As SMEs look to create more value they need to pull the ‘leadership lever’
“We believe that the people in a senior leadership team are the primary levers that the SME and its stakeholders possess to effectively drive their value creation plans.”
Here at Rowan, we advise our clients on how they can build and structure their teams to create and, in many cases, crystalise value. We utilise our data analytics platform, Leadership Dynamics, to ensure an objective, data-led approach to optimising the value creation opportunity.
The Leadership Dynamics 2021 Insights Report showed that the best-performing businesses are more likely to make leadership change, make more change and make change sooner.
The report also found that top quartile businesses were more likely to make at least one change to their board, with 98% doing so, compared to 91% of bottom quartile businesses taking the same action.
The better-performing businesses averaged a higher number of personnel changes, at 3.7, but their less well-performing counterparts only made 3.4, on average.
These are just some of the headline results from the report, but after reviewing the sum of these findings, it’s clear that leadership change is a lever for value creation.
Another key finding shows the importance of building a complementary leadership group. That is having a mix of experience and behavioural traits around the leadership team. Often there is an imbalance of too many similar people, this can often lead to sub optimal performance.
The Leadership Dynamics platform along with the proprietary behavioural profiling means we can help businesses build the right level of complementarity and diversity. This in turn gives the leadership team and the stakeholders the best chance of executing their value creation plans.
When it comes to imbalance, businesses often make the mistake of focussing on the domain and functional expertise of their team. Appointing multiple sector and functional specialists.
While necessary, this alone is not sufficient to optimise value creation. Having people within the leadership group who have been through a value creation process, and therefore have a level of situational experience, is, moreover, the single most important way to optimise the leadership group.
Before a business can make any changes or additions it is important to understand where they are now as a starting point. The Leadership Dynamics platform can provide objective insight on what a team looks like currently as well as providing a the steps that could be taken to reach optimisation.
For a leadership team to be in the best position to deliver on a value creation plan the team it needs to have the right mix of behavioural traits alongside strong functional, domain and most importantly situational experience.