Why investing in high-performing leadership teams adds up

[Australasian Law Management Journal,General Management,Marketing & Business Development,Strategy & Leadership] February 20, 2021

For firms to be truly collaborative and successful, they require a culture in which there is a focus on developing leadership teams rather than individual leaders who do their own thing, writes Keegan Luiters.

The case for a high-performing leadership team is strong. Across industries, global consulting firm McKinsey has found that firms had 1.9 times increased likelihood of having above-median financial performance when the top team is “working together toward a common vision”. This is a compelling competitive advantage.

Within the context of law firms, this holds true. In researching the performance of professional services firms internationally, Heidi Gardner from Harvard University found that “firms earn higher margins, inspire greater client loyalty, and gain a competitive edge” when taking a more collaborative approach.

These two factors – a top team working together well and a more collaborative approach to work across a firm – are not mutually exclusive. In fact, they are complementary. A more cohesive and aligned top leadership team is more likely to promote, support and enable a collaborative approach within a firm. Similarly, the inverse holds true – an approach across the firm that connects different practice areas improves the conditions for senior leadership to lead with a more collective approach.

This is the classic virtuous cycle that is so often the aspiration for a business strategy, with each aspect positively influencing the other. So, where to start? While either will work, the best point of leverage is the approach of leadership. A collaborative approach is not entirely dependent upon the senior leadership within a firm, but the role of those leaders is central to adopting this way of working by establishing and role-modelling such an approach.

This is notoriously difficult to achieve. Research by Richard Hackman, Ruth Wageman and others has found that only 21 per cent of leadership teams are high-performing and 42 per cent perform poorly. What is more likely than a high-performing leadership team is what team coaching researchers often refer to as a pseudo team – where the team is called such by themselves or others, but which fails to work in a cohesive way towards a shared objective.

Foster teams, not individuals

A fundamental reason that leadership teams fail to deliver on their promise is that they are comprised of hard-working, talented, dedicated leaders of independent teams – who don’t function as an interdependent and collaborative team. What is required is a deliberate and intentional focus on leadership teams and not just individual leaders.

In 2020, global advisory firm Gartner released its global survey on leader effectiveness, which surveyed 2819 leaders. This revealed an approach to leadership that it referred to as complementary leadership, which they defined as “the intentional partnership between one leader and one or many leader partners to share leadership responsibilities based on complementary skillsets.”

This is a focus on the collective leadership performance – beyond strong individual leaders. Among the findings was that those leaders who exercise complementary leadership effectively can boost their team performance to 13 per cent above average. It is further data supporting the assertion that high-performing leadership teams act as a competitive advantage.

Differentiation versus integration

There are factors within law firms that make such an approach particularly challenging. The crux of the challenges faced by the senior leadership of many law firms sits at managing the paradox between differentiation and integration. In this context, differentiation refers to the need to possess deep and specialised expertise that clients increasingly expect. Integration is the sense of leveraging this diverse expertise to deliver more value for and with clients at a firm level.

Most firms are strong at differentiation. They achieve this either by developing or acquiring the capability to service a diverse range of client needs across practice areas. For leaders, this differentiation is reinforced by their lived experience.

Typically, senior leaders have progressed through their career as a direct result of their skill as a practitioner and their proven ability to foster strong client partnerships. As a result, senior leaders typically have a deep and thorough connection to a narrow field of practice.

This differentiation is a strength. As with any strength, however, a focus on one area can occur at the expense of another. In this instance, integration often suffers. At senior levels within law firms, this manifests most often in strong leaders of teams, as opposed to strong leadership teams.

This need not be a matter of one or the other. One of the best ways for leaders to develop their own capacity is in a high-performing leadership team. In such an environment, they are required to wrestle with the complexity of competing agendas and take multiple perspectives. Similarly, a strong leadership team benefits from strong functional leaders who bring a deep experience of specific practice areas and focus on performance.

Investing in high-performing leadership teams is a point of leverage worthy of consideration for leaders of law firms. It develops leaders who are better able to operate in a complex environment, as well as teams that are better able to collaborate and ultimately provide firms with a sustainable competitive advantage.

Keegan Luiters is an independent consultant who works with leaders, teams and organisations to lift their performance. This article draws on content from his new book, Team Up. Visit www.keeganluiters.com for more information or connect with him on LinkedIn.


References

Gardner, H.K., 2015. When senior managers won’t collaborate. Harvard Business Review, 93, p.75À85.

Wageman, R., Nunes, D.A., Burruss, J.A. and Hackman, J.R., 2008. Senior leadership teams: What it takes to make them great. Harvard Business Review Press.

West, M.A. and Lyubovnikova, J., 2012. Real teams or pseudo teams? The changing landscape needs a better map. Industrial and Organizational Psychology, 5(1), pp.25-28.

https://www.mckinsey.com/business-functions/organization/our-insights/high-performing-teams-a-timeless-leadership-topic

https://www.gartner.com/en/human-resources/trends/reshaping-leadership-to-prepare-for-the-future