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  • Writer's pictureDavid A. Schneider

How To Manage Employees Effectively

As your business grows, it will be inevitable to have people on board who will help you.

Done right, your team can be your biggest asset. They can help you overcome the biggest obstacles and take the company to the next level.

Or, if done wrong, your team can be your biggest obstacle itself. People can sabotage your operations, let their work slide or only work half heartedly to wait until it becomes 5pm.

But what does separate one scenario from the other?

The key to achieving big results with your staff is the already over-hyped topic of management.

how to manage employees effectively
How much responsibility should your employees have?

Even if you become a pro at automatizing your business and systematizing your business, there will still remain parts of any business that will require a human being to take action or even to make a decision.

And we all know that humans will and do make mistakes, no exception. So how can we create a productive environment for our staff where people are motivated to work for us, and at the same time ensure that they will do what is expected from them?

At this point the question will arise how far your employees should be allowed to go in the parts that can't be fully systematized.

Even with technology advancing at incredible speeds and evergoing faster, there will be parts that need human interactions in a business.

On the one hand, you probably want to own a business that is capable of running entirely without you to have more freedom and time.

On the other hand, you want to reduce the chances for your staff of mistakes to an absolute minimum.

And this is where many founders can't let go and start to make every single decision themselves.

If somebody might do it wrong, better to be that person myself.

If I screw up, then so be it.

But if someone else does it wrong, then we really have a problem!

This behaviour is also often referred to as “the founder´s trap” by Jeff Hoffmann and David Finkel in their book “Scale”.

Many people who started their own business successfully are doing everything they can to protect their “baby” from other people who might do something wrong with it.

While it is understandable that giving up control of your business is hard, this means they have to take care of every little detail and handle even the smallest problems themselves through 70 hours of work a week and becoming strangers to their families on the way.

The trouble that comes with this kind of thinking is that the founders also make mistakes frequently.

It is a human to make mistakes, even screw up completely from time to time.

We are all sinners, we all make wrong decisions.

You've certainly already noticed from our last articles, that systems and automatization are the first steps toward a better life and business in general by taking the founder largely out of the equation.

The next critical step will be to handle those parts of the business where obviously you just can neither automatize or systematize.

And this is where proper management structures will be necessary.

It also comes back to trusting your people at this point, allowing them to make small mistakes along the way and grow as a person themselves.

Studies have shown that this also will lead to more job satisfaction and benefit the business as a whole over the long-term.

But how can you be sure your people dont mess up too much? What mistakes are okay to make and which ones are red flags?

First of all, these will be hard to differentiate in general. You have to look at the exact job your employee has to fulfill in order to define him or her as successful in your company.

Start with giving people clear instructions as well as what to do but also what not to do in any position in your business.

This will be the first step to managing your employees effectively.

You cannot control people and much less their thinking and behaving, but in your business you can limit it to a certain size of failure.

For example, let's say you happen to have an employee who is the buyer for your production parts and know that around 90% of the parts are actually small parts with minor room for errors, while only 10% are really big orders or special parts that require a lot of know-how.

If you as the owner don't want to give up any responsibility to that employee, you will have to agree and be asked by every single small order, even if it is just a set of screws for 5$.

This naturally will take up a huge block of your time and attention - and basically also stifle your employees potential performance.

But also your business will suffer.

Your as the owner or CEO are supposed to govern the large strategic objectives of the business. It should not be your job to handle every 5$ set of screws that gets bought!

So how could you manage this better?

how to manage employees effectively
Your time as business owner is precious. protect it.

As a simple rule, you could let this employee make buying decisions until lets say 4.000$, knowing that this will be around 85% of the orders.

All bigger orders where more money is involved will have to be checked back with yourself once a week in a short 10 minutes meeting.

Voila - you reduced a constant asking and demanding process with an employee who interrupts you daily, and at the same time making the job better for the employee because he or she now can take care of most things herself and doesnt have to ask the boss for every dollar that gets spent.

Your employee has more responsibility in a controlled environment, you are free for more important stuff. Management made effectively.

The same can be applied to many other parts of the business.

For example, in many small businesses the owner himself or herself is also the top performing salesperson of the company.

If the owner is always the big deal maker and insists on making the biggest orders himself or herself, then allow your salespeople to make deals until a volume of let’s say 100.000$ (if this is at least 70% of your orders for example) themselves, and let them send every request north of this number to the founder.

The founder thereby still keeps full control of the most important deals and still gets much more time freed up.

The idea is to look for appropriate patterns that allow to handle 80% of the daily action without much room for error, while the most important stuff is still in the hands of the CEO.

If giving up control sounds like a nightmare to you, you can start smaller of course letting your staff handle only 30% of the tasks initially.

Even if you are totally uncomfortable with letting your people make decisions, you can start small in this way.

Let them handle small deals for themselves and see how your people perform.

Let them make orders until 100$ at first.

Or let them make deals below 10.000$ at first.

Start really small and work your way up from there with increasing the responsibility of employees step by step as they prove to themselves that they can make things right.

As the last step, giving your people responsibility will be the ultimate step to giving you back the dream of having a business that is not dependent on you and allows for more freedom, money and time in your life - the reason why many people take the burden of starting a business.

It is also the basis of delegation and thereby a crucial step in every entrepreneurial journey.

No business can grow long-term without a proper management.

Otherwise the founder and his or her time will always remain the major bottleneck.

Together with clever systems, automatization in large parts of the business and rules for your employees to take more responsibility to themselves, you will find your business not only transformed into being more efficient and predictable than ever - you will also suddenly notice that it is capable of running without you controlling every interaction.

Did you ever wonder how some founders work 20 hours a week and make more money than ever?

Well, I think we have just lifted the secret.

Enjoy your new free time.

And I hope to see you at the beaches of this world with pockets full of cash.


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