The Resolution

Management bench strength is the most common point of failure

Over my career as a Non-Executive Director, management bench strength is the most common point of failure I’ve seen.

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In my experience, management bench strength is the most common point of failure I’ve identified in organisations that fail to achieve their strategic goals. Such failures can occur because the management team doesn’t have the capability to do the job. External factors may play a role as well, but more often than not objectives aren’t met because management failed.

This is why boards need to pay close attention to bench strength. The success of the business depends largely on management performance. If the management team doesn’t have the capability to do their job, then the company is unlikely to succeed.

Boards play an important role in monitoring bench strength

If an executive team concludes that it doesn't have the right capability to get the job done and it goes out and does something about it, that’s great. It means that they are thinking about their own capacity to execute the strategy. But if management can’t see it, or doesn’t want to admit it, then it’s up to the board to get involved.

Boards are responsible for monitoring the performance of the CEO and their management team. There are several ways that the board can monitor bench strength.

The board is presented with many indicators of performance that assist it to judge who is performing and where the problems are. The key is to observe and listen to what management and the indicators are saying.

One of the best ways to gain the necessary understanding is to bring executives into the boardroom to assist the CEO and have them co-present proposals in their own area of responsibility. I recall sitting through a board presentation and thinking ‘I haven't understood much of that’. If I didn’t understand it, it’s unlikely that the person presenting understood the subject matter either.

If an executive is asked by the CEO  to put forward a proposal, and fails to communicate its merits effectively, there are two potential problems: (a) the executive isn’t up to the job; (b) the CEO’s judgement of executive capability is awry. Such situations should be treated as the warning beacons they are, rather than being brushed aside on a “do better next time” basis.

Assessing the capability of executives other than the CEO is, of course, fundamentally the role of the CEO. A non-executive director with misgivings as to executive capability and/or performance needs to recognise that the shortcomings might be twofold – the executive might not measure up and it is also possible that the CEO is too tolerant of mediocrity – and to tread carefully as a consequence. Treading carefully does NOT mean inaction.

Another opportunity to observe executive capability is afforded by boards’ site visits. Such visits give directors the opportunity to talk to people on location and find out how they feel about management by listening to their feedback. How well can the executives explain how their roles align with corporate strategy? How do they feel about how their targets are set? Do they feel like they’re allowed to do their job as well as they can?

Lack of bench strength can also become apparent when a company is facing significant change or undertaking a major project. Directors should assess whether the CEO recognises the scale of change or the range of capability needed to manage a project, and actively question whether bench strength is adequate.

Bench strength can be addressed

The need to change and the ability to construct your executive team appropriately is a really important skill for a CEO. If the CEO doesn’t have the vision or skill to do this, then it’s a real problem that needs to be addressed.

As a director, you know if you’re impressed with what management brings to the boardroom or if you’re worried about their performance. If you are appropriately vigilant and curious, you will be able to form a view as to whether your management team is sufficiently capable or that this is questionable. Companies can fail to achieve their corporate objectives because they simply don’t have the appropriate resources in place. Chief executives need to ensure that their management team has the skill and capability to get the job done. But it’s also crucial that directors take an active role in monitoring the bench strength of the company and keeping it in focus.