If you want to accelerate your growth rate, it is mission critical to build a high performance leadership team by having the right people in the right jobs doing the right work.
Almost without exception, when entrepreneurs come to our firm for coaching, they have one or more weak links on their leadership team.
Yes, these weak links may have been okay in the early days of your company but now the company has outgrown them. They may have been good enough to get you to where you are today, but deep inside you know you will need to upgrade to build a high performance team that propels you to the next big jump in growth.
As a quick exercise, take a moment and rate each person on your leadership team on a scale of one to five, with five being a rock star. Anyone who is not a five should either be managed up to a five in the next 90 days or be respectfully managed out the door.
You cannot afford to have even one under-performer if you want to have a high performance leadership team. All it takes is one bad apple to tank your company.
High Performance Leadership
After more than 30 years of experience in building high-growth companies, here’s what I’ve learned when it comes to building your high performance leadership team.
- Hire the absolute best person for the job, and pay up to get them onboard.
- Align them with your vision.
- Agree on what you want the person to get done.
- Implement a system of accountability.
- Get out of the way and let them do their job.
Let me give you a real life example.
When my partner Brett and I were building Platinum Capital, we had a vision to generate more than $1 billion in volume and do it fast. We knew we had to hire someone who had been there, done that, so we looked to hire a superstar who would be a fit for where the company was going, not where it currently was.
Back then, Brett and I were scrappy entrepreneurs gaining a lot of momentum as we built our business, but we needed to bring in some senior talent to help us scale and create a high performance leadership team. We found a guy named Jack Daly.
Jack had tremendous experience in the mortgage business. He had founded Glenfed Mortgage. He ran the mortgage company at Glendale Federal Bank, Security Pacific Bank, and Fleet Bank. We knew he was the right guy, and having his level of talent on board was what we needed, but there was one small problem: we could not afford to pay him what he was worth.
We convinced him to join our firm by selling him on the vision of where we were headed. There was no doubt we were going to build our company to over $1 billion and Jack bought in to it. But then we had to figure out how to “pay up” for him.
We decided to give him a piece of the action and he became our partner.
Beyond offering a piece of the action, here are two other ways to structure the comp package to make it attractive to top achievers when you do not have the budget to offer what they’re really worth.
First, develop an attractive “pay for performance” package.
In this scenario, you offer a base salary that you can afford and then add a meaningful upside incentive. For example, if you tie your incentive to a result that ultimately generates higher cash flow, you know you’ll have the cash to pay the big incentive.
You need to get creative here. Having a meaningful cash incentive is only one piece to the puzzle of attracting top people.
Find out what really drives your candidate. Is it all about money? Probably not. How about recognition? How about giving them the ability to run their own profit center within your company?
By understanding their motivation and what would get them to jump out of bed in the morning, you can structure the job to meet their needs beyond just putting extra cash in their pocket.
Second, consider a phantom stock type program.
Phantom stock is a form of long-term incentive plan used by businesses to award employees with potential value without stock dilution. It’s essentially a type of deferred bonus tied to appreciation in the equity or market value of your company.
Several of our coaching clients have successfully used this strategy to increase team compensation and encourage employee retention.
Jack was just one of many top people we hired over the years at Platinum Capital. We hired our CFO from Indy Bank and then a few years later upgraded to an even stronger guy. Our head of credit spent years working in senior management for Washington Mutual and Countrywide. We also hired several other key players from some of our strongest competitors.
By hiring those key people who had been there and done it with much larger firms, we built a high performance leadership team and were able to grow our firm much faster, while maintaining control with systems and processes.
And yes, we exceeded our $1 billion goal in 2005 and ultimately hit $1.6 billion in 2006.
When we begin coaching within a firm, I typically find three areas of major weakness.
- The leaders may know where they want to go, but they don’t really know how to get there, i.e., how to Make Big Happen!
- They don’t understand their gross margin and how to positively impact it.
- They don’t have the right people to take them where they need to go.
As a result of these weaknesses, we often begin the coaching relationship by running a planning session with the leadership team. We look for whatever weakness on the team would prevent the company from going where it wants to go. And if that weakness is the leadership team, the company cannot afford to wait until the right person just happens along. You must find the people who have been there, done it, proved it.
Most businesses simply do not have the talent required to scale. My client, Rich Balot, is one of the largest Verizon dealers in the United States. When I met him, the business was on the verge of bankruptcy. He had just lost $8.5 million, was out of cash, and the numbers his CFO was providing him were wrong. On top of that, his head of sales–who was a very close friend–simply did not have the chops to turn the business around.
So what did we do?
Within short order, we brought in the necessary talent, especially in two key roles—the vice president of sales (one of the best in the country in his industry) and the CFO.
With this high performance leadership team in place, the company went on to grow from a $100 million business on life support to a thriving $330 million in revenue in just three years, with a very meaningful profit of double the industry average.
In early 2015, Rich merged his company with a much larger one and he’s now chairman of the combined firm with more than $1 billion in revenue.
Another client, Craig Coleman, CEO of ForwardLine, a financial services company, had steady and consistent growth for years. We accelerated that growth by bringing in a strong head of sales, CRO (chief revenue officer), and a CFO. It enabled his company to scale in a big way, and he recently closed on a large private equity deal at a valuation that far exceeded his expectations.
The results are unmistakable. When you focus on building a high performance leadership team, your revenue will swell. When you bring in top talent, your company will thrive.
Don’t wait. Make the commitment right now to build a high performance leadership team.
About Mark Moses
Mark Moses is the Founding Partner of CEO Coaching International and the Amazon Bestselling author of Make Big Happen. His firm coaches over 100 of the world’s top high-growth entrepreneurs and CEO’s on how to dramatically grow their revenues and profits, implement the most effective strategies, becoming better leaders, grow their people, build accountability systems, and elevate their own performance. Mark has won Ernst & Young’s Entrepreneur of the Year award and the Blue Chip Enterprise award for overcoming adversity. His last company ranked #1 Fastest-Growing Company in Los Angeles as well as #10 on the Inc. 500 of fastest growing private companies in the U.S. He has completed 12 full distance Ironman Triathlons including the Hawaii Ironman World Championship 5 times.