Building Top Team

8/7/2019 Building Top Team

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When a top team ails to unction, it can paralyze a whole company.

Here’s what CEOs need to watch out or.

Michiel Kruyt, Judy Malan, and Rachel Tufeld

Few teams unction as well as they

could. But the stakes get higher with

senior-executive teams: dysunc-

tional ones can slow down, derail, or

even paralyze a whole company.

In our work with top teams at more

than 100 leading multinational

companies,1 including surveys with

600 senior executives at 30 othem, we’ve identied three crucial

priorities or constructing and man-

aging eective top teams. Getting

these priorities right can help drive

better business outcomes in areas

ranging rom customer satisac-

tion to worker productivity and many

more as well.

1. Get the right people

on the team . . . and the

wrong ones o

Determining the membership o a

top team is the CEO’s responsibility—

and requently the most power-

ul lever to shape a team’s perorm-

ance. Many CEOs regret not

employing this lever early enough or

thoroughly enough. Still others

neglect it entirely, assuming instead

that actors such as titles, pay

grades, or an executive’s position

on the org chart are enough to

warrant deault membership. Little

surprise, then, that more than

Three steps to building a

better top team

Kyle T. Webster

F E B R U A R Y 2 0 11

o r g a n i z a t i o n p r a c t i c e





3Three steps to building a better top team

truly beneted rom a top-team per-

spective. Only 35 percent saidtheir top teams allocated the right

amounts o time among the vari-

ous topics they considered impor-

tant, such as strategy and people.

What are they doing instead? Every-

thing else. Too oten, top teams

ail to set or enorce priorities and

instead try to cover the waterront.

In other cases, they ail to distin-

guish between topics they must act

on collectively and those they should

merely monitor. These shortcom-

ings create jam-packed agendas that

no top team can manage properly.

Oten, the result is energy-sapping

meetings that drag on ar too long

and don’t engage the team, leaving

members wondering when theycan get back to “real work.” CEOs

typically need to respond when

such dysunctions arise; it’s unlikely

that the senior team’s members—

who have their own business unit

goals and personal career incentives—

will be able to sort out a coherent

set o collective top-team priorities

without a concerted eort.

The CEO and the top team at a Euro-

pean consumer goods company

rationalized their priorities by cre-

ating a long list o potential topics

they could address. Then they asked

which o these had a high value

to the business, given where they

wanted to take it, and would allow

them, as a group, to add extraordi-nary value. While narrowing the

list down to ten items, team members

spent considerable time challeng-

ing each other about which topics

individual team members could

handle or delegate. They concluded,

or example, that projects requiring

no cross-unctional or cross-regionalwork, such as addressing lagging

perormance in a single region, did

not require the top team’s collec-

tive attention even when these proj-

ects were the responsibility o an

individual team member. For dele-

gated responsibilities, they cre-

ated a transparent and consistent

set o perormance indicators to help

them monitor progress.

This change gave the top team

breathing room to do more valuable

work. For the rst time, it could

ocus enough eort on setting and

dynamically adapting cross-

category and cross-geography pri-

orities and resource allocations

and on deploying the top 50 leadersacross regional and unctional

boundaries, thus building a more

eective extended leadership

group or the company. This, in turn,

proved crucial as the team led a

turnaround that took the company

rom a declining to a growing mar-

ket share. The team’s tighter ocus

also helped boost morale and

perormance at the company’s lower

levels, where employees now

had more delegated responsibility.

Employee satisaction scores

improved to 79 percent, rom 54 per-

cent, in just one year.

3. Address team

dynamics and processesA nal area demanding unrelenting

attention rom CEOs is eective

team dynamics, whose absence is a

requent problem: among the top

teams we studied, members reported

that only about 30 percent o their



February 20114

time was spent in “productive

collaboration”—a gure that droppedeven more when teams dealt with

high-stakes topics where members

had diering, entrenched interests.

Here are three examples o how poor

dynamics depress perormance:

The top team at a large mining

company ormed two camps with

opposing views on how to address

an important strategic challenge. The

discussions on this topic hijacked

the team’s agenda or an extended

period, yet no decisions were made.

The top team at a Latin American

insurance company was com-

pletely demoralized when it began

losing money ater government

reorms opened up the country tonew competition. The team wan-

dered, with little sense o direction

or accountability, and blamed its

situation on the government’s actions.

As unproductive discussions pre-

vented the top team rom taking

meaningul action, other employees

became dissatised and costs

got out o control.

The top team at a North Ameri-

can fnancial-services frm was

not aligned eectively or a criti-

cal company-wide operational-

improvement eort. As a result, di-

erent departments were taking

counterproductive and sometimes

contradictory actions. One group,

or example, tried to increase cross-selling, while another reused to

share relevant inormation about

customers because it wanted

to “own” relationships with them.

CEOs can take several steps to

remedy problems with team dynam-

ics. The rst is to work with the

team to develop a common, objec-

tive understanding o why its

members aren’t collaborating eec-

tively. There are several toolsavailable or the purpose, including

top-team surveys, interviews

with team members, and 360-degree

evaluations o individual leaders.

The CEO o the Latin American insur-

ance company used these

methods to discover that the mem-

bers o his top team needed to

address building relationships and

trust with one another and with

the organization even beore they

agreed on a new corporate strat-

egy and on the cultural changes

necessary to meet its goals

(or more on building trust, see

“Dispatches rom the ront lines

o management innovation,” on

mckinseyquarterly.com). One o the

important cultural changes or thistop team was that its members

needed to take ownership o the

changes in the company’s peror-

mance and culture and to hold one

another accountable or living up to

this commitment.

Correcting dysunctional dynamics

requires ocused attention and

interventions, preerably as soon as

an ineective pattern shows up.

At the mining company, the CEO

learned, during a board meeting

ocused on the team’s dynamics,

that his approach—letting the

unresolved discussion go on in hopes

o gaining consensus and com-

mitment rom the team—wasn’t work-

ing and that his team expectedhim to step in. Once this became

clear, the CEO brokered a deci-

sion and had the team jump-start

its implementation.

Oten more than a single inter-

vention is needed. Once the CEO

at the nancial-services rm

understood how poorly his team

was aligned, or example, he



5Three steps to building a better top team

held a series o top-team o-site

meetings aimed specically at gener-ating greater agreement on strat-

egy. One result: the team made align-

ing the organization part o its

collective agenda, and its members

committed themselves to commu-

nicating and checking in regularly

with leaders at lower levels o the

organization to ensure that they too

were working consistently and

collaboratively on the new strategy.

One year later, the top team was

much more unied around the aims

o the operational-improvement

initiative—the proportion o exec-

utives who said the team had clar-

ity o direction doubled, to 70 per-

cent, and the team was no longer

working at cross-purposes. Mean-

while, operational improvementswere gaining steam: costs came

down by 20 percent over the same

period, and the proportion o

work completed on time rose by

8 percent, to 96.3 percent.

Finally, most teams need to change

their support systems or processes

to catalyze and embed change.

At the insurer, or example, the CEO

saw to it that each top-team mem-

ber’s perormance indicators in areas

such as cost containment and

employee satisaction were aligned

and pushed the team’s members

to share their divisional perormance

data. The new approach allowed

these executives to hold each other

accountable or perormanceand made it impossible to continue

avoiding tough conversations

about lagging perormance and cross-

organizational issues. Within

two years, the team’s dynamics had

improved, along with the com-

pany’s nancials—to a return on

invested capital (ROIC) o 16.6 per-

cent, rom –8.8 percent, largely

because the team collectively exe-

cuted its roles more eectively

and ensured that the company met

its cost control and growth goals.

Each top team is unique, and every

CEO will need to address a unique

combination o challenges. As the

earlier examples show, developing a

highly eective top team typically

requires good diagnostics, ollowed

by a series o workshops and eld

work to address the dynamics o the

team while it attends to hard busi-

ness issues. When a CEO gets seri-

ous about making sure that her top

team’s members are willing and able

to help meet the company’s stra-

tegic goals, about ensuring that the

team always ocuses on the right

topics, and about managing dyna-mics, she’s likely to get results.

The best top teams will begin to take

collective responsibility and to

develop the ability to maintain and

improve their own eectiveness,

creating a lasting perormance edge.

The authors wish to acknowledge

the contributions o Carolyn Aiken, a

principal in McKinsey’s Toronto

ofce, and Scott Keller, a director in

the Chicago ofce.

Michiel Kruyt is an associateprincipal in McKinsey’s Amsterdam

oce, Judy Malan is a principal in

the Johannesburg oce, and

Rachel Tufeld is an alumnus o

the Sydney oce.

1 For the purposes o this article, we defne

“top teams” as groups o executives respon-

sible or either an entire corporationor a large business unit or division, but not

boards o directors or supervisory boards.

Copyright © 2011 McKinsey & Company.

All rights reserved. We welcome yourcomments on this article. Please send them

to [email protected].

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Building Top Team