Delegating the Right Way: Part 2 of 2

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Posted: Nov 15, 2017 12:01 AM

Once you have made up your mind that it's time to start delegating to other people and growing your business, and once you've decided on what to delegate, only three questions remain:

--To whom do you delegate?

--How do you delegate?

--How do you avoid losing control of your business?

When delegating, you can choose among five potential delegates.

Technology. More and more these days, "there's an app for that." On the plus side, technology does not require a salary or benefits, and it runs pretty much perfectly all of the time, except for periodic maintenance.

On the negative side, technology is prone to break down at critical times and become obsolete every couple of years. And using technology as a customer interface gives the impression that you "don't care" about your customers.

Partners. Partners are paid out of a percentage of your business's profits and do not receive a fixed salary (although they probably will have a monthly draw to pay living expenses). Because they have skin in the game (if the business doesn't make money, they don't), they are likely to be more committed and will work harder than employees.

On the negative side, once people become your partners, they become hard to get rid of if things don't work out -- you would have to buy them out at whatever the fair market value of your business is at that time.

Employees. On the plus side, you can tell them what to do and fire them if they don't do it well without paying them anything, unless you want to.

On the negative side, employees are expensive (you have to pay federal and state employment taxes on their wages) and have legal rights. Fire them for the wrong reasons and you may be staring down a wrongful-termination or discrimination lawsuit.

Independent Contractors. Like partners, they don't get a fixed salary or benefits, but unlike partners, they can be terminated for any reason or no reason.

On the negative side, because they work for multiple clients, they are less loyal to your business than your employees, and you may not be able to get hold of them when you need them. They are also much more likely than employees to try to steal your customers if their relationship is terminated.

Your Spouse and Family Members. Hiring your spouse or children to help with the business carries some excellent tax benefits. You are much more likely to count on their loyalty than non-family employees, and they may be willing to work for less than minimum wage. Hiring your children teaches invaluable lessons in the value of hard work and personal responsibility.

Just remember that if you fire your spouse or kids, you will still have to see them every day.

Having selected your delegates, it's now time to train and motivate them.

Training someone to do a particular task usually occurs in three stages: "I do; we do; you do." First, you show your delegate how to do it. Then the two of you do it together. Then you allow the delegate to do it herself under your close supervision until you're 100 percent sure she has the hang of it.

Motivating your delegates is much trickier. Generally, having spent time and money hiring and training your delegates, you want to be sure they hang around. You will need to consider the following, among other things:

--If they are employees, paying them prevailing wages in your community and offering them basic benefits.

--Paying competitive hourly or per diem rates if they are independent contractors (over-negotiating their fees ensures that your work will not be given priority).

--Creating a family atmosphere in the workplace -- study after study shows that employees will tolerate below-average wages if they feel their contribution is valued and that they are part of a team.

--Treating your independent contractors with kindness and respect.

--Considering your key employees as potential successors when it comes time to retire (perhaps via a workers cooperative or employee stock ownership plan).

Delegating most of your responsibilities to others doesn't let you off the hook completely. The legal doctrine of "respondeat superior" (Latin for "the boss is responsible") means you are legally liable for your employees' mistakes. In the words of a former U.S. president, when you delegate, you must "Trust, but verify."

Here are four essential oversight rules:

--Be very clear about the limits of your delegates' authority.

--Stay on top of things, but don't micromanage.

--Insist that customer complaints be brought to your attention immediately -- when a customer is upset, that person should be seen by the boss.

--Never let a delegate get too close to a key client or relationship.

Ultimately, your business should be able to run smoothly and efficiently ... without you. The sooner you start delegating, the sooner you can think about retirement.

Cliff Ennico (crennico@gmail.com) is a syndicated columnist, author and former host of the PBS television series "Money Hunt." This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state. To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our webpage at www.creators.com.

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