Why Delegation is Important
Before we get into how to delegate effectively, let’s start with a quick summary of why delegation is 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 as a bottleneck, and while the quality of your work. Life improves as you no longer have to spend your time fighting fires and answering mundane questions. Best of all, your company is worth more.
As you can see in the chart , those companies that can sustain a three-month absence of their owner are more than twice as likely to receive a premium acquisition offer compared to companies unlikely to survive the loss of the owner:
How to Get Your Company to Run Without You:
The 4 Degrees of Delegation
Delegation is clearly important, so why do so many small business owners fail to delegate tasks effectively?
The problem comes down to thinking of delegation in a black and white fashion. Instead of thinking of delegation as binary, think of delegation as having four degrees, where each degree offers your employee more decision-making autonomy and authority.
THE FIRST DEGREE OF DELEGATION:
FOLLOW MY LEAD
The first degree of delegation is where you trust an employee to follow your instructions. You create a Standard Operating Procedure and ask that they follow the steps you outline in your instructions. For more, download The Definitive Guide to Creating Standard Operating Procedures.
With first-degree delegation, your employee must follow your process. They are not being given any decision-making authority, and you’re not accommodating many variables.
This kind of delegation is suitable for common tasks where you’re clear on what you want done and how you want someone to do it. For example, you may delegate the task of entering a new sale into your company’s CRM platform. There is a specific way you want it done, and there is little need for your employee to think independently or critically about the task. This kind of delegation is ideal for simple tasks carried out by relatively junior employees when you have provided them with a Standard Operating Procedure to follow.
THE SECOND DEGREE OF DELEGATION:
RESEARCH AND REPORT
The second degree of delegation involves giving an employee a broader scope of responsibility to research the range of options for completing a project or task. You don’t have the solution in your mind, so you’d like your employee to do some thinking and come back to you with some options. You’re trusting an employee to do their own analysis and bring you a short list of options to consider. Importantly, with second-degree delegation, the decision on which course of action to take remains with you.
This kind of delegation is ideal when you don’t have the answer to a specific challenge, and you’d like to see the breadth of possible options. These are usually high-stakes decisions that could have a negative impact on you and therefore you want to stay involved and make the final decision. There is some critical thinking required with this second degree of delegation, so it’s important that your employee has good intuition for weighing options and some common sense.
For example, you may ask an employee to do some research into flight options for traveling to a city or research some options for a new estimating software. In this case, you don’t want your employee to give you a laundry list of dozens of options; you would prefer they come up with three or four intelligent options for you to consider. Since you’ll be the one sitting in an airport terminal waiting for a connection if your employee makes the wrong judgement call, you’d like to make the final decision.
THE THIRD DEGREE OF DELEGATION:
DO IT AND REPORT
The third degree of delegation involves extending decision-making authority to an employee. You trust your employee to decide, but you’d also like to be kept in the loop to 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 (For more, download The Definitive Guide to Creating Standard Operating Procedures.) and you trust your employee(s) to think like an owner. It also helps if the stakes of a bad decision are relatively low.
For example, you may delegate the process of collecting receivables to someone on your team while asking them to keep you in the loop with their progress so you have an early warning if the process starts to wander off track.
THE FOURTH DEGREE OF DELEGATION:
The fourth degree of delegation takes a page out of the old Nike advertising campaign, which implored their customers to “Just Do It.” This level of delegation is used when you trust an employee to completely remove something from your plate.
It is best used when you have provided an employee with a 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 you know little about and would be better handled by someone who is more knowledgeable.
Let’s imagine you need to buy a new pressure washer or find a sub-contractor to outsource some projects to. The downside of picking the wrong product is manageable. Therefore, you may choose to assign the task to a subordinate using the fourth degree of delegation.
As you can see from the four degrees, each type of delegation is different and extends more or less authority to your subordinates depending on the degree.