Leveraging Down for CEOs

If you desire to become a successful leader at any level, much less a top CEO, it will be essential for you to master the art of leveraging down. The simple truth is that all great leaders are highly skilled in matters of delegation.

Think of any top-performing CEO and you’ll find that to the one, they possess an uncanny ability to focus on the highest and best use activities. While most executives that have reached the C-suite level understand the importance of scaling via delegation, far too many CEOs struggle with the effective implementation of the concept. To this day I’m amazed at how many CEOs still own tasks, roles, projects, and responsibilities that should be delegated to others. So, in today’s post, I’ll share a few tips on deciding which tasks, and to whom, the art of delegation should apply…

As a CEO it is critical to develop a keen understanding of your value to the enterprise and to further develop an awareness of activities that are dilutive to said value. The number of activities a CEO takes on can certainly vary based upon skill sets, stage of corporate maturation, and the talent level of the rest of the executive team. That said, it is nonetheless safe to say CEOs who find a way to focus the majority of their efforts on the business vs. in the business will be the CEOs who achieve the highest and most sustainable levels of success.

Everyone’s time is valuable, and all-time should be valued. That said, one of the first things you need to understand as a CEO is what your time is worth relative to others in the organization. There is a simple shortcut that allows you to quickly extrapolate an hourly rate from a total annual compensation figure that I find useful for quick comparative purposes. The calculation works like this: if you make $750,000 per year, just eliminate the last three zeros of your annual compensation figure and divide 750 by two. This calculation will give you an hourly rate based upon a 40 hour work week and a 50 week year. In this example, the hourly rate of a CEO who makes $750k is $375 dollars per hour. So, if you run the same calculation on a $100k employee you find a $325 dollar per hour delta between your hourly rate and theirs. Therefore any items that don’t constitute $375 dollar an hour work, which can be leveraged down to someone with a lower hourly rate, provides positive arbitrage both in terms of cost savings and time recovered for higher and better use activities.

Another simple rule of thumb that allows you to maximize the equation mentioned above is to leverage down to the lowest level of talent possible while still ensuring an acceptable level of execution. For instance, rather than leveraging down to the $100K talent in the example above, if you drive down further to let’s say a $30k individual, you increase your organizational leverage factor by almost another 30%. The most productive, high-performance organizations have the ability to deliver fairly complex solutions and complete difficult tasks at the lowest levels within their organization.

Now that we’ve made the economic case for what, and to whom, you should leverage down, let’s discuss what does, and does not, merit the attention of a CEO based on the non-financial analysis. In Stephen Covey’s “The 7 Habits of Highly Effective People” he put forth a simple decisioning framework that helps to distinguish between those activities that are truly priorities and those that just appear to be priorities. Basic human nature is such that each individual believes that his/her problems and challenges are truly important, and therefore should constitute an emergency on your part. Your job as the CEO is to quickly be able to distinguish between the true emergency and the perceived emergency.

Understanding how to effectively delegate to others in a fashion that sets them up for success and not failure is another key part of the equation. It is critical to understand that improper delegation not only results in the task not getting done, but in most cases, in the task ending-up back on your desk in worse shape than when it left. You see, if you keep authority but delegate responsibility you actually disable someone from being effective. If you give away both authority and responsibility you haven’t delegated, you have abdicated. If you keep both authority and responsibility for something but delegate the task, you are tasking not delegating.  Smart leaders empower others by delegating the authority but owning the responsibility. I would suggest reading this paragraph at least 3 times and then examine your delegation style to see if you’re being effective in your efforts.

The moral of the story is this – a lack of delegation creates operational bottlenecks, delegation confused with abdication creates organization chaos, and effective delegation of authority vs. tasks creates personal and operational excellence. Focus on making the lower echelons as competent and productive as possible, driving all decisions down to the lowest level in the organization without suffering an unacceptable increase in delivery risk. The tips mentioned above will help you build a formidable organization, make better use of your time, and ensure operational performance gains across the enterprise.

Thoughts?