Every small business has massive dreams to turn into reality. No small business likes to stay small forever. As a small business owner, you would want your business to scale new heights every fiscal year. After all, it is well-known that the world’s leading businesses started as micro or medium enterprises. You want to have the skills and tools to grow your business to a leading business, and delegation can help raise you to a higher league than you’ve been before.
The journey of a business depends on various driving forces. Among all these factors, what a business owner looks forward to the most are the cost benefits.
An entrepreneur’s mathematics is simple. Profits and revenues should grow while losses and redundant costs should come down.
To streamline this objective, every business owner works on devising and incorporating a host of strategies. Today, you are following specific business strategies and principles to grow your business and your profits.
Cost Benefits of Delegation for Your Small Business
Among various approaches to making a business grow and bolstering finances, delegating is an underrated idea. However, at times, business owners tend to ignore the prowess of this underrated idea to drive significant positive changes.
If you want to take your business to the next level, you have to believe in the strategy of delegation. If you choose to control all business operations by yourself, you will soon become vulnerable to burnout. Besides, your individual productivity will begin to decline when you have too much on your plate. The overall impact of it will fall on your business.
When you decentralize authority and share responsibilities, you can enhance the efficiency matrixes manifold.
It will be interesting to know that many business owners believe that they can grow their ventures by at least 20 percent by delegating 10 percent of their work.
Eli Broad once said that the inability to delegate is the biggest problem he sees with leaders and managers at all levels. Speaking of the credibility of this statement, Eli Broad was one of the most successful businessmen in the United States. In 2019, as per Forbes, he had a net worth of USD 6.9 billion, being at the 78th spot on the list of the most affluent Americans. This should already make you believe in the cost benefits of delegation for your business.
There are multiple segments of the benefits that delegation can offer to your business. In this blog, we emphasize the cost benefits that delegation can extend to your business. On the other side of this blog, you will feel enlightened on learning the various ways in which delegation can be an excellent way for better financial health.
Money benefits of delegation for your small business
Greater employee engagement
Delegation of authority in a business is based on trust and confidence. Therefore, you delegate authority to only those employees you have trust and confidence in. This faith you exhibit in your subordinates while delegating will do a world of good to their motivation. They will feel empowered having been assigned more significant responsibilities. Moreover, they will associate a feeling of belonging in their jobs.
All these factors will lead to higher employee engagement in the ultimate sense. Effective delegation will have everyone involved in imperative and challenging tasks. Besides, the delegation of authority will also suit the development and career advancement objectives of your employees. Each employee in your company will be able to engage actively. It will give them an emancipated sense of increasing self-confidence in the workplace.
A Gallup Poll said that businesses with high engagement among teams turn 21 percent more profitable. To add, as per Forbes, a positive company culture driven by collaboration and delegation can lead to a 4X increase in revenues. On the contrary, US companies with low employee engagement incur hefty losses worth USD 450 to USD 500 billion each year.
Delegation leads to higher employee engagement, which leads to better financial performance by a business.
Maximum utilization of your human resources
With the delegation of tasks and responsibilities, of course, you can reduce your stress. You will be able to spare more time for your wellness and also the more vital business functionalities. Besides, in addition to an increase in your productivity, you can also upscale the efficiency of your employees with effective delegation. In simpler terms, you will be able to get the most out of your human resources.
When you delegate more responsibilities to your team members, their key result areas will change. They will be doing more than what they do in the usual sense. Such a scenario will engage them better and challenge them to prove their mettle. To add, it will also save the costs of hiring people for specific roles. For instance, let us say you have set the goal of optimizing the social media marketing of your business.
You may want to hire a social media manager to brainstorm and implement social media marketing strategies. However, rather than hiring a new person, you can delegate this task to some of the most creative minds in the workplace who have great knowledge of social media. By doing so, you will not have to hire a social media manager if you have the prerequisite talent already present.
One of the most amazing ways to save money for a small business and put it to better use. All that you need to do is be aware of your team members’ talents and interests. That will enable you to make worthwhile delegating decisions.
Reduced training and development costs
Training and development costs are a part of every corporate budget. Companies spend exorbitant amounts of money and tone to training new employees and their constant development. As per Statista, companies spend USD 1300 on average on the training of each employee. In fact, over the years, the training costs have been increasing for companies. Even small businesses are required to allocate large budgets for employee training and development.
Of course, training is essential, and there is no replacement for it. Training is essential for aligning employees’ potentials and objectives with organizational goals. Also, training is needed to facilitate change management in the company whenever modifications are made.
You cannot eliminate training costs, but you can decrease them in a significant way. You must be wondering how it is that you achieve a cost reduction in training expenses! The answer lies in the delegation of authority and duties.
Delegating responsibilities to your employees means giving them the hands-on experience of new job roles. In addition, the delegation will give them direct practical exposure, which may significantly impact e-learning modules.
Delegation will offer greater room for the training and development of employees. The further implication lies in the fact that you will not need multiple training modules covering each aspect of employee development.
Employees can learn in a worthwhile way by discharging the duties that have been assigned to them. Having additional duties inspires innovation, creativity, and problem-solving abilities. Of course, while performing delegated duties, they will seek your support and guidance.
You can inspire your employees with confidence by reaching out to them with assistance. Make mistakes a learning process — not something unpardonable. Performing new duties has a learning curve. Foster a cooperative and collaborative work environment wherein people can make a few mistakes and learn from each other.
Collaboration is a driving force for profitability, productivity as well as employee engagement. All employers know the significance of creating a collaborative workplace. Hence, organizations undertake various team-building activities keeping in view the need for collaboration. Have an objective in mind to create a natural culture of collaboration for greater business success and delegation will be your game-changer. Delegation plays an active role in promoting great relationships and trust-building between co-workers.
When you exhibit trust in your team members by assigning authority and added responsibilities to them, they commit greater loyalty and gratitude to you. It further leads to enhanced emotional connectivity. Your relationships with your team members will improve a great deal because of delegation.
On the foundation of these relationships, you’ll build skyscrapers of collaboration. Some fundamentals of delegation may require different individuals to work toward a common goal. In the process, a greater sense of teamwork, reliability, and coordination will be encouraged. These processes will act as distinctive elements of effective workplace collaboration.
You know and understand that the vitality of collaboration is measurable. For example, McKinsey concludes that 97 percent of employees are of the opinion that alignment deficits in a team affect the outcome of a project. On the other hand, we know how collaboration can create a winning attitude among teams.
The findings of Google For Work reveal that 56 percent of professionals opine that collaboration is the greatest measure to boost overall profitability. Another study concludes that collaboration can augment individual productivity by 20 to 30 percent. Needless to say, a more productive workforce will drive much higher profitability.
Speedy Decision making
Delegation can do wonders in terms of amplifying the pace of workflow and decision-making. When you choose to delegate authority within the organization, it means that your employees can make some decisions on their own. In the larger sense, delegation will facilitate effective and quick decision-making at the organizational level. Being a business owner, you already know that the time spent in decision-making correlates to profitability.
A McKinsey study said that businesses that make vital decisions fast and implement them in real-time achieve at least 20 percent financial returns on their decisions. Furthermore, on average, businesses spend 37 percent of their time in decision-making. A Fortune 500 company can translate to more than 530,000 days of loss of working time. Around $ 250 million is lost in labor costs per annum due to slow and ineffective decision-making.
Brisk decision-making is imperative for productivity and efficient decisions top swift decisions. However, as mentioned above, there is a cost scenario associated with the speed of decision-making within an organization. Delegate, and you’ll have efficiency and speed in your business decision-making. It will pay financial returns as well as minimize losses due to excessive time spent making decisions all by yourself every time.
Greater scope for business expansion
Delegating duties means that you do not have to monitor every area of business operations on your own. When you delegate authority and tasks to others, you have more time on your hands. Imagine a workplace that does not believe in any sort of delegation.
There is centralization of authority in the hands of one or two people, and everything is subject to their approval. Do you think the employers will have enough time to think about the expansion and diversification then?
Every business starts with the ambition to get bigger in due course of time.
Expansion and diversification are a part of every entrepreneur’s vision. For sure, even you can relate to this, isn’t it? Expansion and diversification will bring higher revenues, greater profits, and growth of your capital. For that, you need to find your share of time to think on these lines and make the essential blueprint of expansion. Expansion and diversification will require effective planning, attention to detail, and focused efforts.
Having said that, delegation is important for growing your business as well as your money. You can delegate lesser imperative tasks and some verticals of decision-making to others. Thereafter, you will have more time and a fresher mindset to plan the growth of your business.
Having more time and a fresher mindset to plan is one of the greatest cost benefits of decentralizing power. Expansion and diversification will give wings to your finances, and delegation will be the catalyst.
Reduced costs of rehiring
No business wants to incur high costs of rehiring employees. This is the simple reason why companies are keen on devising effective employee retention programs. But, unfortunately, the cost of rehiring or turnover costs can be so high at times that they can doom a business.
As a Forbes article stated, the cost of turnover can be up to 33 percent of an employee’s annual salary. Needless to say, you do not want your small business to be impacted by such unprecedented losses.
Delegation in itself can be a worthwhile retention strategy.
Employees tend to quit when their expectations are not met. But with delegation, you can cater to the following dimensions of anticipations that employees have.
- Learning opportunities
- Workplace challenges and advancement opportunities
- Greater exhibition of trust by leaders
- Hands-on experience
- A collaborative workplace
- Diversification of skills
- Sense of empowerment and liberation
- Scope for innovation
- Intrinsic motivation
A few acts of delegation can deliver on so many verticals of employee retention.
Employees will be happy to stay with such a company for the longest. Besides high employee engagement, you will also be able to pull down attrition rates. With delegation, you can create a positive workplace environment.
Your employees will love to be in such a workplace every day. This will mean lower absenteeism and turnover and minimum costs associated with them. Are you still unsure about the merits of delegation?
Delegation comes with a bright spectrum of business benefits.
It can be the secret weapon that your small business needs to go big. With effective delegation, you can increase revenues and bring down various other losses that your business may be prone to.
The smartest entrepreneurs are already leveraging the upsides of delegation. It is time you join the league, too, by working on a prudent delegation strategy. Needless to say, the efficiency of how you delegate will be subject to various factors.
To draft a productive delegation strategy, you have to invest great wisdom, business acumen, and management sense. After that, the benefits of it are yours to win!