How to Structure Your Leadership Team
Watch/Listen here or on Apple Podcast, Spotify, or wherever you listen to your podcasts“I believe as the leadership team goes, so goes the rest of the company. So if you don't have that consistent and significant sustainable growth, you've got some work to do.” — Mike Goldman
“If you are the CEO or you're the leader of your team and you have a function with no one accountable, surprise. Once again, you're accountable.”
–Mike Goldman
Common Leadership Pitfalls
Growth without planning:
Example: Rapid company growth leading to cultural issues and high turnover rates.
Solution: Consider hiring a head of HR before problems arise.
CEO overextension:
Example: CEOs managing sales and marketing but unable to follow up on leads due to workload.
Solution: Evaluate the need for a VP of Sales before losing significant business opportunities.
Defining Accountability vs. Responsibility
Responsibility: Multiple people can share it; it's about who is doing the work.
Accountability: Only one person can be accountable; it's about who is ultimately answerable for the outcome.
Tool 1: Functional Accountability Chart
Purpose: Clearly define functions and assign accountability within the organization.
Steps:
List functions or business units (e.g., Sales, Marketing, Finance).
Assign one person accountable for each function.
Identify key performance indicators (KPIs) for measuring success.
Tests for effectiveness:
Multiple people are accountable for one function.
No one is accountable for a function.
Team members are stretched too thin.
Low performers in accountable positions.
Tool 2: 12 Quarter Leadership Team Plan
Purpose: Plan for future leadership needs by projecting growth and requirements over the next 12 quarters.
Components:
Develop financial and non-financial projections (e.g., new clients, product development).
Align leadership structure with projected needs.
Regularly review and adjust the plan with the leadership team.
Building a Great Leadership Team
Key Message: A proactive approach to structuring your leadership team ensures better preparation for growth and challenges, ultimately leading to a stronger organization.
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Today, I want to talk about something most leaders don't think about until it's too late, until it's already caused a problem and it's urgent. And what I'm talking about is how to structure your leadership team, looking at the structure now, being proactive about the structure for the future.
Now, when I say most leaders don't think about it until it's too late, here are a couple of examples I hear all the time.
You know, leaders come to me and say, Hey, Mike, you know, the good news is we've grown like crazy over the last two years, we were at 50 people and now we're at 150. but the problem is, you know, our culture's horrendous. our employee turnover is twice as large as we want it to be the people that are here, you know, are unhappy.
Hey, do you think it's the right time to hire a head of HR?now I have no idea whether hiring a head of HR is going to solve that culture and turnover and morale problem but man, wouldn't that have been a good question to ask a year ago? Before it became such a big issue. The other thing I hear is CEOs that are also heading up sales.
And by the way, that's not a bad thing at a certain level of maturity in most organizations, at least a lot of organizations that I see the founder slash CEO is normally the head of sales until he or she builds an organization that's big enough and mature enough. To make a switch. But that being said, I get CEOs coming to me and saying, Hey Mike, you know, our new marketing strategy is working great.
That's the good news. The bad news is over the last two quarters, we've had so many qualified leads that I, as CEO and head of sales have not. Had a chance to follow up or have my team follow up on those in the most effective way. And I think we've lost at least a couple, a hundred thousand dollars in potential business.
Because I just haven't had the time. The business is getting more complex. I need to spend my time in other areas. Do you think it's time I hire a VP of sales? Now, again, I don't know. That's the answer. I suspect it probably is, but wouldn't that have been a good question to ask nine or 12 or 15 months ago before he lost 200,000 dollars in prospective sales.
I've seen most leadership teams evolve rather than see them be structured in a proactive way. They evolve. It's a founder sitting at his or her kitchen table who says, Hey, I need some help. And that founder eventually over months hires five, six, now it's seven or eight people helping them. And they say, man, I need some people to start managing.
I can't have all these people reporting to me. I need someone to manage these folks. So they find someone they know and they promote someone and just. Over time, the whole thing evolves based on necessity in the moment, as opposed to based on a level of strategy and proactivity about where this leader wants to take the business in the future.
So I'm going to talk about two different. One is called the functional accountability chart. One I call the 12 quarter leadership team plan.
but before I do, I just want to get clear on a definition. Because when we talk about structuring a leadership team, the question it really comes down to is who is accountable for what?
So if that's the big question, We need to make sure we have a clear definition of accountability. So let's do that because I've seen more leaders,just use accountable and responsibility. Accountability and responsibility. I've seen leaders use those interchangeably and cause their teams incredible confusion.
So I want to get clear on how I define it. Now I don't give a rip on what it says on dictionary.com or wherever. We're looking up words these days. I'm going to share a definition with you that works for my clients. And I think it'll work for you as well. And I'm going to start with responsibility.
Responsibility is about who is rolling up their sleeves to get the job done. Responsibility could be one person getting the job done. It could be a thousand. If I have a six person leadership team working for me in my definition of responsibility, it would be fair to say that they are all responsible for giving our clients wow levels of service.
because at some level directly or indirectly, they're all, they all have a hand in that. In fact, if I had a whole company of 100 people in front of me, I might say all of you, all of us are responsible for giving our clients wow levels of service. So responsibility who's doing the work could be one person could be a thousand people accountability.
Is always and only one person. So while we all may be responsible for giving our clients wow, levels of service, Stephanie, who is our VP of client experience, maybe the one person accountable for measuring or coming up with a measure. of client experience for not only coming up with that measure, but setting targets for it, for having a strategy to reach those targets for having a plan.
If we're not reaching those targets of what we're going to do, that person is the one to put it negatively, the one neck to choke. If something's going wrong with our client experience, so accountability. Always and only one person responsibility could be many. So when we talk about structuring the leadership team, our focus is going to be more on that word accountability and not so much responsibility.
So, so let's talk about these two tools. One is the functional accountability chart and the second one is called the 12 quarter leadership team plan. Let's start with the functional accountability chart. And the functional accountability chart is kind of deceptive. It looks very simple, like, Oh, we could create a functional accountability chart in five minutes and we're all going to be fine.
Because very simply, it's a list of what are the functions in your organization. And for each of those functions, who is the one person that's accountable. It's one of the first exercises I do with all of my leadership teams. Very often when I introduce the exercise, the CEO says, Oh great, we can save some time on the agenda, because we're not going to need a lot of time for this.
And we wind up spending 60 or 90 minutes with some major Challenges being identified, some major opportunities coming up. So it's deceptive. It looks simple. It's not that simple. And it's incredibly powerful. and very simply what it is it's a list of what are the functions in our organization.
And I explain a little bit more about what I mean by that in a minute. What are the functions in our organization? Who's accountable? And how are we measuring success? What are the key performance indicators that tell us whether that function is running successfully? So let's talk about, imagine this as a table.
Let's talk about each of the columns on the table. And by the way, if you are listening to this in your car, then keep listening. You'll get a lot of value. Or if you're listening on a walk or on a run, keep listening. But at some point, if you're not sitting down with a piece of paper where you could actually do this, some point you may want to.
Re listen to this and actually do this exercise. But again, if you're walking or running or driving or somewhere you can't write, that's okay. Listen, you'll get value, but you may want to come back to this. So, again, we've got this chart, this table, called the functional accountability chart. The first column, as I said, is functions and or business units.
So, When I say functions, I don't mean titles, CEO is not a function. VP of sales and marketing is not a function. Head of company is a function. Sales is a function. Marketing is a function. Talent development may be a function. Finance is a function. You get the idea. So we want to list out all of the functions of our organization.
And again, as simple as it sounds, when I sit around a leadership table of four, five, six, eight people, most often they don't agree what their functions are. So you want to list out those functions. Now, most organizations. Have somewhere between 10 and 14 or so functions, give or take one or two. If you find yourself listing out 25 functions, you're at too low, a level of detail.
So let's keep it, I like to keep it initially, it's something I call level one functions. Finance is a level one function. If you're saying, wow, we don't have finance, we have accounts payable, accounts receivable, financial reporting, you know, financial analysis, you're down at a level two. Now, the level two functions might be, well, not might be, they are important, but I like to initially do it at what I would call the leadership team level or the level one level.
Now, if you're listening to this and you're on the leadership team, Or you're listening to this and you are the head of that leadership team, the founder, the CEO, then think about it at the leadership team level. But if you're the manager of accounts payable, then you go down, use this same thing, go down to a lower level.
but for the purposes of this podcast, I'm going to talk as if we're doing this at a leadership team level, but we could drive this down to any level you'd like. But at a leadership team level, keep it to 10, 12, 14 functions. And again, it's not title, it's function.
When you think about these functions, one of the questions that comes up all the time is what if I outsource a function? If I outsource a function, that's not a function, right? Because we don't do that. We outsource it. Wrong. Most small and midsize organizations I work with, I should say not most, but a good number of them outsource IT.
They outsource their IT function. If you outsource your IT function, that is still a function. Just because you outsource it, doesn't mean that you That it's something you could just say, I don't have to worry about it. I don't have to worry about who's accountable. I don't have to worry about how we're measuring it.
I don't have to worry about whether in the future I need to bring that back in house. If you say it's not a function, you're blind to it. So let's make it a function, even if you are outsourcing it. Also, when you list out your functions, don't just think about the functions you have. and let me give you an example of what I mean by that.
So when I do this exercise with my clients or with groups of CEOs, I give them a sample list of functions, head of company, sales, marketing, talent development, information technology, et cetera. And one of the functions I have on there is R & D research and development. Now, a whole lot of, CEOs automatically cross that out and say, wow, yeah, we don't have R & D.
Well, it's not a matter of what you have. It's not a matter of whether you have a VP of R & D today, or whether you have someone who's accountable for R & D, do you have, or should you have a research and development function now or sometime in the future? An example of that is I was talking to a company, just last week and one of the CEO, CEO workshops that I run and there was no R & D function, meaning they didn't think about R and D.
They didn't have someone who was accountable for R & D, but in order to hit their growth goals, and this was a manufacturing company in order to hit their growth goals, They needed to develop a significant number of new products over the next 12 to 18 months.
They didn't have effective accountability. That was something the CEO basically did part time because they didn't think about R & D or in this case, they wanted to call it new product development, which is beautiful. Call it what you want, but don't just think about. Today, think about what you need in the future.
Now, some people have, they have a VP of sales and marketing. So they put sales and marketing together because today one person heads up sales and marketing. Well, I don't care if one person heads up sales and marketing, sales and marketing are still. Two functions, the way you measure success in marketing is different than the way you measure success in sales.
The fact that you have one person accountable for both sales and marketing today does not mean that one person should be accountable 12 months from now or two years from now. So don't just think about how you're structured today. Set yourself up for future structure. And I would rather see you be more detailed than less detailed, because if you're less detailed, when you go back and look at this functional accountability chart, quarter after quarter and say, Hey, am I still doing?
Okay. Do I have any challenges? What do I need to think about for the future? If a function is not there, you're effectively blind to it. So even if you have a function like R & D that's sitting there and nobody's accountable for it, but you have it on your list, it's going to challenge you each quarter to say, Hey, am I still okay with the fact that as CEO, I'm doing R & D part time, or are we still okay as a company with the fact that no one's accountable for R & D or do we need to start thinking about.
grooming somebody for that,or restructuring the organization for that, or hiring from the outside. So the first column is function. The second column is accountability. Who is accountable? And when you do this, when you're thinking about this right now, or if you're listening to this and you're able to write it down for the moment, I want a.
Forget about my rule that there's always that accountability is always in only one person, because right now you might feel like you have three people accountable for sales. We've got East coast sales, West coast sales, and central sales that all report into the head of company CEO. And therefore we've got three people accountable for sales or.
customer service is a combination of our, you know, head of operations and our head of sales that do customer service. So if that's the way it is today, that's what I want you to write down. If you have no one accountable today, then leave it blank. But write that down. Who is the person or people that are accountable?
For each of those functions. And again, do this yourself, but man, go back to your leadership team and make sure you agree, not only on the functions, that first column, but the second column of accountability, there's almost never full agree agreement with who's accountable for what. And when I say accountable, it really should be someone on that leadership team.
If you've got a COO and the COO is accountable for finance and they have a manager of finance working for them, that they hold accountable for finance at a level one level at the leadership team level, it's your COO that's accountable for finance. All of the names on the functional accountability chart.
If you're talking about a leadership team level, functional accountability chart, all the names should be members of the leadership team. And if they're not, you may have a problem with the structure. Maybe there's someone not on the leadership team that should be on the leadership team, or maybe you're not holding someone on the leadership team accountable for a function.
You should be holding them accountable for. So once you've got your functions and you've got who is accountable, there are now four different tests that I, Challenge. My clients are four different tests. I want you to think about that will uncover where you have challenges, where you have opportunities with your structure, with your leadership team structure.
And again, if you're not a leader and you're doing this as you know, you're an accounts payable manager, same questions. It may uncover opportunities within your structure. So the first test is now I want to go back to that rule of one for accountability. The first test is where do you have a function with more than one person accountable?
Do you have three people accountable, quote unquote, accountable for sales? Do you have no one accountable for customer service, but basically everyone is accountable for customer service? Well, typically that's going to uncover a problem. Either a problem today or certainly a problem sometime in the future.
But here's what I tell my clients. If you have multiple people accountable for one function, I actually tell them two things. Number one, it's only a problem. If it's a problem, how that sounds ridiculously simple, but There are a whole lot of things to focus on in a business, some more strategic, some more urgent.
I don't want to see you change the structure of your team because some smart coach or podcast host or book told you accountability should be one and only one person. So if you're the CEO and you've got three people accountable for sales and it's working, , don't fix it if it's not broken. Now, let's be real.
The other part of this is if three people are account, if you're the CEO and you've got three people accountable for sales, you are really accountable for sales. Now, again, that's only a problem if it's a problem, but I will tell you if it's not a problem today and you have a goal. To scale your business, to grow your business in a healthy way.
At some point, that's going to become a problem. At some point, you are not going to be able to effectively handle being accountable for sales at some point. Those three people who you're holding accountable are going to need some. Standards are going to need a process. There needs to be a way to, to manage that it's getting done right.
And that should probably at least eventually be one person and not three. So the first test is where do you have more than one person accountable? It's only a problem. If it's a problem, if it is a problem, what's your plan to do something about it? And what's the level of urgency to do that? So that's the first test, the first way to uncover an opportunity.
The second is where do you have a function with no one accountable? Again, that's only a problem if it's a problem, but again, I will tell you if you are the CEO or you're the leader of your team and you have a function with no one accountable, surprise. Once again, you're accountable. You may be doing a crappy job doing it.
you may be a CEO that's accountable for R & D, but you're not really doing it and therefore you're not effectively developing new products or new equipment or new processes or researching new services or researching the industry. No one's accountable. It's you. And you're probably not being very effective at it.
But again, it's only a problem if it's a problem. So if it is a problem, what are you going to do to fix it? Do you need to take more control of it? Do you need to hire someone? Do you need to restructure your team to make someone accountable? Do you need to groom someone new who's not on your leadership team?
So the first test is, do you have more than one person accountable? Second test is, do you have no one accountable? The third test is when you look at this list, is anyone on your team, including you, is anyone on your team stretched too thin very often early in the maturity of a growing company, it's the head of company that is also accountable for sales and maybe also accountable for.
And also accountable for finance. Now, by the way, it is okay to have one person accountable for multiple functions. It's more than okay. Unless you are a 10 million company, you probably have some of that. So I'm not asking if someone's name shows up more than once. That's fine. I'm asking if anybody's stretched
too thin. Is anybody accountable for so many functions that stuff is falling through the cracks? Again, What's the level of urgency there? And by the way, there could be two problems. Stuff could be falling through the cracks or you could be Slowly burning out and overwhelming and overstressing that person who is stretched too thin.
So test number one, more than one person accountable. Test number two, no one accountable. Test number three, stretched too thin. And test number four, Which I talk about in multiple other podcasts where I talk about my talent density framework, my quarterly talent assessment, the new book that I'm writing called the strength of talent.
it, the fourth test is, do you have anyone sitting inside this, you know, being accountable for a function that is low performing, they're not meeting their targets, they're not as productive as they need to be. And, or they're not a culture fit. Where do you have someone that's low performing and what are you going to do about it?
Because by the way, if you're listening to this and you run a leadership team, you can't afford to have a low performer on your leadership team. I have never seen a high performer work for a low performer very long. So you need to do something about that. Coach develop, do something quickly.
to move that person up to high performing or make the difficult decision where you need to cut the cord. So those are the four tests on this functional accountability chart. Remember it's list of functions, who's accountable. And then the four tests, where do you have more than one person accountable?
Number one, number two, where do you have no one accountable? Number three, who's stretched too thin. Number four, who's low performing. the last piece. of the functional accountability chart is what are the, what I call success KPIs. What are the measures of success for each of those functions? What are the measures of productivity?
And again, I've talked about this in multiple other podcasts, but you don't measure success of marketing, by the fact that the new website, Went live on time, or the logo looks great, or, you know, the, there's a beautiful email marketing campaign. Those are nice things maybe, but productivity should be measured more specific than that.
an example might be, marketing needs to produce 10 marketing qualified leads per week. What's the right measure of success for human resources? I always, you know, one of the things I hear is how quickly are they filling,job openings. That's a horrible measure. How quickly are you hiring people?
isn't a better measure, whether they're hiring the right people, what percent of high performers you have in the organization. If you've listened to some of my other podcasts, you know, I have a measure called the talent density index, which is the percent high performers minus the percent low performers.
So we need one, two, three measures of success, key performance indicators for each of these functions. Because just because you know, who's accountable for marketing doesn't mean you know what they're really accountable for, unless you know how to measure. That accountability. So that's tool number one.
That's the functional accountability chart. The second tool, and I'm going to Spend much less time on this one.
The second tool I call the 12 quarter leadership team plan. Now that tool requires you to first with your team, develop projections, develop a plan, a numbered plan with financials and nonfinancials.
Quarter by quarter for the next 12 quarters. And when I say financials and non financials, it's more than just revenue and gross margin and net profit. I mean, those should be included, but it should include things like how many products you need to sell. Do you know how many new products do you need to develop quarter by quarter?
How many new clients will you need to add each quarter? What is your client retention need to look like? Those non financials. Are actually even more important than the financials in this exercise, because those non financials, remember, we're talking about how to structure the team, how to structure the leadership team is where I'm focusing.
Those non financials are going to tell you a lot more than the financials about your team structure, how many new products you need to develop might tell you what your R and D structure needs to look like, or new product development or operations. How many new clients you need to bring on quarter by quarter might tell you about how sales need to be structured, how many marketing qualified leads you'll need, and how many new clients you need to bring on may tell you that.
Three or four or five quarters from now, the fact that you have one person accountable for sales and marketing may not work anymore. And you may need to split that between sales and marketing have, you know, your number of employees quarter by quarter, how many employees will you need is going to be important because you might say, Hey, when I get up to a certain number of employees, I could no longer have.
I could no longer as CEO also be the head of HR slash talent development. I may need someone to do that, or it may tell me that right now I've got a very tactical HR person who's doing, employee handbooks and benefits and payroll and all of that tactical. Kind of stuff. And I may look and say, Hey, when I get up to 75, 75 people or a hundred people or whatever it is, I need a more strategic HR function, someone who's going to be more focused on developing talent than they are getting payroll done.
That's important to know when you're structuring your team for the future. Now, if you're thinking, Mike, 12 quarters, I can't even, I can't even project what we're going to do next month. And you're telling me to do 12 quarters. Well, if you can't do 12 quarters, do eight quarters. If you can't do eight quarters, do four quarters, but project into the future.
The reason why that becomes important is because I want you to be proactive. About where you will have a need. I don't want you to wait until half your people quit to say, Oh my God, maybe I need a head of HR. I don't want you to wait until you lose 200, 000 in potential revenue to say, maybe I need to hire a VP of sales.
I want you today to be able to say, Hey, nine months from now, or 15 months from now. to hit my targets. I'm going to need someone heading up sales. It can't be me anymore. Now, if I know that nine months ahead of time, I could start grooming somebody internally. If I know that nine months ahead of time, I could start networking out there to find the right person to add to my team.
But if I don't know that nine months ahead and I'm sitting here saying, Oh my God, in the last two quarters, I've lost a 200, 000 in revenue. That's going to cause you to rush to hire. And when we rush to hire, it's a big chance we're going to hire the wrong person. So in addition to the functional accountability chart, which is very static, we need to take that chart and project it out quarter by quarter for the next person.
12 quarters and if not 12 quarters, two, eight, if not eight quarters, do four, but please be proactive and project that out. And then what you want to do is you want to review that every quarter because we know real life happens and your projections are not reality. You may do more than you thought.
You may do less than you thought. Problems may come up before you thought they were problems. So review it every quarter and do it with your team. Get your team involved. The projection shouldn't be just yours. They should involve your team. Your assessment of what the right structure is shouldn't be just you should involve your team.
So do this with your leadership team or do this with, you know, what, whatever team you manage, get your team involved in doing this.
I hope that helped again, if you were driving or walking or running and you need to come back and listen to this, what, you know, while you're at your computer or pen to paper, please do that.
If you want a great company, you need a great leadership team. I hope this episode helped you get a little closer there. Take care.