What is leverage management? How can it help you increase output?
Activities have different values. So by increasing the leverage of activities, you can increase output. Leverage management uses three techniques to improve team productivity.
Read more about leverage management and how it works.
What Is Leverage Management?
Previously, we looked at the activity term of the managerial output equation. In this chapter, we’ll look at the leverage term. Because an activity value is multiplied by leverage, if you increase the leverage of an activity, you can increase your output by a large factor.
- For example, in the first equation, imagine activity #1 had a value of 10, activity #2 had a value of 20, and the leverage of both was 1, so your output was 30 (10 × 1 + 20 × 1). If you can increase the leverage of activity #1 to 5, your output becomes 70 (10 × 5 + 20 × 1).
There are three techniques to increase output when it comes to leverage management:
Technique #1: Adjust the Number of Subordinates Who Report to You
For maximum leverage as a supervisory manager, you should have 6-8 subordinates so you can give them each half a day of your time per week. (Half a day is ideal because it gives you enough time to effectively monitor but not enough time to micromanage.)
Though know-how managers don’t have official subordinates, they should also aim to influence 6-8 people or 6-8 coordinating or planning groups.
If your organization’s hierarchy doesn’t provide you with the right number of subordinates, you can “act” as a lower role to get the right amount. Here’s where you can consider leverage management.
- For example, if you manage a manufacturing plant, it might be divided into two divisions, engineering and production. This would mean only two people, the leaders of each division, would report to you. You can act as either the production or engineering manager, rather than hiring someone to fill the role, so that you get that position’s subordinates.
Technique #2: For Leverage Management, Increase the Leverage of Existing Activities
We’ve already looked at how to choose effective managerial activities. Now, we’ll look at how to make these activities more powerful, which you can do in five ways:
1. Affect a larger number of people. Often, you can do this by doing activities at the opportune moment—when you’re in the presence of or can influence many people at once.
- For example, finance manager Robin is in charge of organizing Intel’s financial planning process. If she gives all the presenters clear directions on what they should prepare in advance of the first meeting, the presenters and audience (around 200 people) will all have a clear idea of what needs to be done. If her initial directions are confusing and people don’t prepare or bring the right information to the meeting, Robin would have to have individual conversations with people after to clear things up, this would take her a long time and therefore provide low leverage.
2. Affect people for a longer period, ideally by doing something that only takes you a short amount of time.
- For example, it might only take you a few hours to prepare a performance review, but your feedback will affect an employee’s performance for months.
3. Automate. Look for ways to help automate your subordinates’ work—machines can help people increase their output.
4. Simplify workflows. Often, workflows contain unnecessary steps that can be eliminated to streamline to process. To simplify:
- Create a flowchart that shows every single step of the process.
- Count the number of steps.
- Set a goal for reducing the number of steps. A 30%-50% reduction is appropriate in most cases.
- Ask yourself why each step exists. Eliminate those with no or weak justification (such as tradition or bureaucracy).
Technique #3: Stop Doing Activities With Negative Leverage
Some managerial activities have negative leverage—they reduce the effectiveness of people on your team. You’ll need to be careful of this when implementing leverage management.
- For example, if activity #4 has a value of 40 and leverage of 1, and activity #5 has a value of 50 and leverage of -1, your output is -10 (40 × 1 + 50 × -1).
Three activities usually come with negative leverage:
1. Managerial meddling, which is when a manager takes over her subordinate’s work. It’s negative leverage because after it happens enough times, subordinates no longer take the initiative and instead of doing their own work let the manager do it instead. Meddling usually comes from a manager having too much free time. When you have discretionary time, start a backburner project instead of interfering in others’ projects.
2. Waffling, which is when a manager procrastinates making a decision that will affect others. Her subordinates can’t do anything until the decision is made, so their effectiveness is hampered.
3. Holding a bad attitude. When a manager is depressed or negative, the feeling spreads to her subordinates and discourages them from giving their all.
When used properly, leverage management can increase output and make you and your team effective.