This article is part of our series on leadership qualities

Understanding what makes a great leader and what makes a great team dynamic are the two most important pieces of knowledge when it comes to building a high-performing leadership team that can successfully execute a value creation plan.

The second thing to know is when those teams start to fall into dysfunction and more importantly, why, so you can remedy it.

This article will show how to spot leadership red flags in individuals and team dynamics in terms of people’s behaviours and how those behaviours complement one another. 

What makes a bad leader?

In a previous article, we listed leading by example, self-awareness, ability to adapt to challenges, knowing your audience, ability to consider multiple perspectives and a growth mindset as the top six leadership qualities for high-growth companies.

On an individual level, the qualities of a bad leader are the opposite of the above. Someone who:

• Is not accountable or has a lack of integrity

• Is rigid in their approach to problems

• Cannot or will not allow for alternative viewpoints

• Doesn’t adapt communication to their audience’s needs

• Believes that ability and intelligence cannot be developed (fixed mindset)

It’s very unrealistic that one leader would carry all of these bad leader qualities, or else they probably wouldn’t have been promoted in a high-performance environment, but each leader on a team might exhibit one or two of them.

What makes an underperforming leadership team

In our opinion, when looking at the highest level of a company, spotting bad leaders is not as important as knowing when a team is not working well together. You can have a room full of talented high-performing A-players, but if they can’t work together, their skills and experience are almost worthless, and investors won’t see the returns they expect.

Results or the lack of them is the clearest indicator of a bad team, but for most private equity portfolio companies on a value creation plan schedule, spotting poor performance needs to happen long before results are due. 

Hiring or promoting the right people in the first place is key. The impact on a VCP if the wrong leaders are placed can be painful. An unplanned CEO exit causes, on average, a delay of 18 months to an investment timeline. For dysfunctional teams, prevention is better than a cure.

The red flags to watch out for in a team are a lack of cognitive diversity and a lack of behavioural complementarity. A lack of diversity in ways of approaching problems leads to poor innovation and low creativity, often due to groupthink and an inability to hear alternative viewpoints. 

How to identify the red flags

Knowing what makes a poor team is one thing. Being able to spot the red flags before we get too far along the VCP and realise we’ve made a mistake, is another. This is where relying solely on the CV and interview to assess potential leaders falls down, and where in-depth assessments with data-driven people analytics tools helps uncover true future performance .

Remove the bias

Relying on personal interactions when hiring can get in the way of building a high performing team and leads to bias. Hiring managers, investors and chairs can have clouded judgement as they build relationships with potential leaders, and stray from doing what is best for the organisation. 

A data-driven assessment strategy is an objective way of identifying the optimal leadership team dynamic, and cuts through any emotive reasoning and bias.

Look at behaviours vs personality

When assessing leaders or future leaders, our research has shown that behaviours are a far better predictor of performance than personality traits or past performance. While personality tells us what a person is like in general e.g. “I am an emotionally intelligent person”; behaviours tell us how a person is likely to act in a specific situation in a specific environment, e.g. “I use my social awareness to navigate difficult conversations at work.”

Understanding a person’s behavioural profile will paint an unbiased picture of their likely future performance in situations specific to your company and its stage of growth. Adding this picture to their functional experience, situational experience and market experience, is how to tell whether an individual has what it takes in the required role. 

And when you have a profile for each leader on the team, it is far easier to predict how well they will each work together.

To learn more about how behavioural analytics can help you assess your existing leadership team, potential leaders and their behavioural complementarity, see our PACE Behavioural Analytics page.

Acknowledge the ‘Dark Triad’

In our own research, we have found behaviours psychopathy, narcissism and machiavellianism. These behaviours to some degree are not necessarily always a bad thing for a leader. For example, someone who scores high on psychopathy will be uncompromising in attaining objectives, which can sometimes be a good quality. 

However, over indexing on these darker behaviours or not having a decent spread of complementary behaviours to work as a foil to them, can be destructive to the team dynamic. A large amount of machiavellianism across the team, for instance, causes dysfunction because everyone is working in their own interests. And a high amount of narcissism means that they will ignore realistic limitations.

Approach emotional intelligence critically

Maximising emotional intelligence is not desired in a high-performing team. Like all traits and behaviours, it needs to be taken in moderation so that there is enough diversity and balance on the team.

A key behaviour of emotionally intelligent people is called “self-monitoring”, which is the ability to adapt one's behaviour to an environment. It makes them excellent networkers and likeable people. However, if everyone is constantly self-monitoring, then not only is no one taking the lead, but someone with high instances of People who tend to adapt to others are also susceptible to mimicking and even enabling the negative behaviours of people who lack emotional intelligence.