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Corporate grade, reporting lines and membership of leadership teams in organizations often go together. But unbundling these components is a healthy exercise and a powerful rule in the maths of change.

If you report to Joe – CEO, divisional director or country manager – chances are you share this with another eight or ten people who constitute Joe’s management team, executive committee or leadership team. This is what the organization chart says. Most management teams are formed by what the organization chart dictates; by an ‘accidental’ reporting line. Everybody reporting to Joe is de facto a member of his management team.

In medium-sized or large corporations, structures are very often cross- or multi-functional. Imagine a Business Unit composed of a large Sales function, a smaller Marketing function and then a series of support functions such as HR, Finance, Legal, IT and perhaps a very small Strategy Team. The leadership team of that Unit is bound to be composed of the Director of Sales, the Director of Marketing, the Finance Controller, Legal counsel, the Head of IT and the Head of the Strategy Team. I suggest that this happened by default, by the dictation of the organization chart and that nobody ever questioned it.

But a legitimate question may be, “does everybody need to be part of that leadership team?” Many people in business organizations would of course say ‘no’. But the way we sometimes solve the issue is by promotion/demotion. For example, we may say only directors are really part of the management team. This is managing by grade, not by brain and it’s not what I am suggesting.

Grade in the corporate structure (VP, Director, Manager, Head) should not be a criterion of membership of a particular leadership team. Membership should be by invitation only. And only those who are in a capacity to add value to the role – whether they are in charge of a large part of the cake or not – should be invited.

It may be that, on reflection, the leadership team of the above Business Unit example should be composed of the Director of Marketing, the Director of Sales, the Head of HR and two Country Managers who do not report directly to the top leader of the Business Unit, but who are called upon to serve on that leadership team.

There may be alternative arrangements, but the principle is one of ‘by invitation only’. A principle that forces you to stop taking for granted the fact that membership will happen automatically or that grade or rank are a form of entitlement. It may be counterintuitive at first, but it is very effective. Much of the counterintuitive aspect comes from the fact that we tend to have pre-conceived ideas about how the organization should work. Sometimes these ideas carry flawed assumptions:

  1. We must be inclusive. Yes, I agree but it is inclusiveness by invitation. If people feel the need to have all the direct reports together from time to time or, indeed, on a regular basis, they could have some sort of ‘Staff Committee’ (of all direct reports) if there were reasons for them to meet. But Staff Committee is not the same as a leadership team.
  2. We must be fair. That assumes that all reporting lines to Joe are equal. In the above example it may have been considered unfair to the Financial Controller not to include him in the leadership team. There is nothing unfair about a selection made on transparent grounds. Inclusiveness and so-called fairness, sometimes result in gross unfairness to the group, because the artificial composition makes the team ineffective or highly unbalanced.
  3. We must be democratic. Democracy is a form of government, not a type of organization (unless you work for a company that ballots everybody to elect a CEO!).

When you question management team compositions for the first time and, de facto, try to unbundle corporate grades, leadership and reporting lines, you will encounter some negative reactions and a few puzzled faces. But once this has been accepted as a legitimate questioning of the status quo, a breeze of healthy fresh air will start to flow through your organization!

Something that you may want to try as a model to follow is the Board of Directors. Though there are some differences between countries, a Board of Directors in public companies is usually composed of a few executives and some non-executive directors, who are either representing some shareholder sector or participating as members on their own capacity, background, experience or particular expertise. We have accepted this kind of designed composition as normal when it comes to the Board, but this is far from common for executive and leadership committees. But there is no reason why you could not mirror this, unless you want to stick to the default position because, “we have never done it like that.”


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