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Leadership: How to Develop an All-Star Management Team…Fact: Only 44% of Executives Will Remain with Their Current Company for 2-5 Years.

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Perhaps this story sounds familiar – after months or years of hard work, your company’s business is growing rapidly. In fact, it has begun to demand so much of your time that it is starting to feel like the wheels are going to fall off the proverbial bus. The next logical step is to augment your skill set with people who are more effective than you are in at least one discipline by forming an executive team.

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However, you may not know how to start this process. How should you break up the different roles? What intangibles should you look for in candidates? Which executive roles should you hire for first?

As Varsity Tutors grew, so too did the need to develop structured divisions within my company, each of which was responsible for different operational goals. How to structure the operational divisions, as well as how to structure each executive role, is heavily driven by nuances of your business model and the specific strengths of the individuals your recruit for each role.

 

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As a starting point, I recommend speaking with other executives and understanding how their companies have structured the executive roles. Does HR report directly to the CEO, should it report through the CFO, or should it report to General Counsel? All three are done in companies and the more conversations you have with other companies about what they have learned works best in this regard, the better informed you will be as you start bucketing key responsibilities and determining operational divisions.

Why do companies develop management teams?

Companies generally begin to develop management teams when their founders’ time available to manage important aspects of the business becomes a key constraint. An executive team can help a CEO more strategically devote his/her own time into growing the company and spend less time on the daily operational activities. For example, take CEO A, the founder of a technology firm – if she is approving every single in-office purchase, down to reams of copy paper, and every new hire, she probably does not have enough time for the big-picture strategic decisions that are necessary to properly grow her business.

How do I develop my management team?
Once you decide which executive roles to fill, the next step is to identify the right individual for each position. You can do this by:

Networking extensively

If you are looking to hire an executive, a generalized job posting is unlikely to be the best option. Instead, focus extensively on networking with investors, mentors, and peers at other businesses. They may know of individuals who have the relevant experience skill set you are seeking, and are operational rock stars. Before you reach out to your network, try to clarify your expectations for the role, as well as the specific skills and experiences that the ideal candidate will possess.

This way, your network can provide you with better referrals. The recruiting and onboarding process can be time-consuming and costly, so ensuring a great fit between the candidate and your company is essential to maximizing the probability that the person will be successful in the role.

Assessing for fit

Your new executive may be responsible for overseeing the activities of an entire department or team within your company, which only deepens the importance of that great fit. In addition to you personally meeting with candidates, consider asking members of that particular team to participate in the interview process. Do the personalities of the department and the potential hire complement one another?

It is often easier to find a candidate who suits the existing team than it is to ask an entire department to adapt to one person, and the first scenario is more likely to support your company’s long-term growth. This should not be a quick process – given the importance of the role, you should take time to get to know the person well prior to extending a formal offer.

Because executives typically report directly to the CEO or founder, you should also ask yourself how you would feel working closely with this candidate. A stellar résumé won’t make up for personal deficiencies that lead to internal strife. Even the most qualified person on paper may have a hard time integrating into your business if the chemistry is lacking. While fit can be difficult to assess, you can try asking yourself these questions:

Is there a match between the company culture and this candidate?

Is there a match between this person and the existing management team/staff? Will they work well together?

Does this candidate believe in our vision?

Does the candidate buy into our core business strategy?

What are the candidate’s key motivating factors driving him or her to join our company?
Providing opportunities for professional growth

Helping an executive develop professionally is not just about identifying the right candidate and elevating them to a new role. It is also about ensuring that you can keep that person and help them become more effective over time. Consider these statistics from multiple industries:
Only 44% of executives will remain with their current company for 2-5 years. More than half of executives pursue a new opportunity after five years, which can be devastating for a business. Onboarding a new executive can be time-consuming, but moreover, you also lose the creative thinking, insight, and organizational knowledge of the outgoing team member. These traits can be (and in many instances, already have been) crucial to your company’s growth.

Up to 76% of all executives are willing to consider new opportunities immediately. Why? These new opportunities may be more fulfilling if they offer significantly better chances for professional development.
Remember that executive teams are as intricate and shifting as any other group of staff members. Building an all-star management team is a continuous process. Just as you devote time and effort to recruiting the right candidates and supporting their professional growth, you should also devote time and effort to making sure that your executive team’s work environment is always productive, open, and rewarding. An all-star management team that is sufficiently supported can quickly become one of your company’s greatest strengths.

Chuck Cohn is the CEO and founder of Varsity Tutors, a technology platform for private academic tutoring and test prep designed to help students at all levels of education achieve academic excellence.