Episode #78: Refereeing Your Leaders’ Disputes

Balancing tension and harmony

In our quest to build harmonious teams where everyone works together and collaborates for the common good of the organisation, we sometimes forget how important it is to foster the natural and constructive tensions that are ever present in business.

Having said that, we don’t want the pendulum to swing too far the other way. So what is the right amount of constructive tension to build into your team?

This episode examines how leaders can strike the balance between constructive tension and team alignment, and answers some important questions that leaders commonly have:

• How can tension between my team members and leaders be positive?

• How would I know if tensions go too far?

• How do I manage productive tension, and when do I step in? 

We’ve also created a helpful downloadable, the ‘6 Rules of Thumb for Balancing Constructive Tension and Team Alignment’, which you can download below. Pass this on to your leadership peers who could benefit from striking the balance in their team!

We have had thousands of leaders download this free resource!

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REFEREEING YOUR LEADERS’ DISPUTES: BALANCING TENSION AND HARMONY

Episode #78 Transcript

Hey there, and welcome to episode 78 of the No Bullsh!t Leadership Podcast. This week's episode, "Refereeing Your Leaders' Disputes: Balancing Tension with Harmony". In our quest to build harmonious teams where everyone works together and collaborates for the common good of the organisation, we sometimes forget just how important it is to foster the natural and constructive tensions that are ever present in business. Having said that, we don't want the pendulum to swing too far the other way. So what's the right amount of constructive tension to build into your team, and how do you know when it's time to step? This week, we look at the leadership role you play in striking the balance between constructive tension and team alignment. I'll start by exploring why tension is a good thing. We'll move on to what happens when tensions are allowed to go too far. We'll talk about the role of behavioural standards and how they need to underpin any tension, and I'll finish with six rules of thumb for managing your leaders' skirmishes. So let's get into it.

Enterprises, conceptually, first came into being due to a range of perceived benefits that have been pretty well understood since Adam Smith wrote his classic work, the 'Wealth of Nations' in the 18th century. The concepts of division of labour and the invisible hand of the market still hold a strong place today in economics and organisational theory. Frederick Winslow Taylor made a big contribution to developing this thesis a century later, through his scientific management theory and many others have had a crack at it since. The key reasons that organisations exist is to better deliver products and services in a way that enables the ongoing introduction of technological advances to keep improving efficiencies. A lot of this theory relied upon people having clearly defined and specialised roles and only doing those. Whereas this did herald a massive increase in productivity for many decades, there's a range of reasons why we may need to tweak these theories for today's rapidly evolving world.

For example, the quest for organisational efficiency can often stifle innovation and new ideas and looking purely at the people factor, boredom is the enemy of productivity. So rather than simply aligning and segregating work to deliver optimum efficiency through specialisation, there's been a huge recognition in the last few decades of the value that can be gained by using more holistic approaches. Introducing natural tensions that come from looking across specialised roles and trying to get broader inputs to problems is one of the most effective ways to improve the quality of decisions.

So let's start with diversity. Now there's a sh!t tonne of moral and ethical reasons why we should seek to increase workforce diversity, but looking at diversity in purely practical terms, the constructive tension that can be created by considering opposing views can bring richness to discussions that would otherwise be one dimensional. And clearly I'm not just talking about gender here, I mean the whole box and dice: cultural origin, variety of industry experience, sexual preference, religious beliefs - anything that gives us a unique and valuable perspective on things. Bringing out and encouraging the sharing of different perspectives and views, in my opinion, is a key step to improving organisational outcomes.

We already have some natural tensions that exist in most businesses. So for example, the classic rub points between sales and operations. So it's really easy to sell something, but then your organisation has to deliver on it. There's a natural tendency for salespeople to oversell a product or service, while the part of the organisation that actually has to deliver it struggles to do so. A balance has to be found to set the bar at the right level, not as high as the sales team would like, and not as low as the delivery team would like. This requires a leader to bring out that natural tension in the opposing perspectives of the two teams.

Or how about that constructive tension between a CFO and an operator of assets? And when it comes to spending capital on the assets, the CFO wants this to be as efficient as possible because they monitor metrics such as ROA or return on assets - so the greater the cost of the assets, the greater the implied earnings required to hit the financial targets. However, the operators of that asset are incentivized to provide availability and reliability for that asset. So the higher the capital spend is on a major asset overhaul, the less issues the operator is likely to have to deal with for the next few years of operating those assets. So they want to spend as much money as they can in capital terms, to make their lives easier down the track. Setting up incentives for each of these cases that seek to balance that tension is necessary, but can be really tricky.

What happens when tensions are allowed to go too far? The key to managing tensions and conflict is to give your people clear expectations about how they need to play together in the sand pit. This can be summed up pretty simply: work together to achieve the best outcome for the organisation, not just for your immediate team. You have an obligation to bring the best of your knowledge, capability, and experience to the table, especially when it flies in the face of conventional wisdom. Work hard to understand and incorporate many different viewpoints. However, don't ever lose sight of single-point accountability. A lot of executives make the mistake of "dumbing down" their teams. They encourage people to all get on collaborate and avoid conflict. Some leaders are even naive enough to label these "high performing" teams, but without constructive tension, it's almost certain that you don't a high performing team.

So you can see how incredibly important it is to ensure that you and your people are comfortable with conflict. This, like many other concepts I talk about in No Bullsh!t Leadership, take us all the way back to episode one of the podcast series, "Respect Before Popularity". Now there's a great example of a difficult situation I had to manage a few years ago where the constructive tension was really tricky. I had a market trading function run by an executive who was basically accountable for making decisions about revenue strategy and risk on behalf of the organisation. He wasn't solely responsible for all the inputs, but he was accountable for the results. I had two other executives who were his peers, the CFO and the Head of Strategy, both of whom had successfully run similar trading operations. In the past. There was the overlay of governance from a separate market risk team which reported to the CFO.

Now in every discussion about risk, revenue and trading strategy, if I had all three executives in a room, there would be at least four different opinions about what the correct course of action was. As a leader, this can get tricky. The accountable exec starts to feel a little under siege. "Why is the CEO not just letting me do what I think is right? After all, I'm the accountable executive and I'll ultimately be held to account for the results". The other two are thinking, "We're more experienced than the accountable executive, And he should be listening to and following our guidance. And all three are most likely thinking when it comes to market trading strategies, the Chief Executive wouldn't know sh!t from strawberry jam, so why doesn't he just do what I'm telling him?

So here I am. I work with the accountable executive to help him to realise that just because he's accountable for the outcome, doesn't mean he gets to make decisions unilaterally. He has to listen to his colleagues who have valuable experience, And as long as I can see him listening, incorporating feedback and intelligently mapping a path forward, I will back him 100%. But the minute I see him going into a silo or fortress mode I remind him that we need the right result for the organisation, and it's not just about him getting me to support his team with whatever they want to do. For the CFO, I remind him that he has a critical role to play in governance through the market risk function and advising, the market risk committee, which I chaired as CEO. This was one of those natural constructive tension points that needed to be nurtured and encouraged, but his role to bring his experience to the table in market trading was invaluable to the business. He needed to do that in a way that wasn't threatening to the accountable exec, but enabled him to have his experience incorporated into the final decisions.

This was a conversation about emotional intelligence and influence. As I used to say to him and many other execs I've worked with in the past, being right isn't everything - it's just a good start. It's what you're can achieve after that through influence that really counts. Now with the executive who was responsible for strategy, the conversation was similarly to influence the outcome without relying on me as the circuit breaker or the ultimate decision maker. This required encouraging him to spend more one on one time with the accountable executive to build the relationship and influence directly, rather than through me. Now, all three of these people individually were high performers. They were hardworking, experienced, driven, and capable executives, but it took a lot more than that to turn them into a high performing team and keeping the tensions alive while not allowing them to blow the whole dynamic apart was really tricky.

What role do behavioural standards play? To stop destructive conflict as a leader, you need to set some standards for how the leaders below you get things done. They have to be respectful, the conversations have to be robust, but honest, they have to be open and they all have to be driven towards seeing the best outcome, not just their hobby horse as the goal. So you set the standard for behaviour with everyone in your team. It has to align with your values, and the values of the organisation more broadly, and you have to reward and punish this behaviour consistently. There are no exceptions for smart when it comes to behaviours, so you've got to enforce a no dickhead policy. If your best Rainmaker can't work happily with others, get rid of them no matter what. No questions asked. Your team will be much better without the misbehaviour and performance tyranny that these people bring to your team.

Now what I'm just about to say is as close to a punchline as this episode actually gets. The thing about refereeing a dispute between your people is that you should seek to play a pivotal role. Like a lot of leadership disciplines, you should provide the parameters and set the expectations for how your people behave and perform. The trick is to do this without either getting involved in the specifics of the argument or constantly having to be the ultimate deadlock breaker or decision maker. What does that mean and how does it play out? Well, it's gotta be set up the right way to begin with. Your people have to have clear expectations around a couple of important things. So who is ultimately accountable for delivery of an outcome? One head to pet, one ass to kick - and that person should also have decision rights. But what do you expect from the accountable person in terms of gathering and assimilating input?

How do you expect others to contribute? What are the rules of engagement that you lay down for your people? So for example, peers need to be able to influence each other so that their differing opinions and perspectives are heard, considered and factored into the equation. Your people need to conduct themselves with integrity, so this means no white-anting, no covert political plays and no rear guard actions after decisions have been made. If they have something to say, they need to raise it directly, either one-on-one with the accountable person or in the correct forum. But don't let them create sidebar conversations with you looking to influence you as the accountable person's boss. Only allow escalation to you when absolutely necessary.

Why is this important? Well, for start, you don't want to be the focal point and bottleneck for every decision. There are some decisions that must flow up to you because you have to make them as the most senior person, but these should be minimised to the greatest extent possible and push decision making down as low as you possibly can. You need your people to take accountability for their own outcomes and to get comfortable with performance scrutiny. And funnily enough, this is also a critical part of career development for your people. Learning how to influence and get results when they don't have control. Winning the trust and respect of the people around them. Honing their judgement about when to escalate issues, when to try to resolve them on their own and when to keep their powder dry for bigger battle.

Let's finish with the six rules of thumb for managing your leaders' skirmishes. I've had many a direct report in the past at general manager level and above, believe it or not, who thought that it's my role to step in and help them get the necessary results they need with their peers. Now, I'm not saying you should never do this, but there's a time and a place and you don't want it to be habit-forming. The GM or senior leader who constantly looks to you as their boss to resolve their disputes is either too weak to resolve it themselves, or actually doesn't have a sufficiently compelling case to influence their peers. Now in either of these circumstances, your alarm bells should be going off. So here's my six rules of thumb for refereeing in your leaders' disputes and this will be available as a free download from the Your CEO Mentor website, so it's www.yourceomentor.com/episode78.

Number one, make it clear that you expect your leaders to sort things out amongst themselves. So give them strong direction on working together to resolve their issues. The more senior the leader, the more important this is and the more adept they should be at it. This is particularly important for core leadership positions like the CFO role. Now they have to be able to earn the trust of the executives around them because they have such an important brief, which spans the whole organisation. I have had to let competent executives go in the past because they couldn't establish healthy relationships with their peers. As I used to say to them, I can solve specific issues by coming in with the CEO card, whenever you're having trouble getting the outcomes your charge to get. But if you can't win the trust and respect of your peers, then I can't help you with that.

Number two, make sure the accountabilities are crystal clear. I've said this in a dozen previous episodes and it's just as relevant here: ensure your leaders understand the role of accountable and non-accountable leaders in getting an overall outcome. As I've said before, just because someone's accountable doesn't mean that they get to make decisions unilaterally, and not accountable leaders don't get to play the all care, no responsibility game either. Every leader has responsibility to lend their input and expertise to the core things that cut across their portfolios.

Number three, don't be the bottleneck. The last thing you want is for every decision to come through you. Sure, it gives you control, but you stifle all the creativity and discretionary effort of the leaders below you and you take away their agency. Now I know CEOs who are like this, they've grown up in the business, they know the technical detail from top to bottom and some simply can't let it go. They tend to use this in every decision that's made. Now, the term control freak always springs to mind for me, but the inefficiency and complacency that this drives into organisations is unbelievably debilitating.

Number four, don't let constructive tensions turn ugly. If you see a relationship getting out of hand, deal with it one on one first and then together if necessary, but make sure that your people know how important it is that they have a productive working relationship. They don't have to like each other, but they have to be able to build the mutual trust and respect that delivers outcomes, if they want to be considered as high performing leaders.

Number five, don't let it become personal. You may notice animosity creeping in if a relationship is fraught. Go back to the values and once again, remind your people of their obligations around expected behaviours. At more senior levels of the organisation, this has a profound impact on culture as people take their cues from their senior leaders. But behaviours should be equally important in performance ratings as the KPIs and other deliverables. If leaders can't behave respectfully and ethically towards the others in the office, that should attract a poor performance rating just as surely as if they hadn't delivered their outcomes at all.

Finally, number six, beware the upwards manager. Now there's going to be a lot of these people who spend a lot of time in your office influencing you to think, act, and decide a certain way. Just be careful not to overly favour their views over anyone else's just because they get more air time and they may have built a better relationship with you. This just fuels your existing unconscious biases.

Alright, so that brings us to the end of Episode 78. Thanks so much for joining us and remember, at Your CEO Mentor our purpose is to improve the quality of leaders globally, so please take a few moments to rate and review the podcast as this enables us to reach even more leaders. I look forward to next week's episode where I'm going to do another Q&A with Em. Until then, I know you'll take every opportunity you can to be a No Bullsh!t Leader.

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