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7 Rules for Successful Delegation

Michael Houlihan & Bonnie Harvey — Thu, 01 Feb 2018 18:00:23 +0000

One of the hardest thing for any Type-A business owner to do successfully is to delegate. Some believe, “If you want it done right, you have to do it yourself!” They say, “Nobody can do it like I can do it.” And this may be correct, but sooner or later you must delegate. There’s just too much to do in a growing business, you simply can’t do it all yourself.

It’s certainly a compromise, but we believe successful delegation is a two-way street. The owner must accept less than “perfect” performance. The employee or contracted services individual must move out of their comfort zone, develop new habits, and accept new responsibilities.

Here’s what we have learned after years of experience, most of which was painful. Perhaps it will help you delegate more successfully.

Look for Extrapolation Learners. People who can extrapolate the underlying principle from an example and apply that principle to a new example they haven’t seen before are good candidates for delegation. Many people don’t bother looking for principles since they can get cut-and-paste examples for pretty much everything they need on line.

You will find many who say, “Like what?” to everything you ask, even when they have seen an example of the same principle in operation before. Avoid delegating to these people. Delegate only to people who glean overarching principles from the examples given in trainings and their own experience.

Seek Integrity. When people do what they say, don’t drop assignments you haven’t regularly asked about, and voluntarily keep you posted on the status of their projects, they are good candidates for delegation. Look for people who take responsibility to get the job done and don’t blame others.

Avoid delegating to people who say, “They never got back to me” when you have to ask, “What happened on that project?” because they didn’t voluntarily inform you. Don’t delegate to people who have demonstrated they will only accept the minimum level of responsibility required of them in order to get paid.

Look for Coachability. When people can take and apply constructive criticism, look for policies and procedures that can help them get their job done better and faster, and show steady improvement, they are excellent candidates for delegation.

Avoid candidates who take constructive professional critique personally or don’t seek experienced help because they so desperately want to appear self-sufficient and all-knowing.

Seek Self-Starters. When people see the big picture and, without being asked, initiate appropriate action, mitigate a problem, or improve an unstable situation, they are great candidates for delegation. They still require some supervision, but are less likely to require micro-management.

Avoid delegating to people who have already demonstrated a need for constant supervision and vigilant oversight.

Look for Mistake Learners. Accept that mistakes will be made. Look for candidates who learn from them, candidates that see them as an opportunity to get to the bottom of what happened, candidates who write new documents to prevent a reoccurrence, and candidates who can improve your company’s policies and processes.

Avoid those who hide or try to cover up their mistakes, or blame others (finger pointers). Seek to rid your company of those people who continue to make the same mistakes.

Provide Incentives. Create a bonus structure for the folks you delegate to. Make sure you both agree on the metrics. Use your new bonus plan for just one year, so in subsequent years you can improve the requirements as you discover and fine tune what’s necessary to achieve the results you are looking for.

Give Regular Reviews. Make the reviews more frequent in the beginning to avoid the formation of bad habits or misconceptions. Always come back to the principles. Always remind the candidate about the importance of sales, growth, and profitability. Go over the decisions they have made, validate the correct ones and offer advice on the ones that need improvement.

Delegation is an imperfect art, but you can mitigate the risk of failure by looking for the attributes in others that will give you confidence and peace of mind. You must train your candidates on the process knowledge and operating principles necessary to take on the responsibilities involved. Then you must give them clear goals and regular reviews – and let them do it their way.

We like to say, “When the cement is wet, you can move it with a trowel. When it gets hard, you’ll need a jackhammer.” So, overkill on orientation, make sure they know where the money comes from (sales!), and confirm that your candidate thoroughly understands the principles that will guide their decision making. Then accept the inevitability that they will make mistakes, and they will make decisions that will be different that yours. Some of those decisions may even be better!

Who We Are

Michael Houlihan and Bonnie Harvey co-authored the New York Times bestselling business book, The Barefoot Spirit: How Hardship, Hustle, and Heart Built America’s #1 Wine Brand. The book has been selected as recommended reading in the CEO Library for CEO Forum, the C-Suite Book Club, and numerous university classes on business and entrepreneurship. It chronicles their humble beginnings from the laundry room of a rented Sonoma County farmhouse to the board room of E&J Gallo, who ultimately acquired their brand and engaged them as brand consultants. Barefoot is now the world’s largest wine brand.

Beginning with virtually no money and no wine industry experience, they employed innovative ideas to overcome obstacles, create new markets and forge strategic alliances. They pioneered Worthy Cause Marketing and performance-based compensation. They built an internationally bestselling brand and received their industry’s “Hot Brand” award for several consecutive years.

They offer their Guiding Principles for Success (GPS) to help entrepreneurs become successful. Their book, The Entrepreneurial Culture: 23 Ways To Engage and Empower Your People, helps corporations maximize the value of their human resources.

Currently they travel the world leading workshops, trainings, & keynoting at business schools, corporations, conferences. They are regular media guests and contributors to international publications and professional journals. They are C-Suite Network Advisors & Contributing Editors. Visit their popular brand building site at www.consumerbrandbuilders.com.

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

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3 Ways to Prevent Growth from Killing Your Business!

Michael Houlihan & Bonnie Harvey — Thu, 25 Jan 2018 18:00:50 +0000

Expansion, growth, or build-out phase, whatever you call it, it is the most perilous time for your business. This is ironic because the perception from outsiders is that your business must be doing well because it is expanding! But it’s the expansion itself that can collapse your business.

Before you entered the build-out phase, your business had finally achieved its first level of precarious sustainability. You could finally pay your bills, not with investor’s money, but with revenue! Imagine that! You had finally achieved a few big clients who were making you cashflow positive for the first time since you launched your startup. You had built your business up to a point where you had proven your market proposition and some degree of stability did result, if only for a while.

It wasn’t long before you realized that the few big clients you were so proud of and dependent upon actually had you over a barrel. All your eggs were in one basket. Any one of those big clients could dictate terms or worse, stop buying and put you out of business right then and there. Lucky for you, you listened to your accountant and your salespeople who agreed that you were in a compromised position – until you got some new clients to mitigate the risk of coercion or financial disruption.

So, you decided to expand. You decided to get more customers so no one customer could hold you hostage. You decided to protect your revenue with more sources of income. And then what happened? You hit the wall! Like so many other build-out businesses, you were hit with costs and overhead you hadn’t seen coming. You found out the hard way about the cost of sales. Not the cost of goods. But the cost of sales!

We have found it to be the number one underestimated cost in business. Before the build-out expansion phase, these costs were spread out and absorbed under general “overhead.” But once you start moving into new markets, these costs make themselves known in no uncertain terms.

Suddenly you feel stuck. If you borrow money to expand, how long will it take to pay off the loan? If you sell equity to expand, how much control will you have to give up? And more importantly, what are the costs of expansion anyway? And are they the same in all markets? How can you know them ahead of time? And can you cashflow your way to achieve expansion?

The implications of growth are many. Here are 3 ways to survive this Build-out or Blowout challenge to your business:

Supply. You are going to need extended credit and terms from your main suppliers. They are more likely to extend them to you if you have developed a collaborative relationship with them during your Build-up phase. You have demonstrated empathy for their position by warning them ahead of time when you would be late or short on your payments. You have presented and executed payment plans to become current. You have shared your growth plans with them on a quarterly basis. You have entered into a long-term contract to give them the security that you will remain their loyal customer even after you get large. You have done these things all along, right?
Sales Cost Analysis. You have hired a cost accountant who has identified not only the cost of sales, but the cost of sales in various different markets. They have advised you about the profitability advantages of certain markets. You have heeded their counsel with an expansion plan based on a cashflow growth strategy. You have entered the most profitable markets first, the ones that cost you the least to compete in. You and your cost accountant have identified all the costs of sales, and how they differ from territory to territory. These include, but are not limited to, taxes, fees, transportation, advertising, promotions, customer service, representation, merchandising, presentations, discounting and so on. You don’t expand into the next territory until the first territory pays for itself. Right?
Compensation and Incentives. You have finally figured out that you can’t expect growth by paying your salespeople strictly on volume. In fact, you really can’t grow without a new compensation package based on new, higher goals every year. You have identified what growth means in terms of practicality and business health, and now you have developed the metrics that reward your people for growth and new markets and reorders. You have also set incentives in place for the other folks not on your payroll who can aid your growth. You’ve decided to take a smaller slice of a larger pie, haven’t you!

Of course, there’s a lot more to this tricky expansion business. The main thing is to not over extend yourself, make strategic alliances, grow slowly, and notice what it costs to actually make a sale, service a sale, and keep the sales coming. Work with a cost accountant and your suppliers, and follow a sensible strategy and you can build-out and not blowout! You can do this, right?

Who We Are

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

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Busy is Not Necessarily Productive

Michael Houlihan & Bonnie Harvey — Thu, 29 Oct 2015 17:12:46 +0000

Are you paying people to stay busy or are you paying them to be productive? Having a great deal to do or keeping occupied is no measure of productivity. If you pay employees no matter whether the company succeeds or fails, folks will actually look for ways to appear occupied. This makes them feel comfortable that they have filled up their time. But are they making a contribution? Or are they just being busy?

We think this happens because it is allowed to happen. The way these folks have been oriented during the training process, the way they are paid, and the level of their knowledge of the company’s sales, growth, and profitability can make all the difference. With the right preparation, incentive, and visibility, employees will know how to set their priorities so they’re not just busy, they’re productive!

Orientation. This is not something that has to do with the coffee room, the bathroom, or the forms. It has to do with where the money for the company that pays their salary, bonus, and benefits actually comes from. It has to do with how their job impacts that process. It has to do with really breaking it down graphically so there are no misunderstandings about who the real customers are, what they expect, and why they continue to pay good money for the goods and services the company provides.

We developed a “Money Map” to make this clear to all new hires. Not too different from a treasure map, it showed our people how the money travelled to them, who were involved at each level, and what they wanted. This kind of orientation is not a one-shot deal. It should be revised and repeated annually to keep people focused on the real priorities which change as the company strives to remain relevant and advance in the marketplace.

Compensation. We believe at least some part of an employee’s salary should be based on the performance of the company. Sure you can get granular and bonus on specific production, but in order to build team peer pressure and cooperation, you must focused their attention on the customer. And that goes for everybody in the company.

Since most people are coin operated (respond to monetary incentives), a quarterly 401K matching contribution gets the attention of your staff. Base it on agreed upon metrics of sales, growth and profitability. Since the employer’s matching contribution is voluntary, you have the ability to send a powerful message to your people every quarter. This works better than annual bonuses because the one year time period is simply too long and allows your employees to give up if the first quarter is poor, or lay back if the bonus number is met mid-year.

Visibility. If you have their attention with a well-thought-out performance bonus, they will be very interested in how the company is doing simply because it now reflects in their paycheck. So share with them your monthly reports, identify key challenges and focus on priorities during regular monthly meetings. This will help them zero in on the tasks that really make a difference to the bottom line. It will give them the perspective to understand what they can do to improve the picture.

By practicing what we called “Know-the-Need’ rather than “Need-to-Know,” we got great ideas from our people on a regular basis that solved problems in production, quality control, and marketing. We were able to cut costs and increase profitability because they knew what was needed, they knew we would listen, and they were members of a team interested in achieving quarterly bonuses. Suddenly they were focused on being productive and not merely busy!

Who We Are

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

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