Delegate with Confidence!

Effective Strategies for Success

  January 22, 2019

Delegate with Confidence!

Becoming Un-essential….

As the CEO of a business, you likely have an intuitive sense of how things should be done. From customer/client interaction to vendor negotiations, pricing, sales techniques and more, intuition is actually based on years of experience. We learn from our mistakes and many parts of the business process are repeatable so doing over time allows us to develop a keen sense of what seems “right”. 

It is very hard to delegate as those of us who are experienced can often execute in a fraction of the time that a newbie may take. However, the only way to grow your business, prepare it for a succession or a sale is to delegate to team members. 

Become “un-essential” is critical as you will not be around forever. Although many business owners tell me they are only going out of here “feet first”, the reality is that we cannot time our exit and we will not reap maximum value for our business is we are essential. 

Therefore, creating the right team, allowing them to learn and make small, controlled mistakes and delegate to them is essential. Training is critical and since all-too-often, the seasoned business owner assumes that whatever they do is “easy” and anyone can do it, they may misjudge their own talents.  

Holding on for too long and not allowing your team, whether they are family or non-family members, is one of the most common mistakes we see business owners make in terms of their long term plans.  One such example is the second generation who ran with a steel fist until he was 89 years old. His son did not take control until age 60 and promptly made one critical mistake after another cutting costs but destroying the company’s brand. Generation three took the company from $5 million in revenue to barley $1.5 million and was scrambling at age 75 trying to sell a company which had lost so much of its cache and value. 

Another example is a first-generation immigrant who is still running his successful company which distributes products. He and his wife have continuous arguments about allowing his son the freedom to try out new ideas and make mistakes. The father hates to lose money and cannot understand why his son is not listening to him. The son repeats mistakes the father feels he has already made. However, he is likely not allowing his son enough freedom to truly implement without Dad looking over his shoulder so he makes silly and costly mistakes. An evaluation of the son’s skill sets as well as systems in place can minimize the likelihood of a misstep. 

Building the team…

As family business owners, you really need to look objectively at your child or children and be sure they have the ability to run the company. Since the business is Dad’s “baby” sometimes the children are loathe to tell their parents that they have no interest in the family business. The children may also have ideas on expanding the business but may or may not have the business knowledge to execute. 

Evaluating your team objectively for roles is the first step. Children rarely replicate their parent’s exact skill sets and may have other capabilities but may not be able to effectively run the business. Dynamics in family business also affect the next generation’s ability to gain respect and implement. If the other team members are long-term employees, they may resent the fact that they remember your children running around in diapers and are now in charge. 

Often bringing in an outside advisor with the ability to assess skill sets, strengths and weaknesses is the best way to truly find out if you have effective team members. Knowing skill sets and matching up those skills with the tasks necessary to run the business is critical. 

Taking a hard look at your entire chain of command is another good step for future planning. One company we have been working with has a 77-year-old owner/founder and he runs a 300 person company essentially with two other 70+ year old’s. There is no formal human resource department, no C-suite positions, no effective chain of command.

This CEO has a young son in the business who loves the part of the business he manages but the son has no intention of taking over the reins anytime soon. If something were to happen to one of the senior members of the team, the company would be in jeopardy almost immediately. 

Organizational processes….

If you have effectively run your business for 20, 30 or perhaps even 40+ years, it is likely that a lot of the operating procedures are informal. In fact, many of the systems may simply be rote for a small group of team members who have worked together for years. While that works for today, it is a recipe for disaster moving forward. 

Creating structure, reporting responsibilities, job descriptions and more is necessary to create a formal plan for effective management and an underpinning of success moving forward.  Often a plan like this will run into resistance from the older team members. They resent change, may feel threatened or belittled so creating this in a positive framework is critical for success.

No outside buyer will want to purchase a company that is run informally. There is too much that can go wrong and it can be hard to properly spot inefficiencies and room for fraud if systems are not in place. Many buyers will need time to get up to speed on the industry and intricacies of the particular business so having formal systems in place provides a roadmap for success.

There are many coaches, C-suite executives who can come in for short-term assignments as well as organizational consultants who can effectively help the business owner decide on which systems should be implemented, the order and how to deliver the message so that the entire team buys in. 

Make it a goal this year to make yourself “un-essential”. Put systems in to place which can manage the business, create structure and responsibilities as well as added efficiency. After these are in place, it is a simple matter of then allowing your next generation to try new services, products or ventures with a defined risk profile to let them make changes with the potential for small, manageable mistakes. You may improve the business, grow in unexpected ways, allow your children or team to take responsibility and understand more fully what is involved in running a successful enterprise.