If you’re a business owner, it’s a sure bet you have more tasks you could theoretically do than you have actual hours in the day. So should you pay someone to complete some of these tasks for you, freeing you up to tackle others?

That’s an easy one, right?

Riffling back through memories of Economics 101, most of us will recall the common wisdom that it pays to delegate when we can make more in the time we save than we spend on the person who saves us that time. If you can make a $100 in the time you free up by hiring an assistant for $50 then it’s time to write a job ad.

But no so fast, says a recent post by applied mathematician and consultant John D. Cook. A numbers guy through and through, Cook claims most of us miscalculate when it pays to delegate by relying on the oversimplified thinking above.

"Most advice on delegation is simplistic," he writes. "It ignores transaction costs, and has a naive view of opportunity costs. It says that if you make $50 an hour, you should delegate anything you can hire done for $40 an hour since the opportunity cost of doing the $40 an hour task rather than delegating it is $10 an hour. But things are more subtle than that."

Maybe you don’t reliably have an exact hour of work to delegate, for example, and the help you hired sits idle. Maybe the work you’re thinking of delegating will actually teach you something that will be of value down the road. And how do you factor in the hassle and costs of finding and hiring help? So what formula does this mathematician advice for replacing the old rule?

Chuck out thoughts of time entirely, and think in terms of energy instead, advises Cook:

Managing energy is more important than managing time. Energy is what gets things done, and time is only a crude surrogate for energy. Instead of only looking at what you could earn per hour versus what you could hire someone else for per hour, consider the energy it would take you to do something versus the energy it would free to delegate it.

If something saps your energy and puts you in a bad mood, delegate it even if you have to pay someone more to do it than it would cost you do to yourself. And if something gives you energy, maybe you should do it yourself even if someone else could do it cheaper.

He notes that it’s important to keep in mind that energizing and pleasant are not always the same thing. "For example, I enjoy teaching, but it takes a lot out of me. And most people don’t enjoy exercise that much even though it gives them energy," Cook writes, so make sure that you’re thinking about energy not raw enjoyment when you decide what to delegate.

What do you think of Cook’s approach to calculating when to delegate?


Published on: Jan 2, 2014