I’ve shared a bit about some business basics no one talks about.
In this post, I’d like to share another free activity business owners and managers can do to increase the company’s profitability without spending anything extra.
The single, most effective (and free) way to increase profitability is through delegation.
Yes. It’s something we have all heard before. It’s simple, yet not easy to do. We’ll get into that one in a bit. But for now, let’s make sure we are all on the same page.
What is Delegation?
Delegation is the assignment of responsibility from one individual to another.
In the context of an organization, this assignment comes from the manager to the subordinate (e.g. manager to individual contributor; or owner to president; or director to manager).
Contrary to what is commonly accepted, delegation is not synonymous to task assignment. I’ll discuss that one in the next point.
Two Common Misconceptions About Delegation
First, delegation doesn’t work sideways nor go upstream.
You cannot delegate work to your peer (someone on the same level as you). They can do it as a favor, but not delegation.
When you ask them to cover for you when you go on a leave, that is not delegation. In addition, when your boss takes back work from you, that’s also not delegation.
You cannot delegate to your peers nor to your boss. That’s them helping you out or doing you a favor. Not delegation. Period.
Delegation only goes downstream.
Another misconception about delegation is that it is not a zero-sum game, i.e. when you transfer a responsibility to someone else, it absolves you of that responsibility.
What happens is you now both share responsibility for it.
In effect, you are adding more to your direct report’s responsibility by sharing what used to be solely yours.
If you delegated writing blog posts, that doesn’t mean you are no longer responsible for the results (or lack of it) for this particular task.
Difference Between Delegation and Task Assignment
The difference between delegation and task assignment lies in whose responsibility is that activity originally was.
For example, you assign a (task to handle a) new account to your sales executive, but you delegate running a meeting. You assign client x’s data analysis to your business analyst, but you delegate presenting to the client. You assign 3 more articles to your content writer, but you delegate handling of social media.
See the key difference?
Assigning tasks is giving more of what they are currently doing, whereas delegation is giving a different one altogether.
Now that we have a working definition, let’s dive right in.
Why Delegation Increase Profitability
Earlier, I mentioned that you are sharing responsibility to your direct report. What happens when you delegate a responsibility, the direct report now do the tasks associated with it.
If you delegate running a meeting, some tasks associated with it are sending the agenda in advance, monitor the adherence to the ground rules, and sending out a copy of the deliverables made during the meeting.
Think about it. Your direct report now do the activities, which, in turn, frees up your time.
This increases profitability because, most of the time, the direct report has a lower salary than the manager. And, if you remember the profitability framework (profits = revenues – costs), when costs go down and revenues (in this case output) remain the same, your profitability increases.
Another way to look at it is this: since you delegated something, we can assume nothing changed on the revenue side. The only thing that changes is the cost side of the equation. And because costs decreased, you increased your profitability.
At the same time, you gained back the time it took you to do that task. Now, you can focus on more important and higher-value activities.
Back to the concept of organizations, this means you can now take some workload off your boss’s plate. Doing so lowers the cost of doing that task, leading to more profitability for the organization.
How to Delegate
Delegation is a skill that you can learn. Manager Tools provides a great framework for delegation.
If you haven’t know by now, one of the best traits that makes us human beings is that we have the ability to learn from other people’s mistakes. There is no need to invent the wheel. So you can simply copy their delegation model and do it.
Below is a quick summary of their 4-step model:
- State your desire for help
- Tell them why you’re asking specifically
- Ask for specific acceptance of the responsibility
- Describe what’s involved in detail
Here’s how this come to play;
Step 1: State your desire for help
“, I’d like your help on something.”
Nothing fancy. Not difficult.
Step 2: Tell them why you’re asking specifically
You have 3 options for this:
- They need to get better at something
- They want to get better at something
- They like the thing you’re delegating (i.e. they are good at this already)
“You’re the best salesperson I have. You’ve been constantly hitting your targets monthly. I can definitely see you becoming a manager yourself soon. So instead of groping in the dark when you become one, it’s best if you learn this now.”
Step 3: Ask for specific acceptance of the responsibility
“Would you please take responsibility over the monthly sales report?”
Step 4: Describe what’s involved in detail
“Here’s what’s involved…”
Then explain in terms of DQR (deadline, quality, and reporting standards).
Continuing the example above, the conversation can go something like this:
“Here’s what’s involved. The monthly sales report is due every 5th of the month. Since we are starting out, your deadline to me is every 3rd of the month, so we will have enough time to check it. You already know the details of the report, but there are 3 areas to focus on: (1) closed deals, (2) pipeline forecast in the next 90 days, and (3) roadblocks and issues. Obviously, you will get the report from our current CRM. You will also need to coordinate with accounting to verify if the money indeed came in. I want you to include me in all your correspondences with them. After this, I’ll be introducing you to . What else do you need from me?”
So, that’s the entire delegation model by Manager Tools. Again, it pays to know the “why” behind this and “how” delegation achieves this, so it’s better to listen to the (series of) podcasts.
It’s free. And the best resource for managers and working professionals.
Over to You
Delegation increases profitability.
The activities you did before are now done by someone else at a lower cost. Since output is not changed, and you lowered your costs — this improves profitability.
Now, the other side that wasn’t discussed here is the part where you spend the time you gained back on more important things.
If you’re the business owner, you can spend your time on finding new clients or meeting investors. If you’re a manager working in a large organization, then you can ask your boss for more tasks.
Either way, delegation is not a reason you just watch Netflix at work because “there aren’t any more work to be done.”
What about you? Have you tried delegation? Did you try asking for more higher-value tasks from your manager? Let me know in the comments.