Dysfunctional by design - Why management teams so rarely act as a team and what we can do about it …

According to Tom DeMarco and Timothy Lister in their classic project management book "Peopleware - Productive Projects and Teams" from the 1980s, the terms "management" and "team" are not really compatible.

"For all the talk about 'management teams,' there really is no such thing - certainly never jelled teams at the managerial level. "

From their perspective, real team building only takes place "at the bottom of hierarchy".

"As you go higher an higher in the organization chart, the concept of jelled teams recedes further an further into oblivion. " [1]

The question of why this is the case is not really answered by DeMarco and Lister.

In my experience, however, this does not diminish the truth of their thesis. Whether I myself was working in the role of a division manager, as a business unit manager and part of an executive board, or as a management consultant on the sidelines, I was always struck by the perception of at least a productivity-reducing, sometimes even destructive way of dealing with each other. The actual purpose of typical groups of managers - to promote the company - proved in my eyes to be massively restricted by internal competition, heterogeneous goals, demarcation, obfuscation, personal advantage and the pursuit of individual interests outside the company's objective.

Only in the team in which I have now been working at Qvest Digital for over 10 years do I experience things differently. And there are specific reasons for this success - and potential failure - which I would like to share in the following sections.

The myth of stimulating competition

One obvious reason for the failure of management groups as teams is the classic image that competition stimulates business. And this creed is often followed where the air becomes hierarchically thinner and people are (often wrongly) ascribed entrepreneurial skills.

To make it tangible what consequences this promotion of competition can have at a management level, I would like to tell you about an experience that happened 20 years ago.

At that time, a reorganization meant that I myself, in my role as Head of Consulting, was moved up a level in the hierarchy together with the Head of Project Management and thus reported directly to the Chief Sales Officer. From an organizational point of view, this didn't really make sense; it would certainly have been better to keep the two departments under one management in the future. However, the Management Board was obviously unable to agree on a candidate. When I paid my first visit to my new boss, he literally said to me: "Mr. Barth, Mr. X (the head of project management) and I have known each other for years and have successfully implemented projects together. But don't worry, you and Mr. X are on the same starting line and then I'll see who can run faster."

It doesn't take much brainpower to predict that our collaboration would be rather difficult after that. At the time, we both lacked the personal means to leave the predetermined path and take more unencumbered paths in our collaboration. Although I was well aware that the Board of Management's announcement was not really effective and would not have allowed myself to be tempted to behave in a similar way towards my employees at the time, I accepted it as a common and rather unavoidable game at this level of management.

The board of directors certainly believed that his behavior was beneficial. He probably saw the potential in the confrontation that we would both rise above ourselves and thus create maximum value - the myth of fruitful competition.

But the opposite was the case. At the interface between the teams, a formal petty war developed that regularly escalated. Observing each other's actions took up a lot of space and distracted from the relevant issues. The value stream and customer experience suffered because we were passing the ball back and forth. I really didn't cover myself in glory.

After about 1.5 years, I was promoted to business unit manager, again in a new structure. It seemed unthinkable to everyone involved that Mr. X would be able to work under me, so he was transferred to a different role in the organization. A short time later, he handed in his notice. So this phase of misery also ended with the loss of competence.

Problem recognized but not solved

Let's continue the anecdote and gain a different perspective on the challenges faced by management teams. As a business unit manager, I became part of an 11-member management team, which also included the 3-member executive board. In keeping with the spirit of the times, it was all men, of course, and I was by far the youngest.

While the CEO tried to create a team feeling - he regularly spoke of "swarm intelligence" - and we also received appropriate external support, all the dysfunctions that Patrick Lencioni describes in his book "Five Dysfunctions of a Team" [2] actually manifested themselves in the group. Responsibility was not accepted, there was no focus on achieving goals, conflicts were only dealt with in a hidden manner and torpedoing the implementation of supposedly jointly reached decisions was a practiced habit. A level of trust only existed between individuals, political coalitions were commonplace.

The actual causes of this behavior were not investigated. The Board of Directors, which itself was also divided, attempted an erratic shift between management - "This is now signed in blood!" - and laissez-faire - "These are all highly paid managers, I expect them to solve their own problems". I myself felt worse and worse in this constellation, I increasingly hated having to take part in the weekly, eternally long meetings. The culmination of the attempt to get to grips with the challenge of the team was the individualization of the problem: an expensive HR consultancy was hired to check the ability of each individual to fulfil their role in a 360° assessment. The assessment ultimately had no consequences and, as was hardly to be expected, did not contribute in any recognizable way to solving the problems.

Rethinking leadership collaboration

Why do management teams find it so difficult to really form a team? The answer to this question can be approached from different angles. The antipodes of the explanatory approaches are, on the one hand, individual psychological perspectives combined with group dynamic interpretations and, on the other hand, systems theory approaches that tend to analyze the visible structures and formalisms in order to then understand behavior that is adapted to them.

I will use the latter perspective for my attempt at an explanation. In doing so, I would like to take the positive perspective and spend less time looking at the fatal patterns and more time designing scenarios for how management cooperation can be put on a new footing.

If we look at typical management constellations, there are numerous factors that contribute to assigning personal responsibility to managers and controlling them individually. This also includes encouraging a competitive mindset. The side effect is to make collaboration between managers more difficult, to the point where they no longer function as a team at all due to the loss of a truly common goal. It is precisely these external or system-imposed individualization components that are at the heart of the problem.

We can consciously counteract this! What is necessary for this?

The CEO

In management teams, you often come across the "executive" role, which, in case of doubt, bundles all decision-making power onto itself. The idea behind this is, of course, that there must be someone in the management team who can enforce the decision in the event of disagreement and - here we are back to the familiar theme - bears overall responsibility.

It has a lasting effect on the individual's perceived self-efficacy in teamwork if decisions are made on the basis of a culture of better arguments and less through the exercise of differences in rank. Even if this is not practiced, the existence of this role creates differences in the team that have a negative impact on team dynamics. For example, in such a constellation, it is generally not possible to assume joint responsibility, which inevitably relativizes the importance of their actions for the ordinary team members and throws them back on themselves.

I know from my own experience that there is no need for an "executive". At Qvest Digital, we have been working together in a four-member board for over 10 years without this role. According to our rules of procedure, we have the option of escalating to the Supervisory Board in the event of disagreement, but this has never happened.

Monetary targets

I was at a conference some time ago where a senior executive complained that the management team was not sufficiently engaged in the shared transformation goals. When questioned, it became clear that each individual member had individual, monetary targets for their personal area of activity, according to which their performance was assessed. The message that the company conveyed to the managers was clear: achieve the best possible result in your area of activity, everything else is irrelevant. So the lack of focus on the common issues was not really surprising.

If I want a management team to work as a team, all members must have the same goal. Deviations generally lead at least to defocusing, possibly even to conflicts within the team. If uniformity is guaranteed, then the biggest mistake has already been rectified.

It is even better if the achievement of objectives is not monetarily incentivized. This also creates conflicts within the team, as there may always be issues that are critical to the company but are not reflected in the team's objectives. Depending on the level of motivation that is individually induced by the amount of money expected when targets are achieved, team members behave differently when prioritizing secondary, but also important issues. This again leads to disputes that create no value.

Team experience

Most management teams that see themselves as such but are not actually teams are characterized by the fact that they do not actually work on anything together. A shared, creative space is not created because responsibility in the sense of accountability is only ever assumed for topics within the management circle and the actual implementation is delegated to the line organization. There is no shared work experience that leads to results that are associated with a sense of pride in the work.

On the one hand, this makes it difficult to really get to know each other and appreciate each other's individual skills, and on the other hand, no real shared responsibility is ever taken for anything. Both aspects have a devastating effect on building genuine trust.

Distribution of responsibilities and transparency

I am COO at our company. At the same time, I give presentations on organizational development topics, actively do sales, participate in marketing measures and support the finance department because, as a theoretical astrophysicist, I have very good access to figures and models. I am involved in strategy development and consciously deal with new market developments.

We don't have a business distribution plan, despite my title. Of course, everyone has their own focus of experience due to their personal history, but this, together with the title, does not form a sphere of influence protected by a firewall. Just as I look into the finances, the finance colleague also has direct, decisive sales account responsibility and, if necessary, gets involved in project management.

Eliminating this formal classic of assigning personal responsibility creates two things: firstly, a feeling of mutual help and support, and secondly, genuine transparency regarding the challenges in the company as a whole, not just in one's own narrowly defined sphere of influence. Only with this collective knowledge is a management team in a position to work together and act together in an entrepreneurial manner.

Escalation proxy vs. team identification

Is the management team even my team? Or is my degree of identification in interaction with the middle managers entrusted to me perhaps much greater? As a manager, I have to ask myself this question.

I think it is perfectly possible to belong to two teams with a high degree of identification. However, this presupposes that I disclose the conflicts that may arise as a result and help to resolve them where the core of the problem lies.

This is where mistakes are often made that put a strain on the management team and result from an incorrect understanding of leadership. When a conflict arises at the working level between two areas, managers up to the top of the organization like to act as escalation proxies: instead of guiding employees to resolve the conflict at the factual level through direct communication, they take the solution out of the employees' hands and pass the conflict on to the top of the organization as an escalation proxy, where two board members then argue about challenges in the interface between the areas that they themselves do not even understand in detail in case of doubt.

This understanding of taking responsibility for the actions of "one's own people", the team entrusted to me, as opposed to joint responsibility as a management team perpetuates the "us versus them" thinking that exists between many divisions at the highest level and prevents management from really working together as a team in a spirit of trust to find solutions that move the company forward as a whole.

Shareholding structure and salary differences

I am a shareholder and a member of the Management Board of Qvest Digital AG. This means I have two roles and have to balance these against each other in my day-to-day work. The weighting also depends on how relevant my company shares are for my personal economic balance sheet compared to the salary component that I draw from my position on the Management Board.

If there is a lack of transparency or an undifferentiated approach at this point with regard to the inequality of the level of participation and salaries in the management team, the team experience is massively disrupted. If it is more opportune for one colleague to generate dividends, while the other would rather see their salary increased, this has an impact on the prioritization of daily activities. If such conflicts arise, they must be disclosed and dealt with jointly.

I once had a relevant experience with regard to poor handling of this issue in the past. In the aforementioned management team in which I worked, it was a matter of setting an example within the company when the economic situation was bad. The chairman of the board suggested that the costs for the upcoming summer party should be paid jointly from the private coffers, with everyone contributing equally. I felt this was massively unfair, knowing that the Chairman of the Board was paid twenty times my salary and held 20% of the shares in the company. Why should I step into the breach in the same way as he did? Thank God the tide turned and the issue was dropped ...

It is possible

In my experience, consciously dealing with the aspects described and the resulting adaptation of structures creates the external conditions for groups of managers to work together as a team.

Even if you succeed in implementing all of this in your own organization, the path to becoming a team is still not a foregone conclusion. However, at least there are no longer any formal structures that act as a centrifugal force on members of the management team.

The next steps then involve classic team building. It must be possible to build mutual trust.

And then, ultimately, it seems possible to disprove DeMarco and Lister and create something like "jelled teams " even at the highest organizational level.

Sources

[1] DeMarco, Tom; Lister, Timothy, “Peopleware - Productive Projects and Teams”, 3rd Edition, Addison Wesley, 2013, p.149

[2] Lencioni, Patrick, “Five Dysfunktion of a Team”, Jossey-Bass, A Wiley Imprint, 2002