Over a long career as a business leader and entrepreneur, I’ve had the honour of serving on the leadership team of ten companies. Most of those have been small businesses with less than 50 people in the entire company. Two have been medium-sized businesses with over 100 people and one of those reached a total headcount of 250 people during my time there.
I’ve learned a few things on this multi-decade journey about people that make a good fit on leadership teams of small and medium sized businesses. This post will share a few of these lessons.
A good leadership team is like a family in some ways. You share a common bond, that being the mission and vision of the company. Everyone is executing on a plan to implement the strategies set to achieve success (product sales, revenue targets, usage targets, profit). Members of the team generally get along and share common views on the above objectives, but above all there is mutual respect amongst the team members...just like a family.
Unlike your family you can choose to opt out and there are many reasons why people leave their jobs. Losing a member of the leadership team is painful, especially in small and medium sized businesses because the business may not have the bench strength to easily replace a departed executive.
The business functions or departments in a company are fairly common. The titles or references may vary but most businesses have: marketing, sales, the administrative functions (finance, HR, IT, legal), operations (production, delivering product, support clients/users) and the product group (which can include product management, product development, and possible research). The leaders of these functions will report to the President or CEO of the company. It’s a fairly straight-forward organizational structure.
Hiring for these leadership positions is anything but straight-forward. Making the right hire for these positions is critical for the success of the business. Obviously they need to have skills and experience in the subject matter of their respective function. That’s table stakes.
The members of the leadership team need to possess a solid understanding of the overall business. They need to understand how the functions should work together, but also what the business should expect from any given function. For example - the head of operations should understand that marketing is expected to generate leads for sales and create awareness among clients and users about the company’s brand and products. The head of operations won’t have anything to do with marketing achieving these objectives, but they need to know what these objectives are and if marketing is doing a good enough job on their objectives to drive the business to success. The reverse expectation would be there for the head of marketing, to understand the objectives of the operations team.
The head of any company function or department needs to know what each of the objectives of all the other departments is, and if they are performing well enough to achieve those objectives.
The leadership team of a well-led company has educated and helpful interactions from all leadership team members when aspects of any department are being discussed. This often occurs at weekly leadership team meetings or planning sessions. The leadership team is weakened if a member can only contribute to their specific functional area. If this is the case you may have a good departmental manager but someone who may not be ready for a seat at the table with the leadership team.
When a member of the leadership team chooses to leave the organization there may be a subordinate to the departing department head who is a candidate for the leadership position. Promoting from within is a great thing. It rewards achievement, hard work and dedication to the company’s vision. It sends a signal to the rest of the team that internal promotions do occur at this company. Because the overall headcount may be limited often in small and medium sized businesses there simply isn’t the talent pool to promote from within. So, it’s always a good thing when promotions occur. But...before going down this path the CEO needs to clearly ensure the subordinate who is under consideration for that promotion can in fact make that leap. As we discussed above, there are broader business skills required to be an effective member of the leadership team. The CEO needs to spend time getting comfortable that the subordinate has those broader skills.
A member of the leadership team needs to have strong buffering skills. Team members will typically have visibility of most of the operational details of the business; metrics such as orders, sales, leads, product development progress, and cash flow position are all part of the company dashboard shared regularly with all members of the leadership team; the trending on these metrics is typically part of the operational dashboard as well. If the business is trending on these metrics up and to right, great. If the business is hitting its KPIs, fantastic! If the cash position is healthy, wonderful.
When things are not going well, the Board of Directors is unhappy with the progress of the business, or a crisis fire has erupted, the leadership team members are expected to remain calm and collected. They should be contributing towards a solution to these issues and executing on a plan to fix the problems of the day. They must bear the burden hoisted on their shoulders, by having knowledge of the intimate details of the business health. They must exude calm and remain collected with their subordinate team members and the rest of the company team. It can be lonely at the top...knowledge can be a burden.
When hiring a person on to the leadership team, a candidate's prior experience and background is obviously helpful in assessing their fit and suitability to the company. Candidates from larger successful companies often draw lots of attention. The person from “BigCo” looks good on the leadership team page of the website. Such candidates may indeed be good hires and do great things for your company. Be careful. Success at a large company doesn’t automatically translate into success at a small/medium size business. “But they’ve been where we want to go...they were what we want to grow to be as a business”. All true. Remember that the resources available at a large company are considerably different than at your smaller organization. The installed base of customers, the lead generation machine, the brand recognition built up from years of marketing efforts, all contributed to the candidate’s success at BigCo. If a candidate from a much larger candidate becomes a finalist a spot on your leadership team, make sure they can function in a much more lean environment; make sure they achieve with much less of a head-start; make sure there is less margin for error and more pressure to deliver accomplishments in short-timelines; and, as discussed above, make sure they have broad and general business competencies that will contribute to the overall leadership of the company.
The success of any business rides on the shoulders of the people working at the company. Those entrusted to lead that team of people are crucial to the overall team achieving the company’s objectives.
Thank you for investing time in reading this post. Questions and comments are always welcome.
Shail Paliwal
Comments