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CEO dilemma - inheriting underperforming teams 17/08/2011

Declan Woods reveals a real life leadership challenge faced by a CEO, who recently took charge of a leadership team and found that most members had been promoted above their experience and were immature as a corporate team.

CEO dilemma - inheriting underperforming teams

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  1. Impact on team & organisational performance
  2. Weighing up consequences
  3. Investment in training or replacing team?
  4. Developing the corporate team
  5. Replacing the corporate team
  6. Setting clear vision

Impact on team & organisational performance

The CEO is deciding whether the organisation should invest in them (to improve their skills) or ‘get rid’ of them to be replaced with managers that are more qualified.

This CEO sounds very unlucky to discover at this point that her entire team is immature. However, most incoming CEOs face a phase of assessing their inherited team, deciding who is fit to stay and who may need to go, then making a plan for the right timing to address any concerns and this is an on-going part of the CEOs role.

We also don’t know in this scenario how the lack of experience and immaturity is showing up in or impacting upon (team and organisational) performance, what the team are actually good at despite their ‘deficiencies’, or what and how better alternatives are available.

Weighing up consequences

It is easy to imagine, when faced with this situation, that an incoming CEO might make changes in haste with longer term consequences. Answering these questions before acting will therefore provide a range of possible options to consider and help arrive at a better outcome for everyone concerned.

Any right minded CEO will be aware that the decisions reached will have a systemic impact on performance, on the culture in the business and their personal brand and would take appropriate action to ensure they maintain balance, resourcefulness and focus on all fronts.

Investment in training or replacing team?

An often unchallenged assumption is that the organisation actually requires a corporate team (who are capable of achieving more than a group of individuals) and one that acts as such. If so, this would suggest it is worthwhile investing to develop the whole team. If not, one option is to target individuals for specific development (e.g. critical placements to fill gaps in experience, shadowing or mentoring).

The CEO has to balance investing to develop versus replacing the team. The literature suggests that the cost of replacing a team member can be as much as three times the annual salary at least, so the cost of investing in development seems a far more sensible financial option if other factors are equal.

Developing the corporate team

Time is another key factor. If it seems that the team could be developed within the timescales to meet the objectives then that could well be the better route. There is of course a loss in time and disruption of changing a team, which will need to be factored into the overall decision. It is a balancing act between the time it takes to get a new team up to speed to hit the objectives alongside developing a team to do the same. (Re-building a corporate team may take 12 to 24 months. While the team’s capability will increase during this period, there may be a lag between development and tangible results and setting expectations based on this is important.

Whatever the decision, it will require the CEO to exercise, and role-model, mature and experienced leadership especially because of the high symbolic weight the CEO’s actions carry for the rest of the organisation. In this position, some CEOs find value in working with external consultants to explore all the options as they work towards an appropriate solution. Part of this work could be helping the CEO check whether she is appreciating the diversity of the team and getting the best from it with their preferred leadership style. After all, it might be easier to change one person than several.

Replacing the corporate team

The solution to this depends significantly on the CEO’s objectives and specifically the timescales to achieve them. The CEO needs to have confidence that she can achieve the objectives with the current team. If she has to deliver them within a set time period, and does not have the luxury of developing the team within that time, then the CEO will need to consider changing the team.

This said, it is difficult to think of conditions, beyond corporate governance and other legal matters, where immaturity and inexperience in a leadership team would be a reason, purely in itself, for replacing the entire corporate team, and especially, one where the benefits of doing so would seem to outweigh the ‘cost’. It is therefore important to balance the amount of change and disruption this would entail without disrupting the business to an unacceptable degree, particularly given the reality of changing team dynamics and the pain of the transition. For example, trust is vital for an effective team and can be an early casualty if changes are made. A key task for the CEO is to maintain these.

Setting clear vision

There are things the CEO can do immediately such as setting a clear vision e.g. the destination and direction for the organisation and team is…; clarifying expectations (of individuals and the team); using a coaching style to build confidence and create early “wins”; shifting to a more “pace setting” leadership style as team confidence grows.

In my experience, people can and do rise to the challenge and results follow, which is surely the chief purpose here. There are pros and cons to the different options available and the CEO is best placed to decide which one(s) is the most appropriate in the circumstances.

Declan Woods, capability director, Board & Executive Coaching Penna

Declan Woods, capability director, Board & Executive Coaching Penna

eclan leads Penna’s coaching practice and manages some of Penna’s largest client relationships. He is a board and executive coach and leadership developer who specialises in coaching high-achieving leaders.

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