Boards That Build: Shaping Teams and Future Leaders

Elevate Teamwork in Uncertain Times

DAVID REIMER: What has changed over the years about how you think of management team effectiveness? What does “good” look like now compared to five or 10 years ago? 

CJ WARNER: In a business environment where things are predictable, the real purpose of companies is to focus on what they’re already doing well and to make it more efficient. You can get away with people operating in silos in that kind of environment. But in this highly dynamic and somewhat unpredictable business environment, companies need to be flexible.  

Teamwork is essential. Companies can be much more innovative and much more responsive when everyone’s working across boundaries and working effectively. The essential importance of teamwork is at an all-time high. 

KATHY WALLER: I agree, and because we have so many people who are not in the office right now, that’s changed the dynamics somewhat. You can’t just stop by somebody’s office when you’re not in the office. So you have to make an appointment, which changes the dynamic of a management team. It works better when the management team decides that they are going to be in the office so they can interact with each other. That also sends an important signal to the rest of the organization. 

MARK TEMPLETON: To me, the biggest change is the environment that management teams are operating in. A decade ago, when companies faced difficulties, about 80% were self-inflicted wounds versus 20% external factors. I think it’s the opposite today because of the velocity of everything, from globalization to the political environment to the impacts of AI. It’s as if someone turned the treadmill speed way up.  

Observe Unscripted Moments to Gauge Unity

REIMER: Given the degree to which board meetings are highly produced and choreographed affairs, how do you assess how well the management team is really working together? 

TEMPLETON: It’s not easy to know if there is true alignment behind the appearance. So you have to look for those unscripted moments when someone asks a deeper or broader question than expected. Then you watch how the management team debates. Are they sharing ownership of a problem and working across silos consistently?  

I like to ask a question in meetings to probe for those dynamics: “When you debated this internally, what were the major points of view that you debated?” That forces everyone to talk, not just the person assigned to speak. 

WALLER: You do look for those moments, like when the management team is joining a board dinner, when people are more relaxed. It’s interesting to watch the dynamics of people during those times to see how genuine they are about seeing their peers as part of a team, and how well they know each other. That will tell you how well they’re working together if they actually have some kind of relationship with each other. 

WARNER: You can also have those unrehearsed moments during board visits to the field. That’s when you see your leaders in their true environment and how well they are building and driving team performance. You really get a sense of the culture that they’re fostering themselves. 

Those dynamics will also be set in part by the reward system that the CEO puts in place. Is the CEO rewarding team members as individual performers, or are they being motivated and rewarded collectively? 

Model Collaboration to Set the Right Tone

REIMER: What’s the role of the board in articulating expectations about the effectiveness of the management team?  

TEMPLETON: I always encourage management team members to speak up. Then you can watch the body language to see if they are being coached, or if the CEO is putting walls around them. That’s another way to influence the culture of the team. 

WARNER: Boards can significantly underestimate the effect they have on the overall direction and culture of the company. What the board asks for most often, and how they ask, does drive what the management team is going to be focusing on, because they know they need to be on top of their game when they meet with the board again on those topics.  

And how the board itself role models teamwork cascades through the organization. They’re watching how we behave. If we’re acting collaboratively, seeking out expert opinions, and working together to maximize the value of our own diversity to get better outputs, they can see that dynamic and take that value back to their teams.  

When there are poor dynamics in the boardroom, that puts a pall on things for the rest of the management team, because they’re actually trying to get something important done. We always joke about the fact that you can never be totally useless as a board, because you can always serve as a bad example, showing the management team how they should not behave. 

WALLER: It’s interesting when the board itself makes a shift. I witnessed one situation where there were challenging dynamics until a new chair came in who completely changed the dynamic. Everybody saw an amazing shift in the board and management team. Suddenly there was much more healthy debate in the boardroom, including during management presentations. The shift was incredibly powerful. It’s painful but it feels good when you get to a better place. 

Measure Successors by Teamwork and Impact

REIMER: How do those team dynamics influence your thinking around succession planning? How much weight do you give that as you think about future leaders of the company? 

WARNER: I’ll go back to my earlier comment about working across boundaries effectively. Leaders need to have a higher emotional intelligence, understand how to manage external parties effectively, and truly listen and then be responsive. So when it comes to talent management, that’s becoming much more of an important lens that we all use for selection as well as development.  

If you’re selecting from a pool of internal candidates for the CEO role, you’ve got to think about the team dynamics as a whole, because you’re really selecting the CEO and his or her team. How is the team composition going to change if you choose one successor over another? Are people going to leave? 

TEMPLETON: You do have to consider the impact of CEO succession on deeper layers in the organization. The last thing you want is a mass exodus. You really want someone who can bring a team together.  

I find the single biggest challenge with succession is that boards, whether they hire a consultant or do this themselves, start by making a list of all these characteristics they want in their next CEO. And the only thing that’s missing from the list is the Superwoman or Superman logo. They don’t consider the more relevant context of looking for the best leaders who are going to be most relevant for the next three to five years. There has to be clarity about what the company actually needs in a leader, rather than the must-haves versus the nice-to-haves. 

WALLER: When evaluating internal candidates, so much of your understanding about them started with what the CEO told you about them. It’s up to the board at that point to develop their own opinions about people. We all need a chance to get to know them and to assess them for ourselves. You can ask the CEO to move them around and put them in various scenarios or roles so you can see how they perform in different circumstances.  

But you’re not really hiring that person for the job today. You are hiring that person for a future job. You have to understand how they think and how they assess things. What kind of judgment do they have? Because they won’t walk into the job with all the skills that they need. It’s up to the board to take the time to get to know these candidates and have conversations about them without any management in the room. Because when the CEO tells you their perspective, that’s just one perspective. 

TEMPLETON: There are interesting patterns you can spot in successor candidates. Sometimes you see “lone wolf” types. They’re incredible “athletes.” But then there’s the person who gets things done through others. They’re a force multiplier for the organization. That will inform how transferable their performance is going to be across various situations. 

WARNER: That rubric makes a lot of sense, and it’s not always easy to tell who is going to be most effective. Someone may be able to gather everyone together and keep them happy. But will they be a driving force that makes people somewhat unbalanced but moves things in a more powerful direction? Because we do need effective change-makers. But if people are too strong in terms of nurturing everyone, that may be more of an overly stable approach than what’s required. It is very challenging to balance those.  

WALLER: Another dynamic when you have potential succession candidates is that people start to behave differently around them. You start to see camps forming, which can be incredibly problematic because those camps are then propping them up. You may not be seeing their true performance. You have to find a way to get around all the noise and understand the individual’s true capabilities.  

TEMPLETON: I completely agree with that, because [in a CEO search] you want someone with ambition, but you don’t necessarily want someone who’s ambitious. Parsing that nuance can be difficult, especially when there are multiple horses in the race. Humility is critical when you are judging successors.  

Evaluate Future Leaders Through Real Decisions

REIMER: In our work with boards, we are seeing many take more of a scenario-planning approach to succession, with different scenarios requiring different kinds of leaders. How do you think about the dynamism of the backdrop in which you are trying to evaluate different candidates? 

WALLER: I agree that those plans will be ripped up because everybody recognizes that the one thing you cannot predict is your future. There is a related challenge when you’ve got a really talented CEO who isn’t ready to leave and almost becomes a blocker for attracting and retaining talent because they aren’t ready to engage in the succession discussion. 

One of the best ways to assess internal candidates is to see how they handle a challenge in their area of responsibility. But if you’ve got a CEO who’s not ready to go, they’re going to tell [the internal candidate] what to do. They’re not going to allow you to see the strength of that person and the decisions that they would have made on their own. Part of the challenge is getting the current CEO to recognize it is time to loosen the reins so the board can see what decisions the successor candidates would make on their own. Not that you’re going to let them fall off a cliff, of course, but you want to see them using their own judgment.  

WARNER: Because leadership is becoming more challenging, and the CEO job is becoming so much tougher, we have a smaller group of candidates from which to choose. So we need to work harder on talent development earlier. If you think about it in that way, all companies would be stronger if they made succession a continuous process, regardless of how challenging the current environment is. 

TEMPLETON: Predicting the future is more difficult than ever because of velocity. That cannot be an excuse for not being opinionated. You have to revisit and refine your assumptions and your thinking about the process every year. That’s why succession discussions should be continuous and shouldn’t be a transactional process. 

Develop a Culture of Succession

REIMER: What do all these challenges and opportunities around succession mean for HR leaders? What does “good” look like for the function over the next five years?  

TEMPLETON: I would encourage CHROs to be the driver of succession and to communicate the rationale behind the process. That helps a lot, because boards generally depend on CEOs too much for succession and don’t take on the obligation themselves because it can be awkward. So directors have to be more proactive about it, and if CHROs can help create a culture of succession, that will open up great conversations and lead to more transparency. 

WARNER: I really like that concept of developing a culture of succession. We have to fight complacency. Over the last five years, we have seen many examples of how all the change we’ve been through has forced us to make tough decisions about issues that we might have lived with in quieter times.  

Many organizations have a mixture of people who are good, but they are not great. And so we don’t make the tough decisions about talent. But when we do have to make those decisions, and we bring in dynamic, new people who are particularly well-suited for the role, it’s like magic. It opens up a whole new world for the entire organization, and it can catalyze the excitement of going forward. So fighting complacency is absolutely critical for CHROs, and they need to catalyze other leaders to also make some of those tough decisions. It’s always worth it when you do. 

WALLER: When I look at the CHRO role, a key responsibility is to know the talent. That’s a big responsibility, particularly in large organizations. They’ve got to have the right team, and they need to be surfacing talent and making sure that people are getting opportunities to develop and move to new roles, so that the leadership of the organization gets a chance to see their skills in action.  

The CHRO needs to have a good relationship with the CEO, but there also has to be some distance there, because you don’t want the CEO telling them how to think. CHROs need to really be independent in their thinking about talent, because they need to be able to help the CEO bring new talent to the table and to move people into stretch assignments. That helps strengthen the succession culture.