Chapter 10 – Solutions for the Over-Delegator

Like many aspects of your business, problems with delegating can go one of two ways.  And, even though delegation problems can present themselves in one of these two ways, it is not totally uncommon for a business to have problems with both.  Just like problems with under-delegating can affect your business, problems with over-delegating can be just as harmful.

Over-delegating, at least in the way I think about it, has to do with turning functions into hot potatoes and just tossing them at the first person who can catch them.  Like Michael Gerber explains in his wonderful book, “The E Myth”, delegation can have unwanted effects if you don’t maintain the management of the delegated task.  That is, even though you delegate tasks to others, this does not mean that you can just forget about them.  You still need to make sure the overall goals are met.  You still need to make sure the tasks get done.  And, you still need to make sure that any questions the person has get answered.  Management, you can never escape it.  Try and your business will suffer.

This phenomenon seems to present itself the most in one of two areas, either in accounting or in sales.  Typically, this happens in the areas of the business the business owner is most uncomfortable in.  And, since most business owners are extraverted, accounting is usually a white-hot-hell portion of the business the business owner would love to just put on someone else and never think about again.  For the introverted owner, putting sales on someone else’s shoulders can be a tremendous relief.  For the typical introverted business owner, they would much rather just spend their days in the back room designing a better and better mousetrap.  But just like with the extraverted owner example, sales is a critical part of the business, one that, like accounting, will punish you if you do not understand what is going on.

To start, let’s look at the accounting example.  For many business owners, the accounting function is one of mystery and drudgery.  As such, it usually only gets done as well as it has to (to meet obligations), which means the owner will miss out on the benefit good accounting could have.  If you have not heard it before, let me be the first to say it.  If you do not understand the accounting of your business, you do not truly understand your business.

Now, that is not to say that you are not the world authority on your product, your facility, and each staff member’s birthday and professional sporting team preferences.  However, if you do not understand the accounting of your business, you are missing out on being able to use the true steering wheel of your business.  As if this was not bad enough, you are perfectly setup to be ripped off.  After all, all business is accounting, the flow of cash from the customer’s pocket to yours to those of your supplier’s.  If you are not the world-renowned expert on this process, you are definitely missing opportunities to make your business run better.  Not only that, by not checking in on the details of the accounting, you expose yourself to all sorts of nasty risk.  That is, if you are not paying attention, how would you know if an employee was stealing from you?  Or, if a supplier was incorrectly billing you?  The truth is, you probably wouldn’t know, at least until a lot of damage had occurred.

With unpleasant areas of the business, it can be so easy for us to just (gladly) hand entire processes over, just thankful to be finally rid of them.  And, since we detested these processes in the first place, we are going to use our new-found freedom to never check in on them again.  These things are someone else’s problem now; after all, so let them deal with it, right?

Wrong.  The business is YOUR problem.  Your name is on all of the documents, your name is on the tax returns, and you are the one who will be left holding the bag if something goes wrong.  These items are just too important to leave them unmanaged, so just know that, like taxes, management is a critical obligation of your business.  After all, it is your management that makes your business yours.

I will give you a personal example of this.  With the start of one of my businesses, I let my accountant complete and submit all of the paperwork for the various state agencies.  And, because he did not really understand what we were going to be doing, he selected the incorrect classification for our department of labor and industries account.  No big deal, right?  I mean, how much difference could there be between categories?  It turns out, a lot.  Because of our misclassification, we were overpaying by nearly $3 per hour for every worker.  To add insult to this, I did not catch this mistake for over a year.  During that time, I paid many tens of thousands of unnecessary dollars to this one agency.  And all of this was because I was too busy, and/or too important, to take 20 minutes to fill out a form, or even check it before it was submitted.

To add insult to injury, I did the same thing with my personal taxes that year, and this same accountant misreported one of our expenses.  He incorrectly placed our advertising expense (which was huge, totaling nearly 20% of sales) in the Travel/Entertainment category, which if it contains a high number is a known audit trigger for the IRS.   And again, because of my flippant attitude to these “menial items of minutia”, I got to endure a multi-year audit.

Now, it is true that this guy was an idiot.  But, all of these items were my fault.  I was the one being careless about whom I delegated to, and I was doubly-careless for never checking the work.  I just assumed that everything would be done right, mostly because I was paying a premium for his service.  Well, let me tell you that these assumptions cost me dearly.  But on the other side of these mistakes, I have learned to always trust, but verify, those to whom I delegate my work to.  This especially goes for areas like accounting where I have a lot to lose if things are not done absolutely correctly.

With regard to the other example, you can get yourself in just as much hot water by wholly trusting the sales function to someone else.  Sure, you could end of with someone who is wonderful, who truly does not need any management.  But, wouldn’t you like to know for sure?  Since your sales process is often the face of your business that your customer sees, don’t you want to know that you are putting the image that you want out there in the world?

Often, many unseen problems can exist, and thrive, if your sales people/processes aren’t properly managed.  From overselling your product, to using high-pressure tactics, to breaking promises, to outright lying to customers, there can be a lot of problems that can remain hidden.  If you are afraid to be “out there”, interacting with your customers, you need to get over it.  Letting someone else completely represent you can lead to lots of undesired results.  Your business needs you to take charge, to manage this process.  Otherwise, you probably won’t end up with the reputation you want for your business.  You will end up a reputation that is a reflection of your mis-management.

As another personal example, I once employed the greatest salesman I have ever known.  This guy was amazing.  He had a voice made for radio, which made him killer over the phone.  He also could talk in a way that just oozed charm, making him not only very likable, but also very trusted.  I used to sit down next to him, just to listen to him talk.  Customers seemed to love him, and his sales numbers were through the roof (about 200% of the next best person).  He seemed to close on practically every call.  This guy was a rainmaker, and I considered myself incredibly fortunate to count him among my staff.

However, after several months, something started to seem strange.  I knew this guy was killing it every day on the phone, but we were not doing that much better.  I could not point to anything specific, but it just seemed like we should have more money.  We were doing well, but not as well as we should have been.  And, since I had already hot-potatoed the accounting to the accountant, I could not prove it.

Well, it was not until I took some of the accounting back that things started to become clear.  I realized that it was true; this guy did sell a ton of product (and collected the commission checks to match).  However, I also found that his return rate was an astronomical 300% higher than the next highest salesperson.  That is, even though he was selling more, he was doing so at a cost to the business.  Although he was selling a lot, almost a third of what he sold was returned.  And, since we paid shipping both ways (and most of the returned items were opened, which meant they could not be re-sold as “new”), this was costing us a fortune.  On top of all this, the salesman had found a brilliant loophole in our sales commission strategy.  That is, we paid a percentage of every order sold, but we did not subtract a percentage for every order returned.  So, to add insult to injury, on every returned order we were out not only the cost of the new items, and the cost of the shipping, we also we out the sales commission.

When I caught this, I immediately changed our commission policy.  The effect?  This guy’s sales numbers went way down, and he actually quit within a couple of months.  In hindsight, he was clearly overselling customers, who were simply returning the excess because of our no-hassle returns policy.  And, when I corrected this, he could not make the incredible money he made before, so he left to find someone else to take advantage of.  My job then became to not only replace him, but to also start repairing the damage that his hard-selling ways had created.  The company had a black eye, and due to my mis-management, it was now my job to fix it.

So, please, learn from my experience.  Always manage all of the parts of your business, especially the areas that can hurt you.  Know that at the end of the day, you are the one on the hook for everything, and by blindly entrusting people to fulfill important functions, you set yourself up to be taken for a ride.  And, when you do start to finally delegate correctly by continuing to manage the process, make sure you deal with issues that arise as soon as you become aware of them.  Nothing good can come out of letting problems smolder, so if you see something, deal with it.  You will feel better for it, and the other employees will thank you.