Top teams and organisational performance

Research consistently shows that the effectiveness of the top team has a decisive influence on organisational performance.

Studies suggest that the composition and functioning of the top team can account for up to 43 per cent of the variation in profitability between organisations. In other words, how the senior team works together matters as much as many strategic or structural decisions. (1)

Evidence also shows that the top team is a stronger predictor of organisational success than the chief executive alone. Performance is shaped less by individual brilliance and more by the quality of collective leadership.(2)

This is reflected in investor thinking. Ninety per cent of investors report that the quality of the management team is the most important non financial factor when evaluating an initial public offering. Organisations where the top team is aligned around a shared purpose and direction are also almost twice as likely to deliver above median financial performance. (3)

References: 

1. Shipton, H., West, M. A., Dawson, J., Birdi, K., and Patterson, M. (2006). HRM as a predictor of innovation. Human Resource Management Journal, 16, 3–27.

2. Finkelstein, S. and Hambrick, D. (1996). Strategic Leadership: Top Executives and Their Effects on Organizations. New York: West Publishing.

3. Keller, S. and Meaney, M. (2017). High performing teams: A timeless leadership topic. McKinsey Quarterly.