Executives who delegate important decisions to the second tier, and not the principals, run the risk of curbing their firm’s potential.
Since when is it okay for a firm’s senior executive to outsource leadership? Hopefully, you answered “never” to that rhetorical question. Unfortunately, too many firms haven’t figured out that leadership cannot be delegated.
Organizational leaders are supposed to set the direction for their company, establish the goals they seek to achieve, and connect individual tasks to the overall strategy. Leaders are also supposed to retain the responsibility of making decisions affecting the long-term health of the organization.
Why are so many principals handing top-level responsibilities to non-principals? In all of the leadership programs I’ve attended, not once did I hear someone recommend that, when handed a significant decision, it’s best to pass it down the chain. All too often that’s what principals are doing and it’s chipping away at your firm’s potential.
How many difficult decisions do you pass down your company’s ladder?
It’s strategy season. It’s that time of year again when firms begin to look forward to 2017 and setting their new “strategic” goals. As a side note, if it’s a one-year plan, it’s really not “strategic,” so plan bigger.
In this season of strategic planning, how are firms determining which strategic consultants to hire to help build their plans? Some firms are doing their planning internally, while others are outsourcing the consultant search process to their human resources department.
Outsourcing your search for a strategy consultant to the HR department is like asking your IT department to look for a new healthcare provider for your firm. Sure, they could possibly find a great provider, but is that really the best, most qualified department to conduct your research?
Who knows more about your company’s current direction than your principals? It only makes sense that they are the best equipped to ask the important questions of potential strategy consultants. Too often, HR managers are made to be the firm’s hunter-gatherers, but quite often, they’re simply a speed bump in the process. Put your principals to work and have one of them do your research.
I take the same approach to training programs. For smaller firms, the principals are best positioned to understand where their employees need development. Hopefully, your managing principal is well enough connected to your project managers to understand their strengths, their challenges, and their professional development needs.
Larger firms typically have a robust HR department with experienced training managers, but they still need direct involvement from senior leadership to effectively identify the firm’s needs.
- Assign a decider. Make one of your principals a project manager for firm-level programs, such as strategy development and training. Give them the authority to make a decision about a consultant or training program without having to go before a full executive committee meeting.
- An outsourced decision will cost you more. Do the math on delaying your decisions. Let’s say you’re in the market for a principal leadership training program. As a principal, you outsource the search to your HR manager, who conducts a lengthy search and comes up with five potential consulting firms. The manager reports the findings back to you and you have questions about the program options. The HR manager then researches the additional questions and reports back to you. You trim the list to two potential firms and you ask your HR manager for more details. Finally, you decide to go with option “C.” The HR manager has now spent more than a dozen hours over the course of six weeks going back and forth, at a median labor cost of $40 per hour. That $1,500 seminar you were considering will now cost you over $2,100 because of your outsourced search process. If you had handled the search yourself – and you could, because you know the market – you would have reduced the lead time and significantly cut your overhead costs.
On the positive side, I’ve worked with many firms that understand leadership can’t be outsourced. Those are the firms with principals who know what their company needs and are looking for options to meet those needs. They ask probing questions to better understand the pros and cons of our company and our programs, and then they make a decision.
Many of those firms were recently represented at Zweig Group’s 2016 Hot Firm and AEC Industry Awards Conference. Some things to consider:
- Senior leaders of the Best Firms to Work For companies invest in their employees. They understand what their employees need because they actually spend time talking and working with them; they don’t have to ask others what their employees need.
- Hot Firms know the industry. They know which peer firms are growing and which ones are in decline, and they know what’s causing the growth or decline. Hot Firm leaders haven’t outsourced the task of assessing industry trends to their HR department; they take it on themselves.
- Hot Firms make timely and thoughtful decisions. Once these leaders have the information they need, they make a decision without delay. Pausing to ponder and waffle back-and-forth is a waste of billable time. Hot Firms gather information, evaluate, decide, and move on. They don’t get trapped in an endless gather-and-evaluate loop.
According to Zweig Group’s 2016 Principals, Partners & Owners Survey, principals spend an average of 34 percent of their day in firm management, but they wish they could bring that number down to 28 percent of their day. Sure, they could reduce the amount of time they spend on firm management by outsourcing their leadership decisions, but then, what type of firm would they have? It certainly wouldn’t be a Hot Firm or Best Firm to Work For.
Bill Murphey is Zweig Group’s director of education. Contact him at email@example.com.
This article is from issue 1174 of The Zweig Letter. Interested in more management advice every week from Mark Zweig, the Zweig Group team, and a talented list of other guest writers? Click here to subscribe or get a free trial of The Zweig Letter.