“Managerial Leverage” – what is it & why you should bother about it as a founder?

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91springboard Co-Founder, Anand explained Managerial Leverage on our internal blog. Posting it here as I thought this might be useful for some. I enjoyed how it reminded me to think of the hours consumed by not designing the processes well.

First, leverage. Let’s say I spend two hours a day on email. I want to become more efficient, so I spend time researching how I can. I spend 3 hours on research and find that using a text expander, filters, and learning a few keyboard shortcuts are recommended tools. It takes me another 3 hours to install and learn these tools. Over time, this makes me 20% more efficient at email. 24 minutes a day is two hours a week. In three weeks I’ve recovered my initial investment of 6 hours. In a year, I’ve saved 100 hours. I’ve leveraged new processes I learned today to save time in the future. My time investment in learning those has positive ROI.

Now, managerial leverage. Imagine I’m a manager with six direct reports, each of whom does two hours of email a day. I can write up my findings in an email (30 mins) and spend some time with each person answering their questions and helping them set up their tools (lets say 30 minutes each). By investing 3.5 hours, I can potentially help my company save 600 hours a year, not to mention freeing up my team to do more interesting high level work than responding to email. That’s managerial leverage. Note that it’s a double edged sword. If I had insisted on a process that made people more inefficient, I’d have 6x the inefficiency. If I have reports who have reports, the cascade has an even larger multiplier. You get the picture.

That’s it in a nutshell. When your decisions and processes have ramifications on entire teams, small tweaks can have large impact. Good managers see the importance of this and invest their time in process design and training.

One Comment on ““Managerial Leverage” – what is it & why you should bother about it as a founder?”

  1. Excellent and nice post. I’m glad to have found this post as its such an interesting one This is such a great resource that you are providing and you give it away for free. I love seeing that understands the value.

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