Six steps to building effective teams fast

Newly appointed CEOs and senior leaders must concentrate their energy on getting the right people in place quickly, as failure to build an effective team fast will have serious consequences, writes IMD's Michael Watkins

This article is republished with permission from I by IMD, the knowledge platform of IMD Business School. You may access the original article here.

What is the most common regret I hear from senior executives who have transitioned into new roles? Regardless of whether they were promoted internally or hired from the outside, the answer is the same: not moving quickly enough to build an effective team. In interviews focusing on their transition experience, senior executives told story after story about learning this lesson the hard way. Sometimes they delayed because they wanted to give people time to prove themselves. Sometimes the cause was hubris: the transitioning executives believed their leadership would transform lacklustre players into high performers. Sometimes the politics of moving a powerful player out of the organisation were fraught with difficulty and slowed the process down. Sometimes it was just a matter of competing priorities; there was so much going on during the transition that team restructuring was placed, to the executive’s later regret, on the backburner.

Regardless of the reason, the consequences of the delay were damaging. The leaders put themselves in triple jeopardy by not moving quickly or thoughtfully to get the right team in place. First, they didn’t have the people they needed to develop and realise their vision and strategy, so they and others on the team had to shoulder more of the load themselves. Second, they opened the door to divisive political manoeuvering by under-performers trying to delay the inevitable or disappointed rivals still fighting the last war. Third, and more subtly, they raised questions about their ability to make hard calls, contributing to a loss of credibility.

So how should new CEOs and other leaders approach assessing and restructuring the team they inherit? By adhering to six imperatives:

1. Set a deadline for making team decisions.
2. Match your approach to the demands of the situation you are facing.
3. Establish clear assessment criteria for the team you inherited.
4. Be as efficient as possible in doing the assessment work.
5. Help those who can’t reenlist exit gracefully. 
6. Finally, strike a balance between change and continuity as you reach conclusions about your restructuring plan.

Set a deadline for effective team decisions

The first imperative is to set a deadline for making all significant year-one team-related decisions. I advise the executives I work with to begin with a 90-day decision-making window and then adjust this up or down depending on the gravity of the situations they face.

Note that this deadline is for making your team-related decisions, not completing their implementation. Decision-making establishes the foundation for developing your “Team Evolution Plan”, which may take a year to implement fully. The timing for completing key team restructuring moves will depend on a host of factors, including the availability of suitable personnel and the logistics of negotiating exits. The key here is to move as quickly as you can once you have made up your mind while balancing stability and change.

Establishing a deadline means not letting any significant team decisions slip beyond this point. You may decide to move more quickly to deal with obvious problems or fill open roles on the team. Operating faster is fine if that is what it takes to move the business forward. The deadline is there to ensure that you will not fall into the trap of moving too slowly; it forces you to be systematic, efficient, and appropriately decisive in making all the key calls concerning your top team. Beyond the opportunity cost of not having the right people in place, delay typically makes it more difficult and costly to replace people. After all, when you first take the CEO role, the team is not yours; it’s your predecessor’s. If you wait too long before making changes, you will find you have “inherited” the team in a deeper sense.

Match your team development strategy to the situation

Of course, the specific deadline you select (and more generally how you will approach leading your new business) will depend on the severity of the challenges you are facing. This brings us to the second imperative – match your team development strategy to the situation. The more severe the problems, the faster and deeper you have to make your changes.

How should you think about this? First, start with a clear view of the type of business situation you are entering. In The First 90 Days, I developed a framework called the STARS model for assessing the impact of different types of business situations on how executives entering new roles should manage their transitions. STARS stands for startup, turnaround, accelerated growth, realignment, and sustaining success. The fundamental idea is that leaders should approach their transition differently depending on the situation they are entering.

Read more: Six strategies to ensure your new organisation structure works

In startups and turnarounds, the level of urgency for making team changes is typically higher, and the time frame for making key decisions is correspondingly shorter. In such situations, newly appointed leaders should strongly consider working with a 60-day decision-making window. In realignments and sustaining success situations, the problems are less severe, and the capability of the inherited team is often greater. So, a 90-day or perhaps even 120-day window should be employed.

Establish your assessment criteria

Having set the decision deadline, the next imperative is to think hard about your criteria for evaluating your team (see box for the questions you should ask yourself).

The issue of role complementarity often is missed, but it’s a crucial dimension of assessment. The goal is to create an effective team of natural complements that collectively can drive the business to achieve great things. Some aspects of senior team complementarity are obvious – you need someone to head up marketing and someone strong in finance. But other dimensions are more subtle. Who will focus on rigorously evaluating, developing, and implementing the vision if you are the visionary? If you plan to be the good cop, who will be the disciplinarian? Who will mind the store if you intend to focus a lot of time externally dealing with key stakeholders? 

Be efficient in your assessment

Having established a time frame and having thought through evaluation criteria, the third imperative is to be as efficient as possible in assessing the effectiveness of the team you inherit. If you are an insider, you may already have a lot of information about the team at your disposal. However, even (indeed especially) if you think you know people and their capabilities, it is worth doing a systematic and thorough assessment. If nothing else, it will help immunise you against potential criticism that you are “just settling scores” if you decide to let someone go.

In assessing your team, there are obvious things that you will do, including:

• Reviewing all the available data and focusing on key function-specific metrics to get a sense of overall performance, drilling down as necessary into the details.
• Talking to the Board about their assessments of the capabilities of key people on the senior team and the match of their abilities to the demands of the situation.
• Consulting with respected outsiders who are experts in key functions such as finance or marketing.
• Making judicious use of consultants to do performance, strategy, industry, and benchmarking reviews and plumbing them for their insights about key people.

Read more: Four effective and practical ways leaders can truly do more with less

Beyond this, however, there is no substitute for doing “up close and personal” assessments both in 1-to-1 and team settings. Helpful approaches include:

• Developing a standard template of questions that you ask all team members about the business as a whole (in addition to function-specific questions), perhaps patterned on a standard SWOT (strengths, weaknesses, opportunities, and threats) analysis.
• Setting up structured business review meetings in which team members present to the team as a whole.
• Putting a challenging business problem on the agenda and observing how the team deals with it. 
• Doing some “vertical slices” of information gathering by talking to the reports of your new reports and perhaps even delving deeper into the organisation to explore capability and alignment.
• Practising the art of “two-level observation” in individual and team meetings, which means looking not just at what is said but how it is said (is information volunteered or does it have to be extracted, is responsibility embraced, or are fingers subtly pointed elsewhere?) and how others react to what is said (do they engage or disengage, do they respond positively or roll their eyes?).

Help rivals exit gracefully

One major challenge that new CEOs face is dealing with people on their teams who were competing for the position and didn’t get it. If they are highly capable candidates, they will have a range of other opportunities. Some will leave immediately of their own accord or have been asked to leave as part of the process leading to your appointment. 

As a rule, you should facilitate their departures for greener pastures as expeditiously as possible. At the most, if they have critical capabilities and you are confident that they won’t be disruptive influences, you may negotiate transitional arrangements. Many such temporary bargains are struck in the wake of CEO successions.

There are, however, rare but notable cases where a disappointed competitor for the CEO role is a natural complement for the new CEO. It can be that the business is large, diverse, and successful enough to demand the attention of two highly capable people, and there must, of course, be enough maturity on the part of both people to make it work. The executive must be willing and able truly to “reenlist”.

Read more: Solving succession woes with Employee Ownership Trusts

Balance stability and change

Inheriting and reshaping a team is like repairing a plane in mid-flight. This means establishing priorities for making changes in your team to strike the right balance between short-run stability and long-run potential. It also means recognising that making changes on your team can be time-consuming.

The key is to focus first on making the highest priority personnel changes. Doing this well means distinguishing between critical and non-critical roles before assessing people. Those in critical roles will be assessed with greater urgency and to higher standards. Ensuring you have A-players in these roles is imperative. You may be able to work with B-players in less critical roles, anticipating making these less important changes later.

It’s up to you

Success in adopting these six imperatives is, of course, no guarantee that you will make the right choices in assessing and restructuring your team. But failing to adhere to any one of them – by letting the process go on for too long, by failing to establish the right criteria, or by not being sufficiently rigorous in making assessments – is a sure recipe for trouble. In the end, you are just one person. If you can’t leverage yourself, your vision, and your energy effectively through the top team, you are on the way to derailment.

How to pick an A-team: seven questions you must ask

1. Are they outstanding representatives of their functions? Whether it is marketing or operations or finance or government relations, you need people who are accomplished and respected experts in their chosen disciplines.
2. Do they have the right values? It matters little how able someone is if they can't be trusted to do what's right for the organisation.
3. Can they balance their functional orientation with what's good for the business as a whole? Your top team has to understand and support the overall strategy and vision and be willing to disappoint their people sometimes in the name of pursuing the greater good.
4. Do they really want to be here? After all, capability matters little without passion for the business and drive to achieve excellence.
5. Are they effective leaders? As you move to drive alignment and engagement down through the business, you need people who can communicate with and motivate their people to go the extra mile.
6. Are they able to function as members of the team? It matters little how effective they are in their narrow functional roles if they leave a trail of dissension and dead bodies in their wake.
7. What roles will they play? Given the work the team needs to undertake and the roles you prefer to play, who are your natural complements?

Michael Watkins is Professor of Leadership and Organizational Change at IMD. He is the best-selling author of The First 90 Days, Master Your Next Move, Predictable Surprises, and 11 other books on leadership and negotiation.