What Makes a Leadership Team Effective?
Most leadership teams believe they are performing reasonably well. The data suggests otherwise.
A landmark study of 120 senior leadership teams across 11 countries found that only 21% are genuinely high-performing — and the conditions that separate them from the rest are well understood, designable, and developable. This page sets out what the research shows.
by Tony Gardner
7 min read
Leadership Team Effectiveness: Why It Matters
A leadership team is the most influential group in any organisation. Its decisions and ways of working shape strategy, culture, and performance far beyond the boardroom or executive floor.
Yet it is also one of the most under-developed groups in most organisations — assumed to be effective because its members are senior and experienced, rather than deliberately developed to be effective as a collective entity.
The performance gap is not trivial. Bain & Company’s research across 1,250 companies found that organisations led by highly effective executive teams achieved revenue growth, profitability, and total shareholder returns three times higher than the study average.
When C-suite teams collectively demonstrate four traits — inclusion, trust, commitment, and prioritising the greater good over individual interests — they are six times more likely to be business performance leaders.
McKinsey’s research adds a further dimension: the quality of the leadership team is amongst the most significant determinants of organisational adaptability — the capacity to respond, pivot, and lead through change. In volatile environments, that capacity is not a nice-to-have. It is survival.
Yet successful teaming at the top remains, as Bain puts it, “the exception, not the rule.” Most senior leaders are developed as individuals, not as peer members of a collective unit. The result is leadership teams that function as a coordination forum for functions rather than as the place where the organisation is genuinely led.
“companies with highly effective executive teams perform 3 x better”
The Research: What Effective Leadership Teams Do Differently
What separates effective leadership teams from the rest is not the calibre of individual members but the conditions they operate under, the disciplines they practise, and the behaviours they collectively model.
The Six Conditions establish the foundation — the right design, direction, and support; Hawkins’ Five Disciplines describe the ongoing practice — how a team commissions itself, collaborates, and learns; and Bain’s five behaviours are the visible result — what effectiveness actually looks like in action. Get the conditions right, practise the disciplines, and the behaviours follow.
The Wageman–Hackman Research: What the Data Reveals
The most rigorous research on senior leadership team effectiveness comes from a professors Ruth Wageman and Richard Hackman of Harvard University. Their study — published as Senior Leadership Teams: What It Takes to Make Them Great (Harvard Business Review Press) — examined 120 senior leadership teams across 11 countries, including teams at IBM, Shell, Unilever, and Sainsbury’s.
The headline findings are striking:
Only 21% of leadership teams achieved outstanding performance as defined by the research criteria
43% of teams scored in the mediocre range for team development and member experience
42% were found to be under-serving key stakeholders
The six conditions identified by the research collectively account for up to 80% of a team’s effectiveness.
The research also found something that cuts against a common assumption: the biggest predictor of team effectiveness was not the talent of individual members, but the conditions under which the team operated. A team of outstanding individuals operating under poor conditions will underperform. A well-designed team, properly supported, will consistently outperform.
Peter Hawkins’ Five Disciplines of Leadership Team Effectiveness
The Five Disciplines model is a practical companion to the Wageman–Hackman six conditions’ focus on design. These 5 disciplines address practice — what a leadership team must do to be effective:
Commissioning - Why does this team exist, and what do our key stakeholders need from us? If neglected, teams pursue inherited or functional agendas rather than clear, consistent goals.
Clarifying - What do we agree, as a team, are our purpose, priorities, and ways of we operating? If not agreed, members hold different mental models of what the team is for and how it should operate.
Co-Creating - How should we working together — are we having the conversations that matter? If unclear, meetings are performative; real thinking happens in corridors and bilateral conversations.
Connecting - What value should we be providing to our key stakeholders? If this isn’t a focus, the team focuses, stakeholders - including the people the team leads - experience fragmented, inconsistent messaging and leadership.
Core Learning - Are we getting better over time? If not, the team repeats the same patterns and doesn't grow.
Co-creating — how the team works together inside the room — is where most coaching effort is warranted.
Google’s Project Aristotle, analysing hundreds of teams, found that the single most important factor in team effectiveness was psychological safety: the shared confidence that honest contribution would be received, not penalised.
Professor Amy Edmondson of Harvard Business School, who coined the term, describes it as “literally mission critical in today’s work environment.”
“only 21% of leadership teams perform outstandingly”
The Six Conditions of Leadership Team Effectiveness
These six conditions divide into two tiers: three essentials and three enablers that amplify them.
The Three Essentials
1. A Real Team
A real team has clear membership, enough stability for trust to develop, and genuine interdependence. Many senior leadership groups are a collection of functional heads who report to the same person and regularly meet but fall short in collective effectiveness.
2. A Compelling Direction
Purpose is the cornerstone of team effectiveness — a direction that is clear, challenging, and consequential, demanding the team’s collective best. The key question is: why does this team need to exist and work together? Teams that cannot answer it clearly struggle deliver.
3. The Right People
Membership should reflect the skills, diversity of perspective, and interpersonal capabilities the team’s work requires. This may not simply be the heads of all significant functions. Size matters too; larger teams compromise dialogue, slow decision-making, and dilute accountability.
The Three Enablers
4. Sound Structure
Sound structure means the team’s task is genuinely collective, norms are clear — agreed ways of engaging, deciding, and holding each other accountable. Structure is among the most significant in distinguishing truly outstanding teams from those that function adequately.
5. Supportive Organisational Context
A leadership team’s effectiveness is influenced by its context — the quality of information it receives, its relationship with its board, how far rewards recognise collective as well as individual performance, and the resources available for development. When the environment an LT operates in pulls leaders towards individual rather than shared success it team will struggle to perform.
6. Expert Team Coaching
Skilled team coaching, offered at the moments that matter most — formation, significant membership changes, or a required step-change in performance — is the final condition. It works best as an amplifier of an already solid foundation; the stronger the other five conditions, the greater the impact of coaching.
The Five Behaviours of High-Performing Top Teams
Bain & Company’s research across hundreds of top teams in eleven industries identifies five behaviours that consistently distinguish high-performing leadership teams:
Direction — Genuine alignment on strategy, purpose, and priorities. Agreement is real, not performative.
Discipline — Decisions are made, not deferred. What is agreed in the room is implemented outside it.
Collaboration — Trust is active, not assumed. Constructive challenge is normal. Cross-functional problems are solved collectively.
Dynamism — The team leads change rather than reacting to it, holding the organisation’s direction through disruption.
Drive — The team is industrious and resilient, modelling the standards it expects of the organisation.
These behaviours are the observable expression of the conditions and disciplines described above — they emerge when the foundations are in good shape.
The Most Common Reasons Leadership Teams Fall Short
The central issue holding most leadership teams back is the group-not-a-team problem. Many organisations have a senior leadership group rather than a leadership team. The disciplines of a real team are not built by meetings and a shared calendar.
Unclear or competing purpose. Where direction is vague or unarticulated, members default to functional priorities. The leadership team becomes a coordination mechanism rather than the place where the whole organisation is genuinely led.
Oversized teams. Political pressures routinely produce teams too large for genuine dialogue. Beyond seven or eight members, effectiveness degrades significantly.
Suppressed conflict. Teams that avoid productive disagreement cannot make quality decisions. Psychological safety is not softness; it is the precondition for honest, rigorous thinking.
The two-team tension. Most members of a leadership team simultaneously lead a team of their own — and many give their primary loyalty to the team they lead rather than the one they are part of. Without deliberate attention, functional priorities quietly override organisational ones. Read more about how leadership team coaching addresses this.
“the first thing holding most leadership teams lack is no clear purpose.”
“companies whose executive team is aligned and working effectively together are almost twice as likely to achieve above-median financial performance”
The ROI of Leadership Team Effectiveness
While it intuitively makes sense, the business case for the value of effective leadership teams is substantial and well-evidenced.
McKinsey analysis found that companies whose executive team is aligned and working effectively together are almost twice as likely to achieve above-median financial performance. Bain’s 1,250-company study puts the premium higher still: highly effective top teams deliver revenue growth, profitability, and total shareholder returns three times higher than the study average.
A separate finding from McKinsey shows that transformations anchored in team-centric approaches can improve organisational efficiency by up to 30%.
The Centre for Creative Leadership adds a sobering counterpoint: 65% of senior executives describe their leadership team as ineffective. That is not a marginal problem. It is the baseline most organisations are starting from — possibly your’s.
On the investment in developing leadership teams specifically, the ICF’s global research across organisations that have measured returns finds that a median return of seven times the initial outlay. Nineteen per cent reported returns of 50 times or more.
DDI’s research reinforces the broader case: organisations offering effective leadership development at all levels are 54% more likely to rank in the top 10% of their industry’s financial performance — a figure that drops sharply when development is patchy or limited to one level.
The Wageman–Hackman research is unambiguous: effectiveness does not happen to leadership teams by accident. It is designed, built, and sustained — or it is not..
Leadership Team Effectiveness Frequently Asked Questions
What does the research say about how many leadership teams are truly effective?
The Wageman–Hackman study of 120 senior leadership teams across 11 countries found that only 21% achieved outstanding performance. A further 43% scored in the mediocre range, and 42% were under-serving their key stakeholders.
What are the six conditions for leadership team effectiveness?
Three essentials — a real team, a compelling direction, and the right people — and three enablers: sound structures, a supportive organisational context, and expert team coaching. Together they account for up to 80% of a team’s effectiveness.
How does psychological safety affect leadership team performance?
Psychological safety — the belief that it is safe to speak up and challenge without fear of repercussion — is the single most important factor in team performance, according to Google’s Project Aristotle. Without it, leadership teams produce performative agreement rather than the honest dialogue good decisions require.
Can leadership team effectiveness be developed, or is it fixed by the people involved?
Effectiveness is primarily determined by conditions, not individual talent — and those conditions can be deliberately designed and developed through leadership team coaching. A well-designed team consistently outperforms a talented but poorly structured one.
What is the difference between a leadership team and a leadership group?
A leadership group is a set of senior leaders who report to the same person. A leadership team has genuine interdependence — members must work together toward a purpose no individual could achieve alone. Many organisations have the former while believing they have the latter.