From the February 2006 issue of Investment Advisor • Subscribe!

February 1, 2006

THE GLUCK REPORT, Part II:On Being a Leader

Patrick Lencioni shares his take on how to be a better CEO

Have you ever seen your one of your managers--a grown man--cry after your staff tells him he is a leader and urges him to stop thinking he isn't worthy of a leadership role? Do you know if your office manager is emotionally wounded by the fact that she is being undermined by one of your partners? Did you ever invite your staff to tell you where you are failing them?

If you have not communicated at this level with your team, you probably should. Without this kind of communication, your team is dysfunctional, your business is waylaid by people problems, and your service is probably suffering from a lack of commitment from your staff.

So says Patrick Lencioni, author of the bestselling book, The Five Dysfunctions of a Team (Jossey-Bass, 2002), who believes management is based on trust. If key people in your firm trust each other, he argues, they will exchange brutally honest constructive criticism. Once they are capable of this, they will be committed to their decisions and goals, can be held accountable, and are more likely to produce results.

Why did you write this book? The biggest untapped potential for organizations is its people. Companies don't lack finance, technology, and marketing. Southwest Airlines isn't successful because of its business model. Any airline could duplicate it; it's Southwest's culture that makes it work. The real opportunity for most companies is to address organizational dysfunction, a big part of which is the team at the top. I wrote this book because it represents the greatest opportunity for improvement and the greatest source of pain and suffering for people in an organization. While people have been talking about teamwork for decades, when you ask people how to do it--how to create teamwork--there are a thousand approaches. I've come up with five ways teams are destroyed or become dysfunctional.

Many of our readers work at small firms with only three or five people. Would you ideas apply to them? If you only have three people in your office, then everyone is on the team. The five dysfunctions apply in the strongest, purest way in a firm where everyone is on the first team. But the number of people on a team is critical. Generally, smaller is better than larger. When you get close to nine on your team, it's harder to be a team. Five to nine is the right amount of people. Too many companies ask people to be on their leadership team for reasons of inclusion or as a reward. The only reason someone should be on a leadership team is because he or she serves the organization. The reason you want to limit the number of people is that teams have two kinds of communication: advocacy, where someone says something like, 'I think we should invest in bonds;' and inquiry, where people say, "Why do you say that?" When a teams gets beyond nine, people spend too much time advocating. When too many people are at the table, there's a sense that you won't get the floor back and people just keep advocating.

The first dysfunction that you talk about is a lack of trust. Team members have to get comfortable with one another if they are going to have any chance of addressing the other dysfunctions. When I talk about trust, I'm not talking about predictive trust, like I can predict that person's behavior. Anyone that's worked together long enough can have that kind of trust. I'm talking about vulnerability-based trust, where people are willing to be open about their mistakes and who they are. When people know that the others on their team are fully capable of acknowledging themselves--good and bad--and when people become confident that what others on the team say is what they really mean, they are willing to acknowledge a better idea and be completely open. That kind of trust is irreplaceable. When people are not capable of being vulnerable and fully human, that is when politics enters. People try to manipulate situations for themselves instead of being nakedly honest.

You have some trust-building exercises that help teams. First is the personal histories exercise, where people talk about who they are. It is not a touchy-feely sort of thing. In this exercise, we asked people to say who they are, where they grew up, how many siblings they have. People need to be comfortable talking about where they came from if they are going to trust each other. We've seen people who have worked together closely for 10 years who didn't know basic things about their colleagues' character development and background that informed who they are and why they act the way they do. I once came across a situation where we asked team members for the most difficult challenge they faced in their childhood. One fellow said his sibling was murdered when he was 12, and he talked about how that affected him. This fellow had worked there for nine years and never mentioned this to anyone, even though it was a big part of who he is. If you work on a team, however, it is a relatively intimate thing, and people have to know each other. I'm not saying you need to pry or talk about these issues every day. But people need to know one another and understand each other.

How do you know you have enough trust? When people say things like, "I don't know the answer," or, "I made a mistake," or "What I said yesterday was out of line." It is when people say things to demonstrate weakness, like "Teach me to be more like you because I admire you." It is when people acknowledge each other's people strengths. You know you don't have enough trust when you never hear people say, "I was wrong; I made a mistake. "

You say that conflict is the second dysfunction, but it is a lack of conflict that is the dysfunction. Please explain. Conflict is about productive ideological conflict. When two people disagree, there is always an element of tension to it. In a sense, it's like you're judging each other. Discomfort in a team is good, as long as there is trust. Without trust, conflict is bad because then it's people trying to hurt one another or prove themselves right or protect themselves. With trust, conflict is a sign that people are looking for the best answers. If someone else makes a better point, others on the team admit it. Conflict is not about personalities. It's about ideas. Problems arise when there is conflict and no trust because then people aren't comfortable disagreeing. They wind up in the parking lot talking about each other. Great teams don't hold back because they know there is no problem disagreeing with each other because it is aimed ultimately at finding the right solution.

The third dysfunction is a lack of commitment. How do you know if you have commitment from your team? People can't buy into a decision if they don't weigh in on it. They need to put their thoughts on the table. If they can't do that, they'll have a lack of confidence in the decision. Intel has a culture of "disagree and commit." It is okay to disagree, but you need to commit at the end of the discussion. If people are not committed to an idea, they have a vested interest in seeing the idea fail. They won't go out of their way to make a decision stick and an idea work. In some cases, they may say it is better if the idea failed because then it would prove them right. So conflict begins with commitment. Anyone with kids knows what I'm talking about. Say you tell your child to mow the lawn and he says that he doesn't want to do it and that he wants to play football instead. What's better to say, "I'm not interested in hearing why you don't want to do it." or "I understand you have objections and I am not making this decision without considering those objections. But this is my decision?" People just want to be heard.

You say that sometimes teams should force themselves to make decisions without that much research. If you have a team that cannot make a call, cannot commit, then a relevant exercise is to make a low-risk decision that can't have horrible consequence without a lot of research. It will prove that, more often than you think, you actually have the information you need to make decisions. Some people just can't make decisions unless they have looked at every angle five times. But the exercise can help commitment-phobic teams.

Fear of accountability is the fourth dysfunction you identify. It's about people not holding each other accountable for not doing what they said they would. This is so common. People will call each other on obvious things, like missing your numbers four quarters in a row. But holding each other accountable means calling each other on behaviors. It's really important that the team leader is willing to lead this. If the team leader holds you accountable for behavior, then the other members of the team will also do it. However, if the leader is not willing to hold members of the team accountable for their actions and behaviors, then the team members are unlikely to do it. This is not an easy job for a leader. It's not as if anyone starts an investment advisory firm because they want to tell people that they're not paying attention in meetings. But if you're not willing to do it, then behaviors will be all over the place.

What other exercises can you suggest? Doing the Myers Briggs assessment or using some sort of profiling tool that helps people acknowledge their unique, non-judgmental tendencies is often helpful. (See The Gluck Report April 2005 for information about assessment tools.) Myers Briggs can show you that I tend to approach issues in a certain way and knowing this about me can help you know that you need to call me on it if you see me behaving this way. It gives people a context for calling out each other. For instance, I'm an unstructured thinker. I'm creative and not very focused. So when I do something that is not well focused, my staff can say, "Hey, Patrick, focus. We need a decision." Another exercise is that everyone on your team sits at the table and writes one thing about each person on the team that makes the team stronger and one thing about each person that makes the team less effective. First, you go through all the positive ones and then all the ones hurting the team. After doing this, everyone on your team will have given each other the one thing they can do to be more effective.

Editor-at-Large Andrew Gluck, a veteran personal finance reporter, is president of Advisor Products Inc. (www.advisorproducts.com), which creates client newsletters and Web sites for advisors. Advisor Products may compete or do business with companies mentioned in this column. He can be reached at agluck@advisorproducts.com.

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