Executives are the small group of people who have the responsibility to provide the direction and leadership for their organization. Typically, the “executive team” consists of the CEO (or President) and the people who report directly to that person.

The rest of the organization and the outside world expect this group of executives to set the future direction for the organization and guide its activities. This group is also responsible for building and sustaining the organizational culture and capability to achieve its vision and mission.

The Dilemma

The dilemma that many executives face is their understanding and ability (or willingness) to make the transition from middle level to senior management. They have developed such a high level of competence running their functional areas that they tend to continue to maintain that responsibility. The consequence is that they remain heavily involved in day-to-day management, at the expense of not fulfilling their senior level responsibilities. The inability to make this transition has the following consequences:

• Their functional areas run very well, because they have many years of experience and high levels of competence
• Because the senior people remain in these roles, their own middle managers do not develop the maturity and skills to run the organization independently.
• In addition, as senior managers remain primarily focused on the performance of their own areas, they unintentionally contribute to the creation of a “stovepiped” company that may sub-optimize overall performance,.
• Other than the CEO, no one assumes responsibility for the overall guidance of the ship of state. There is no collective will for setting the core strategies, making sure that the company is strategically driven, creating major new opportunities, building for the future, etc.
• The company does today’s work very well, without realizing that it is losing competitive advantage by ceding the future to its competitors (some of whom may not even exist yet) through its own busy-ness.

The Core Team Responsibilities of the Senior (Executive) Team

• Develop the Strategic Plan for the Company
  • Guided by the CEO/President o Subject to Board approval
  • Develop the annual Business Plan for the Company
• Under the guidance of the CEO/President and subject to his approval
  • Includes both the business plan and its supporting budget
  • Set the core strategies and initiatives to achieve the strategic and business plan
• Guide major strategic initiatives
• Lead major acquisition, merger, divestiture, alliance, strategic partner initiatives
• Define and create the desired organizational culture
• Design and implement the core cross-functional work processes
• Design and manage the balanced scorecard – the measurement and control system
• Manage, guide and oversee day-to-day business operations and budget
• Manage the capital assets of the company
• Develop and manage the human performance and talent management system, including manpower needs, talent development, performance management, and compensation systems

The CEO and Executive Team – Three Organizational Models

There are three basic models that a CEO can use in working with his senior managers. Each has strengths and limitations.

Model One – CEO and Individual Executives

In this model, each executive reports directly and independently to the CEO as the primary operating relationship. Executives have little to do with each other, and have no responsibility for each other’s performance. They may participate in periodic staff meetings, if called by the CEO. Essentially, each executive is responsible for his own area of responsibility. This model is known as the “star” model of communications, represented graphically below.

This model works best in an organization where the senior managers have very little to do with each other. They are each responsible for their own area of business with minimal interdependencies.

Model Two – CEO and Executives as a Work Group

This is the most common organizational model. Each executive reports to the CEO, with direct functional responsibility. However, the CEO also brings his “team” together regularly, and holds the entire team generally accountable for overall organizational or company performance.

In actuality, the individual executives are NOT responsible for overall organizational performance. They are each responsible for their own assigned functional areas. These areas are defined, with high individual accountability.

Yet, there is also an expectation that the senior managers will work together to help and support each other for two reasons.

• First, they all share the common higher level goals of the entire company. They may have a bonus that is dependent on overall company performance.
• Second, they do have significant interdependencies. The work of each part of the organization connects with other parts of the organization, and they must work well together to achieve the broader goals of the company.

This is the most common organizational model for senior teams. It is shown below as the ‘hub and rim.

The limitation of this model is that when all is said and done, it is really only the CEO who has full accountability for the overall performance of the company. Each member of the executive group is responsible and accountable for the performance and results assigned to his part of the organization. The underlying belief is that if each executive does his job, then the overall goals will be achieved. The whole is the sum of the parts. The dilemma, of course, is that none of these organizations can be successful without the help and support of each other. While it may be the responsibility of sales to generate the revenue, the sales organization requires good quality products from manufacturing that were well–designed by engineering. Sales leads were generated by marketing activities, and good-post sales support is essential for repeat business. The parts are highly interdependent.

The “hub and rim’ model is the most common form of executive behavior. The managers are a work group, not truly a team. They typically do attempt to cooperate with each other and display teamwork in their behaviors. Fundamentally, however, their responsibility and accountability is for their own respective areas.

Model Three – CEO and Executives as a Team

This model is potentially the most powerful, but also the most difficult to achieve.

If the CEO and executives are truly a team, then the common goals of the organization are the team goals, and they supercede the individual goals of each of the functional areas. Executives still have their individual core responsibilities and accountability for their assigned functional areas. But they also have collective responsibility and accountability for a defined set of team goals – the company goals.

Following are common examples of the work that a true executive team actually performs together:

• Development of the company vision and its strategic plan
  • Design and implementation of strategic initiatives
  • Development of the high level tactical deployment and implementation plan to achieve the core strategies
• Collective development of the overall company budget
  • strategic, tactical and capital
• Collective development of the high level core cross-functional work processes.
  • Detailed development can then be delegated to lower level cross-functional teams because the requirements, goals, boundary conditions, hand-offs, sign-offs, measurements, responsibilities, authority limits, etc. have been agreed by the senior team
• Creation of the company’s product and service package – the value proposition to be offered to the marketplace
• Establishment of the company measurement and control system – the “dashboard” to monitor performance and drive behavior
• Creation of the company talent management system – including its performance management and compensation components

Making the Choice

The “team model” for executives is more difficult to develop and sustain than either individual staff members or a work group. It requires that every executive have a clear understanding of their role as both a team member and as an individual senior manager with functional responsibilities.

• The team model has great potential if the company requires higher level strategic work or if the elements of the company are highly interdependent.
• If the company is more tactical and transactional and works well within functional boundaries, then an executive work group may be the better choice. It is easier to create and maintain, and will generate cooperative behavior as long as responsibilities and accountability can be defined within functional boundaries, leaving the integration to the CEO.
• If the executives who report to the CEO are essentially autonomous, then the “star” model might be most appropriate. It is certainly most efficient for the individuals involved, although it may be more demanding for the CEO.

Regardless of the model to be used, the CEO and senior group should make a conscious decision regarding the way they will operate and the relationship they will have with each other.