How to Build Strong Leadership Teams
Originally published: 06.01.09 by Paul Grunau
We are in the midst of the worst economic climate we have had in a long time. Many leaders at hvacr companies have never faced challenges like these. In fact, most executives probably have dealt only with growing companies over the last few years. Now, we must manage very different issues. What steps should you take as revenues decline, customers’ businesses suffer, credit and bonding tighten, and your backlog falls rapidly?
I wish I had the answers. I don’t, but can say unequivocally that now more than ever, companies need strong leadership. Adversity causes the cream t rise to the top. The most skilled, visionary, courageous, and developed leadership will prevail.
Why You Need a Leadership Team
Deep leadership positions companies to survive and even prosper during challenging times. Such companies possess not only leaders, but also strong leadership teams. Why are leadership teams important? In my experience, many hvacr contractors are led by talented and committed leaders who oftentimes started or built the business. They have strong personalities, are well known in their markets, and are well regarded by employees and customers. Most important decisions go through them. Consequently, while they are crucial to success, they also can significantly constrain growth and evolution.
To sustain success over time, it is imperative to develop a leadership team and to focus on developing people who can ascend to that team. The right number for that leadership team and who is represented is a matter of individual company dynamics.
Fundamentally, that team should consist of individuals who “own” parts of the business from a results and accountability standpoint. Collectively, the entire business should be represented on the leadership team. This may be functional (accounting, administrative, fabrication, engineering, etc.), or market-based (by location, by business or industry line, etc.), or a combination. In the company I formerly ran, our leadership team consisted of the leaders in our different geographic markets; leaders of different businesses in our largest market; and leaders in functional areas.
As exhilarating as it is to be involved in significant decisions, you need to individually assess the caliber of your leadership team, especially during this difficult time. Ask yourself the following questions: • Can I look around my business and identify individuals who “own” different parts of it?
• Do these individuals understand how their businesses, or parts of their businesses, work financially?
• If I asked them to define success for their businesses, what would they say?
• Can they stand in front of me and our team and articulate their visions for their parts of the business, and then follow up with tactical steps they are taking or will take to move toward that vision?
• What am I doing to create an environment where individuals feel as if they “own” part of the business?
• Are my actions on a daily basis consistent with building a senior leadership team?
These are tough questions, and I think we all would agree that we have room for improvement when we answer them honestly.
Building Your Leadership Team
Once you’ve answered these questions, the next step is to build your leadership team. This team will evolve and grow — and will help the organization prosper — but for this to happen you must first make a commitment to their development. Here are some helpful guidelines:
1. You must decide that you want your company to be run by a team rather than an individual. If you want to maintain control at a very detailed level, you will struggle to build a strong leadership team.
2. Look inside your company first for team members. Usually, you can find promising individuals in your business; you just have to give them a chance. Pick them based on values and beliefs. Do they share your values (and consequently the company’s values)? Do they understand how to treat customers and colleagues? Most importantly, do they possess good judgment? If they are in your company, they should have some level of technical knowledge, which is important. Values and beliefs, though, are a greater predictor of their success.
3. Organize your business in such a way that you give your leadership team an opportunity to measure their results. High achievers, given the chance, will strive mightily for good results. To encourage this, look for ways to help them measure results. This can be formatting financial statements so their “business” results can be seen, for example. Obviously, you must balance this with overall company results, but if you’ve picked the right people, this should not be an issue.
4. Define success for each member of your leadership team every chance you get. Your contribution to the leadership team will start with picking the right people, then creating an environment where they can measure their results, thus defining for each individual what successful results look like. They could include financial metrics (my recommendations are around gross margins, pre-tax income, customer retention, revenue by customer capture, to name a few), as well as some qualitative metrics such as customer and employee satisfaction (you can survey both). One of the most important things company leaders can do is paint a picture for the leadership team of what success looks like. This then becomes a tangible set of objectives as those individuals move through the organization. It gives the leadership team tools to use as they define success to their teams.
Ultimately, the success of most companies comes down to leadership. A company’s likelihood of achieving sustained, long-term success is directly related to the depth, breadth, and continued development of its leadership. Honestly look at your organization. Do you see a strong leadership team in place that goes beyond just you? If the answer is yes, congratulations, and keep it up. If the answer is no, you are in the midst of an unprecedented economic climate, and the long-term success of your business depends largely on decisions that you alone will make.
Paul Grunau is the chief operating officer of APi Group Inc., a billion dollar holding company for more than 32 independent construction and construction-related businesses with 9,000 employees in over 150 locations. Paul is a graduate of Brown University, where he received a bachelor’s in economics. He completed his master’s of management degree from the Kellogg School of Management at Northwestern University.