Business

Do you manage by results or by activities?

A concept of leadership that dates back about sixty years is called Theory X versus Theory Y. Leaders usually fall into one of these two buckets. If you believe in Theory X it means that you don’t trust the people who work for you, so you have to spend your time observing and micromanaging them to get results. On the flip side, Theory Y says leaders trust everyone by default, and most people will do whatever it takes independently.

The truth is, most executives probably embrace both theories a bit when managing people. But what you think of these theories can also come to light when you answer a vital question: Are you managing the business or the results?

What is your management style?

The idea behind this question is how you interact with the people who report to you. Do you allow your staff to work independently, as long as the results are there? Or do you find yourself prescribing the kinds of things your employees should do on a daily basis to help them achieve better results?

Let’s look at an example. In this scenario, you maintain a software sales organization. You have a salesperson who reaches the quota you set for him each month. But you also know that he really enjoys playing golf. Thus, he makes five calls per week. He’s hitting his numbers, so are you having a problem with his behavior?

Some of you might say, this commercial is lazy. What if he doubled down on his job and made ten calls a week? He could double his sales, making more money for himself and the business. This is theory X.

But some of you might respond by saying, this representative has earned the right to play golf. The company set its goal and it achieved it. What is right is right. To the right? This is theory Y.

The temptation to micromanage

Now, if the sales rep doesn’t reach their number, how might your answer differ? It probably opens things up in a way where you’re more focused on that rep’s business just because the results aren’t there. But even then, there is a catch.

As soon as you, the leader, start managing someone’s activity – like asking that rep how many calls they made, who they called, did they follow up, etc. – you show that you have lost confidence in this person. Frankly, you’re not happy, and neither are the rep, who is probably unhappy to see you questioning everything they do. In many ways, you both lose.

When I moved from managing results to managing activities, the employee was in the wrong place with me. I didn’t like working on their actions and the likelihood of recovery was not high. Most of the time, it ended with the employee leaving the company, either by their choice or by mine.

You limit your output

Another problem with business management is bandwidth. As a leader, especially if you are running a fast growing business, it is going to require a significant investment of your time to manage the activities of your people rather than just the bottom line.

While it can be tempting to micromanage your path to higher performance, it’s been proven time and time again that the best leaders are those who focus more on results than day-to-day activities. Not only does this help you maximize the impact of your time, it also maintains a sense of trust among your employees. As soon as you lose that, well, suddenly you will have much bigger issues to face.

The bend in the pipe

If you’re tempted to manage an employee’s activities, think back to when a boss micromanaged your work. What did it do to you? Not great, right? This feeling is worth remembering when leading your team.

It would help if you were also wondering if spending your time managing activities is the best investment you can make. It is possible that by neglecting other issues within the business, you will become the constraint – the crux of the pipe – to future growth.

I’m not saying you can’t serve as a valuable guide and resource for your employees when their bottom line is down. But if you maintain a certain distance and give them the autonomy they need to resolve their performance issues, you can maintain and potentially increase the confidence you have in your team. When you do this, you might even find that you can increase their bottom line in the long run while making sure you spend your time on higher leverage issues within the company.

Finding the right balance

So whenever you can, consider applying Theory Y to your management style while focusing on managing for results, knowing that you can keep Theory X and Business Management as a contingency plan.

If you can find the right balance, you will find that it is more effective for you, the employee, and the company. You all win.

The opinions expressed here by the columnists of Inc.com are theirs and not those of Inc.com.

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