Successful companies share one thing: effective leadership. 

Rick Faber is chairman for Vistage Worldwide Inc., and the founder of Growth Guru—both entities that provide consulting services to businesses. He said a good leadership team is vital to any company’s longevity, growth, and success.  

“Without great, effective leadership teams, you don’t have followers,” he said. “And without followers, things don’t get done.” 

The influence of good leadership extends beyond the bottom line, said Equitable Bank  Community Bank President Doug Nodgaard. He continued that he can get a sense of a company’s leadership from a mere glance around a workplace. 

“Is it a sterile environment or do they have pictures of their kids and grandkids and dogs?” he said, explaining that people who don’t feel at home won’t put down roots. In companies where people feel disengaged, turnover is going to be high.  

Greg Andersen, CEO of creative agency Bailey Lauerman, said that effective leadership teams are easy to find: Look behind flourishing companies. 

“So the question is, ‘Why?’ I think there are characteristics of companies that have strong leadership teams. They are cohesive. They are able to collaborate to define their opportunities of success but also to be able to maneuver through turbulence,” Andersen explained. “And I think that they are also strongly connected to their employee base and have direct influence on the culture of the company and are able to nurture that in positive ways. In building that culture, they are establishing a standard for what ‘great’ looks like and they have a common definition for what that is.”

Faber said other common features of strong leadership teams include a high level of trust and an aligned agreement on success behaviors. 

“First and foremost, trust is necessary. Without trust, it doesn’t really matter what else we think is important. If there isn’t trust between leaders, the team will struggle,” he said. “Aligned agreement on success behaviors is like a list of ‘This is who we are and the behavior we expect to see,’” he said. 

These success behaviors are specific to each organization but not limited to management, Faber explained. For instance, a success behavior could be as simple as always arriving to work on time or answering incoming phone calls within two rings. 

Faber also said good leadership teams have a “regular and consistent communication cadence,” meaning information is shared in a comprehensible and predictable way.  

Similarly, Andersen said, this kind of transparency also helps erase “the perceptual barrier of ‘them’ and ‘us.’” In his experience, successful companies are often the “flattest.”

“When there was a really strong connection between the leadership team and staff,” he said, “in those companies it always only felt like ‘us,’ the collective ‘we.’” 

Diversity in the leadership team is also key, Andersen said, and that encompasses a variety of characteristics including industry experience, market experience, and even life experience.

“That gives us another set of unique and different perspectives that fundamentally make our leadership team stronger,” he said. “Ultimately, we really believe that diversity is important because it creates a stronger fabric, just like a culture.”

Leadership teams shouldn’t be a homogenous echo chamber of like minds, he added. 

“We also have diversity in personality types…when you create an environment for a leadership team where people feel it’s a place where you can speak your mind with civility, that tends to create confidence for everyone to share their opinions,” he said. “That diversity of perspective is important, and it needs to be encouraged.”

It’s easier for a small or medium-sized business to assess leaders, Faber said, because they are closer and more accessible to their customers and employees. In smaller companies, the leadership team usually has expanded roles and responsibilities. 

“As companies grow, the focus typically becomes narrower,” Faber said. 

“When you’re in a small company, they need to know that you know them not as an employee or a customer, but as a person,” Nodgaard said. “That’s the advantage of being a smaller company: you know people better.”

Companies that are struggling may be more inclined to assess their leadership, but companies that appear to be doing well by financial and other measures should also regularly assess their organization and its leadership, Nodgaard said. He emphasized that people in positions throughout the company, not executives only, should be included in the process. Board members can also participate. 

“You do a 360 review anonymously,” he said. 

Andersen explained, “Everyone is evaluated by a set of people ‘above’ them, a set of people within their peer group, and a set of people who report to them. That ensures that we have that diversity of perspective and it’s not a group of senior people telling each other how amazing they are because they’re doing each other a favor or they don’t want to offend somebody who is a colleague in the leadership team.” 

Gathering information on how people feel about the company in general is another useful element of a 360 review, Andersen said, and indicates if leaders are collectively doing a good job. 

“We’re also constantly measuring and getting the perspective of our staff as it relates to their views of the company. That can be anything from their confidence in the strategic direction of the company to how they feel about the quality of contribution of their peers, their understanding of expectations and standards and the things that go with that,” he said. “And the fundamental characteristics of the company: feeling that they’re empowered, that they’re trusted and supported, that they have a clear career path set out before them.” 

Fortunately, many credible professional tools are available to organizations looking for insight, Nodgaard said. 

“We had everybody do the Gallup StrengthsFinder, which I think is pretty objective, and then we went over the results with everybody,” he said, adding that effective organizations are comprised of people with different strengths. “You learn what other people’s strengths are and you learn about how they process information and how they make decisions, and it just makes it easier to work together when you know that.” 

Assessment may uncover difficult truths, including a realization that “who got you here won’t  get you there,” Faber said. As a company evolves over time, so must its leadership, and the people in place when the company launched may not all be the right people to meet future goals. 

“Companies have to make difficult choices along the way,” Faber said.

Sometimes good leaders have to be the ones to make these hard decisions about who stays and who goes, Faber added. Even informal assessment tools, like a simple high and low/trust and performance quadrant can help; generally, if it can be said that someone is both trusted and performs well, they’re effective. Low trust or low performance indicates problems. 

“I can probably deal with somebody if their performance is a little mediocre, because I can probably work with them on that if I have high trust. If I don’t have trust and their performance is mediocre, then why are we doing this?” he said. “The other end of the spectrum is high performance/low trust. We have these rock stars who knock the numbers out of the park but everyone thinks are jerks. No one trusts them and they disrupt a
strong team.” 

Leadership teams also evolve over time with the introduction of new members, and that kind of growth can be fostered by supporting professional development from within the organization, Nodgaard said. It contributes to stability and successor management, which he considers important characteristics of an effective
management team. 

To begin with, internal communication channels should share opportunities with all employees, he said. “Our company policy is that no matter what the job is, it’s posted internally first.”

Employees should also be encouraged to take advantage of industry training classes and even career-building activities in a company culture that supports professional development, Nodgaard added. Equitable Bank employees are asked what their career goals are as part of the performance review process, and are invited to work with managers on a plan to get there. 

“I can’t remember the last time I turned down a training opportunity for any of my employees,” he said. “We want to know what our employees are looking for.” 

Faber agrees companies can cultivate future leadership teams by being conscious of what
lies ahead. 

“We always have to have that future [organizational] chart in front of us,” he said. “Then we have to provide experiences for these potential leaders along the way.”

He emphasized that these opportunities should be “safe” places for employees to learn with confidence, rather than overwhelming responsibilities individuals are not ready for. 

“Some people become available at a certain point in their career and it lines up with an opportunity within the company,”  Andersen said. “That is my story and how I joined the agency; the stars aligned for a number of different reasons…It just fell
into place.”

However, the process can be fostered, he said. 

“It’s understanding where people’s strengths are and where they’re not so strong; you’re trying to build the right formula and the right combination of skills and personalities and perspectives and put that together,” he said. “It is an iterative process and it’s not easy, but when you understand your past as well as your future and what it’s going to take to continue to be successful, you try for the parts of that formula you think are going to get you there. Then, when you have those pieces in place, create opportunities for people to lead and succeed.”

Andersen added, “[The leadership team is] a catalyst of the work and we try to be a source of confidence, but we also try to get out of the way and let other people do what they do well. That’s how you nurture the next level of leadership: allowing people with the ability to do great things to do that, and to create an environment for them to feel like they can and are trusted and supported, knowing they can come to you when they need to,” he said. “I think it’s about providing just enough leadership, just enough direction to allow the company to move forward on its own, to allow individuals to see that they have an opportunity to lead no matter what position they’re in or how long they been in the agency or the industry. That’s how you can start to see the behavior that indicates someone is ready to lead, and then you create opportunities for them to do so.”

 It’s all part of looking at the long game, Faber said. 

“Effective leaders have great vision, and their teams follow them,” Faber said. “Great leadership provides pathways for continuous and incremental growth.” 

Visit baileylauerman.com, equitableonline.org, or vistage.com for more information.

This column was printed in the April/May 2021 issue of B2B Magazine.