How to build a great management team

Building a high-performing management team is a key task in the life of any CEO. A strong management team is particularly important if you want to drive your company into faster growth and greater success than the average company achieves. This article describes what challenges Business-to-Business (B2B) Software-as-a-Service (SaaS) CEOs face when building their team and provides some insights and tips on how to succeed.

Written by Eivind Bergsmyr, Partner at Viking Venture

How to organize the company?

At Viking Venture, we are firm believers in functional management teams. Functional management is a team representing all functional areas, unlike a geographical organization, where country managers or regional managers run each geography. The combination of these two makes a matrix organization, which you often find in really large corporations. In a growth-stage SaaS company, we strive for simplicity and clarity and believe this is the easiest to achieve in a functional management team.

The benefits of a functional organization in a growth stage SaaS company are;

• Clear responsibilities for driving Key Performance Indicators (KPIs), no conflict with country/regional management
• Coherent processes across geographies and segments and a solid ability to learn and optimize processes
• Clear handovers to the following functional area
• Functional expertise on the management team enabling efficient decision-making

Who to hire first?

Based on our experience, building a fast-scaling SaaS company is hard without getting the most critical roles in place early. Natural functional areas in most teams are Finance, Sales, Marketing, Customer Success, R&D/Technology/Operations, and Product Management. Among the first are;

• VP of Marketing – to drive inbound and outbound leads
• VP of Sales – to close new customers
• VP of Customer Success – to onboard customers, keep them happy, and increase their business with the company
• Chief Technology Officer (CTO) – to develop new products and features as well as keep existing products up to date; also responsible for operations
• Chief Product Officer (CPO) – to establish and maintain an efficient product strategy and roadmap by combining market, competitor, and customer knowledge with a deep understanding of the product and its technical possibilities and limitations
• Chief Financial Officer – responsible for accounting as well as budgeting and assembly and use of KPIs across the organization

Other functions to consider early are Responsible for Revenue Operations (RevOps) and Recruitment, and People and Culture (HR).

How do you attract the right profiles?

Employees are usually the most cash-consuming investment you make as a CEO. The difference between good and great hirings might be huge. The difference between good and failed hirings might be even bigger. A failed hiring means you lose not only the money you spent on salary and hiring costs but also the cost of lost opportunity, delays, and wrong decisions.

Managing a company through fast growth is a complex and demanding task. Ideally, you want people around you with both relevant experience and knowledge to bring to the table. Hiring people who need to learn both your industry and the nature of the transition your company is going through is a double risk and definitely a high-risk strategy for any CEO. Young companies often end up hiring first-time managers for important roles. Examples might be the superb sales executive who wants to become VP of Sales, the best developer who aims to be a CTO, or the excellent controller looking to grow into a CFO position. They are all first-time managers.

As CEO of a fast-growing company, you often need to let talented people grow into management. However, be aware of the pitfalls and look for people with the capacity, capability, motivation, and personal characteristics that increase the probability of success. Ideally, you want the job to grow into the capabilities of key employees and not vice versa.

Experience shows that the availability of people changes as companies grow. The early-stage company often attracts people with a higher appetite for risk but usually lacks some of the ability to work systematically and consistently day out and day in. When the company grows, the perceived risk reduces a bit and you can often recruit people with a background from larger companies. While the early-stage hires often focus a lot on the upside (including financial incentives such as bonuses and stock options), the later-stage employees might be more focused on the current job content and security. As the company grows, the CEO has the opportunity to put together a more diverse and skilled team of people who can balance out the needs of the business.

A clear understanding of the ideal profile is a necessary starting point for any successful hiring process. Suitable candidates can be sourced through advertisements, headhunters, or your network. Often, internal promotions are a lot less risky than hiring external people.

The CEO of a fast-growing company needs to constantly work on improving and developing his or her management team to continue the company’s success. Often the CEO trusts the individual managers ability to grow into new tasks and requirements too much, ending up replacing managers who have reached their level of incompetency far too late.

Create an efficient team culture

Outstanding individuals do not automatically create exceptional teams. It is important to spend time and energy on creating an atmosphere of mutual trust and respect in the team. This can be helped by recruiting individuals who complement each other and have the right attitude. “Hire for attitude and train for skill” is often used as guidance in the recruitment process.

It is important to create a climate for constructive disagreement in the team, often linked to an “obligation to dissent”. This means that an individual must speak his or her mind at every important discussion and decision point. Implemented in the right way this might lead to avoidance of bad decisions as well as the creation of new ideas.

It is important to hire and foster managers who lead by example. This includes everyone from the CEO down to the team lead. What you do as a manager is much more important than what you say. If you, as a CEO, think the rules you establish for your employees are not valid for yourself, you will have difficulty building a consistent culture across the company. Life in a small company is often about doing more with fewer resources. Then, you need everyone to roll up their sleeves and complete all tasks! From brewing coffee and cleaning the desk to signing the biggest contracts.

Build your management team

This article explains why building a high-performing management team is critical for any CEOs in B2B SaaS companies. We advocate for functional management teams, rather than geographical or matrix organizations. Ensure that key roles like VPs of Marketing, Sales, Customer Success, CTO, CPO, and CFO are hired early, and consider roles in Revenue Operations, Recruitment, and HR. Attract candidates with relevant experience and industry knowledge. Promote a team culture of mutual trust, respect, and constructive disagreement. Continuously improve the management team, avoid over-reliance on managers’ potential, and make timely replacements.

If you want to learn more about management, we have written an article with five tips for efficiently managing your board. The article focuses on the more practical aspects of running a board as a CEO and business-oriented tasks for a growth company, leaving the compliance part out for now.