Delegating E by Will Phillips
People are at the root of almost every single business problem. The first instinct of a manager or business owner is to simply get rid of the person. However, this rarely solves the problem. All you do is get rid of one set of weaknesses and bring in someone with a different set of weaknesses. The job of management is to coach people to perform better than they thought they could, and to institutionalize coaching throughout the organization. An ongoing issue for any business ought to be how to get people to do more than they think they can do.
One important assumption is that nothing works. There is a major gap between management theory and what actually happens in the workplace. Managers and CEOs learn all these theories, take them back and try to apply them in the workplace, and nothing happens. What is necessary is something in the middle, called engineering, which involves adapting what you learn so that it can fit into your organization.
Delegating and E are two different words and two completely different concepts. The E is one of the four major management roles that must be filled in organizations to achieve long term success. A brief review of these roles:
PR0DUCER One of the primary roles and first role in an organization is to produce a result. The critical result you need to produce is to meet the needs of your customers. No matter what you do, if you don’t meet the needs of the customers, you don’t have a business. Producing will make your organization effective.
ADMINISTRATOR: This involves all the systematic and programmed ways you can figure out to solve problems on a regular basis, so that each new problem or challenge that arises doesn’t require a major retreat to get people together to figure out how to solve it. This will make your organization efficient.
P and A will make your business successful in the short run because you have a systematic way to produce results. Over time, however, you will get into trouble because things change.
ENTREPRENEUR This means to create new things and to have the courage to implement them. This is what you have to do to respond to change. Otherwise the great system you have for producing results will go down the tubes.
INTEGRATOR: This is the least understood and hardest to implement role. The chair analogy helps to explain it. If you take all the parts of a chair together, you have the essence of chair. If you take away one leg and it falls over, you no longer have “chair”, you have junk. The other parts of the chair didn’t feel the broken leg, and they didn’t care about it either. Also, the chair will not fix itself; it will require maintenance from the outside.
The analogy is to the human hand. The hand is not a mechanical collection of pans, it is an organic collection of things that are linked together, or integrated. If you remove one of the fingers, the hand will still be a hand. It will most definitely feel it, and it will certainly care about it. And almost all the time the rest of the body can heal the wound. The hand is organically connected and integrated. Your organization needs to be organically connected. Organizations that are integrated have the ability not only to heal themselves but to reproduce themselves,
This is where the issue of delegating E becomes important. When you founded or first started leading your organization, you were the one who provided the change, the ability to adapt. As the organization grows, it tends to stay with you, and the E tends not to be in the body of the organization. This causes a number of problems, the most important of which is a starvation of entrepreneuring skill and change within the organization. The ability to adapt to change gets starved out of the organization. Thus, you get the very common situation where the business gets sold, the owner leaves, and the new owner comes in and tries to run the business without really knowing how to do it. In a very short time the business gets in trouble.
To bring back fun into the business, and to add real value, E needs to be delegated into the organization. Without it you have an entrepreneurial organization, not a professional one. There are approximately 15 million businesses in America, and all but 500,000 of them are privately held. The avenge life span of the 14.5 million privately held businesses is about 20 years, which amazingly enough is the life span of the ownership. In America, we are great at starting businesses but not so good at keeping them going.
Delegating B is talks about three very relevant issues concerning your business:
- So you can sell it for more.
- So they are more fun for you as they grow and mature.
- So there is more of a contribution to the economy you live in.
ORGANIZATIONAL LAW CYCLES
Every organization goes through a predictable life cycle, and each stage has very identifiable characteristics.
COURTSHIP: The company is all idea. It has no systems and isn’t producing anything. It is all E.
INFANT: All of a sudden you have to pay the rent, so you have to start “P-ing” like heck. You have one product for one customer, you are producing it and surviving.
Go-GO: This is a great stage because opportunity is everywhere. There is tremendous growth, but there may be no profit. Cash flow is truly cash flow. As soon as it comes in it goes out. It is a fun, exciting stage, but it easy to make major mistakes as you spread yourself too thin. This is often the time the bad acquisition gets made because you didn’t take the time to examine it properly.
At this stage, the entrepreneurial CEO begins to feel like he can make no wrong decisions. At this stage, the company also begins to add layers of management and supervisors, which usually become to many too quickly. This is called bureaucracy. It causes a dilution of E throughout the organization. This means you don’t have time or energy in 24 hours a day to pay attention to all the changes that need to be changed.
There are ~two types of changes the E refers to. One is strategic change, meaning where the organization should be going, what markets it should be in, and what products it should be producing. The other type of E concerns operational change. These changes are more tactical, but they are equally important. As the organization grows it becomes easier for you to focus on the big strategic picture and forget about the operational stuff. If you are an engineer or accountant type, the opposite will happen.
The point is, as the business grows, there isn’t enough of your E to go around. The business now begins to stagnate. This doesn’t necessarily mean it will stop growing. A business stagnates long before it stops growing.
FOUNDER’S TRAP: This is when the business hits the founder’s trap. It is difficult for you to feel you are wrong, and it is difficult for others in your business to feel you are wrong. They will start coming to you for every single problem or decision. Most entrepreneurs are smart and love to make quick decisions. It is very difficult for you to stop making decisions for everybody, even though this eats up all your time.
Your people believe you have the right answer. They have learned how to P and A their jobs very well. What they don’t know how to do is E. It is much easier to run any new idea by the boss to make sure it is okay. This creates a dearth of E in the organization.
The “Pac-Man” theory of management says that P eats A eats B eats I. This means that P will kill anything that gets in its way. A will kill E and I. B will kill I. And everything will kill the I.
An example is a company that has no marketing department, but realizes that it must have one. So it creates a marketing department, but usually under the umbrella of sales. Since sales is all P, it will dominate the department. Eventually, instead of having a real marketing department that focuses on new markets and products, you end up with maybe a few people doing market research or sales reporting, which isn’t marketing at all.
The same thing happens with engineering. Operations, which is a big P, tries to get some engineers in it in order to P better. So they bring in a new, young engineer with all kinds of new ideas for efficiencies and work flows, but he has to report to the big P. He ends up really doing nothing but maintenance on existing machines. This also kills the E.
Accounting also kills the E. Accounting tells you where the money went. Finance needs to tell you where the money is coming from. Accounting is A, finance is E. A eats E.
Human resource development is E and I; personnel is A. Again, A eats F, and human resources turns into record keeping instead of focusing on developing and growing people in the organization.
A major problem with small companies is they can’t afford separate departments for R&D, finance, marketing and HR, which are truly B functions. What happens is the CEO ends up doing all the E functions for these departments. This leads to the founder’s trap, where all the E is in one person at the top and all the P and A are in the people at the bottom. Entrepreneurs love to delegate all the dirty work, but they hate to let go of the B stuff. Thus the E, the decisions, changes and new ideas, never get delegated to anyone else in the organization.
Your job as CEO, if you do delegate the B to others in the organization, is to be the integrator. You will have a bunch of different B’s going head to head with each other. You will need
to be the mediator and keep them in balance. One other important task will be to B where it cannot be delegated down, which is the E of vision. When you have moved to this point, you have created a business that is professionalized. You can bring in another CEO and the business will continue to run smoothly. This will be an organization which has I, and can live on its own.
How do you delegate E? How do you know which to do first, and when? You can look at it from two perspectives: structure and process.
Perhaps the biggest barrier to delegating E is the issue of judgment. You may not want to delegate activities like marketing, finance and R&D because you don’t trust others’ judgment. It often happens that you get forced into delegating this stuff because of various circumstances which are usually not conducive to delegating properly.
In the delegating process, you start out with “I do it” and you want to end up with “he or she does it”. To get from one to the other, there is a transition step. That step is “we do it”. This means you may not have a marketing department, but you can have a marketing function, which meets on a regular basis. Who is the “we”? At the very least it is you and one other person. It might also consist of you, the head of sales, a sharp young person in sales, or the new young person you’ve hired to be head of marketing. The marketing function will begin by you leading it and by going through the process of decision making so that others can see how you arrive at your decisions.
Next you model the behavior. Then you watch the marketing function operating as a decision making unit. If needed, you step in and make course corrections for them. This process puts them in the finest management training they can get. This process also moves you from the E to the I. When you have demonstrated competence from them, and demonstrated confidence from you, then you phase out. Now the E has been delegated.
Another way to preserve and grow the E in your organization is to structurally armor it. This means you create a function or department that doesn’t report to a P. You create the structure in order to protect it. You don’t make marketing accountable to sales, or engineering accountable to production. You separate them in order to encourage and raise productive conflict. Your role as the I is to make the conflict productive.
Every organization in a growth phase should have a strategic structure of what your business should look like when it is twice as big or even five times as big. If you aren’t growing, you should have a strategic structure of what your business should look like in 5-10 years. You realize what more specialized functions you will need when you are doing twice or three times the amount of sales you do now, and you look at when you need to bring them into the company.
It is also valuable to analyze your structure in terms of PAEI. You may find you can’t afford departments yet, but you can afford a function. A department has a space, title and salary of its own. A function has none of those things; it is a meeting.
People have the ability to E. Unfortunately, as people grow up, school, parents, and society spend most of the time teaching kids not to be creative. What we learn growing up are rules and systems. As a matter of fact, working together on solutions in school, which is “I-ing” is called cheating. We simply don’t get a lot of training on how to E and I.
This type of delegating E is a slow process, but it is absolutely the best way to develop and grow your people. This is the process of moving from the “I do it” to “we do it” to “you do it”. It is not fast and it isn’t easy, but it is very effective.
BRINGING A INTO THE ORGANIZATION
As companies enter the go-go stage, everything is focused on P and B. Opportunities are everywhere, and the company usually tries to take advantage of all of them. There is a crying need for some A. Everybody is screaming, “Let’s get organized!” It is necessary to establish policies and procedures for hiring, pricing, ordering, shipping, and many other areas. This is the adolescent stage of a business. However, as you bring A into the organization, it is critical that you don’t kill all the E.
As the A comes into the organization, people begin to realize that profit is actually possible, that the company may actually be able to make more money by doing fewer things. Most organizations simply don’t have the time and money to do full scale P, B, and A. So, when the A is brought into the organization, there is a cutback in either the P or E. The big question is, which one should it be, not which one is it.
The answer is P, but it actually is almost always E. What happens then is that if you have people in the organization who have pretensions of being a big B, they suddenly wonder why they are needed. As you tell them you are no longer going to take advantage of all these opportunities, and are going to scale back and actually make money, their response is “Why do you need me?” This is when they leave and become your competition. Also, once the E leaves the organization, it is very difficult to put it back in because the company gets a reputation. You end up with an organization which is predominantly P and A, which is the prematurely aging stage.
This is not necessarily a bad stage to be in, especially if your product cycle is a long one. This stage doesn’t require a lot of E. This can turn out to be a cash cow, which you can milk for all the cash without needing a bunch of E. However, once the curve starts to decline and you need to put E back in, by then it is usually too late.
So, as you add A to the organization, cut back some on the P. This doesn’t mean to stop growing; but it means you redirect and channel the growth through fewer opportunities. This will allow you to pass successfully through the adolescent stage. Through the process and structure, you can successfully delegate B throughout the organization.
“WE Do IT”
By now everybody has heard of the concept of management by wandering around. Most employees don’t like it because they already know how to P and A their jobs. When you come by you generally want to E that person, which disrupts what they are doing. The danger is that you aren’t just an E, but you are a PE. This means that not only can you generate ideas fairly quickly but you can also shoot them out quickly. The problem is not that you have E; the problem is the transition you use to put the B into practice so it produces results.
When solving a problem or making a decision, every person goes through a series of steps. Usually they are not conscious of those steps. A PE entrepreneur can go through the whole process in a matter of seconds. You see a problem and you reach a decision as soon as possible.
At this point, Phillips distributes a handout that lists the steps in the decision making process. The purpose is to make you more aware of the process, so that when you are in the “we do it” stage of delegating, you have a conscious way of going through the process. Part of your job is to become a coach for B, not just to delegate it. You can’t just throw a long pass and then leave the stadium.
If you go to a coach and ask him to help you improve, the first thing he needs to know is what your current skill level is. Then he has to watch you in action so he can determine what you are doing wrong. Take golf as an example. If your coach looks down the fairway at the results of your swing instead of actually watching you swing, he isn’t going to be able to help you much. Just telling you “bad shot” doesn’t help you know what you are doing wrong. If you do the same thing when you are delegating B, you are not being much of a coach.
The same thing is true in making decisions. The handout attempts to make the process of “making the shot” a little more conscious.
The basic steps in the decision making process of an entrepreneur are:
- Accumulate data
- Deliberate or analyze
- Get an idea (illuminate)
- Make a decision
However, this leaves out a few steps. What gets left out is:
ACCOMMODATE: This is known as the beach ball effect. When you work in an organization, it is like standing on a beach ball. From on top of the ball, you look down and see red, and figure you have a red problem. You issue a memo to do something about the problem. Now you have the person at the bottom who sees the memo come drifting down. He looks at the ball and he sees blue. He’s worried about the blue problem and he sees a red memo coming down. So he doesn’t have the same enthusiasm for your solution as you do. Or, he implements it in a way that creates some side effects.
You have your wonderful decision that isn’t getting implemented, and you look down at that person and decide he is either dumb, unmotivated, or just doesn’t care. He looks up at you and thinks the same thing. This causes the beach ball effect, which means that each person has some truth. In the accommodation process, you have this great idea, but now you take a look at all the reasons for “why not”. As an entrepreneur with a large ego, this is very, very difficult. The last thing you want is people questioning your wonderful decision. You want them to salute it at once.
No matter how warm, loving and open-minded you are to employee input, there is still a phenomena that occurs because your employees know that you do the hiring and firing. If they like their jobs and want to keep them, they are going to make you happy. If you have a new idea they will support it if they think it makes you happy. They aren’t trying to undermine you. They are just trying to do what they can to make the idea work.
DEFREEZE: This is another step that gets overlooked. You can’t just walk up to someone and tell them you are going to coach them or solve their problem for them. You have to get them ready. You have to get their brain off whatever it was on and get it focused on what the problem is.
REINFORCE: After the decision has been made, you once again need to ask what they think of the decision and the way you got it.
So, the process should look like:
- Incubate (sleeping on it)
The different roles will have different strengths in the decision making process. A’s will excel in the accumulate and analyzing stage. They also love to incubate. They can get locked in the cycle of paralysis by analysis.
E’s will excel at the illuminate stage. P’s will excel at the finalize stage. l’s will generally go where everybody else is. This is why it is so important to have each role filled in a meeting, because that way all the important steps in making a decision are covered.
DEVELOPING DELEGATION OF E
The following is a specific decision making and problem solving simulator you can use to test and train every one of your people.
It is called a RAP session.
An example is having a meeting to discuss the monthly financial report. It involves each department head doing three things:
- Reviewing the report before the meeting
- Listing any significant deviations
- Proposing actions to correct the deviations
The CEO must also do this for each department. When everyone
comes in to the meeting, you ask the first person to read his significant deviations and his corrective actions. If they agree with yours, you move on to the next person.
If there is disagreement, you move into the “educational mode1’. This is not a punitive or “I’m smarter than you” mode. This involves explaining to the person why you disagree with him and why you feel it is an important issue.
When you first begin this, it is a lot of work for you because you have to read everybody’s report. Also, many department heads may not recognize the significant deviations and may not come up with any good action items. It also may happen that the people do recognize the deviations but have no idea of what to do about them. You save those issues for discussion later in the meeting.
You then finish of the first part of the meeting by making sure that everybody has an action item on the things they need to do. The action item should list the actions to be taken and the desired results of the actions. Too often the action is delegated but not the results. Whenever you delegate it is important to spell out the desired result. Finally, you must spell out by when the results are expected. This is different from when the person is going to take the actions. This is when you can expect the desired results from the actions taken.
The second pan of the meeting is devoted to the issues for which people have no ideas. You set a priority on discussion of the issues, and as a unit focus your attention on solving the problem in each specific area. Everybody in the meeting now becomes a consultant for each individual with a problem area. One of the best ways to solve recalcitrant problems is to get a different perspective. The other viewpoints are invaluable in providing that perspective. Not only does this process solve problems for the organization, but it also begins to create an organizational team.
When this process gets up to speed, 70% of the time will be spent on problem solving and action planning. Inithlly, more time will be spent on reviewing the material. This is also a great method for finding out if a person is ready to have E delegated to him.
One problem you will constantly run into is when employees say they don’t have the authority to do a certain task. How often do you hear, “You can’t hold me responsible for that. I don’t have the authority to do anything about it.” Or, “Put me in charge
and I’ll see that something gets done.” The real problem is that each department or unit in your business is not an entirely separate entity. There are interdependencies, which create authority gaps. What you need to do is create something to counteract this problem, because you are the only person in the business that worries about all the things that fall in the gaps.
Everybody else just worries about doing their job; you worry about the whole company. When you delegate I, you begin to transfer some of the worry about the whole organization down through the organization.
One of the ways that you implement strategy is through structure. One useful tool to do that is by having a strategic job description. You can use the same sheet of paper, with three sentences on it, for everybody in the organization. The three sentences are:
- The very first priority you must attend to in coming to work here is making sure that this business achieves it goals.
- The second priority you must attend to is to help other employees and departments achieve company goals.
- Your third priority is to do your function.
As a company grows there is the need for people to specialize so they can perform individual functions better. As soon as you start doing this, you plant the seed for the organization to start aging unless you do something to counteract it. The aging that occurs is when you hire someone to be an accountant, a salesperson, or a department manager. In essence, you are telling that person you are hiring them only to worry about that particular part of the organization, and that you will worry about the whole organization. In the process, they become more and more responsible for less and less. Eventually you end up with a full-blown bureaucracy.
By setting up departments in your organization you have begun the process of creating bureaucracies. How do you counteract that? The first basic tools are creating a vision and a mission. The mission should capture people’s focus on where the organization is going. It can help, but if you don’t do anything in the structure, it will have little impact.
This leads to strategy, structure and rewards. You have to measure these things. You know what the goals are, you have structured people to be responsible for them, now you have to create a reward system which says that part of your reward will
be based on how you do in your job function, and part will be based on how much you help others. Part of it will also be based on how well the organization as a whole achieves its goals.
It is fairly easy to measure how you achieve the goals. But, how do you tell who has been helping who? I have a management committee meeting in which each department head writes down their internal customer needs and all the needs of the other departments they think they are supposed to meet. Then have individual meetings between the department heads to see if they are in agreement. If there isn’t agreement, bring the issues back to the management meeting for further resolution. This process creates a set of internal needs that each is responsible to.
In order to make this work, you have put in place an information system. You now have the three essential strategic elements that every organization needs to drive it – strategy and structure, information systems, rewards.
The second most used strategic structure, and the least effective, is organizational culture. This is how you usually get people to work as a team. You tell people what the goals are, how important it is to work as a team, and then send them to a teambuilding seminar. But, if you don’t do it structurally, you don’t measure it and don’t reward it, it won’t happen.
As you begin to set up the structure, measure it and reward it, you will begin to start delegating I. In the RAP session, particularly when delegating E, it is important to identify the following:
- What is the problem or challenge that you are delegating?
- Clarify what the task is not.
- Clarify the expected results.
- Decide who is on the team.
- Set deadlines for results.
Delegating E is delegating the how. As a team you have already decided on the what. Learning how to delegate means learning how to be quiet. Because of your P and E abilities, this can be very difficult. It takes work and practice and a real commitment to grow and develop the people in your organization. The results will be a professional organization and the realization of long term success.