Automation versus Delegation
According to Webster the definition of “Delegation” is “a person or group of persons officially elected or appointed to represent another or others”. Traditionally when we use the term in a business sense, the explanation is commonly that of passing lower priority work off to someone who is entrusted to complete it, so that the delegator’s time and attention can be put to use on higher priority issues or activities.
Any small business owner who started out in whatever line of work they’ve chosen as a result of their own expertise in whatever industry they’re in will tell you that the hardest part of growing their business is letting go of the idea that they ...view middle of the document...
Furthermore, given that employees are in fact internal customers, there are some internal processes that nearly demand a face and name as opposed to a button and password.
Understanding that not every process or activity can or should be automated, any shrewd business owner will look for ways to do more with the least expenditure of their hard earned dollars. So they hire employees to do specific tasks that are core to the success of the business and unfortunately along with employees come the myriad of regulations, compliance issues and generally aggravating procedures that need to be created and adhered to. Not to mention the burden of taxes and benefits.
Unfortunately most companies also hire employees to do specific tasks that are not core to their business success. For example, a dentist, regardless of the size of his practice, does not need an expert in payroll processing to give his clients better dental hygiene. Nor does a software company need an expert in Human Resources on staff to provide their clients with more innovative or better quality software applications. In both cases, the activities like payroll processing, HR, benefits and other various administrative tasks are not core to the business success. Literally, efforts devoted to these tasks are non-revenue generating and should be avoided if at all possible.
Now don’t get me wrong. I am a huge proponent of the use of Human Capital Management as a strategic tool. Using HR experts to place the right people in the right jobs and complimenting that with the right policies and procedures not only reduces the cost of hiring and training, but also bullet-proofs the company against employee related lawsuits that can sap a companies profit margins in the pound of a gavel. However, in short, why pay top dollar to have these experts on staff when you tap service providers that have far greater expertise and are far less expensive?
No less am I a proponent that managing cash flow, budgeting, capital planning and financial analysis are strategic and unique to a company. However, accounts payable, accounts receivable, billing and general accounting are critical, but not core functions.
As a potential investor, I would be reluctant to invest in a company whose management is focused on running the best accounting shop in their business, unless...