What Does Time Allocation Mean to Your Performance?

“Busy, busy, busy.” This has become a go-to phrase when someone is asked how their typical workday has been, be it from an entrepreneur or a professional. Whether it’s a true reflection of one’s mental state or just a light-hearted sarcasm, the feeling that time is just not enough to do what we want to accomplish is a common experience in modern days.

Time is probably one of the most valuable and yet scarce and vulnerable resources for managers nowadays. According to the attention-based view, how organizations allocate their attention serves as a central process out of which decisions arise. Therefore, how managers allocate their time and attention on a daily basis does not only impact the efficiency and effectiveness of the operations but also determines their capability to adapt and change along with the external environments. Time allocation is even considered as a living characteristic of the business, which should change as it moves through different stages (Van de Ven, et al, 1984). However, a major pitfall for managers is their lack of willingness or capacity to adjust their time allocation to the pattern that is required by the stage of the firm is in (McCarthy, et al, 1991). 

Time Allocation in the Organizational Life Cycle

Organizational growth theory suggests businesses, especially during their early years, usually go through 5 stages in “founding”, “growth”, “maturity”, “decline” and “revival”, although they do not necessarily follow in a strict order. The same goes for the product life cycle. This implies that the behaviors of the entrepreneurs or managers should also adapt to the change from one stage to the next. From a skill set perspective, founders usually start from the specialized skill to start up the business, but as the business grows, they need to possess managerial and administrative skills to mobilize human capital to move the business forward. However, the switch from “doing” to “managing” doesn’t come naturally, and is not always welcomed either (McCarthy, et al, 1991). From a time-allocation perspective, founders usually go through the stage where they primarily focus on technical efficiency and internal politics in the first stage (Smith, Mitchell, & Summer, 1985); then increasingly delegate authority (Lippett & Schmitt, 1967; Steinmetz, 1969; Greiner, 1972; Cooper, 1979), through more formalized channels of communication (Greiner, 1972; Kazanjian, 1988) and later dedicate more time on accounting and control functions (Greiner, 1972; Kazanjian, 1988).

Time Allocation is key to Capability Enactment

A 2020 study from Kevill et al illustrated how micro-enterprises allocate their time has a direct impact on their capacity to purposefully create, extend or modify their resource base (also known as Dynamic Capabilities); and the failure to allocate time to capability enactment can lead to capability vulnerability. This holds true not only to those entrepreneurs to start up and grow their business, but also those large organizations who aim at business revivals by encouraging more creative, entrepreneurial, and non-routine behaviors acting alongside routine behaviors (Teece ,2012).

Time Allocation Influences Professional Performance—The Importance of Planning 

An early study on time allocation patterns and the effectiveness of managers (Penfield, 1974) gave us some initial insights. 204 first- and second-level managers were randomly selected from a maintenance and construction department of a large, metropolitan area public utility were interviewed on how they spent time on 8 key activities in the managerial profile, and how that impacts their perceived performance. It was empirically observed that the higher-rated managers put significantly more focus on planning, supervising, coordinating, and evaluating and less importance on staffing and negotiating than did the lower-rated managers. Whether the picture below has changed in the years after remains to be seen, however, it is crucial to raise the awareness of how managers’ spending their time impacts their job performance.

Time Allocation Impacts on Business Performance—The Importance of Administrative Attention

A study from Cooper et al (1998) on 391 firms found that how entrepreneurs allocate their time depends on their primary goals— “earning a lot of money” (economic) or “doing what I love” (non-economic). 

Their prior management experiences at the time of founding are a strong predictor of the firm’s venture performance as well. It’s found that firms whose entrepreneurs devote relatively more time to administrative activities will show better performance than firms whose entrepreneurs devote more time to craft activities. This is backed by more research where founders with managerial experience are more likely to be successful regarding firm growth and financial performance (Cooper & Gimeno, 1992), especially those who emphasize administrative goals are more likely to have firms that grow and change (Filley & Aldag, 1978). Interestingly, the number of hours worked per week or the size of the firm showed little significance in influencing the firm performance.

It is important to keep the administrative side of the business in a good shape; but why do so many managers consciously or unconsciously avoid spending enough time on the operations?

Time Allocation Reflects One’s Own Business Orientation

There has been a constant struggle for entrepreneurs to spend time between administrative and creative tasks. Fairly speaking, any new venture is built around the entrepreneur him/herself, and the strengths or weaknesses of the firm are a reflection of their interests, capabilities, prior management experiences, and thus their choices (Cooper et al, 1998). Livesay (1982) proposed four types of entrepreneurs, namely the rule-of-thumb, informed, sophisticated, and mathematically advised.

Entrepreneur’s business orientation usually starts with their personal aspiration which gets further materialized through the expression of the founders’ ideas and creativity. It’s not surprising that most founders tend to spend more time in creativity and idea generation, while not much into the administrative side of the business as it grows. However, as shown earlier that there is empirical evidence that the time spends in administrative activities correlates with the financial performance of the firm.

Therefore, a good knowledge of one’s strength and weaknesses that come with one’s character, or at least the awareness of it, should play a role in resource planning that can maximize opportunities as well as mitigate business risks—delegating or outsourcing those tasks that one is not good at or interested in, but definitely not ignoring them.

References

Cooper, A. C. (1979). Strategic management: New ventures and small business. In D. E. Schendel & C. W. Hofer (Eds.), Strategic management: A new view of business policy and planning. Boston, MA: Little, Brown & Company.

Cooper, A.C.,& Gimeno, J. (1992). Entrepreneurs. processes of founding, and new firm performance. InD.Sexton and J. Kasarda (Eds.), pp. 301-340. The state of the art of entrepreneurship, Boston: PWS-Kent Publishing.

Cooper, A., Ramachandran, M.,  Schoorman, D. (1998). Time Allocation Patterns of Craftsmen and Administrative Entrepreneurs: Implications for Financial Performance. Entrepreneurship Theory and Practice. Volume: 22 issue: 2, page(s): 123-136. Issue published: January 1, 1998. https://doi.org/10.1177/104225879802200209

Filley, A. C., & Aldag, R. J. (1978). Characteristics and measurement of an entrepreneurial typology. Academy of Management Journal, 21(4), 578-591.

Greiner, L. E. (1972). Evolution and revolution as organizations grow. Harvard Business Review, 50, 37-46.

Kazanjian, R. K. (1988). Relation of dominant problems to stages of growth in technology-based new ventures. Academy of Management Journal, 3, 257-279.

Livesay, H.C. (1982) Entrepreneurial History.  Publié dans: Kent, C.A., Sexton, D.L., Vesper, K.H. (Eds.) Encyclopedia of Entrepreneurship.  Englewood Cliffs, N.J.: 7 –15.

Lippitt, G. L., & Schmidt, W. H. (1967). Crises in a developing organization. Harvard Business Review, 45, 102-112.

McCarthy, A.M., Krueger, D.A., & Schoenecker, T.S. (1991). Changes in the time allocation patterns of entrepreneurs. Entrepreneurship Theory and Practice. Volume: 15 issue: 2, page(s): 7-18. Issue published: January 1, 1991.https://doi.org/10.1177/104225879101500203

Penfield, R.V. (1974). Time Allocation Patterns and Effectiveness of Managers. Personnel Psychology. 1974. 27, 245-255.

Smith, K. G., Mitchell, T. R., & Summer, C. E. (1985). Top level management priorities in different stages of the organizational life cycle. Academy of Management Journal, 28, 799-820.

Steinmetz, L. L. (1969). Critical stages of small business growth: When they occur and how to survive them. Business Horizons, 12, 29-36.

Teece DJ (2012) Dynamic capabilities: Routines versus entrepreneurial action. Journal of Management Studies 49(8): 1395–1401.

Van de Ven, A. H., Hudson, R., & Schroeder, D. (1984). Designing new business startups: Entrepreneurial, organizational and ecological considerations. Journal of Management, JO, 87-107.