In the previous 5 minute growth tip article, I shared how companies need to implement the structures, systems and processes needed to grow. Without this, they either won’t grow beyond the limits of their current structures, or they will grow inefficiently and increasingly unprofitable.
But as a company grows to 50, 100 or 200 employees, the CEO may feel like the company is no longer making real progress with those kinds of improvements. Any changes and improvements they want to make for their company don’t seem to get done, or don’t get done right.
So, how can CEOs increase the momentum?
We know that, as a company grows, the CEO has to get results increasingly through the members of their top team. This is one of the ways companies need to operate differently in order to grow and profitably (other examples are listed in this previous article).
This tends to happen in stages.
In the first stage, the CEO will have their supervisors produce the day-to-day results, while the CEO implements most of the changes and improvements in the business.
As the company grows, the CEO will find that this also becomes too onerous for them and that they are becoming the bottleneck for change and improvement.
At that point, they'll look to have the members of their management team also complete improvement projects within each of their departments, and possibly even between and across departments where needed.
The two keys to making all this happen are: 1) efficient leadership team buyin, and 2) accountability for execution.
A Power Shift
When a company is small, say 10 to 20 employees, it’s more straightforward to get improvement projects done for the company.
Often, as the owner or CEO, we just do these projects ourselves.
If we begin to delegate these projects, we simply ask a supervisor to get it done. If they are strong, they will usually make it happen.
When we have 25, 50, 100 or 200 employees, it gets harder.
The reason is what’s called “power differential”: the difference between the influence of the owner or CEO and the influence of others, in this case the supervisors or managers reporting to them.
In a smaller company, there is a large power differential.
Here, the owner or CEO is a strong voice that is heard more easily among the small group of employees. There are often no other voices that are similarly strong (unless of course there is one or more partners involved).
It’s also easy to see when someone in a small group is not following through on a project. So each supervisor has a strong motivation to follow through on the owner’s direction.
As the company gets larger, this power differential decreases.
As some departments get larger (eg. a production department), the managers of those departments gain influence. They have now become critical links in the productivity and profitability of the company.
The CEO no longer has that same strong singular voice. One or more other managers have strong voices as well. Employees in their department will often listen as much to their direction as to the direction coming from the CEO.
As well, the CEO becomes more detached from the front-line and may feel less confident about what is the right thing to do. Meanwhile, the influential managers now often have a better perspective on what needs to be done in the operations. This also increases their own sense of power.
This smaller power differential between the CEO and a manager reduces the owner's influence to get the manager to simply take directives to carry out an improvement project they dream up.
While the manager may move the project forward to some degree, the owner will often find that the manager doesn't take full ownership of it.
Combine this with the fact that the manager may not see the value in the project, may not agree with the decision, and will have many demands and competing priorities within their department, and the project will often miss the mark, be late, or fizzle out entirely.
If the change or improvement does begin implementation, this lack of "buy-in" by the manager will also result in them not getting employees' bought-in either, and these employees not embracing, accepting or adapting to the change.
Owners will often complain that their managers don't take initiative, aren't driven, or aren't being real leaders.
In reality, it's this lower power differential and the increasing demands on these managers that reduce their motivation to just "do as the boss says".
The result is that getting managers to make changes and improvements in and across a mid-size company becomes more challenging than getting supervisors to do so in a smaller company.
The trick is in the two keys: 1) efficient leadership team buy-in, and 2) team-based accountability.
Efficient Leadership Team Buy-in
Rather than a CEO figuring out on their own what needs improving and changing for the company, and simply delegating those projects to others, they need to shift to making decisions for the company together with the members of their top team. This will enable them and their top team members to make decisions for the company that they’re all committed to.
In short, "people support what they help to create". When leaders are involved in making decisions and feel that their perspective and opinion is heard, they are much more likely to be committed to those decisions and to own and drive the projects to make them happen.
This doesn’t mean the CEO doesn’t get the final say. It’s just how they get to a final decision that needs to be adjusted.
Patrick Lencioni, in his best-selling book, The Five Dysfunctions of a team, called this approach “disagree and commit”.
The top team discusses the problem or opportunity and gets all the information out on the table for consideration. Options are discussed and weighed. All members of the top team have the opportunity to share their perspectives and concerns. If an agreement is easily made, then great. If not, the CEO makes the final decision with everyone knowing their perspective has been heard and considered, and agreeing that now is the time to commit to the final decision.
This approach allows for effective leadership team participation, while keeping it efficient.
This can be a game-changer for CEOs who have already shifted to involving their top team in decision-making, but may have gone too far.
Their team's decision-making has slowed to a crawl or decisions simply don’t get made, because they and their leadership team members don’t always agree on what’s best. And the CEO isn’t willing to make a final decision for fear that their leaders won’t buy in at all.
“Disagree and commit” solves this problem.
Accountability for Execution
Once there is top team buy-in to a decision, how do we ensure accountability for its execution?
Buy-in is certainly important for accountability. But it’s not enough.
Accountability ensures that leaders assigned with taking on certain improvement projects follow through as best as humanly possible. Accountability also means being open and transparent when a project or special effort doesn’t go as planned, so all possible action can be taken to get it back on track.
Accountability, also, is more difficult as a company grows. And it’s also due to the decreasing power differentials.
Simply following up one-on-one with individual leaders no longer works as well. Again, leaders of larger departments have more power, and their performance is more hidden in a larger company. So there is less pressure to follow through.
The solution is again a team approach.
Mark Green, a colleague of mine in New York, and a colleague of mine in Gravitas Impact Premium Coaches, captured the key ingredients for accountability in his recent monograph titled “Creating a Culture of Accountability”.
There are three ingredients for accountability:
As the leader of the team, the CEO needs to lead by example, be honest with themselves to ensure they have the right people in the right seats on their leadership team, and raise their expectations of their leaders.
Role accountability is about ensuring each leader is clear about their own and each others’ accountabilities. This includes defining the specific results expected for each role and the metrics that make those expectations clear.
Note that it’s just as important for leaders to be clear on each others’ roles as their own. This ensures only one person is accountable for each function and everyone is clear on what to expect from each other.
Process accountability involves three leadership team elements and a one-one element:
- communicating with leaders about improvement projects in a way that maintains their natural motivation to execute by 1) communicating your belief in their ability to succeed, 2) reminding them why it matters and 3) paying attention to their progress;
- ensuring planning happens before action, on a consistent basis and in an open way, with all leadership team members aware of each others' plans and how they contribute to the whole;
- having a rhythm of effective and efficient leadership team meetings that ensures regular follow-up on progress and results, while creating a subtle peer pressure that motivates leaders to deliver;
- and regular one-on-one coaching between the CEO and each leadership team member to develop and support performance.
From Directing Individuals to Leading the Top Team
Efficient leadership team buy-in and team-based accountability for execution are the two keys for CEOs to enable continual improvement in their growing mid-size companies.
And we can see a common thread for the CEO: shifting from directing individuals to leading and building the top team.
This shift can be challenging for CEOs who have become comfortable with a directive style. Yet shifting to leading the top team is critical to getting their leaders bought in, executing, and making more progress.
But is it really progress if you’re not going in the right direction? And how do you know if you are going in the right direction? More on that in my next article.
What aspects of leadership team buy-in and execution accountability could you improve?
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