Effective Executive Teams: How to Build Teams That Deliver

Summary:

Effective executive teams do more than set strategy. They build trust, work through complex human dynamics, and stay aligned as business demands change. Learn what separates strong executive teams from the rest, and how organizations can help senior leaders sustain their effectiveness over time.

Effective executive teams are essential to organizational performance, but confidence in senior leadership remains low. Only 32% of leaders trust senior leaders, according to DDI’s Global Leadership Forecast. Among frontline leaders, just 27% say they are confident in their senior leadership team’s ability to advance strategic goals.

And the stakes are high. When senior teams struggle to build trust, collaborate effectively, or present an aligned vision, the impact cascades throughout the organization. For example, DDI’s research shows leaders are 2.4X more likely to feel enthusiastic about AI’s potential when senior executives work cohesively and present a united front.

So how can senior teams get back on track? How can you tell whether the team is delivering results now and over the long term? What capabilities and dynamics do executive teams need to be successful? Answering these questions starts with understanding what executive team effectiveness really looks like, and how both business outcomes and human dynamics shape a team’s ability to perform over time.

Measuring Executive Team Effectiveness

To paraphrase the modern-day sage Forrest Gump, “Effective is as effective does.” Simply put, an executive team's success can be measured by whether it delivers outcomes while fostering a sustainable culture.

This involves setting direction and establishing the mechanisms that enable collaborative effort to achieve shared goals. This also means addressing “whats” and “hows.” Sustainability matters because the ultimate test of an executive leadership team is its ability to create long-term value, not just drive results in the next quarter.

Measuring the extent to which a senior team is delivering the “whats” is relatively easy. Is the team hitting its quarterly objectives? Is there reason to believe that results will be delivered in the near term? (To answer this question, forecasts are a typical metric used.) Does the team have a longer-term track record of goal achievement?

Regarding that last question, many executive teams use a “balanced scorecard” to measure outcomes. While some might argue that elements of a balanced scorecard are subjective, they reflect the “outcomes” the team is accountable for delivering.

Assessing an executive team’s performance against the “hows” is more difficult. Does the company have well-defined and efficient processes to translate its inputs into outputs? (Measures of operational efficiency give us some indication of this.) Does the company have a culture that aligns with and supports the organization’s mission and values?

Despite the generally accepted wisdom of management expert Peter Drucker that “culture eats strategy for breakfast,” these sorts of executive team effectiveness metrics are given lower priority. That is, if they are considered at all.

Executives Must be Experts in Human Dynamics

My experience working with executives and senior teams suggests that the challenges of managing “whats” and “hows” are not evenly distributed. Most of the C-level leaders I work with have a clear idea of their organizations' mission and direction. They also have clear goals and objectives. For the most part, these goals are effectively cascaded throughout their organizations.

Most of my work with executives involves helping leaders influence stakeholders, implement efficient work processes (often referred to as “governance”), and manage culture. In one instance, a leader I work with is responsible for managing an organization-wide project to implement a new IT infrastructure. The initiative's goals are clear. The challenge is getting numerous individuals and the departments they represent to partner together to define processes, implement new work systems, and sustain them over time. The greatest challenge to delivering the initiative successfully involves managing the human dynamics of the work, not the technical requirements.

In another instance, a leader is working to enhance the organization’s ability to adapt to new customer requirements while improving operational efficiencies. The organization’s performance metrics are clear (revenue, margins, and customer satisfaction). But getting numerous department heads to break down a siloed culture and pull together to address these requirements is the nut to crack.

I’m not saying that establishing strategic direction, effective decision-making, and execution skills aren’t important. Executives and senior teams must possess these skills individually and collectively. But these are “table stakes.” 

What often differentiates the most successful leaders and teams is their ability to manage human dynamics: building networks and partnerships, influencing others, navigating organizational complexity, and continuing to grow themselves. DDI’s latest research reinforces the importance of these interpersonal capabilities. Leaders are 19X more likely to rate leadership quality as high when leaders in their organization demonstrate strong interpersonal skills.

Effective Executive Teams Bring Complementary Strengths

How executive and senior teams meet these demands takes many forms. For example, sometimes executives on a team are all highly skilled in these areas, while other times, team members bring complementary skills. My experience suggests leaders need at least a modicum of each. But there will likely be differences across the team on these dimensions.

The most important point is that teams understand their collective requirement and figure out how to deliver on it. Not every executive needs to bring the same strengths. But the team needs to demonstrate these capabilities collectively.

Having team members understand their own strengths and weaknesses helps. But it also helps to appreciate the strengths and skills of other leaders. With this, leaders can steer decisions, encourage input, and weigh team members' contributions to guide the team toward appropriate actions.

The Human Dynamics of Executive Teams

Up to this point, I’ve focused on how senior executives impact the teams they lead. But the human dynamics skills I’ve highlighted need to be applied to the executive team itself because executive teams involve some unique challenges.

DDI’s CEO Leadership Report offers another revealing perspective on executive team effectiveness. When CEOs were asked to evaluate their senior teams, 41% of CEOs in their first six months rated their teams as effective. That figure fell steadily with CEO tenure, reaching just 29% among CEOs who had been in role for more than five years.

At first glance, this result is surprising. You would expect the longer a team works together, the more effective it would become. The team’s purpose would be clear, processes would be honed, communication should be automatic, and team member cohesion would be high. Right?

But a deeper understanding of the human dynamics of senior teams might help explain these results. In many of my executive coaching engagements, I’ve had the opportunity to assess the personality characteristics of senior leaders. I’ve found one common factor: high ambition. You don’t generally become a senior leader unless you have the drive and competitive spirit to overcome difficult challenges and achieve outsized results. These leaders also typically have a strong personal growth orientation.

It doesn’t take much imagination to see what might happen when you bring a bunch of leaders with high ambition together onto a senior team. Where is their next promotion? If the existing CEO plans to stay on, upward movement for the other team members is blocked.

Opportunities for personal growth can also be stymied as these leaders focus their efforts on developing subordinates and junior team members while paying less attention to their own development. Over time, this may lead to stagnation, frustration, and, in a worst-case scenario, intra-team competition.

Insights from Looking at the Life Cycle of Executive Teams

My experience working with teams has suggested that teams, and especially executive teams, have a “life cycle.” The notion of a “life cycle” is familiar to anyone who’s studied the life sciences. Living organisms go through a predictable process of formation, growth, stagnation/decline, and death (or transformation). Teams can be thought of as living organisms that are driven by human dynamics.

Viewing executive teams through this lens offers insights into actions that can sustain effective executive teams over time. Much has been written about how to support executive team formation and growth, but senior leaders have received less guidance on preventing stagnation and decline.

Leaders need to look for signs of disengagement and stagnation. Senior leaders with long tenure are no exception to the need for continued challenge and growth. Executives, like everyone else in the organization, need challenges to continue developing and meet their personal growth needs.

The competitive instincts of senior leadership team members must also be addressed. This may involve opportunities to expand into new business ventures, lead business revitalization efforts, or develop new products. While some of these activities may lead to promotion opportunities, such as heading a new venture, the key is to provide executives with an outlet for their ambition that meets both organizational and personal needs.

Organizations also need to make development relevant to the demands executives face now and in the future. Leaders trained in future-focused skills are 9X more likely to feel well-equipped for their role, while organizations that train leaders in at least two critical future-focused capabilities are 1.6X more likely to receive high-quality leadership ratings.

The Key to Effective Executive Teams

No two executive teams are alike—they comprise unique individuals with a complex matrix of skills and personality traits. The common thread is that they establish objectives and bring people together to achieve them.

The most effective executive teams manage both sides of leadership: the strategic demands of the business and the human dynamics required to deliver against them. That means building trust, understanding one another’s strengths, staying aligned through change, and continuing to develop even at the highest levels of the organization.

The work doesn’t stop once a strong executive team is formed. Sustaining effectiveness requires the team to keep evolving together as business priorities, individual ambitions, and leadership demands change.