BAD BLOOD ON THE SENIOR TEAM

HOW SHOULD A CEO ADDRESS FRICTION BETWEEN HIS CFO AND THE SALES CHIEF? BY BORIS GROYSBERG AND KATHERINE CONNOLLY BADEN

The feedback in the 360-degree reviews was supposed to be anonymous.

But it was crystal clear whod made the negative comments in the assessment of one executive.

Lance Best, the CEO of Barker Sports Apparel, was meeting with Nina Kelk, the companys gen- eral counsel, who also oversaw human resources. It had been a long day at the companys Birming- ham, England, headquarters, and in the early evening the two were going over the evaluations of each of Lances direct reports. Lance was struck by what he saw in CFO Damon Ewens file. Most of the input was neutral, which was to be expected. Though brilliant and well respected, Damon wasnt the warmest of colleagues. But one person had given him the lowest ratings possible, and from the written remarks, Lance could tell that it was Ahmed Lund, Barkers head of sales. One read: Ive never worked with a bigger control freak in my life.

These comments are pretty vicious, Lance said.

Youre surprised? Nina asked.

I guess not, Lance acknowledged.

His CFO and his sales chief had been at logger- heads for a while. Ahmeds 360 also contained a few pointed complaints about his working style1 no doubt from Damon.

Lance sighed. Five years earlier, when hed stepped into his role, hed been focused on growing the company that his father, Ericthe previous CEOhad founded. Barker licensed the rights to put sports leagues logos on merchandise and partnered with large brands to produce it for retail markets, and when Lance took the com- pany over, its revenues were about 100 million. Soon after, hed landed the firms biggest partner, Howell. Negotiating the deal with the global brand had been a challenge, but it increased business

so much that Lance and his direct reports still felt they didnt have enough hours in the day to get everything done. They certainly didnt have time for infighting like this.2

So what do we do with this info? Lance asked.

Nina shrugged. This is the first time Ive been through this process myself.

Right. Clearly Ive got to do some- thing, though. I know that Ahmed and Damon arent mates, but I do expect them to be civil.

Nina nodded, but Lance sensed she was biting her tongue. You can be hon- est with me, Nina. I need your counsel.

Well, she said tentatively, I think thats part of the problem. The expecta- tion is that were civil, but that doesnt translate to collaboration. We all trust you, but there isnt a whole lot of trust between the team members.3

So does everyone think Damon is awful? he asked, pointing to the report. Nina shook her head. Its not just

about him. You can see from the feed- back that Ahmed isnt a saint either. He picks fights with Damon, and the tension between themand their teamshas beenhavingarippleeffectontherestof us. You see the finger-pointing. It seems like everyone is out for themselves.

Although Lance hated hearing this, it wasnt news. Hed just tried to convince himself that the problems were growing pains and would sort themselves out. After all, sales and finance were often at odds in organizations, and the conflict hadnt had a big impact on Barkers rev- enues. Theyd grown 22% the previous year and 28% the year before that.

Of course, none of that growth had come easily, and opportunities had cer- tainly been missed. Barker had dropped the ball on inquiries from several retailers interested in its products by failing to coordinate getting them into the companys system quickly. Now, Lance realized that might be a sign of

more fallout to come. He needed to fix this. My dad always wanted to do one of those team-building retreats, 4 he said, smiling. This had been a running joke among Barkers executives for years. Whenever Eric had sensed tension, he would mention the idea, but he never followed through.

Nina laughed. Unfortunately, I think were beyond that.

THIS MESS

The next morning, Lance was in his office when he got a text from Jhumpa Bhandari, the head of product and merchandising: Can you talk?

Knowing this couldnt be good, Lance called her immediately.

Skipping the formalities, she launched in: You need to get them on the same page. Lance didnt have to ask who them was. Ahmed has promised samplesforthenewlineontheClarkson account, but his order exceeds the limits accounting set, so we need Damons sign-off, and he wont give it.

This was a recurring fight. Ahmed accused Damon of throwing up road- blocks and using his power to undermine the sales department. Damon retorted that Ahmed was driving Barker into the ground by essentially giving products away. Lance went back and forth on whose side he took, depending on which of them was behaving worse. But he didnt want to intervene again. Why couldnt they just find a compromise?

Practically reading his mind, Jhumpa said, Theyll stay in this standoff forever if you let them. Its as if theyre in their own little fiefdoms; they act like theyre not even part of the same team.

Have you talked to them about this?

The holdup with Clarkson? Of course I have. But it doesnt help. This situation is a mess.

The last comment stung. The team wasnt perfect, but it was still operating at a pretty high level.

It would really help if you talked to them, Jhumpa gently pleaded.

Lance thought back to the last time hed sat down with Ahmed and Damon. Each had brought a binder filled with printouts of the e-mails theyd exchanged about a missed sale. Lance had marveled at how long it had proba- bly taken each of them to preparenever mind the wasted paper.

Let me look into it, Lance said. This had become his default response.

Can I tell you what Id do if I were in your shoes? Jhumpa said. Fire themboth.5

Though Lance had always appreci- ated her straightforwardness, he was taken aback. Just kidding, she added hastily. What about having them work with a coach? I mean, we could all bene- fit from having someone to help us talk through how we handle conflicts and from establishing some new norms.

Lance wondered if the firing com- ment had really been a joke, but he let it pass. I did talk to that leadership development firm last year, he said. They had some coaching packages that seemed appealing, but we all agreed we were too busy with the new accounts.

Well, maybe we should make time now, Jhumpa replied.

After they hung up, Lance was still thinking about the idea of letting

Ahmed and Damon go. Terrifying as the thought was, it might also be a relief. Hed heard of CEOs whod cleaned house and replaced several top execs at once. He could keep Jhumpa, Nina, and a few others and bring in some fresh blood. It would be one surefire way to reset the team dynamics.

DOING JUST FINE

Later that afternoon, at the end of a regular meeting with the finance team, Lance asked Damon to stay behind.

I heard theres a holdup on the Clarkson samples, he said.

The usual. Sales needs to pare back the order. As soon as Ahmed does that, I can sign off, Damon said calmly.

It doesnt sound like Ahmeds budging.

He will.

Lance decided to wade in. Is every- thingOKwithyouguys?

Same as usual. Why? Whats going on? The numbers look great this quarter. Were doing just fine.

I agree on one level, but I have con- cerns on another. Its taking six months to onboard new customers at a time when everyone is fighting for them.

Is this about those 360 reviews? I tried to be fair in my feedback, Damon said a bit defensively.

The input is anonymous, so I dont know who said what, but the tension between you and Ahmed is obvious.

Of course it is. Im the CFO and hes in charge of sales. If were both doing our jobs well, theres going to be conflict.6 And thats what Im doing: my job. Im the keeper of the bottom line, and that means Im going to butt

heads with a few people. Lance had heard him say this before, but Damon took it one step further this time. Your discomfort with conflict doesnt make this any easier. 7

They both sat quietly for a minute. Lance knew that as part of this process hed need to examine his own leadership. Indeed, his 360 had been eye-opening. Hispeoplehaddescribedhimasapas- sionate entrepreneur and a visionary, but theyd also commented on his preference for managing one-on-one instead of shepherding the team and on his ten- dency to favor big-picture thinking over a focus on details.

OK. I hear you on that, Lance finally said. Thats on me. But you also need to think about what you can do to improve this situation. Theres a differ- ence between productive and unhealthy conflict, and right now it feels like weve gottoomuchofthelatter.8

OUR VISION MIGHT CRUMBLE

Have you considered one of those team-building retreats? Lances father asked when they spoke that night. I know you all never took me seriously

Lance chuckled. Because you never booked it!

but I still think its a good idea, Eric continued. No one really knows how to have a productive fight at work. Its not a skill youre born with. You have to learn it.

Im considering it, Dad. But Im not sure it would be enough at this point.

What about the comp? This was another thing Eric had brought up routinely. During his tenure as CEO hed realized that the C-suite compensation

wasnt structured to encourage collabora- tion. Bonuses were based on individual, functional-unit, and company perfor- mance at respective weightings of 25%, 70%, and 5%.

Maybe its time to bump up that 5% to at least 10% or even 20%, Eric said. Id like to make those changes, but

I need Damons help to do it, and hes swamped,Lancesaid.Besides,lotsof experts say that too many people view comp as a hammer and every problem as a nail. CEOs expect comp to fix anything, but usually you need other tools. I may have to do something more drastic.

Youre not considering firing any- one, are you? Eric had personally hired all the senior executives now on Lances team and was almost as loyal to them as he was to his own family.

To be honest, its been on my mind. Im not sure what I would do without AhmedorDamon.Theyreanimportant part of why we make our numbers each year. They help us win. But I look back and wonder how we did it playing the game this way. I need a team thats going to work together to reach our longer- term goals.9 When Eric had retired, he and Lance had set a target of reaching revenues of 500 million by 2022. This group feels as if it could disintegrate at any moment. And our vision might crumble along with it.10

Im sorry, Eric said. Do you feel like you inherited a pile of problems from your old dad?

No, I feel like Ive somehow created this oneor at least made it worse.

Well, one thing is certain: Youre the boss now. So youll have to decide what to do.

1. Taking into account the evidence in the case and what you know about organizational behavior what is(are) the root cause(s) of the infighting between Damon and Ahmed? Explain in detail. (Root causes are the underlying issues that create a problem if you continue to dig for explanations, the root cause is the issue that has no other issue underlying it. There may be more than one root cause.)
2. Imagine that you are consultant and Lance Best (CEO of Barker Sports Apparel) has asked you for help about how to move forward. Based on the case and our readings, how have issues related teams, conflict, culture, and power contributed to the companys current situation, including the infighting and its effects on the team, employees, and company productivity? Dont provide advice here, just identify where there are issues related to these topics. (This is the most open-ended question of the case, but it is the one where you should take the most space in writing about the relevant concepts on each of these topics. This should be the longest section of your response because it should apply a wide variety of concepts to the case.)
3. Several people suggested to Lance that his leadership may be part of the problem. [For example: Nina indicates that Lances expectations for civility dont translate into collaboration. Jhumpa suggests Lance talk to them and implies that Lance has let them continue this behavior. Damon says that Lances discomfort with conflict is a problem. Lance, himself, realizes he hasnt done what he could have to address the problem sooner and has likely made it worse.] Based on the chapter and articles about leadership and decision making, identify and describe some problems in the way Lance has handled the situation over the last few years and explain why they were problematic for the employees or the entire company.
4. In the case, several alternatives are suggested to Lance as things he could do to address the infighting problem: (1) participate in team-building retreats, (2) fire one or both employees (Damon and Ahmed), (3) get Damon and Ahmed to work with a coach, and (4) change C-suite compensation to promote collaboration. Choose two of the alternatives and evaluate each of those in terms of:
   1. how it would affect Damon and Ahmed
   2. how well it would address/resolve the root causes(s) you noted above
   3. any potential negative consequences for the company of implementing that alternative
5. Based on the root cause of the problem that you discussed in question 1, consider all possible alternatives to resolve the problem (including the ones in question 4 as well as any ideas you have generated on your own):
   1. Recommend ONE BEST solution to your root cause. Explain why you chose that one, including why you believe it is superior to the other solutions.
   2. If your chosen solution is implemented, what changes should Lance expect to see in the C-suite teams collaboration, the organizations culture, and the power dynamics?