Episode #98 Effective Delegation

Q&A with Marty and Em

There have been a couple of questions that we’ve seen appearing as common themes over the past few months, so Em and I thought we’d tackle them today in a Q&A!

First, we answer a question from Dave, who asked about effective delegation:

“How, why, and when should you delegate, and how do you ensure outcomes are achieved?”

This is a common question that cuts across many of the themes we talk about and provide leadership tools for in No Bullsh!t Leadership, so it’s a good opportunity to bring some of these together.

We then tackle Jenni’s question:

“Do you have any strategies or tips for managing contractors and partnerships?”

Just a few weeks ago, in Episode 95, we dealt with outsourcing, and this question flows on really well. What do you do with an agreement once it is struck?

Episode #98 transcript

Marty: Welcome to Episode 98 of the No Bullsh!t Leadership podcast. This week's episode, I'm doing another Q&A with Em on Effective Delegation. It's been a while since Emma and I tackled a Q&A episode, so I thought it was time to pull a couple of questions off the stack that are appearing as common themes in our feedback. First, a question from Dave, where he asks about effective delegation. How, why, and when should you delegate and how do you ensure that outcomes are achieved? This is a common question that cuts across many of the themes that we talk about and provide leadership tools for in No Bullsh!t Leadership. So it's a great opportunity to bring some of these together. Then we go on to tackle Jenny's question. Do you have any strategies or tips for managing contractors and partnerships? Now just a few weeks ago, in Episode 95, we dealt with outsourcing and this question flows on really well from that. So what do you do with an agreement once it's struck? Of course, critical to No Bullsh!t Leadership, Q&A is the dulcet tones of Emma Green. Hey, Em, how are you doing today?

Em: I’m really well, it’s so good to be back on the mic! I haven't been on the podcast properly I think since April. I think the 1st of April was the last Q&A we did so, yeah, I'm really excited to chat through these questions. How is the book writing coming along?

Marty: It's coming along surprisingly well. I think I'm about three quarters of the way through, and the manuscript is due to our publisher in the U S by the end of August. So plenty of time to deal with that and to get into really good shape. So I'm really excited about it.

Em: Very good! I've still got a chapter or two to catch up on with my editing, but I'm sure you're doing just fine without me. Let's talk about delegation of duties to people in your team. Where do we start with this one Marty?

Marty: Okay, well, this is a good question because it cuts across pretty much every leadership imperative that we talk about. So it cuts across the ability to be able to handle conflict, to work at the right level, to drive accountability through your team, and certainly when we talk about building a high performance team, this is really where it's at. You can't over-function for your people and I think we've mentioned that and touched on it in quite a number of episodes. But delegation is basically working out which tasks your people should undertake rather than you. And in larger organisations there's normally a formal delegation framework of some sort that really guides you as to who should be doing which things. So for example, in big organisations, a board will delegate authority for certain decisions to the CEO who in turn delegates to her executives and so forth.

So it's really formalised in this board approved framework. Everyone can see who has the ability to make a call in any given area. So one of these is always financial delegations of course. A Chief Executive, for example, might be able to approve up to say $50 million in a one off capital expenditure, as long as it's within budget, but anything over $50 million might require board approval. And there are also non-financial delegations as well, so for example, perhaps a CEO can't make the decision to initiate litigation against an external party without board approval. So at the lowest level a team leader may have the ability to make decisions up to say $10,000 in value.

Em: Okay. So do you typically have a document somewhere that has all of this written down so that you know, who is able to do what, is it kind of like an org chart?

Marty: It sort of is. It normally goes by levels and positions and it's really done as a matrix most usually. So what you'll see is a list of the delegation areas and then who has delegations to which level. So it's like just a grid where you can see, you know, the CEO has this much delegation, this area, and as an executive at this level has this much delegation, and you know, this specific role has a different delegation again. So they set these up, they're not normally too complicated, but they do give you a really clear outline of who can do what.

I mean, you've got to be careful with these though, right? Financial delegations are normally linked to positions rather than people. And I remember once a while back, I was reviewing a list of delegations at a company I just joined as a finance executive. And I was scanning a list of the people that had a certain financial delegation applied to them. Now, according to this list, these people had the authority to spend up to $150,000. And as I looked down the list, I spotted a name I was familiar with and I turned around to the guy I was talking to and I said, "I know this person, and I wouldn't trust him to go across the road, buy me a cup of coffee and bring back the right change. Yet here we are letting him make $150,000 decision on behalf of the organisation". Like seriously.

Em: Yeah. It's pretty tricky. I think this type of delegation that you're talking about, it seems quite formal instruction. From my experience, and it's probably because I've never worked in big organisations like this, delegation is way more informal and it's kind of like, "I have too much on my plate. Who can I get to cover this for me"?

Marty: Oh yeah, absolutely. And I'm talking about the most formal high end of town where, you know, you do have very formalised structures because people need to know what's going on and need to know what they allowed to do. And so that's really important. But in smaller organisations, it's very much, suck it and see, work as you go. It does require more judgement when you don't have a formal framework though. So each individual has to have the judgement to say, "This decision is a bit big for me. Maybe I shouldn't make it on my own. Maybe I need to just check that with my boss".

Em: Okay. So what are some of those rules for delegation of authority then?

Marty: All right, well let's start with the who. So you want to push as much as you can downwards through the organisation. You want decisions being made closest to where the source of that information is. So you've got to start letting people make some of the decisions to appropriate for their pay grade and get them used to feeling safe around this. So you don't want to be holding on to stuff yourself that your team's being paid to do. If you over-function for them, they will tend to become weak over time. And then you've got to think about the what. You need to delegate anything that they're capable of doing, including stuff they've never done before, because you've got to stretch your people. So you stretch them so they learn and just keep an eye on them if their breaking new ground. There may also be need for more support in some areas than others. And if you're thinking about that model of situational leadership theory that we've spoken about before on the podcast, the Hersey and Blanchard model, that's really important in terms of knowing how much assistance and how much support to give to someone who's doing any given task for you.

Em: The thing that comes to mind for me around delegation is accountability. Especially when you talk about micromanagement. Once you've delegated a task to someone else, then that task becomes their accountability, not yours. So is that something that you talk through with them really clearly when delegating that task so that they know what responsibility they're taking on?

Marty: Oh yeah. That's absolutely right. So people have to be really clear on what your expectations are. And we talk about the three things that people want to know each day. What are your expectations of me? How am I going against those expectations and what does my future hold? And they've got to know the answer to that first question. What do you expect of me? So when you delegate something to someone, they've got to have the knowledge and clarity about what you expect from them in return, in terms of timeliness of delivery, quality of delivery, functional delivery, all those things that are important. But the thing is, if you delegate the accountability, you have to delegate the decision rights that go along with that. So, as I always say to my wonderful wife, Kathy, “If you want me to do something, you've got two choices. You can ask me to do it. And then of course be happy with how I choose to do it. Or you can do it yourself. You don't have the third option, which is to ask me to do something and then proceed to tell me how I should be doing it.”

So, as I say, I'll let you know if I don't know what I'm doing, but otherwise let me get at it. So look, accountability and empowerment really travel together. They've got an unbreakable link. And when we speak about decision rights, that's one part of empowerment, but it also means things like making sure people are adequately resourced with money, people and physical assets, ensuring that they appropriately skilled and trained. You've got to help them by inspecting their progress and tracking their movements, so that they don't lose focus on what they're doing. Ask the right questions about the risks and issues, coach them through that, and you've got to give them the culture to work in, that makes it possible for them to function in a no blame culture. You've got to reward excellence over perfection and say, "That's fantastic. Keep moving. You're doing great".

Em: Excellence over perfection is a big one here, so I encourage anyone who hasn't listened to episode 3 to go and do that. You can find it at, www.yourceomentor.com/episode3. That probably wraps that question up Marty. I hope that helps Dave. Now, let's get onto Genny's question. Coming from a marketing agency background, this was basically my life, but what are your hot tips for managing contractors or partnerships?

Marty: Once again, I'll talk from the big end of town and then we can translate our way downwards from there Em. So, partnerships are a little bit different. I've never found too many happy joint ventures that I've had companies in, so we'll start with contractors first and see how we go. First of all, and this might sound really dumb, but when you establish a relationship with a supplier or a contractor, you've got to make sure that everyone who works with that supplier knows that you've actually got a contract with them. And this sounds really strange, right? But quite often I've seen in larger organisations, contracts are negotiated centrally, by say a central procurement team, but the people who live by them, who are often in distributed locations, have little awareness of what the contract is or even that it exists. So, off contract spend, as we call it, is a big indicator of how successful any procurement function is. In other words, how much of our supply of this particular item is being bought through the contracted supplier we have and how much of it is bought off contract. So if you had a contract for supply of computer hardware, like laptops, but your local guys are walking into a Best Buy and just paying top dollar for it, that's not going to work. You end up overpaying, and after having gone through all the hard work of setting up a commercial relationship with a supplier, you find that you're not even using it.

Em: That would be so annoying.

Marty: Oh yeah.

Em: One of the things that I find absolutely imperative when working with contractors is making sure that the contract is super detailed. I'm a real "details" person, so that works for me, but I just think outlining all of the deliverables, the due dates, the payment times, it might seem like overkill at the time, but it has saved me so many times just removing that ambiguity from the situation and having everything black and white, clear as day. Is this something that you recommend?

Marty: Yes it is. Clarity in the contract is important. There's also a couple of other things that are important to recognise around that Em. One of them is, that there is no such thing as a complete contract. There are always going to be things that are left out no matter how well you write it and no matter how comprehensive you think it is. The other thing is, that depending on the type of project, so if you're in project mode and you've got a very fixed deadline, deliverable dates and so forth, that works well, but it doesn't work quite so well when you've got for example, a service provision arrangement for a maintenance activity that's a three year contract where you're outsourcing maintenance of certain assets and plant. You can't define specifically everything you want done, and so you rely much more on the relationship.

So, your fundamental point's right. The more clarity you can put in the contract, the better for everyone. So we spoke about making sure everyone knows you've got a contract. Once you've done that, training the people who have to use the contract in how to manage it, is the next really important step. So what are the obligations for supplying these particular goods or services? What are your obligations as the customer? So for example, sometimes you will have committed to buying guaranteed volumes of something in a contract. So you've got to be aware of your obligations to do that. And where is your financial advantage? So you've got to understand things like rebates and penalties, because poor supplier management can destroy a well negotiated contract pretty quickly. What else, the third thing is you've got to make sure that you've got an accountable person for managing the contract. This is the same as anything else. One head to pat, one ass to kick, that's it. And this is how you know the organisation will actually pay attention because one individual is on the hook for making it work.

Em: One of my hot tips with this is just making sure that the communication with your contractor is regular and clear. Obviously it depends, as you said, how long the contract is and what it's for, but don't just give them the contract and then leave them for months without checking in. You need to be across what's going on so that if your boss asks you, you can relay the progress accurately. So I really think that those regular work in progress meetings are great for this. And it means that you can catch any potential problems before they become big problems. I've also found that agreeing on the WIP tempo from the get go, before anything, the WIP, the work in progress.

Marty: Oh, okay. Yep. Yep. I'm with you.

Em: If you agree on that before anything's signed, it just makes it so much easier for you to get into those consistent updates without them feeling like you're micromanaging. So instead of, "Hey, just checking in, what are you doing"? It's more like, "What's the latest, give me an update". It's just got a bit of a different feel about it I think.

Marty: Well it does. I'm glad you clarified that WIP was work in progress because otherwise I thought you were just trying to whip your suppliers, which is not a good look either! So yeah, I think that's exactly right. That's a really good point Em. One thing I will say about large contracts you write though, particularly, if someone else is managing and monitoring the contract, somewhere either in a devolved or external way from your negotiation point in head office, I'd say you've got to bake any savings that you've projected in the contract into future budgets. So for example, if your procurement team and the actual users of the contract have agreed on achieving certain dollar savings, then you need to actually take that out from future budgets. Let's say you write a contract that's supposed to save $4.5 million in operating costs.

Well, that's awesome. Next year, your operating budget is going to be $4.5 million lower, and I'm going to make sure because I'm ripping it out right now. See otherwise, why would you do it at all only to watch the value bleed into other spend because it's not managed properly. If you want $4.5 million in savings through a contract, well then the last thing you want to do is give someone out there as an operator, a $4.5 slash fund to use however they see fit. Good point. So yeah, it can be a trap, right? And most importantly, once you understand the contract, once you've negotiated it and you understand it really, really well, the only thing to do with it is whack it in the bottom drawer. You can't manage a contract by the black letter of the law.

You have to manage the relationship. So you've got to know your rights and your boundaries and the value proposition, everything else, but you really need to work with your supplier. Sometimes the supplier will over promise, so that they can win the work, they've cut their margins too fine, but who holds the risk for that? We spoke about this in the outsourcing episode, you hold the risk. It's the illusion of risk transfer. You can't outsource the risk and you still have to get the product or service you're paying for. So if suppliers shave their margins really close, they'll often look for ways to cut corners, and they do that every day. And this is what sours a relationship. So it's working that relationship through so that both you and your supplier can get the most out of the contract and both be strong and profitable as a result.

Em: Yeah, this is where those frequent WIP conversations really help. As you said, it's the relationships that really matter here. If you've got that good, strong relationship with your contractor, it means that you can usually work things out and come to a solution, even when shit hits the fan. Now, before you wrap this episode up, Marty, I just want to drop in a quick note that enrolment for the September cohort of Leadership Beyond the Theory opens in 4 weeks time. So if you've been thinking about joining the next cohort, it's the last one we're running in 2020, now's the time to start looking at the time and financial investment so that you've got all your ducks in a row when we open doors. More information on the program can be found at courses.yourceomentor.com or shoot me an email at emma@yourceomentor.com if you'd like some help working out if the program is right for you. Alright Marty, let's wrap up this episode.

Marty: Yeah. Thanks. Em. Well, that brings us to the end of Episode, 98. Thanks so much for joining us. And remember at Your CEO Mentor, our purpose is to improve the quality of leaders globally. So please take a few moments to rate and review the podcast because this is what enables us to reach even more leaders. I'm really looking forward to next week's episode: Don't play one season too many!

Until then, I know you'll take every opportunity you can to be a no bullsh!t leader.

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