One of the most important factors in the success of any business is who is in charge – the leaders – and the quality of their leadership skills.
A bad leadership team, which creates an unhealthy culture, can make their team’s lives a misery, and drive a business into the ground.
Having worked with thousands of business leaders, both a facilitator for peer groups and as a Certified EOS Implementer, I recognise the value of developing good leadership skills, and how hard this can be.
In this guide, I will take an in-depth look at how to assemble a good leadership team and how to develop their skills.
Throughout, we’ll offer links to articles, case studies and videos which take a deeper dive different elements of building an effective and inspirational leadership team.
- Who should be on your leadership team
- Rightsizing your leadership team
- Three examples of companies rightsizing their leadership teams
- What is the value of listening skills to a leader?
- The five leadership abilities
- The four leadership ability: systemising
When it comes to building a successful company in any industry, you will need to overcome a number of challenges.
Having a strong leadership team in place is one of the key ways to be confident of your company’s long-term success.
A leadership team needs to work together, meet regularly and agree where the business is going, make decisions about the best way to achieve their aims, and how to overcome the challenges they face.
What skills do you want in your team?
It is important you have a team which doesn’t have overlapping responsibilities, understands what their responsibilities are, and has the skills to deliver them.
These responsibilities divide into three major areas, which are:
- Sales and marketing – either two different roles, or one role with both responsibilities
- Operations – how you develop and deliver your product and/or service
- Finance, administration, internal IT and HR – depending on the size of your business, this can be one person in charge of all these roles or different leaders
For more information about roles and responsibilities use the EOS Accountability Chart.
However, building a team possessing these skills is only half the battle. They must also share your core values – which the EOS People Analyserwill help you to determine.
Cohesive teams aligned with the same core values are more productive and better at making big business decisions. However an empowered team isn’t created overnight, and doesn’t happen by accident.
The two major mistakes I usually see CEOs and owners make is their teams are either too small or too big.
A leadership team which is too small
In the first case, there are too few people at the head of the organisation to lead and manage it effectively. Sometimes this is the result of the CEO, owner or founder not letting go, and trying to do all the roles themselves.
In this case, with too few people, another common mistake is to put an administrative person in a role that grows beyond their capabilities.
An example is when the booking keeping has always been done by an admin person, and the business has outgrown their expertise. It needs someone able to analyse profitability and build a relationship with financial institutions and/or banks for funding.
In this case, you must have a qualified professional with those skills and expertise.
A leadership teams which is too big
In this case, there are too many people given a leadership role.
Rule of thumb is leadership teams that are seven or larger can create unproductive team dynamics.
Sometimes this is due to loyalty. People feel they should be on the leadership team because they have been with the business since the beginning. Take an objective view of what the leadership position requires and who has the core values and management skills to match it.
Secondly, it is because the roles and responsibilities have not been well defined, there is overlap and the business is not structured for growth.
For example, when businesses grow their revenue substantially and still are structured as a smaller business.
Thirdly, sometimes owners structure their business for the past or currently, but not for 6-12 months in the future. They don’t take into account how long it might take for them to find the right person or outsource skills.
A final challenge is you have someone who has been promoted into a leadership position who is not good at managing people and doesn’t enjoy it.
The structure of the business with roles and responsibilities should be reviewed every 90 days and again on an annual basis in order to make sure the business is structured for future growth.
If you take time to objectively look at the leaders at the top of your business and don’t let personalities, history, and egos influence it, then you are in a great position to build a winning leadership team.
However, if you feel like you either lack crucial team members, or your team isn’t in the right roles, it may be time to look at using the Accountability Chart tool.
As I speak with entrepreneurs and business owners, one of the most common questions I ask is “Who is on your leadership team?”.
I’m often met with a wry look, and the answer is “Well, I’m not really sure.” Or they start trying to justify and make excuses as they explain who they think it may be. “Well, it should be this, but I may have too many people.” Typically they’re not clear and unsure.
One of the greatest challenges faced by growing businesses is identifying who the best leaders are – those who are capable of leading the business to the next level of growth.
Without the right leadership team a company can stagnate, lack clarity and innovation and be unable to get things done.
One of the fundamental considerations for establishing the right leadership team is ensuring the team is the right size.
There have been many studies conducted into how many leaders should be on a leadership team. The general consensus is the optimal number is three to seven leaders at the helm of the organisation, no matter the size of the business.
One of the things that I’ve observed with my clients is the bigger the company the smaller the leadership team.
Smaller, more streamlined teams ensure the number of individual, one-on-one relationships within the group are kept to a minimum, meaning there is less social complexity and jockeying for position.
In context, understand that a team size of five has 10 of these social links, while a team of seven has 21. The addition of just two team members more than doubles the number of interpersonal relationships involved.
Due to complexity, it is more difficult to get alignment and unity, and the dynamics of the entire team can be compromised.
As a general rule, the more people you add into the group, the less each of those members actually contribute to the overall leadership team.
Rightsizing and getting the right people on the leadership team is one of the first things we work on when implementing EOS.
Over the two-year people of implementing it, rule of thumb is 80% of the time the leadership team changes – one, a few, or the majority of people.
Often, the problem is the business has outgrown the leader, but they stay at the helm because they have seniority.
Perhaps they have been there since the very beginning and there is a sense of loyalty that keeps them in place. Perhaps the issue is that the current state of the business means they just aren’t able to perform.
Whatever the case, my job is to help uncover any issues with team members in their current position and help them discover the right role, so they can contribute and feel good about the job they’re doing.
By moving people around within the business, and/or hiring, we can help find the right people to build an effective leadership team and get things moving in the right direction.
So what does ‘good’ look like?
Every successful company has a team of good leaders at its core, making the right decisions.
When implementing EOS we believe you must structure the leadership team without consideration of any individuals.
We “hypothetically” fire everyone, and then work together without any egos or subjectivity to say what the leadership should look like six-12 months in the future.
Once we have consensus on the right structure, then we use a tool to match the team’s skill-set to the role and responsibilities. This makes sure that we have the right people in the right seats.
This sounds easy, but in practice you have to have an open, honest, vulnerable team. They need to be prepared to eliminate silos and politics and are working for the greater good of the business and not for individual gain.
This all assumes that the people you are considering for the leadership team match the core values of the company, and have the experience and skills to fulfil the role.
All of the above should enter the equation when assembling effective leadership teams.
LINK: ADDITIONAL ADVICE AND RESOURCES TO HELP YOU RIGHT-SIZE YOUR LEADERSHIP TEAM.
One issue most business founders’ wrestle with is the optimum size for leadership teams.
We find when clients implement EOS, the structure of the leadership team changes about 20% of the time.
It is important to set it up to manage business growth, considering what the leadership team should look like six-12 months in the future.
Here we look at how three client’s leadership teams changed while they were implementing EOS.
An unaligned team
One client’s team went from 11 to six leaders.
The chief executive realised he had some of the wrong people in place. They had a lot of people with titles, but the team wasn’t strong and aligned.
While setting up the right structure for the team, during the first EOS Focus Day, we hypothetically fired everyone (no egos, personalities or personal agendas)and asked them to hover above the business so they can see the big picture and advise it on the right structure for the leadership team.
They structured the company with a visionary, an integrator, and four departments: sales and marketing, commercial, operations and finance.
Five seats were integrated into these four departments. One member of staff left, and others took on other roles in the business.
Over a period of 18 months, two members of the newly structured team changed – one left and another stepped down from the leadership team and took a position in his department because he didn’t think he could deliver what was required as the lead.
Lack of strategic conversations
After this client initially structured their organisation with eight leaders, they found that they were not having the strategic high level conversations which were needed to at that level.
Two years into the EOS process, they had an open honest conversation during a quarterly session and decided to restructured the leadership team from eight to four seats.
The change meant that the head of marketing and head of HR reported directly to the CEO and were no longer on the leadership team. The head of health and safety reported to operations, and IT reported to finance.
The four person leadership team found they could have the right conversations at the right strategic level and were able to make big picture strategic decisions to direct and lead the organisation in a more effective way.
Five leaders, five seats
This client started with four leaders filling five seats: a visionary who also sat in sales and marketing, an integrator, a head of operations and head of finance.
The operations director was let go due to lack of performance, so the integrator stepped in to run that department.
Within the next 12 months, the company promoted someone internally to be head of sales and marketing, and hired an external person to run operations. This meant they had five leaders filling five seats.
Each business is unique, so we believe the leaders of each one need to take a strategic look at their leadership team structure and decide how many seats is right for their situation.
It is important to structure leadership teams so they can manage the growth of the business.
CASE STUDY: CHALLENGING THE LEADERSHIP TEAM
As a business leader, listening shows that you appreciate your team and it forges trust between you and your employees.
We all feel the need to be recognised and one of the ways leaders can recognise team members is to praise them in public and be sure to give them the time they need.
It is one of the most important leadership skills you can develop.
The best leaders give their teams the necessary tools, resources, training, technology, people, and most importantly their time and attention.
Spending time coaching them, mentoring them and allowing them space to discuss opportunities and concerns helps them to grow. They need to know you’ve got their back, and have their best interests at heart.
By being a good listener, a leader is able to see the world through the eyes of others. This expands a leader’s point of view, motivates the team and improves employee performance.
An example of leadership skills
An example I heard recently is a boss who would come around his desk and sit beside his team whenever they were speaking to him. He felt that sitting side by side, rather than being behind a desk, made conversations better.
It created equality and eliminated any physical obstacles and barriers.
When asked why, he explained it put his direct reports at ease and showed them that he cared. In doing so, he helped motivate his team to perform better and they were never afraid to present new ideas.
As a leader, the only way to know what employees are thinking or what is hindering their performance is by listening to them. Listening involves more than being quiet and asking questions, it is about reading body language, expressions, mood and behaviour. With so much activity going on in a workplace, listening should be a leader’s priority.
Ask for opinions
A simple but effective technique is when leaders ask: “what do you think?” This question encourages employees to expound their ideas. It allows leaders to crowd-source the best ideas from their team and in some cases, employees will present a fresh perspective to a problem.
When employees notice that a leader appreciates their views, they will be more motivated to find solutions on their own. This enhances overall business performance.
How can you improve your leadership skills by listening better?
- Put time aside time to focus
The best way is to schedule one to one meetings and/or performance reviews with your staff. Make it clear this is a safe space where they can raise concerns.
Before a meeting, take a few moments of silence to clear your mind. This allows you to have a clear head, get focused and elevate above the day to day hectic pace.
It helps to have a simple agenda of points to address. Mindset-wise, try to avoid having preconceived notions and be open. Otherwise you risk taking over the meeting and not allowing your employee to speak.
If your employees have raised concerns, always tackle these sensitively in the moment, attempting to get as much information as you can without being forceful, rather than making excuses or brushing them off.
Many leaders are so busy that when they should be engaging with employees, they are trying to multitask. This can make an individual feel as though they aren’t valued or being listened to.
Put yourself in their shoes: imagine you are talking to someone who is scanning a room or looking at their phone. How much attention are they giving you? Are they really hearing you?
Maintaining eye contact and focusing on the speaker is key. Even if the speaker is not directly looking at you, keep looking at them. This helps you concentrate on what they are saying, and avoid distractions.
Be open-minded & curious when listening
It is difficult for a business to build an innovative and creative culture if its leaders aren’t open and prepared to listen to new ideas. If you keep asserting your own ideas and opinions, your team will be reluctant to contribute and share their thoughts.
Keep an open mind, picture what your employees are trying to say, note down any questions you have and ask for clarification when they have finished speaking, rather than interrupting them in mid-flow.
Listening is one of the most valuable leadership skills to practise and develop. Don’t be afraid to use silence as a tool to encourage people to speak. The benefits of becoming a good listener will be shared by your team, your clients, your suppliers and personally with your family.
CAST STUDY: USING THE FIVE LEADERSHIP ABILITIES
Growing any business entails strong leadership skills.
A good leader helps maintain and enhance the employee motivation and creativity required to increase levels of service or the products you are offering.
Signs your business growth is slowing
Businesses never grow in a straight line, they generally thrive and grow then “hit a ceiling” when they reach a period of slowdown or growing pains.
When this happens, business leaders often feel they’re stuck in a rut or overwhelmed and frustrated with daily operations.
Five leadership skills for business growth
These five essential leadership abilities will help you break through the ceiling and get back on track:
The ability to simplify matters and situations
As your business department or company structure expands, the amount of information generated can become increasingly complex – and sometimes chaotic.
You can often find yourself drowning in a sea of data, units, details and documentation.
My advice is to tackle this mass of information by simplifying your messages, processes and structures as much as possible, so communication is basic and to the point: use the KISS principle – Keep It Simple Silly.
Delegation and elevation
Wherever possible, delegate tasks and projects to other team members, so you can elevate your own skill-set to meet the demands being posed.
Delegation and elevation are signs of true growth, helping you shrug off the constant demands which slow business growth. This gives you the opportunity to develop strategies that will help the company expand, and provides key team members with the chance to grow their own roles.
The Accountability Chart which we use in the Entrepreneurial Operating System (EOS) is an excellent tool to help you delegate and elevate.
After all, you only have 100% of your daily work time available to carry out jobs.
If the tasks you need to complete will take 120% of your time to carry out well, delegating 20% of your workload frees up the time you have available.
Ensure those you delegate tasks to are the best team members for the job, who share your core values and the company vision.
In EOS, we believe these team members “must Get it, Want it, and have the Capacity to do the job” (GWC). If they don’t understand the requirements of the role, don’t want to take it on or can’t handle the required tasks, then they are not the right person for the job.
Ability to predict and forecast ahead
Another key leadership skill is the ability to forecast long and short term.
With long term predicting, you should be able to plan and predict business operations up to 90 days ahead.
This way you can “climb the tree” and “work on the business”, identifying issues likely to arise and putting plans in place to cope with them.
When it comes down to short term predictions, you should be versatile enough to solve problems and issues arising on a daily or weekly basis in line with company values and for the greater good of the company.
These can be raised and resolved in regular meetings, such as the weekly L10 meetings held by companies running on EOS.
If you fail to predict accurately, your organisation or department won’t have the direction or abilities required to prioritise jobs which arise, and it becomes difficult to achieve your vision.
The ability to systemise merely means documenting and simplifying regular tasks and procedures so all team members can follow the six to ten core procedures required to meet your “way” of doing business.
If you follow the Three-Step Process, you should initially document the 20% of tasks or procedures which provide at least 80% of the results needed by your business or department.
Including checklists into your processes makes it easier for team members to follow your guidelines, and remove redundant steps or processes that are not really relevant to the task in hand.
These procedures need to be “followed by all” so you may need to provide training or management for some of your team.
Documenting these essential procedures creates consistency throughout your business structure and enhance company performance considerably.
This also ensures greater transparency and simplicity and better efficiency and predictability company-wide. We’ve found that team members enjoy their work more as they know they are performing to acceptable standards.
And, of course, bottom line profits will ultimately be positively impacted.
The ability to structure
Having the ability to step back from organisational requirements and the existing company ethos helps you see the big picture.
Kurt Gödel, the renowned Austrian logician, said: “You can’t be in a system, while at the same time understanding the system you’re in”.
Taking that step back allows you to make decisions on the best way forward and understand how the organisation can be re-structured to bump start growth and move on to the next level.
It’s vital that you cut out thoughts of people, personalities or egos at this stage.
Ultimately, getting people in “the right seats” will be crucial to your ongoing success.
Growing a business requires a specific set of leadership skills. You need to manage the day-to-day while helping your team to execute better and be more efficient.
The key to successful business development lies in focusing on your main goals and then optimising your company’s routine in order to achieve those aims.
The Five Key Leadership Abilities™ that are essential for business success in any industry include: the ability to simplify, delegate, predict, systemise, and structure.
Each of these attributes is necessary for a leader to manage and grow their company efficiently. Today, we will take a deeper dive into the fourth leadership ability of the EOS.
The importance of systemising
Take a moment to consider whether you have a way of doing business. A company ethos and routine probably came to your mind almost immediately. We call this “systemising” your business.
You will find that systemising enables you to run a business better when you take the time to document processes and train your team on them. Opting to systemise can make your company more consistent, scalable and manageable while also increasing profits and ensuring all your team know what they need to do and how they need to do it.
How to approach systemising
The first step when beginning to systemise is to assess your company’s method of documenting tasks. Consider whether there is a single approach and if everyone actually follows it.
Often, if a business requires their workers to document each and every step, then the employees feel micromanaged, and may become non-compliant. The process can seem boring and tedious. The paperwork inevitably just ends up discarded in drawers or never opened and used.
Some businesses don’t have a specific approach to documentation at all. In this case, each employee might use their own method, making results inconsistent and less effective.
With either approach, you most likely won’t get the consistency and scalability you desire.
Employing the Pareto principle
Systemising your business allows all your employees to understand what the key processes are and how to follow them. You can use the Pareto principle to help you decide what these processes should be.
The Pareto principle is also known as the 80/20 rule. The idea is that you document 20% of your company’s processes which will give you 80% compliance or consistency.
Once you’ve identified the top 20% (six to eight core processes), then you want to create checklists – headlines and bullet points – for each process. Having a way of doing each process should make your business more efficient. Ask yourself: what can we eliminate or automate to make the process smoother and remove unnecessary labour?
In my experience, documenting processes and tasks benefits everyone in business. Checklists can also be motivating for employees as they see where they are in the process and what needs to be done next.
Documenting all your processes requires focused effort. A fellow EOS implementer shared the following formula:
S – they need to be simplified
W – in writing
A – agreed by all
T – train everyone
M – measured the effectiveness
E – evolved
The best person undertake this task is a team member with strong organisational skills, who loves to break down processes into logical steps.
When you systemise your processes, task completion and business growth is easily monitored and reviewed. Team members know what is expected of them and how to do it – they are able to get more done and be more efficient.
For more information about how the Entrepreneurial Operating System can help you create a healthy leadership team, and build your leadership skills, do get in touch.