How a Strong Leadership Team Shapes Company Culture

Startups live and die on the strength of their leadership teams—as individuals and the ability to come together as an effective group. I’ve seen this leading organizations of every size and stage, from $0 to about a billion dollars in revenue, from one employee to well over a thousand.

Through those experiences, and now as CEO-in-Residence at Primary advising portfolio founders on their journeys to becoming world-class CEOs, I’ve been lucky to learn and test the following advice with a wide variety of fellow leaders.

Why leadership teams matter

Leadership teams are incredibly important because they're behind the organization design. They're the ones who set compensation, policy, strategy, and structures that help the other teams work together within the organization. On a cultural level, leadership teams also become a kind of compass for how the organization thinks of itself and how it operates.

Ultimately, it's about performance. You want to have a strong leadership team so you can meet your goals and release what your organization is trying to put out into the world in the best way possible. When building this foundational team, there are several things to think about:

Hire competent individuals

This isn't rocket science but the first thing to think about is finding top talent for your team. You need to have people who can do their job well. They need to either already have the skills and experience necessary or be able to learn them quickly when they join the team.

The skills are table stakes, of course, but not only do people need to be competent in terms of job skills they also need to be competent collaborators, which means they need to have a high EQ and some humility. These can be hard to detect before someone joins your team. Take your time hiring and develop a systemic approach that includes conversations with multiple people including those who will report to the new executive.

Foster a team spirit

Having spent some time working in team development, I know that highly capable individuals on bad teams can become not-so-capable individuals who don't reach their potential. I also know that really good teams made up of average performers can outperform, and often do outperform bad teams, made up of stellar individual performers. So teamwork is really important and makes a big difference. It's crucial to create an environment where people feel like they're part of a team.

How to do that?

Company culture consists of diversity, psychological safety, and trust

'Culture,' when applied to an organization, can be an amorphous term, so I want to be a little more precise here. Generally, I'm speaking about three things: diversity, psychological safety, and trust.

Diversity

First, companies that have a good organizational culture incorporate a variety of perspectives because we know that innovation and disruptive ideas tend to come when one idea interacts with another idea, and together, they create this kind of third idea. There's no perfect formula for diversity but it means bringing people with different backgrounds or skill sets together. Sometimes, this is correlated with demographic diversity, like race, gender, sexual orientation, and class. However, you can have a lot of diversity in backgrounds but everybody went to Stanford and has similar ways of thinking, for example. So homogeneity and diversity can show up in different ways.

Psychological safety

We need a diverse group of people in the room, but we also need those people to share what's on their minds. That means we need to create an environment with psychological safety where people feel encouraged to share the dumbest and craziest ideas—those potentially disruptive ideas. If we don't have a place where they're excited and comfortable to share, it's as bad as not having them on the team in the first place.

Trust

Lastly, a good organizational culture means team members need to trust each other. In a collaborative environment, it's rare that everybody is going to think the same course of action is the best idea. Sometimes I win, and sometimes I lose, but I still need to commit. I still need to be an active participant in the plan we create and decide upon. This means I need to trust my colleagues, the team environment, and the decision-making processes we put in place.

Remember, growing a team is an ongoing process

I encourage people who sit in the C-suite at organizations to think of their colleagues as their first team and their primary responsibility because these attitudes, approaches, and dynamics will trick down into the various functional areas.

A leadership team isn't just a group of people, it's an entity that goes through somewhat predictable development processes. Just like you have to assemble gears into a watch, you also have to assemble a group of people into a team. This is an ongoing process, and it's not as dependent upon operational or structural pieces, like policy and procedures, as it is on the team's culture. More than anything, it's about how people think, feel, and relate to each other.

If I'm on a smaller team, like a delivery team inside of a large organization, I'm going to look to the leadership team to understand what's okay and what's not. If I see the leadership team collaborating, working well together, and respecting each other, then I'm going to think that's expected of me as well. So the leadership team sets the tone both for the good and the bad inside an organization.