses analysis, and team evolution planning. The plan should result in a road map which spans the underlying assumptions through to the output of the planning. This establishes the validity of any team development plan by demonstrating the links between team planning and strategic management, budget justifications, the vision statement and mission and both strategic and tactical goals, and human resources planning.
Team development planning provides a leader with a strategic basis for decision-making that is based on achievable goals. Metrics will allow a leader to anticipate turnover (planned or otherwise) and to plan recruiting and team member development … to move the team toward the team that is needed in the future.
Plans for team transition are inputs to planning for team expansion, internal training, movement, reassignment, and recruiting.
Assessing the Team
A team assessment identifies skill sets, analyzes synergies and identifies gaps and surpluses. A skill set assessment provides baseline data on the existing team. Over time, a trend analysis will provide data on how successfully the team development plan is being implemented. Trend analysis is essential to the effective implementation of any team development plan.
A demand analysis measures future activities and workloads and describes the skill sets needed by the team of the future. Demand analysis must take into account changes in team composition that are driven by changing organizational demands.
Finding the Gaps and Surpluses
A gap analysis compares information from the team assessment and demand analysis. It identifies the differences between the current team competencies and the skill sets needed in the future. The comparison requires that the skill sets defined in the team assessment and the demand analysis phases be comparable … that is not independently developed. Gap analysis identifies situations in which the number of personnel or competencies in the current team will not meet future needs (demand exceeds supply) and situations in which current competencies exceed the needs of the future (supply exceeds demand).
Planning the Response
This process should result in a response plan for closing gaps in skill sets and reducing surpluses. It will include such things as planned recruiting, training, retraining, and placing or replacing team members. An affective response plan must take into account team member needs or aspirations … which may work either in favor of or counter to the direction of planned team evolution. The response plan needs to be integrated into the company’s strategic plan.
Three components of a well based plan deserve special mention. Management team assessment is a process which defines and quantifies skill sets and competencies (both existing and required to carry out a future function). Conducting a management team assessment requires the leaders of an organization to anticipate how the nature of the organization’s focus will change, and then to identify future human resource requirements. A well-based management team assessment is critical to the evolution of an effective plan for team development.
Leadership assessment identifies the attributes that will help each team member become a more effective leader and the behaviors that are limiting both their and the company’s growth. Assessing the leadership styles and effectiveness of key team members will help evolve and implement an effective team development plan.
Role analysis describes the conditions of successful job performance. Role analysis focuses on tasks, responsibilities, knowledge and skill requirements as well as other criteria that contribute to successful contributions by each team member. Information collected in this process is used to identify and quantify competencies.
In Summary
Team development planning offers a means of systematically aligning a company’s priorities with the budgetary and human resources needed to accomplish them. By beginning the planning process with the development of a new vision statement, revised strategic plan, defined strategic and tactical objectives, leaders can develop a team development plan that will help them accomplish those objectives.
These plans provide a sound basis for justifying budget and team expansion decisions, since there is a clear connection between objectives and the budget and the human resources needed to accomplish them.
To be successful, team development planning requires a solid commitment and leadership from the top. They must lead the planning process, must assure that team development plans are aligned with the vision statement, strategic plan and strategic direction that the company has chosen. They must also hold other team members accountable for carrying out team development planning and implementing the plan. Team members must take responsibility for leading the planning and implementation process.
The results will be a company that will become better aligned with its vision statement, strategic plan and strategic and tactical goals and directions.
© Dr. Earl R. Smith II
Related Articles:
- Moving the Ball
- Management Incentivization the Right Way
- Attitudes, Agendas, Interventions and Compromises
- Assessment Programs – High-Value Investments
- Planning and Implementation
- Designing and Building a Balanced Senior Management Team
Dr. Smith is Managing Partner of The Federal Circle. The Federal Circle partners with teams and existing companies. We help them up their game and win big in the Federal space. We also arrange funding for acquisitions and expansion by acquisition. Our model is based on the belief that, if you select the very best and work with them in a highly professional and focused manner, the results will be truly amazing. He is the author of Amazing Pace: Turbo-charged Business Development – a book that shows how Advisory Boards can dramatically increase revenue. Dr. Smith is also the author of Dream Walk: Parables for the Living – a book of Raven Tales and exploration.
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[...] Designing and Building a Balanced Senior Management Team [...]
Emilio Vargas wrote:
Gentlemen,
Great suggestions! Progress is steady for us. In addition to your advice, you have helped me reflect a bit. We are doing well as we move forward. After all, if it were easy they would not need me. haha
Dylan Persaud wrote:
Emilio,
I have found if you hold each them accountable within the part of the organizational strategy they cover and make them give reasons for their deviation this collaboration will lead to a better overall dynamic. The goal is getting them to work together as a team to accomplish the company’s goals and you act as the facilitator to enable them to achieve the company’s objectives.
I have created teams with proven leaders that have added value to their last few organizations. Meaning, They have had either some sort of vision, leadership, business, IT, operational, execution or strategic value they have done previously.
I find from my experience that executives have titles but have not proven what they can accomplish or how they are going about adding value to their organizations. As can be seen from the recent economic collapse as executives move freely between companies and they were the ones devaluing company worth and profitability. If you have built a concrete plan and actually implemented them to lead organizations then I would consider to put you on a management team.
Emilio, I can relate to your comment. Getting everybody on the same page is hard – keeping them there – particularly when the correct page changes over time – is a major challenge to leadership. I use strategic off-site retreats for the reset process. I find that a facilitated retreat works best. One led by the senior member of the team is far less productive. I would recommend such a strategy in your case. Dr. Smith
Emilio Vargas wrote:
I am currently going through this. My biggest challenge is conflicting objectives and poor team work. All the team members are committed to success but I spend more time redirecting their efforts. They are quick to deviate from major areas of the plan with little or no coordination with the rest of teh team. For me it has become an almost exclusive leadership function with almost no time for strategy and tactical work beyond that related to leadership.
Thanks for great comments. I agree with Don that the cultural aspect can be difficult. I have found that a two edged sword. Teams that need skill sets outside of the core technology of the business tend to try to adapt one of their own rather than let an alien in. I have seen companies ‘appoint’ programmers as CFO. I also agree that ‘chemistry’ is important but think that the focus on ‘tranquility’ is often overdone. Internal tensions can play a particularly effective role in stimulating high productivity. Dr. Smith
Don Turner wrote;
On one level, yes. However, even “shared destiny” is secondary to “the ability for the team to effectively work together.” As you know better than I, a strategy/vision is only as valuable as the team’s ability to execute, which I feel is principally governed by chemistry.
On a technical and practical level, achieving and maintaining perfect chemistry is effectively asymptotic (you approach, but never quite get there). As such, and because screening of such chemistry in an intuitive, and therefore, an inexact science, the business problem becomes finding the strength, courage, and foresight to remove the “bad elements,” deal with the resulting impact, and move onward.
This is simply one man’s opinion and perspective..
Michael Winwood wrote:
For chemistry – I read – shared destiny…..
Don Turner wrote:
Truly a critical aspect that is much easier said than done. Like Earl, I have dealt with a variety of situations, although Earl appears to have accumulated a few more years of wisdom than me. I am currently on the board of several start-up ventures, and will be adding a few more board positions very soon. I have also been part of the startup management team, so I have a few perspectives, as I am sure you both do.
In addition to the points/factors that Earl highlighted (which I agree with), I would like to suggest that the most fundamental (yet important) factor is team chemistry. In the end, and even after so many aspects were “addressed,” I have seen that to be the make-or-break factor. Secondary to that, but clearly something that is inextricably linked, is personal greed and ego.
As posted in black-and-white on my linkedin profile and resume, my “Management Philosophy” below reflects my thoughts on core principles for the formation and success of any start-up venture (or even a program/initiative within a giant corporation–same dynamic, different magnitude, risk, and costs).
===================
Management Philosophy
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<> Success is a function of timing, capability, focus, perseverance, follow-through, and more importantly, team chemistry. If the team does not have the chemistry, then nothing else matters.
<> Advancement is derived from actually moving forward and recognizing that mistakes will be made. Too many ventures become gridlocked as a result of waiting for the perfect moment or trying to achieve nirvana.
<> Trust your leadership team, but never ignore gut feelings. Treat everyone with respect, and check your ego in at the door. To do otherwise is a recipe for a short-term business venture.
Michael Winwood wrote:
These are big questions Earl – I have started up teams, taken over teams. reformed and refreshed teams, renewed and enhanced teams, been part of other teams etc. I could write you a book. Tell me more about the critical issues that worry you or that you think you need more input with. For me the fundamentals are quite simple: what is the goal; what capabilities do we need; what have we got; where can we access what we need; what shall we do with what we’ve got; how will requirements change as we progress; what do we do about succession; how do we manage the business critical risks; how do we test our assumptions and challenge our analysis; and what else can we do to improve throughput, optimise performance and increase impact??
Paul Katchings wrote:
We are in dire need of another direction in management and I have two observations.
My first observation starts with the correct organ-izational structure. For example if the reality is that a human being is movable with two legs and two arms then the reality should be that the organizational structure for the management team should follow a standard mimicking a scientific design that we can all agree on such as from genetics which actually produces ‘organs’ where we get the name organ-ization from?
Before we get to management, we need the correct organizational structure to place this talent into? Management is basically environment five senses based.
If the human body comes into existence from just 31 cells that causes over 100 trillion cells in 9 months with coordinated management by the five senses, then it seems to me that this exact same five level (1+2+4+8+16) organizational structure should be used for better management for the enterprise?
I have over the years witnessed all types of horrible organizational structures that represent ‘dis-organized’ thinking and design. I suspect the demise of most enterprises is traced to ‘dis-organization’. I remember when Citi Bank had 1 Chairman – 2 Vice Chairmen and – 4 Executive VP’s, just 7 clear executives and this bank was operating ‘at–that-time’ like a machine?
This is my first observation.
My second observation is that all of us ‘thinkers’ are in the business of making this a better planet for human beings which is based on the reality of economics following a correctly defined structure to manage.
Let me set the stage for my second management observation.
Something we did not know ‘consciously’ just a few years or months ago is that:
1. 23 counties that produces more value for its citizens have more public companies that the others
2. We know by formula x=(a*b)/c with ‘y’ shares outstanding for public companies where multi values are created by this formula which is more powerful than that formulas used in nuclear reactors.
3. We know the faster way for countries to close the value gap for its citizens is simply by the setting of public companies around existing brands.
4. We know that the average value of a global public company is about $1 billion
5. We know that these 23 countries with mature stock markets the value of their public companies exceed their gross domestic product. So by formula we can trace the reason and conclude that countries domestic products are never suppose to exceed the total value of the countries public companies.
With this current information about public companies, we know that the concept of bringing cash-capital in from the future for present use is the essence of capitalism and the vehicle of capitalism is the public company.
Absent the public company we have no concept or school of economic thought called capitalism?
By the above formula that produces excess value for public companies called ‘positive equity’ the exact opposite of ‘negative credit’ thus capitalism has not been defined correctly over shadowed by the annulment of capitalism by governments permitting the tax deductibility of interest on credit which is clearly not a sustainable economic model for global demand.
Thus capitalism which produces essentially free equity is not as pervasive as it should be.
The world has 66,400 public companies and the world needs 407,000 when we compare how excess value is actually created by the 23 countries referenced above. Therefore the world is undervalued by $340.6 trillion.
In order for the world to implement 340,600 public companies, the organizational structure must be fixed for speed and executive management must consist of Virtual Management Teams of exactly 31 members.
The only hindrance to the implementation of $340.6 trillion in more value for 3.2 billion members of the global work force over the next three years is correct management structure.
Paul Katchings
Mike Buck wrote:
Dr. Smith in response to your start-up analogy, start-ups require a very versatile leadership style. Leadership is a word with as many definitions that it has definers. However, the best leadership style that fits a start-up team is one that is both task-orientated and relationship-orientated. One that is strong in both leadership and managerial skills. John Kotter of Harvard Business School argues that management is about coping with complexity. Good management brings about order and consistency by drawing up formal plans. Leadership, in contrast is about coping with change. Leaders establish direction by developing a vision of the future; then they align people by communicating this vision and inspiring them to overcome hurdles. This is exactly the type of leadership that is required of a successful start-up. I would suggest using John Kotter’s eight steps of transformation as a basis which also works well in start-ups. The eight steps are as follows (Kotter, John. Leading Change. 1996):
• Establish a sense of urgency
• Form a powerful guiding coalition
• Create a vision
• Communicate the vision
• Empower others to act on the vision
• Create short-term wins
• Consolidate improvements & produce still more change
• Institutionalize new approaches
Leadership is the ability to influence a group toward the achievement of a vision or set of goals. And the success of the start-up depends upon creating the vision and then completing the due-diligence to follow through on each one of the tasks to make the vision come to fruition. Now that I’ve outlined one (1) process that I used with success, I will tackle your questions.
I’ve been involved several and they were all successful when a collaborative approached was used, a plan was developed, implemented and the tools and resources were available to implement each phase of the plan. The teams had to be cross-functional and not silo’d. In the team member selection process, each member was evaluated for his/her ability to do the job, whether they were a self-starter and could work self-directed, and whether they would mesh with the culture of the group. Yes, in each case at least one (1) team member did have to be replaced because they falsely portrayed one or both of the final two (2) attributes. Additionally, in each case short-term goals were in place to enhance the confidence and morale of the group and metrics were in place to monitor the progress of the group. In the unsuccessful attempts I’ve seen a start-up or re-organization fail is when predisposed plan was developed that team members were not included in the development process. Furthermore, the plan was not flexible which prevented the team to overcome unforeseeable challenges. The challenges fell into the categories of the structure of the organization, the systems used, the skills of the employees, and the employees who were openly or covertly resisting the change. In short, the culture of the organization did not have the trust and respect of the management team to support the new strategic plan. I hope this helps and should this require further explanation please don’t hesitate to contact me.
John, Good contribution – thanks. I accept that there is no single formula for fostering energy within established teams but a discussion of ways to approach the challenge is surely a good way forward. What strikes me about your list is that it is part tactical and part strategic – part factual and part conceptual. You seem to be working at both. I wonder which you think the more important – ideas like creativity, maturity and autonomy or facts like the size of the organization, format of meetings and span of control. I don’t have a choice – just wonder, if the exercise is to increase the ‘energy level’ of a team, what are the best places to start. I would be interested in your thoughts. Dr. Smith
John Dearing wrote:
I think the absolute key to this is the selection of the right people and therefore the starting place for fostering energy has to be in the recruitment phase- identifying not only personailty traits suitable for the specific role within the management team but ones that are complementary to the other members of the team. Virtuous cycles can be created by developing a team who support, challenge and inspire one another but these can easily be destroyed by injecting the wrong personality.
I don’t think there is a single formula for fostering energy within established teams and would suggest this is a similar debate to “what makes a good leader” in that some management teams seem to just generate energy in the same way that some people just naturally seem to inspire followers.
In reality it is probably about finding the right combination of a number of factors which are likely to change based upon the prevailing economic conditions and chosen market. There is probably a whole forum’s worth of debate about what these factors might be but as a brief starting point I suggest the following:
- The degree of flexibility/ autonomy each manager holds;
- The creativity of the team;
- The perceived risk averseness of stakeholders;
- The maturity and saturation of the market;
- The size of the organisation;
- The location and format of meetings;
- The span of control of each of the management team; and
- The teams ability to transcend the day-to-day and look towards the bigger picture.
Not sure if this is what you are looking for but hopefully it will stimulate further debate. John
John, Very good comment – thanks for taking the time to add it. I am very interested in your idea of ‘fostering energy’. Can you add a bit more about how you would go about that? Dr. Smith
John Dearing wrote:
I think the above raises some interesting points and demonstrates the state of flux within management and leadership approaches. From my experience the defining factor in first rate management teams has tended to be their energy. Experience and intellect are a given although it is rarely the most experienced or most intelligent management teams who stand out. It is more about having the energy and enthusiasm to challenge established practices and or cultures to drive a fresh way of working into the business or market in the case of a start up. Fostering this energy within the management team is infectious within the organisation, creating a dynamic and innovative culture. This in turn should lead to the company creating a more sustainable competitive advantage and ultimately delivering results to it’s stakeholders on the bottom line. Energy in itself isn’t enough but when combined with the more traditional management competencies it can be gold dust.
neuroleadership.org.Rose Rubin wrote:
I have recently been studying David Rock’s work on neuroleadership, that is the study of leadership with the brain in mind. There are some really good points he makes regarding interactions with others and how to get the most from everyone. He discusses the “Toward” state and the “Away” state that happens in any interaction. This could be useful information when dealing with a team or when choosing a team. You can look for people who generate the “toward” state in others by their speaking and actions. Can they be present with you, listening well? Are they positive? Can you relate to them easily? Are they comfortable in confrontational situations, in other words, do they have good “Emotional Regulation”? More information is available at http://www.neuroleadership.org.
Rob Coulthard wrote:
If you have the right skill sets, knowledge and resources it then becomes a very humanistic issue with three key elements and a final crux factor. You may wish to measure your team formally or even with a snap shot guess.
Social awareness (Peak Empathy) – does everyone know everyone else and does everyone know that everyone else knows each other!
Social Management (Communication, Motivation and State Management) – Is the team socially motivated to a common goal, can they communicate effectively and can they manage their emotions and attitudes.
Inter-dependency (Backing each other up regardless) – Of the three levels of dependency your people will move from dependency to independence and finally Inter-dependency.
The measure of team cohesion, an elite team and their performance capability will very much be realised depending on the comodoties of each of the above areas. Also, you will rarely achieve a high level of social management without having social awareness or indeed interdependency without having the other two foundations in place. Finally and key in all of this is the Judgement Capacity of both individuals and team.
We have recently conducted much work and research in this area with both Military and corporate clients and would be happy to share more of our philosophy and intervention strategies. Rob Coulthard
You make a good point – these challenges are not limited to start-ups or distressed companies. Most of the solutions apply across the range – to change the culture , you most often need to change major players. I’m in the middle of exactly that with a company. Dr. Smith
Sendil Nathan wrote:
It all goes back to Leadership versus Management. When to play one card and when to withdraw to the other… and as you say, if they can at all. I’ve encountered structural problems with very mature and reputable organizations. Start-Ups are only susceptible even more since they are really playing the creative destruction card… being small, playing big. Most people are not prepared for such asynchronous warfare.
Thanks for the comment Sendil. That muddled distinction is often the cause of real structural problems later on. I have seen both types of CEO – ones who wear to many hats and others who wear too few. Earlier this year I had to completely re-build a management team because the CEO and COO had decided that they were owners – sat around all day and watched the stock price fluctuate. Two years ago I had to do something similar with a CEO who thought that CEO meant chief of everything. Good leaders know how to balance these issues. The really good ones know that their role in the company will shrink as it grows – they will be responsible for fewer things but those things will have a greater impact on growth. Dr. Smith
Sendil Nathan wrote:
As your opening paragraph states, to paraphrase you, the question of “Urgent versus Important” is miserably muddled. In a start-up there is a need for the founders to wear many hats, turbans, caps and scalps just to keep the head over the shoulder, the pressure from three important forces: the investors – including founders, the product or service design, and the market of consumers, customers and suppliers have profound impact on the form of the organization and its direction. This influence is stronger than internal vision, right or wrong.
The second problem has to do with ROI expectations and how it molds the initial team. The desire for raw performance often supersedes vision, forcing senior teams to over-indulge on bottom line and tactics rather than strategy and the landscape to the horizon and beyond. This fosters foot soldiers eager to dwell into the battle trenches rather than step back and ponder the war worthy of a 5-star general. As Secretary Gates recently confessed, Obama is “asking strategic questions on Afghanistan that have not been asked since the 80s.” Really? The world’s best military institution and its civilian command has been on coma for three decades? Do you really believe that the rest of the gene-pool is can be any better? Probably not.
Hence the greatest challenge is aligning the organization to the strategic vision.
Janet Nelson wrote:
I had the experience of forming a team both from scratch, as well as inheriting one that needed ‘revamping’. Actually I experienced the latter, twice. What I’ve found is that the (But it is much easier to teach the industry-specifics that it is to teach a power-monger to share information)
In starting up a new team I found that it is very important to bring the new team together as soon as possible, and as soon as required. It is extremely useful that the genetic ‘history’ of a (new) project be shared by all. As for inheriting a team; all changes should be made at about the three month mark. Shorter than that and current members don’t have the time to get-on-board if they are able and willing, nor does one really know their true capabilities of the team members. Wait longer than that and one runs the significant (and probable) risk of missing the opportunity to make change. Also, at this point it is still new enough that “s/he is perceived as wanting to bring in his/her own people” rather than “I didn’t cut it”. It’s not so personal at that point.
Lastly, investing in skills and industry-specific training and refresh is a must. It builds teamwork, a sense of urgency and leaves the message that continuing to know and do things the way they’ve always been done is not okay
Robert Holman wrote:
Interesting Article, thanks for posting. One way to find proven and vetted members of your management team, really the first place to look, is through your investors. Provided that you have VC investors, they would be the perfect place to find top professionals with strong backgrounds.
Roy, Thanks for two great additions to the discussion. In the end we all agree that there is no panacea – no secret sauce – no silver bullet. It is always a matter of balance and judgment. I would also agree that judgment is something that you can evaluate by looking at the decisions a person has made over the years. It seems to me that we must take a long view in that process. Sure, you may encounter a person who has been inept for a couple of decades but is now suddenly a genius – But the risk of being wrong seems a bit great. I also agree that years of experience is not a good raw measure. In some cases – particularly the trades like diamond cutter – it is a real plus. In others it results in stale knowledge that has been superseded by advances. I also am a fan of selective outsourcing – particularly in the early going. I have used that approach a number of times and, if done correctly, it works very well. Dr. Smith
Roy A Ackerman wrote;
Responding to Katharine’s comments:
I have worked with several venture capitalists who do, indeed, maintain a cadre of effective, intelligent, and direct CFO/CRO/CEO types. Some are under contract to their entities, others are employed on an ad-hoc basis- both to evaluate potential investments and to augment the staff for those that do benefit from their financial largesse.
When our firm was young (oh, so many years ago), we hired folks we thought would help our cause between 12 and 18 months prior to our direct need. It sounds like a waste of funds- but from years 4 to 18, we were growing at 25% per year- and would never have the time to find the right folks when we needed them, had we waited.
Roy A Ackerman wrote:
I am responding to Earl’s comments to me…
I have a real problem with that concept- experience. Yes, I am older now and yes, I have more experience. But, I remember how ticked off I was when younger and (almost as) capable- and was derogated with my diminished experience. I believe experience is very useful- but capabilities and zeal need to be employed in the equation, as well.
I also worry when considering that comment when it applies to my (grown) children. One, who just approached 30, has served as (senior, chief) development officer for several institutions- raising more funds than her predecessors and having happier staff at the same time. Another, 26, serves as sous-chef for a (small) chain of very, very highly regarded restaurants- and has been that for more than two years….
So, experience is critical, but so is capability, quick wit, elan, and composure.
I will complete this complaint by remembering that I have met (and refused to hire) several folks who did not have twenty years of experience, but one year of experience, twenty times over…
W. Steven Garrett wrote:
For what it is worth, I wrote and have lived by this method for 35+ years of start-ups. Sincerely, Steve Garrett
INDIVIDUAL VALUES
1. Individuals value a clear understanding of their roles, how they fit within the organization structure, and the degree of authority, granted, to perform their tasks.
2. Individuals value the opportunity to participate in the negotiation of performance expectations of their role.
3. Individuals value the encouragement to use their skills and creative potential.
4. Individuals value the respect, trust, and confidence of their managers.
5. Individuals value a regular and constant flow of information, to be informed of changes, which have an impact upon their relationships with the organization and the performance of their duties.
6. Individuals value timely and honest feedback; being appraised of their performance, and sharing in the successes and failures of their units.
7. Individuals value a reward system that recognizes accomplishments in an objective and understood manner.
8. Individuals value a development program that prepares them adequately for the performance of their responsibilities.
ORGANIZATIONAL RIGHTS
1. The organization shall have the right to make a reasonable profit and to grow in a manner as to provide continued growth opportunities for its owners and employees.
2. The organization shall have the right to formulate a strategic plan to achieve its objectives by recruiting and maintaining a staff of competent and committed personal.
3. The organization shall have the right to establish the managerial philosophies, policies, procedures, and control mechanisms to maximize the probability of attaining its objectives, by means of the defined strategy.
4. The organization shall have the right to monitor progress against the plan, and to insist that variances are accounted for in a through and timely fashion.
5. The organization shall have the right to appraise the performance of the individuals within the organization; to utilize the potentials of those on the team through the establishment of reasonable performance expectations; and to insist upon the growth of these persons to meet changing conditions.
6. The organization shall have the right to refuse to tolerate ineptitude, or even mediocrity, of its personnel.
7. The organization shall have the right to direct its own destiny, within the regulations and ethics of the society of which it is a part, and to change, modify or accelerate its rate of growth and direction.
BUSINESS PLAN
The STRATEGIC PLAN is the statement of desired corporate position and, in general terms, the means of attaining those positions in light of anticipated major internal or external changes in the business environment.
The OPERATIONAL PLAN is the statement of the specific means and controls employed, under a variety of potential conditions to accomplish part of the strategic plan.
The BUSINESS PLAN is the document resulting from the integration of the strategic and operating plans.
Good comment Katharine – thanks for adding to the discussion. My experience has been that investors also ‘collect’ talent. Many of them have ‘go to’ CEOs and CFOs that they have developed a solid relationship with. When I am engaged to either build or re-build a management team, I have proven sources that I use – particularly when the effort requires business development and sales people. It all begins with a well thought out plan and a dedication to the discipline required to carry it out. building a team is the first test of a CEO/founder. If they do not do it well, the second test – developing a viable business plan – may not matter that much. Dr. Smith
Katharine Giacalone wrote:
Dr. Earl – I totally support your points about “having a plan!” If people don’t spend the time planning, they’ll waste time and money in the long run and this will surely interrupt their business planning activities.
It’s not unreasonable to take a few months to plan the hiring strategy for a management team. Some organizations actually do planning and test the waters for candidates before a company is formed. This eliminates the emotion of “hurry up and hire” which can get founders in trouble fairly quickly. It’s important to recognize the size of the company, its growth potential and big business implications before people start hiring employees. Great founders are always on the alert for talent!
Robin, I take your point and you are completely right. The real test is fielding an A-level team. Thanks for the clarification. First drink is on me at the next Dip event. Earl
Robin Cook wrote:
Earl, I didn’t say that BUILDING the team is easy – I said that DESIGNING the team is! Building the team is very complex & difficult. Figuring out the sort of team you need is not always easy, but it’s a whole lot easier than actually finding the people who match that!
Roy, thanks for the comment – I agree with your core point. Team members need to be able to rely on others on the team. But the core question is still competence. I come across lots of teams where critical roles are being filled by individuals who are simply not experienced enough to fill them. Two of the most common are CFO and business development. A founder has to take a strong approach to vetting team members and needs to reach out through his network to find the very best people. One very common result I see is a team that has come up with a very good idea only to be outpaced by a stronger team.Dr. Smith
Roy A Ackerman wrote:
key point is developing trust and reliance among the team. It’s why many startups rely upon their own network of confidants.
I wish I could agree with you Robin. I have had to rebuild teams for investors, replace under-performing CEO – particularly in the sales and marketing areas. Sure, building a team is easy – but building an effective team that can win is a lot harder. Dr. Smith
W. Steven Garrett wrote:
Build it with people of integrity, commitment and most of all, a passion…this is the KISS principal.
Robin Cook wrote:
Earl, designing the team is the easy part!
Steven Janow wrote;
My general experience with business teams is that when there is a gut feeling that someone isn’t working out or might not be a good fit despite having a suitable background, this person is ostracized either deliberately or subconsciously. This person then gradually brings less to the table until a flashpoint and the person is let go or quits.
When I worked on my MBA, 85% or more of the projects were team work oriented, and even though I didn’t have a traditional background for the team, my teams, including the ones I was in charge of, always brought above average results. At my previous job, my analysis and strategic recommendations stopped months of declining sales, despite some coworkers questioning my loyalty and ‘poisoning the well.’
For a non-business example: When I heard 4 prominent members of the Boston Symphony perform string quartets, they were not as good as established string quartets who do this exclusively.
Here’s my point: It takes time and good communication to take qualified individuals to form a unit that runs like a well-oiled machine. If after time someone can’t fix their peculiar idiosyncrasy that’s inhibiting the group, then maybe that person should go. To be overzealous from the get-go on making a larger-than-life team might be unrealistic unless you already have an amazing network.
I hope this helps.