Q. I'm sorry to say it, but the owner of the company where I work is the quintessential micro-manager. He has hired three managers (I'm one of them), but he won't give us any decision making authority. I'm not sure why he won't delegate, but it's killing our company. Because everything has to go through the boss, we can't respond quickly enough. What would you recommend?
A. In the process of doing research for our book, we interviewed the owners of more than 100 small businesses. One of the consistent patterns we found was that entrepreneurs had difficulty effectively delegating decision-making authority. The primary reason is that delegating decision-making authority means giving up a measure of control and that’s hard for many entrepreneurs.
Yet, if their businesses are to continue to grow, these owners will have to overcome their reticence to let go. Failure to do so will mean that the principal’s workload will continue to increase. At some point, they will be overwhelmed and out of capacity. These business owners will unwittingly become the constraint to growth in their own businesses.
This is a bad situation, but the only thing worse than not delegating when it’s needed is delegating before the proper infrastructure is in place. Doing so can send the business spiraling out of control before the owner realizing what is happening―we’ve seen it all too often. Putting the proper infrastructure in place to allow safe delegation means three things:
• Hire the right managers – Delegating before the right people are in place is a recipe for disaster. Unfortunately, getting the right managers in place often requires difficult decisions, because it can mean layering or replacing loyal employees who simply do not have the skill set to become managers. Although the decision can be gut wrenching, failure to make the tough call can cripple a businesses.
•Document processes – It’s not very sexy and no one will pay a nickel more because you have well-documented processes. Even so, once a business reaches the point where the owner cannot be personally involved in every transaction, good process documentation is the best way to communicate to employees exactly how you want things done. It ensures that things are done consistently across an expanding enterprise and provides a basis for continuous improvement.
If every widget maker does things in the same way and one of them identifies a way to improve the process, it’s relatively easy to propagate the improvement across the entire organization. But, if each worker makes widgets differently, the process improvement will only be useful to the person who identifies it―the others are doing things in a different way to begin with.
• Establish robust metrics – This is what enables a business owner to know what is going on in the bowels of the organization even though he or she isn’t personally there. Good P&Ls are necessary, but not sufficient. For example, tracking the number of shipments that are currently late can let the owner know if there is a problem with on-time deliveries while there is still time to fix things. Left uncorrected, this problem will eventually show up in the P&Ls as a decline in sales, but by that time, the damage is done―the customers are gone. Good metrics are what allow a business owner to sleep at night.
With a solid infrastructure in place, business owners can confidently delegate decision-making authority to their managers―without it, delegation can be a recipe for disaster. Developing a proper infrastructure takes a lot of work, but the results are worth the effort.
Do you have a business question for Doug and Polly? Tweet it to us @BizReviewUSA or send us an email at [email protected]