Cross-functional collaboration is best fostered when clear strategic priorities are set and each team and team member understands how they contribute to the company’s strategic direction.

Across all the businesses that I have led, the situations were diverse, spanning private and public companies ranging from sub $10 million to more than $500 million. I participated in six exits, including three while CEO. No matter the company’s stage or where it was headed next, creating cross-functional alignment was essential to reaching our goals– and often an area that needed improvement.

I had an opportunity to dive into this topic as part of a panel on Effective Team Collaboration and Alignment at LLR’s CXO Collaborate. Alongside seasoned CEO Michael Williamson and former CEO Jim Flynn, and LLR’s head of Strategy, Sarah Long, we looked at why cross-functional collaboration is so important, what good looks like and how to achieve it. Here are what I think are the most salient points for leaders to remember.

Warning signs that your operations are siloed

You can’t run a company for any length of time without running across instances of disconnect between functions, but recognizing it isn’t always easy. Here are some of the indicators we identified as signs that different areas of the business are not working together effectively.

Resource allocation is not being guided by company-wide strategic priorities. Whether it’s engineering versus sales and marketing, or product development versus maintenance and technical debt elimination, everyone wants to do everything. But the reality is that we all face resource constraints and must allocate funds to discrete buckets.

Our panel of CEOs has found it productive to set strategic priorities such as “expand the base” or “defend the base” to solidify what you will do as a company and, just as importantly, what you will not do (at least for now – it doesn’t mean never). The former focuses on new products and acquisitions, while the latter centers around client success and satisfaction. Setting near- and long-term priorities, being clear where funding goes and when, and communicating it throughout the organization is vital.

Strategic priorities such as “expand the base” or “defend the base” solidify what you will do and, just as importantly, what you will not do (at least for now – it doesn’t mean never).

Sales and marketing are not aligned on priorities. Ask most any sales executive what they want from marketing and the answer is the same: “more leads.” CROs are usually very strong personalities and will lean on marketing to emphasize lead generation. While lead gen is critical, marketing must also deliver on other key functions, constantly promoting the brand, refining the message, and creating content to support a variety of programs. The CEO must ensure marketing is fully supported for all these efforts.

At the same time, setting clear goals and conversion rates for each source of lead generation (marketing generated, outbound, inbound, partner, etc.) is a fundamental must-do and it must be routinely measured. Yet the conversion from marketing qualified lead to sales accepted, and the progress thereafter, is often overlooked. If not measured and managed, this can lead to conflict at many levels and impact the company’s ability to grow.

Communication isn’t clear before and after acquisitions. After selling a company from one PE firm to another, our new partner’s first comment was, “it took a lot of work to get to the starting line.” He’s right – M&A is a lot of work. However, the real work begins as soon as the deal is announced. Employees on both sides have one question: what does this mean for me? To gain their support and engagement, outline how the event supports previously communicated strategic goals and demonstrate that it was the result of a well-thought-out process. Similar to the strategic priorities mentioned above, a robust and frequent communication plan throughout the newly combined organization is essential.

Low level of leadership involvement with teams. How involved does leadership get with the people they manage? Look for tangible proof that leaders are pulling teammates into the decision process and valuing individual contributions. If you do not see this, model it and pull your executive team into demonstrating the behavior along with you.

Senior-level collaboration is important, but leaders need to engage with the functional teams they lead and solve problems together.

Low day-to-day engagement among employees. How engaged are people during meetings, whether it be monthly operational reviews, senior leadership meetings or town halls? If attendance and engagement are low, it’s time to focus on rebuilding a sense of shared purpose and responsibility. We use a tool called OfficeVibe, which conducts a ‘pulse survey’ on a weekly basis to gain valuable, anonymous employee input.

Poorly aligned incentives. Are incentives aligned across functions? If compensation doesn’t align, neither will the priorities and behaviors. Establishing overlap around metrics and incentives creates shared goals and encourages cross-collaboration.

3 ways for leaders to foster company-wide alignment

The leadership experience represented on our panel ranged broadly across the middle market, yet we all agreed on three guiding principles to help strengthen cross-functional collaboration and alignment.

A shared vision promotes common goals and cross-dependencies

Alignment begins with a shared vision, mission and strategy. But it’s not enough to create and roll them out once. You need to support and reinforce them for as long as it takes to reach the goal. In my experience, there is often a gap between strategy and execution: to realize the strategy, the company must translate it into an operating plan that explicitly names the priority activities as well as those they don’t plan to pursue.

The other weak point is communication. Jim pointed out that often an organization will go through a laborious process to build up a strategy or investment thesis, present it and then fail to communicate it across every function.

“We employ a lot of brilliant people, but if they don’t understand what we’re trying to do, where we’re trying to go and what cross dependencies are needed to be successful, we’re not going to get anyplace. Success starts with clarity of vision and an understanding of how each person contributes to the goal, from the person who is making copies to the person architecting solutions.” – Jim Flynn

Asking the right questions builds openness and trust from the bottom up

It’s hard enough to build cohesion and trust within a team. Asking people to extend that trust cross-functionally is even harder. Consistent communication is crucial; we all mentioned monthly 1:1 reviews, quarterly business reviews (QBRs), town halls, and pulse surveys as channels for encouraging it. We also agreed that the CEO and leadership team need to play an active role in modeling open communication.

For me, a big part of this is to encourage complete candor and truth-tellers on your team. At the end of meetings, I would sometimes ask, “Is there a question I could ask you where your answer would change everything?” And sometimes, the person’s answer really would change everything. I recommend finding that magic question—the one that gets people to tell you the whole truth, not just what they think you want to hear.

“Don’t just talk about goals and objectives. Add dependencies to the agenda. Who do people report out to, what dependencies do they have on others, who is waiting on a delivery from them? Otherwise, people get focused on hitting their goal without understanding the impact of the dependencies between the different functions.” – Jim Flynn

“One of the hardest parts about being a CEO is that you have limited information when making decisions. The most valuable functional leaders are ones that are forthcoming and transparent. I’ve had brilliant product leaders or sales leaders that produce incredible results. But if they function on an island, they’re not as valuable as those that know how to communicate.” – Michael Williamson

Clear and measurable accountability structures encourage collaboration

Accountability came up again and again during the panel discussion as the glue that secures alignment. It can be built into vigorous QBRs that focus not only on what people have done but how closely it aligns with what they said they would do, where things went off track and why.

One of the best questions a CEO can ask at these reviews is, “What do you need from your colleagues and how is your interaction with them?” I also developed a simple system to track and score resourcing for each function on a one to five scale. Does it have the right systems and data in place? Does it have the right number of team members? Are those team members high performers? That allows me to measure the health of each function over time and have the right conversations at the right time with the team leaders to make sure they have what they need to get where I need them to be.

My colleagues on the panel also suggested interesting ways to create more accountability:

“One tactic I’ve found effective is to have people report on their dependencies—who they’re waiting on and who is waiting on a delivery from them. Otherwise, people fall back on just hitting their own goals without understanding the impact and the dependencies between the different functions.” – Jim Flynn

“One of the most impactful tools I have implemented are scorecards using the LLR Value Creation Team’s approach. They help people in each functional area to know exactly what their role is, how those things align to the bigger vision and how their success is going to be measured.” – Michael Williamson

Here’s the bottom line.

Jim probably put it best when he said, “We don’t run fiefdoms, we run companies full of brilliant people. Our job as leaders is to figure out how to break through the noise, get beyond individual objectives, get everybody aligned and go in the same direction.” In other words, CEOs exist to foster the cross-functional. It’s not easy—and it gets more challenging as a company grows—but it’s integral to the company’s success.  Keep the vision and strategy for the company front and center, establish authentic communication channels and build accountability structures into your daily operations.

This GrowthBit is featured in LLR’s 2024 Growth Guide, along with other exclusive insights from our portfolio company leaders and Value Creation Team. Download the eBook here.