When looking at building a senior leadership
team for a PE backed business, it’s hugely different from that of a plc or
large corporate. From my experience, a
PE backed business typically has a timeline of 3 to 5 years to deliver
significant results for the PE fund. Accordingly the leadership team, and the
hiring CEO, must develop and deliver strong business results quickly.
Whenever I joined as CEO of a business, one of
the first things I would do is assess the existing management structure to
ascertain if adjustments were necessary to turn the performance of the business
around, or to push a successful business to achieve greater returns. I
generally use a few firm principles to guide me and these are broadly as follows:
Don’t
compromise and be ruthless if necessary
There can be no hesitation or compromise to
ensure you build the strongest performing teams. I believe it’s crucial to wait for the right person; it’s all about getting the right people
you need to achieve business goals. If
not, it will come back to haunt you and cause you unnecessary issues later on.
If you inherit a team, then it may be the case
that this team is not structured or built with the right skills to enable you
to carry out the activities required by the business. The growth of the business simply requires
bringing in fresh team members who have the necessary vision and skills.
In this situation, you need to make the hard
calls. If people lack the right skills
or cannot do the job, then they must go. There is no scope for compromise. With
the demands and pace of a PE backed business, there really is no room for
passengers. This is frequently a
difficult part of the job to exit people, however I believe that the wider business
understands that difficult decisions need to be made. They will acknowledge
where a CEO has made a difficult leadership decision.
Experience
is essential
On that basis, there are certain things I
always look for in building a leadership team, namely people who have 25-30
years of experience under their belt. I call it my “grey hair” principle. It’s
a great support to me as CEO to have a mature, experienced team sitting around
the leadership table who will not be fazed by the various business challenges.
They will pretty much have seen it all before. This reverse ageism principle
has always served me well and I have had great, older colleagues who have done
great jobs for me. The other big advantage of this is that they tend to speak
their minds more and can contribute strongly to the growth of a business.
As CEO, I don’t have the time to wait through a
long adjustment period for management to find its footing or develop into their
roles. With the right leadership in
place, I can be more confident of delivering the annual return and ongoing
growth that investors expect.
Once or twice however I’ve made mistakes, hired
someone who wasn’t ready, or wasn’t right for the role. This is when the 6-month probation period is
crucial as this allows a get-out for both parties. I believe that setting clear
goals for the first 6 months, and giving regular performance feedback, is
crucial to letting a new hire know he / she is performing. If they are not
hitting the required standard in these first 6 months, I have at times exited
people at this stage. This is tough to do but is better in the long run for me
as CEO and for the business.
Let
them get on with it
When you have experienced people in place, who know
more than you do frequently, it aids in the overall momentum of the
business. You can give them clear goals,
get out of their way and simply let them do their jobs. By identifying situations where strong
existing leadership just needs greater independence and rewards, this makes it
easier to push the business forward. A good friend of mine uses the 3D rule of
management – Decide, Delegate & Disappear! I don’t quite do the “disappear”
bit but I do like to actively delegate and let my experienced team work away on
delivery.
I also strongly encourage people to have
different opinions to me. This
challenges me, and ultimately provokes more valuable discussions with respect
to business issues. Tapping into the
reservoir of others’ experience can lead to far greater returns than having to
pull people along with you.
So, in summary, when you hire people that have
been around the block, they can handle themselves and the demands required of
them leaving you to focus on strategy, direction and other issues.
Consider
your Succession Plan
Lastly, as CEO, I believe that it is imperative
that you think about your succession plans and how to develop more junior
colleagues so that they can potentially step up to more senior leadership roles
in due course. Ideally the skillsets and
experience is there for every team member to move upwards in the chain but it’s
up to the CEO to ensure that smooth transition and to create opportunities for
it to happen. Keeping an eye on the
future line-up is part of maintaining a strong leadership team.
Hopefully you have enjoyed this short read
about the few key principles that I have used in building leadership teams,
particularly in demanding PE backed businesses. Perhaps in different types of
businesses a CEO may have a longer development time line or may not be under
such intense pressure for results each month or quarter. Certainly when I
worked as CEO in a plc business, there were always options to move people to
other parts of the wider Group so the need to exit people was not as intense.
However PE backed business have a particularly demanding dynamic I believe and
hence why, as CEO, I adhered strongly to these principles. They have served me
well to date!
