Great Leaders Delegate!

As a leader, regardless of what level, one of the most important skills necessary for success is delegating authority and responsibility to your team.  Done properly, this will improve your effectiveness and performance and that of your team, allow more time to focus on your key responsibilities and objectives, and increase employee participation and accountability.

Many years ago, after being appointed to my first leadership role, I learned, the hard way, the importance of this skill in becoming an effective leader and manager.  In reading the many books and articles about this subject, I found a very simple and straightforward tool that has worked well, both individually, and within organizations – The Decision Tree.  This tool was described in Susan Scott’s book, Fierce Conversations, and has been used in many organizations, including General Electric, to improve managerial effectiveness, performance, and employee engagement.

The Decision Tree provides clear authority and responsibility for decisions and actions in the organization.  To use this tool, first think of the organization as a growing tree that bears fruit.  In order to ensure its long-term health, there are many decisions that need to be made on a daily, weekly, and monthly basis.

With this scenario in mind, there are four levels of decision making and action.  The specific level is dependent on the degree of potential harm or good to the organization that will result from the decision and action.  These four levels are as follows:

  • Leaf Level – Make the decision, and act on it.  No report is required. 
  • Branch Level – Make the decision, act on it, and report after the fact, on a daily, weekly, or monthly basis, depending on the action.
  • Trunk Level – Make the decision, but do not take action until reported, and approved.
  • Root Level – Make the decision, with input from others.  These are the decisions that, if poorly made and implemented, could cause major harm and damage to the organization.

The benefits of the Decision Tree tool are as follows:

  • Clearly defines the level of authority and responsibility for decisions and actions, at all levels of the organization.  Each team members knows exactly where they have the authority to make certain decisions and take action.
  • Provides team members with a clear path of professional development.  Progress is made as decisions are moved to the next level – from Root, to Trunk, Branch, and Leaf.  As employees demonstrate good decision making at the Root level, their decision level can, and should be, moved up to the next level.
  • Develops leadership and decision making skills at lower levels in the organization, freeing up leaders and manager to take on the more challenging and important responsibilities themselves.
  • Increases personal accountability, allowing employees to identify and recommend solutions outside of the supervisor’s personal reach.
  • Develops future leaders.

In summary, the Decision Tree provides leaders and teams with very clear guidelines for decision making and action, improved effectiveness and efficiency at all levels, professional and leadership development opportunities, and increased employee engagement, accountability, and participation.

Since you can’t do everything yourself, I highly recommend using this tool to reduce your To Do list, increase focus on key responsibilities and objectives, get your team involved, and help your organization grow and be successful.


“The first rule of management is delegation. Don’t try and do everything yourself because you can’t.” – Anthea Turner

People and organizations don’t grow much without delegation and completed staff work because they are confined to the capacities of the boss and reflect both personal strengths and weaknesses.– Stephen Covey

Organizations Need Metrics

Let me ask you a few questions about the performance of your organization so far this year.

  • Is it Performing To Your Expectations?
  • Do You Know Where You Are (after 4 months of the year)?
  • Are You Making Progress Toward Your Objectives? 

If you can’t answer these questions quickly, without having to read a bunch of reports, then I’m willing to bet that you really don’t know how your organization is really performing, and if you’re on course.

As we’ve noted in the past, successful organizations have a formal business plan, and a budget to achieve that plan.  The business plan provides the overall direction and key objectives for the organization, and their budget is the chart to help plot the course, identify the current position, and measure progress toward the objectives.

There is, however, a third component that all organizations should have in place to quickly evaluate their performance – a set of Key Performance Indicators, or KPI’s.  KPI’s are specific, quantifiable targets to measure the critical factors that are essential to the organization reaching its objectives, and can provide information about its performance in those key areas. Every organization will have their own individual set of KPI’s to measure their performance and progress, and identify actions required to improve that performance over time.

In order to set effective KPI’s, an organization must establish its objectives in the business plan and related budget, and then choose those KPIs that best reflect the objectives that are essential to the organization’s success, and can be measured.  Think of them as a dashboard that will tell you the performance in key areas of the organization at a glance.

Generally, most organizations will have up to five primary KPI’s, although each department may have a separate set of KPI’s that support to overall organization objectives.  More than five will dilute the organization’s focus, and be distracting vs. helpful.  In addition, most KPI’s are usually are long-term, so the definition of what they are, and how they are measured, should not change often, unless the organization’s objectives change, or it gets closer to achieving a particular objective.

Effective Key Performance Indicators will:

  • Reflect The Objectives of the Organization
  • Be Specific Factors That Are Critical to the Organization’s Success
  • Be Measurable, and Include Specific Performance Targets

Once you have the set of Key Performance Indicators that define your organization’s goals, and can be measured, use them as a performance management tool.  Effective KPIs will give your entire organization a clear picture of what is important, what actions are required, and insure that all activities are focused on meeting or exceeding them.

While it may be possible to manage without a plan, budget, and KPI’s in the short-term, I can guarantee that your organization will survive, and be much more successful, with all of these elements in place.

If you would like to discuss your organization’s particular issues, please give us a call at (727) 637-4666, or email me directly at Don@HuttlinAssociates.com.

“It is an immutable law in business that words are words, explanations are explanations, promises are promises but only performance is reality.” – Harold S Geneen

“Manage your destiny, or someone else will.” –  Jack Welch

“What’s measured improves.”Peter F. Drucker

“If you don’t drive your business, you will be driven out of business.”B. C. Forbes

 

Organizations Need Profitable Growth

There is a saying that “an organization can’t cut its way to profitability“, at least on a sustainable basis.  While this is certainly true over time, many organizations have implemented internal cost reduction programs over the past several years to improve profitability in the face of the poor economic and market conditions.  Although the majority of these programs were probably overdue, and have been effective, many organizations are finding that there is not much more that can be done internally without sacrificing service, efficiency, and quality.

As a result, organizations must now look outward, and improve their profits through profitable revenue growth.  However, this growth must be planned, managed, and controlled in order to make it sustainable over time, and generate the desired results.

One of the more popular, and potentially dangerous, strategies, is growth for growth’s sake, using the tactic of cutting prices, and hoping to “make it up on the volume” to improve profitability.  While there may be some special situations where this tactic may actually work (at least for a period of time), in most instances, the increased revenues will not be enough to offset the lower profit on each sale, reducing overall profitability over time.  In the worst case, some organizations will continue to cut prices, further reducing profits, eventually threatening its survival.

The dangers associated with this strategy include the following:

  • While the lower prices may, in fact, generate more revenue in the short term, this revenue may not be profitable for the organization due to the higher costs, and increased activity required to support it.
  • In many instances, cutting prices will result in an overall decline in market prices, setting the expectation of customers for those lower prices.  Once this happens, it generally takes a long time to get prices back up to reasonable levels.
  • Finally, if the growth occurs too rapidly, and is not profitable, the organization may find itself without the resources or financing required to support the growth, and unable to manage the activity properly.  This will lead to service and quality breakdowns, and the potential for future revenue declines.

Generally, no organization can be successful in the long term with this strategy.

Profitable, and sustainable, growth results from a strategy that is well designed, managed and controlled.  In order to accomplish these objectives, the  organization should ask itself several key questions:

  • Where will the new profitable business come from?
  • Do we know our real costs, and are they competitive?
  • What are the additional costs and resources that will be necessary to support the future growth?
  • What is the real profitability of our current customers, and/or market niches?
  • Who are our most profitable customers, and can we increase our share of their business?
    • Are there more potential customers like them in our market?
  • Can our existing processes and procedures handle the increased activity without a breakdown?
  • What differentiates us in the market, so we are not competing just on price?

The answers to these questions may lead to even more questions, all of which will assist you in defining your profitable growth strategy, the requirements of that growth, and how best to manage and control it over time.

Those organizations that can define and execute a clear strategy for profitable growth, and manage and support it properly, will sustainably improve their profitability.

If you have any questions, or would like to discuss your organization’s specific issues, please give us a call at (727) 637-4666, or email me directly at Don@HuttlinAssociates.com.

“Without continual growth and progress, such words as improvement, achievement, and success have no meaning.” – Benjamin Franklin

“Companies that grow for the sake of growth, or that expand into areas outside their core business strategy, often stumble. On the other hand, companies that build scale for the benefit of their customers and shareholders more often succeed over time.” – Jamie Dimon

“Growth is never by mere chance; it is the result of forces working together.” – James Cash Penney

What Are Your Whats?

What does your business need to succeed?  Do you really know the answer, or just guessing based on your experience and “gut”?

Every business has a What, and some have several Whats.  So – What are the Whats for your business, and how do you identify them??

It’s not easy, but identifying these Whats is critical to the success of your business.   It takes an objective and critical review of the entire business, asking hard questions in each key area to find the answers.

I’ve listed some obvious questions to get you started in each key area.

Sales

  •  Do you have enough revenue? (Businesses always need more customer and sales, so this is always the first one).
  • How is the health of your major customers?
  • Are your prices competitive in your market and how do you know?
  • Do you have a good mix of customers, or are you too dependent on just a few?

Costs

  • Do you know your true costs and does your pricing system reflect those costs?
  • How are you managing your suppliers? Are they the right ones to support your business?
  • Are you as productive as you could be and managing your overtime expenses?
  • How much waste are you generating?

Cash

  • Do you know your cash position each day?
  • Are you billing and receiving payment promptly?
  • Are you getting the best payment terms from your suppliers?

Organization

  • Do you have the right number of employees and in the right positions?
  • How do your customers feel about your organization?

These are just some of the question that you will want to ask.  As you think through your business and begin the process, others will become obvious.  When you think you have asked enough questions, ask some more.  It is critical that this process be thorough and objective to get the best results.  You may even consider outside assistance to insure that these objectives are met.

The answers to these questions will give you a realistic picture of your business today, and help you identify What it needs to improve, grow, and succeed.

Now that you have the What – it’s time to take action to improve your business for the future.

If you have any question or comments, or would like more information about this process, call us directly at (727) 637-4666.