An Empowered Team: Compound Interest for Your Business
“Empowerment is not giving your people the ability to make decisions. Empowerment is the giving your people the ability to mistakes” – Steve Hitchcock, COO Duncan and Son Lines
The above quote (one of hundreds of golden nuggets I heard at this year’s TCA Convention) got me thinking deeply about empowerment – true empowerment, which also requires a necessary absence of micro-management from senior leaders and managers.
I use the concept of compound interest as a frequent analogy for many business processes and functions, which I think is totally appropriate, since it is (as Albert Einstein once declared) the 8th Wonder of the World. The concept of compound interest doesn’t just apply to money, it can be easily applied to human capital, and technological capital. For human capital, if you have the right ingredients – people with a decent set of technical skills, and better-than-average amount of character and purpose, the gains your staff can make (if you give them the right tools) can catapult your business to the next level of profitability and efficiency.
The above can happen if you have two necessary table stakes. First, you need the right people (I know easier said than done in this low-unemployment environment). Second, you need to employ the correct approach to managing those people. Specifically, you need to have a strong culture and set of shared values that leads a current or future associate to respect the business and want to add value to it – day after day.
If you ask a leader with a micro-management problem, in my experience, they will undoubtedly admit to this ‘addiction’. Normally, this business-limiting issue affects the entrepreneurs who built the business from the ground up. He or she has invested their blood, sweat, and many tears over the years to get to where they are today. It’s natural that they are emotionally torn when it comes to trusting someone else with an important business function. However, for those that are true micro-managers (many say they are, but they aren’t), they don’t realize the opportunity cost of looking over their team’s shoulders day after day – they are not receiving any interest payments on their human capital. To visualize this, think of a hamster on a wheel. Lots of busy work, but no progress.
I started this post off with a quote about empowerment. I had not heard it defined like that before. Empowerment is not, at it’s basic level, about giving an associate the ability to say no to a customer, authorize additional compensation for a great driver, or perhaps decide to stop doing a process you’ve been doing for eons. No, true empowerment is allowing them to make those decisions, without fear of reprisal if the decision(s) didn’t work out to the company’s advantage. Further, true empowerment requires a lack of unnecessary oversight (see micromanagement).
My challenge for you this week. The next time one of your trusted associates brings a business-critical decision to your desk, simply reply “I’m good with whatever you decide”. Conversely, when a team member (who has been trained properly) discloses that a previously made decision didn’t turn out the way it should have, simply reply “Good, we can learn, and get better”. On the last one, watch this great video from Jocko Willink for inspiration.
It’s time to start earning higher rates of interest on your human capital.