Four Levels of Effective Delegation to Create a Self-Sustaining Business

Can your business truly thrive without you? Unlock the secrets to effective delegation and learn how to avoid common pitfalls like the hot potato delegator, the delegation hippie, and the false delegator. 

We’ll explore the importance of delegation in creating a self-sustaining business and introduce four impactful levels of delegation. From "follow my lead" where employees follow clear instructions, to "research and report" where they analyze options but you retain decision-making authority, you'll gain practical strategies to enhance delegation efficiency and scale your business.

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Transcript

Effective Delegation for Business Owners

Chip Schweiger 0:27

Chip Schweiger here, and welcome to another edition of Things Entrepreneurs Should Know, the business podcast for entrepreneurs, founders and business owners who want to build lasting financial value and supercharge the growth of their business. You're busy and you've got a lot of things to do, but you need a way to fix this, and that's to delegate an increasing number of tasks to your team. It frees up your time to focus on the important things, and a business that can run independently of its owner is the ultimate asset to own.

Chip Schweiger 0:58

So today on the show, let's talk about delegation and specifically touch on why sometimes we think we're doing a great job of delegating, but maybe we're not. Then I'll reveal four effective levels of delegation that can help you scale your business and still retain enough control to keep you comfortable. And even when you're effectively delegating a task, employees may still get stuck, and when they do, they need guidance from you. So I'll also give you an easy to use hack to help them get past those roadblocks After the episode. Check out the show notes at teskpod. com.

Chip Schweiger 1:42

Hi and welcome back. . When you first started your business, you were probably doing just about everything opening and closing the doors, contracting with service providers and collecting from customers. As your company grows though, it gets harder and harder to be involved in every aspect of your business. So maybe you decide it's time to start delegating tasks and duties to your staff, and if you're like most business owners, you probably give yourself a pretty decent grade as a delegator. However, if you're constantly finding yourself disappointed in people on your team, the problem may be less about them and more about your ability to delegate effectively. For example, do any of these delegation styles sound familiar?

Chip Schweiger 2:26

The hot potato delegator. So the hot potato delegator tires of a project or a task and quickly tosses the activity to an employee to handle. Like a hot potato, you touch the problem briefly and then pass it on to somebody else quickly, without much thought. The problem is the person you're giving the project to may or may not be clear on what you want them to do, and that means the potato often falls right back into your lap. How about the delegation hippie? So the delegation hippie is inspired by the free-loving spirits of the 1960s that believed in communal living where there were no rules and everybody was treated equally. The delegation hippie asks the subordinate to handle a task, but fails to provide clear lines of authority and control. The employee is left wondering if they need to check in with their boss before deciding on a course of action. They're usually not very clear about the budget that they've been given to work with.

Chip Schweiger 3:20

Another type is the false delegator. So the false delegator is the person who asks an employee to help with a project. The employee is left with the impression that they're being given broad decision-making authority to complete that project, while the manager actually wants to be kept abreast of all the possible solutions her employee is considering and wants to retain final decision-making authority. The employee decides on a course of action without the consent of the manager and problems arise.

Chip Schweiger 3:49

Now, before we get into how to delegate effectively, just a reminder of why delegation is such a critical skill for any business owner. Being able to delegate well means your company can thrive without you personally overseeing the details. This freedom allows your company to grow without you personally overseeing the details. This freedom allows your company to grow without you as a bottleneck, plus the quality of your work. Life improves because you no longer have to spend your time fighting fires and answering silly questions. Best of all, your company is worth more.

Chip Schweiger 4:18

Delegation is clearly important. So why do so many small business owners fail to delegate tasks effectively? Well, the problem comes down to thinking of delegation in terms of black and white. Instead of thinking of delegation as binary, think of delegation as having four degrees, and each degree offers your employee more decision-making autonomy and authority. So the first degree of delegation we'll call it the follow my lead and this degree of delegation is where you trust an employee to follow your instructions. You create a set of standard operating procedures and ask them to follow the steps you outline in your instructions. With first degree delegation, your employee must follow your process. They're not being given any decision-making authority and you're not really accommodating any variables at all.

Chip Schweiger 5:06

This kind of delegation is suitable for common tasks. It's when you're clear on what you want done and how you want someone to do it. For example, you might delegate the task of entering a new contact into your company's CRM platform. There is a specific way that you want it done and you really don't need your employee to think independently or critically about the task. This kind of delegation is ideal for simple tasks that can be carried out by relatively junior employees. You just need to make sure that you provided them with standard operating procedures to follow.

Chip Schweiger 5:38

The second degree of delegation is called the research and report degree, and it involves giving an employee a broader sense of responsibility to research the range of options for completing a project or task. Here you're trusting an employee to do their own analysis and bring you a short list of options to consider. Now it's important that with second degree delegation, the decision on which course of action to take remains with you. You don't have a solution in mind, so you want your employee to do some thinking and come back to you with some options. This kind of delegation is ideal when you don't have the answer to a specific question or challenge, and when you'd like to see the breadth of possible options. These are usually high-stakes decisions that could have a negative impact on you, so you'll want to stay involved and make the final decision. There is some critical thinking required with the second degree of delegation, and so it's important that your employees have good intuition for weighing options and have good common sense. For example, you may ask an employee to do some research into flight options for traveling to a city. You may ask an employee to do some research into flight options for traveling to a city. In this case, you don't want your employee to give you a laundry list of dozens of options. You'd prefer that they come up with three or maybe four intelligent options for you to consider, since you're the one that will be sitting in the airport terminal waiting for a connection. If your employee makes the wrong judgment call, you'd like to make the final decision.

Chip Schweiger 7:07

Another one is the third degree of delegation, and I'd call it the do-it-and-report-it degree, and this degree of delegation involves extending decision-making authority to an employee. You trust your employee to make a decision, but you'd also like to be kept in the loop so that you can coach your employee if you start to question their decision making. This kind of delegation makes sense when you have provided your employees with a standard operating procedure and when you trust your employees to think like an owner, and it also helps if the stakes of a bad decision are relatively low. So an example here is you may delegate the process of collecting receivables to someone on your team. You want to ask them to keep you in the loop with their progress. That way you'll have an early warning if the process starts to wander off track.

Chip Schweiger 7:55

The fourth degree of delegation, called do it, takes a page really out of the old Nike advertising campaign. You know, just do it. And in this level of delegation is used when you trust an employee to completely remove something from your plate. It's best used when you've provided an employee with the standard operating procedure for completing a task and the impacts of a bad decision are relatively manageable. It can also be appropriate to use the fourth degree of delegation if a task is something that you really don't know a whole lot about. You'll feel better if it were handled by someone who is more knowledgeable. So let's imagine you need to hire a carpet cleaning company. Now, you really don't know much about carpet cleaning. I know I don't know much about carpet cleaning and the downside of picking the wrong cleaner is pretty manageable. So you may choose to assign the task to a subordinate using the fourth degree of delegation. Now, as you can see from the four degrees, each type of delegation is different. Each one extends more or less authority to your subordinate, depending on the degree. More or less authority to your subordinate, depending on the degree.

Chip Schweiger 9:04

In addition to defining the degree of delegation, you may also want to consider whether a time or monetary budget makes sense. So what do I mean? Well, at the Ritz-Carlton hotel chain, each employee, regardless of level, is given a $2,000 budget to fix a guest problem. Ritz-carlton is using the fourth degree of delegation and empowering staff at all levels to make a guest problem go away, that is, if it can be done for less than $2,000. Each employee at Ritz-Carlton knows that they have decision-making authority to act up to a specific spending threshold. For example, if a bellhop damages a piece of luggage, they know that they can and really are expected to replace that piece of luggage, provided that they can do so for less than $2,000. Now you may think that the $2,000 rule is overly generous, but consider this the average Ritz-Carlton customer spends over $250,000 with the chain in their lifetime, so a $2,000 budget is actually a pretty decent investment, I think, to keep a quarter million dollar customer happy.

Chip Schweiger 10:09

Like the financial budget, you may also consider providing a time budget to each degree of delegation. For example, you may ask an employee to invest up to 10 hours researching options for a new shipping process for your company. You'll have them report back to you with their recommendations. Now. The employee knows that their job is to research some possibilities and report back to you. They also know that they're comfortable with investing roughly a quarter of a typical work week on the project With a 10-hour budget. Your employee knows that an exhaustive analysis taking months is just too much time to invest, and a high-level internet search taking a few minutes is just too superficial. A timed budget gives your employee a sense of how important the task is to you and how comprehensive they need to be in exploring options. So here's the takeaway If you pick the appropriate degree of delegation, create a standard operating procedure and outline a time or financial budget for your employees, many of your projects and tasks can be successfully delegated.

Chip Schweiger 11:13

Now, despite your rigor in assigning a task, sometimes employees get stuck, and that's when they need further guidance from you on what to do when they hit a roadblock. And this is where the yes-able question comes in handy, and this is really a super effective hack. So here's how it works Tell your employees that when they have a problem, they need to resist the urge to simply dump the problem in your lap. Instead, they have to research two or three possible solutions to their problem and present their recommendations to you, but it's got to be presented in a question that you can simply respond to with a yes or a no. For example, let's imagine you decide to delegate the task of collecting your company's receivables. Now you've chosen the first degree of delegation and provided your employee with a standard operating procedure. You also give them an allotment of time to get it done.

Chip Schweiger 12:06

Despite following the process, your employee gets stuck when a customer refuses to pay. Now, in the old days, your employee would likely come to you and just deposit the problem in your lap. Mr Jones won't pay. What should I do? They have neatly transferred the problem from their lap. Mr Jones won't pay. What should I do? They have neatly transferred the problem from their lap to yours. A better solution is to make yourself available to employees with questions, but insist that they pose them in the format that allows you to say yes or no.

Chip Schweiger 12:33

Now, when Mr Jones says he won't pay, your employee is forced to consider some options. She would likely conclude that one option is to write the customer off, another option would be to send them to collections, and maybe a third option might be to propose a payment plan. After weighing the three options. You simply ask your employee to come to you and explain the options that she's considered, and then ask you a simple question that you can say yes or no to, so they might come back to you with something like this Mr Jones won't pay, and I've considered writing off the account, sending him to collections or offering a payment plan.

Chip Schweiger 13:09

If we write him off, though, we're out the money and a collections agency might get the money, but we'll never do business with Mr Jones again. Therefore, I think the payment plan is the best option. Are you okay if we divide the amount he owes into three installments and get him to pay over time? And here's the great part you simply answer the question by saying yes or no. You can also see how much they're thinking and you'll understand the other options your employee has considered. And, best of all, and you'll understand the other options your employee has considered and best of all, your employee starts to think like an owner.

Chip Schweiger 13:44

If your goal is to build a business that can thrive without you, you need to master the art of delegation. Start by assigning a degree of autonomy you want your employee to have, and then outline a time-based or financial budget to work within. Finally, encourage employees who get stuck to come to you with questions that you can simply answer yes or no, to Follow this methodology and you'll find the number of problems that end up in your lap will diminish, all the while you'll be building a more enjoyable and a more valuable business. Well, that about wraps up another edition of the Things Entrepreneurs Should Know podcast. Be sure to check out our website at teskpod. com, where you can find the show notes and archive of our past episodes and other resources to help grow your business.

Chip Schweiger 14:32

That's teskpod. com, and if you haven't done so already, I'd really appreciate it if you'd take one minute to give us a review on Apple Podcasts or rate us on Spotify. It helps out a ton to get this into more entrepreneurs and business owners. And if you've already done that, please consider sharing the show with families and friends who you think might get something out of it. As always, thanks for your support.

Chip Schweiger 14:57

This is Chip Schweiger, reminding you that if you always do what you've always done, you'll always get what you've always gotten. We'll see you next time.