How to Properly Delegate Decision Making Authority
Q. My small business is growing. However, I currently make every important decision. Employees bring me a problem and I solve it. I need to delegate decision making authority to others, but I don’t want to drop this on my employees all at once. How can I train my managers to make good decisions before I completely remove myself from day-to-day decision making? A. First, congratulations on your growing business. Also, good for you that you have recognized that you need to delegate decision making authority. However, it is also wise of you to not to do this with reckless abandon. We recommend a five step process to move your employees from you making every decision to your employees operating independently. 1. Build the proper infrastructure – The first step is to build the proper infrastructure. It isn’t safe to delegate before you have done this. The proper infrastructure consists of three things: · Hire the right people – You can’t safely delegate if you don’t have the right people to whom to delegate. · Document processes – Literally, write down how you want things done. Yes, this is boring, mundane work and no one is going to pay you an extra nickel because your processes are well documented. However, this is the best means for communicating how you want things done when you can’t be there—skip this step and you will likely pay for it. · Develop robust metrics – You need to get regular reports that quantify the performance of your business. Financial statements are a necessary part of these metrics, but by themselves they are insufficient. You need operating metrics that tell you how things are going in almost real time. Once the proper infrastructure is built, you are ready to delegate. However, your employees may not be ready to be thrown into the deep end. Follow the stepwise process outlined below to ensure that they are ready for the new challenge. 2. Employees provide recommendations – As you described it, your current mode of operation is your employees bring you problems and you provide solutions. As a first step toward independent decision making, insist that your employees bring you a recommended solution with the problem. You still make the decision, but you have the opportunity to coach your employees whenever your decision is different than the recommendation they brought you. By the way, we find that leading your employees to a different conclusion by asking a series of questions is a far more effective way to train them than by simply telling them they are wrong. Another useful way to train your employees is by giving them rules of thumb to follow as they make decisions. 3. Employees make the decision, informing you prior to implementation – Now your employees are making the decisions, but because they bring them to you before implementation, you can change the decision if it is going to run the train off of the tracks. However, we would caution that you not countermand your employee’s decisions except in the most dire of circumstances. After all, you delegated decision making authority, don’t take it back. If you have to change your employee’s decisions with any frequency, you have moved to this step too quickly. 4. Employees make the decision and implement, you are notified after the fact – Don’t go here until you agree with essentially every decision your employees make. If they make a decision with which you disagree at this step, it may be too late to recover. Our advice is that you not go to this step all at once. For example, you might say that the employee can implement any decision with less than a $10,000 impact without your approval, but you want to be involved in any larger decisions before implementation. 5. Employees operate independently, you monitor results – The final step is that you do not require notification at all. You simply monitor results and ask questions based on the metrics you see. Again, you may want to set dollar limits to determine decisions in which you need to be involved prior to implementation. Delegating decision making authority is tricky business, but these five steps will help ensure that you let go as smoothly as possible.