How Leaders Can Cultivate High-performance Teams

Improve your team’s decision-making by tapping into unshared information.

Kate Isaacs is a scholar, teacher, and strategy advisor who designs organizations and stakeholder partnerships for people and places to thrive. As a Senior Lecturer at MIT Sloan, she teaches courses on leadership and inclusive innovation. Ms. Isaacs consults with organizations in all sectors on strategy and culture change, specializing in facilitating multi-stakeholder collaborations. As a certified Shadow Work coach, she emphasizes the positive potential in people and organizations. Ms. Isaacs works to notice and expand on what is already working while also looking to find ways to overcome obstacles that block the natural orientation towards creativity, growth, and health.

Each year, our SPDR® MasterClass program draws on the expertise of leading scholars like Ms. Isaacs to help advisors grow their businesses, keep pace with change, and better satisfy clients’ evolving needs.

Strong teams are the driving force behind successful wealth management firms. To help high-performance teams succeed, leaders today must create the conditions that cultivate trust, wellbeing, and innovation.

During a recent MasterClass, leadership expert Kate Isaacs guided attendees through the award-winning Mount Everest simulation, where teams attempt to summit the mountain by analyzing information, determining how much of that information to share with their teammates, and overcoming challenges by making group decisions.

More than just a game, the simulation reveals best practices crucial for creating high-performing teams, including sharing uncommon information, encouraging productive debate, and fostering psychological safety.

Why Effective Information Sharing Is Mission Critical

In the simulation, each team member has information that isn't available to others — and how the teams manage this information asymmetry has a critical effect on their success. Teams with strong leaders who get full diversity of thought on the table finish better than teams that do not.

Unique information is essential for learning and innovation, but teams often struggle to unearth uncommon information. In fact, information held by more members before team discussion begins has more influence on team judgements than information held by fewer members, independent of the validity of the information. Social psychology suggests several reasons for why this happens, including:

• Probability of Information Distribution: We’re all likely to hold onto some private information.
• Mutual Enhancement: It’s fun to talk about common interests. We’re judged as more competent and credible when we engage in conversations with shared information versus when we share uncommon information.
• Bias for Preference-consistent Information: Group members prefer to discuss information that is consistent with their preferences.

However, when a group uses only shared information to make decisions, it can miss optimal solutions.

Minimize Status Differences to Improve Team Decision Making

Surprisingly, many common approaches to improve team dynamics can actually lead to lower-quality decisions.

Ineffective team decision-making tactics include:

• More discussions and bigger teams, or more information but the same distribution
• Separating the review and decision processes
• Holding people accountable for decisions
• Pre-discussion polling

What does work? To arrive at better decisions, teams can minimize status differences and frame the issue as an information-sharing problem rather than a judgment to be made.

To support better decision making, leaders can:

• Position themselves as information managers
• Encourage discussion of privately held information to increase the focus on unique information
• Foster productive debate
• Implement helpful brainstorming principles, like welcoming wild ideas and withholding criticism

Effective Team Leaders Foster Psychological Safety

Psychological safety is closely related to effective team dynamics. When team members have psychological safety, they are not afraid to bring up new ideas and questions, and feel safe speaking up about mistakes and concerns. They also won’t feel that they will be punished or humiliated for them, either.

You know your team has high psychological safety if people are comfortable:

• Asking questions
• Requesting clarification
• Inquiring about others’ views
• Discussing dissenting views
• Admitting mistakes
• Asking for help

How Financial Advisors Can Become Better Leaders

Inspired by years of research and experience, Ms. Isaacs suggests seven practical approaches advisors can take to become better leaders:

• Acknowledge your own imperfections.
• Reduce status barriers to participation and encourage equality through tactics like anonymous contributions.
• Set ground rules and hold people accountable to values. Start by acknowledging that you’re going to share information and are inviting everyone to share.
• Encourage multiple channels of communication, such as 1-1, written, group, and surveys.
• Use outsiders and data to balance powerful insiders.
• Celebrate instances of courageous behavior.
• Remove yourself from time to time, as people behave differently when the leader is in the room.

High-performance teams are the heart and soul of any successful organization. Armed with a better understanding of information asymmetry and group dynamics, leaders can empower their teams to perform at the highest level and make the best decisions possible.

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