Be an Ethical Entrepreneur, Marketer, and Business Builder

This 1 thing would have made the $70k minimum wage successful

The Gravity Payments announcement that the CEO, Dan Price, was taking a $930,000 pay cut to pay his team a minimum wage of $70,000 has recently caught headlines again because it doesn’t seem to be working.

It would be easy to point out the obvious problem with this approach, the same one Walmart is experiencing when they raised their minimum wage, that when you pay people for just showing up, you violate the social contract that employers and employees have that more talented, hard-working employees should earn more.

In other words, when people don’t earn a raise, (i.e. it’s just given to you as a minimum) it upsets those who have earned a similar raise or a very close amount.

However, that’s not the biggest problem with the Gravity Payments minimum wage.

The biggest problem, as-is generally the case, was Price’s ego.

If Mr. Price’s primary motivation was improving the way of life for his team members and he was happy to redistribute his wealth to do so, that would truly be a noble and generous act.

To ensure it’s success he only had to do 1 thing:

NOT TELL ANYONE

That’s it.

Had Price met with each person individually on his staff who was making less than $70k/year and told them, “Hey, I think you deserve an increase in pay and we can’t afford to do it all at once but over the next few years, we’re going to work hard to bump you up to $70,000/year,” it would have likely been an extremely successful adjustment.

  • The longer term employees would not have felt unfairly treated because other, less-effective team members were now making as much as them.
  • The people who received the raises would have actually worked harder (particularly if he gave them specific, actionable feedback as to WHY they received the raise).
  • The public, political pundits and the press would have not ever known about it to debate it and his customers wouldn’t have left because of his perceived socialist experiment.

Price, unfortunately decided to take a different approach.

He setup a video camera, held a company-wide meeting, recorded himself announcing the minimum wage to his team and then shared that video with the media heralding himself as a generous and benevolent leader.

His actions fall under a simple concept I try to live by, “If you have to tell people you’re smart, funny or nice, you’re not.”

In other words, because he had to prove to the world that he is such a great guy and an example to be modeled by CEO’s everywhere, his plan backfired.

If he was a looking only to improve the lives of his team and never told anyone that he took a $930,000/year pay cut to help them, he would have been a great leader because his concern would have been solely for others.

So the question is, if it was that simple to execute properly, and it was, why didn’t he do that?

Since I don’t know Price, my insights about him come mostly from his actions however these 4 explanations are more of a reflection on shortcomings all successful entrepreneurs will struggle with at some point in our growth.

  1. Ego – “Pride comes before the fall”, are words that ring true for all of us and who wouldn’t want to become the national face of such a hot topic?
  2. Greed – Let’s face it, when you stage something like this along with video recording the meeting and interviews on national TV, you are trying to get free exposure to your business. There’s nothing at all wrong with free publicity. Unless you do it at the expense of your team while claiming it’s for their benefit. My guess is Price took a calculated risk to temporarily reduce his pay and then increase his income again (through a salary increase, dividends, a stock sale or sale of the entire business) as a result of increased sales coming from the low-cost PR.
  3. Political Agenda – Being a 31 year old with a 7-figure salary tends to inflate your self-worth so potentially he thought he could be the first person to prove socialism works. Or maybe he just thought of it as charity since he was donating his own salary and profits. (And by me mentioning this am I hypocritically pushing my political agenda? Sorry, it’s hard not to do.)
  4. Lack of leadership – As Simon Sinek reminds us, great leaders eat last. It doesn’t work the same way when you do something good so you can get personal media attention to show everyone how great you are.

This may look like I’m picking on Price…

Ok, I am.

But, unfortunately, this would be an instance of the pot calling the kettle black as I’m surely guilty of ego-driven mistakes in business.

However, when a situation this unique and popular comes to the forefront due to national media attention, it gives us the opportunity to learn.

And that’s my goal. To articulate both the good intentions and poor execution of this strategy, and separate the 2.

Dan Price appears to be a sincere, hard-working, intelligent and successful guy and his mistakes in executing a $70,000 minimum wage don’t change that.

Hopefully, this will help him, and other business leaders, consider that you CAN achieve seemingly impossible things (like a $70k minimum wage) when you become a servant leader and put the needs of your team ahead of your own ego.

Dan, if you read this, I truly appreciate your good intentions and hope my advice can help you execute better servant leadership going forward since that appears to be your goal.

To humble, servant leadership, Bryan

Hire based on the job description… That you write after the interview…

We’ve had a couple of adjustments to make between my 2 businesses lately. Namely, our top sales person based on revenue generated quit with 2 days notice…  The day he provided his notice I launched 2 new radio ads that “indirectly” generated 6 leads in the first day he was out of the office. I say indirectly because none of the appointments have been run yet so I don’t have any feedback from our sales professionals as to the prospect’s reason for calling. Obviously asking them how they heard about us is a waste of time, which is why both ads have a specific offer only available by mentioning the ad. 😉

Writing a job description shouldn't be this hard...

Writing a job description shouldn

At any rate, there are a few important aspects to recruiting:

  1. ALWAYS be recruiting.
  2. Have a plan so when you find the perfect person you can impress them.
  3. Have a basic job description that you then tailor to that “perfect” person.

When people ask me if we’re hiring my standard response is “we’re always looking for great team members.” Finding loyal, hard-working, reliable team members is one of the hardest parts of business so if you meet the “perfect” person for your team while visiting another business are you really going to sit by and do nothing? Great people pay for themselves. Granted, you may not have a spot in your current business right that moment however you may have one over the next few months or years as your business matures. Heck, you may even buy a business for that perfect person to run. I personally had someone recruit me for over 5 years before I called them up one day and said “so do you still have an opportunity for me?” (of course he did).

So now that your eyes are open, how do you know they’re “perfect” for the team? Moreover, how can you make sure they’re “perfect”?

This is where my opinions differ a bit from Brad Sugars, Michael Gerber, Michael Masterson and even Marcus Buckingham (their books are all in my Recommended Reading section). Actually I agree with all of them as well – I just decided to blend their philosophies…

Before we get into the job description, you absolutely MUST have your Vision, Mission, and Points of Culture. Not only is it crucial for you to make sure you find someone who can fit into that culture, it has been the absolute best recruiting tool I possess. When you bring out your Points of Culture during the interview process, people are impressed. They immediately respect your attention to detail, focus on ethics, and business savvy. If for no other reason than it seems to be common sense, yet they’ve never seen anyone else do anything like that. 🙂

Back to the job description… Make sure you have one for every open position in your company. That description does not have to be extremely detailed, but it should include at least the top 3 responsibilities for that position (that’s a Brad Sugar’s concept though I can’t remember from which book), compensation, team members for whom they will be responsible, and a general description of their overall purpose are necessary prior to an interview. My descriptions also include a section for “Test and Measure” where I list specific numbers they’ll be responsible for improving through testing and measuring. For instance, Average Dollar Sale, Closing Ratio, Daily Break-even, etc. may all be important “Test and Measure” concepts for a particular position. It’s my responsibility as the Team Leader to provide them with those numbers and provide the education and resources necessary to improve them.

So your pre-interview job description may look something like this:

Compensation: Fifteen percent commission of all gross sales with a target of $50,000 in sales per month.

General Responsibility: Generate new revenue for the business by presenting the best solutions to our target market.

Specific Responsibilities:

  1. Present products to clients and prospects
  2. Generate leads on your own in addition to those generated through our marketing
  3. Ensure that every client is so happy they’re excited to provide referrals

Test and Measure:

  1. Average Dollar Sale for your sales
  2. Average # of transactions per year per customer
  3. Closing ratio

The need for those basic points is simply to make sure you are being realistic in your search for the perfect person. It’s basically common sense things like you wouldn’t try to recruit someone making $50,000 per year for a $10/hour position even if they are perfect. The job description ensures that you’re focused on the person with the proper traits.

Now here’s the important part, after you find that person, interview them, and learn a bit about their passions, talents, and skills, you need to expand on your job description to ensure that new recruit will be doing what they do best as often as possible (Marcus Buckingham harps on that in all of his books).

For instance, my current openings are in sales. Your stereotypical sales professional can’t stand paperwork, is rather disorganized, but is extremely outgoing, excellent at building rapport quickly, reading people, and isn’t afraid to ask for an order.  That type of personality would lend to having all appointments, follow-ups, paperwork etc. handled by someone other than the sales professional so they can just focus on getting in front of prospects. His job description might include generating new business by cold-calling or canvassing because he enjoys the challenge. However, what happens if you find a talented sales professional who is organized, loves to know how a business works, enjoys building longer-term relationships, and even feels comfortable documenting what they do. Well you write up her job description to focus on setting up relationships with complementary businesses who can be constant lead sources, you have her document the steps she took to build those relationships, and for the most part you don’t require her to do any cold-calling or canvassing because if she’s not passionate about it she won’t be good at it anyway. If possible, you probably still want someone else in your office managing the paperwork, appointments, etc. however a person with that type of personality may be more effective juggling her own schedule because of her highly-organized nature.

This is where I differ a bit from Michael Gerber who focuses on creating your organizational chart right from the beginning with full job descriptions. The chances of you finding the person who fits your detailed job description perfectly on every point is nearly impossible. If Michael Gerber had actually ever owned a business before writing his book he would know that. 😉

Michael Masterson, on the other hand, teaches that all of your top-level people should have the same job description – “Whatever is best for the customer”. Sorry, that’s just a prescription for chaos… Reference my blog on the lessons 5-6 year olds taught me for a better analysis of why.

In summary, ALWAYS be looking for new recruits, be prepared to set yourself apart from any other business the recruit has ever dealt with, and then tailor your job description to focus on her doing whatever she does best as often as possible.

To your success, Bryan

How to minimize the impact of hiring new people on your office…

Part of building a business will always be building your team – that includes both the team you already have to work with and the new people you’ll be adding to your team. The recruitment process can be quite an arduous one and if my memory serves me correctly, Dave Yoho taught a few years back that the average small business loses between $30,000 and $40,000 for each “bad” hire or a hire who doesn’t work out! As of yet I haven’t put a pen and paper to that number in our business however when you add in all the expenses it starts to make sense – my time is spent writing advertisements, conducting interviews, reviewing resumes and employment applications, indoctrinating new hires into our culture, reviewing progress during the initial evaluation period, setting them up for payroll, negotiating compensation, etc. etc. etc. My team is also asked to train and work with them for an initial evaluation period and if they don’t work out then I have to go through the process all over again. I can start to see how those numbers can become very realistic. With that in mind it’s paramount that your recruitment process is accurate in its selection and systematized.

For this blog we’ll be reviewing some basic ways that I’ve learned to systematize my hiring process with the help of my father and some other small business owners.

In order to have the most likely success in recruiting the right person it makes sense that the more people who are interested in your position the better choices you have. So you write up the “perfect” recruitment ad (we’ll review how to write that ad in another blog) and place it in your front window, in the local newspaper, on their website, on monster.com and you let everyone on your team know you’re looking for some new positions. Now you have to deal with people coming in, filling out employment applications, tying up your office staff with questions, etc. etc. etc. However there’s a better, more efficient, easier, and possibly more selective way to handle this initial stage of recruitment. This is what I do:

  1. Place an advertisement for an open position with a unique phone number listed.
  2. Setup that unique phone number with my VOIP phone provider (or you can get one setup with onebox.com as my father does).
  3. Record a detailed Voice Message on my new line that includes a more detailed explanation of the job position, responsibilities, pay, and 2-3 questions for the recruit to respond to about their experience and why they think they would make a good fit for our team.
  4. The voicemails then get emailed to you for you to review at your leisure. Mine obviously also get sent to my Blackberry where I can listen to them and respond from anywhere in the world. 😉
  5. I call and ask them to come in an fill out an application (I haven’t really ever been a big fan of resume’s).
  6. If my initial reaction to their job application and personality is positive I provide a copy of the Vision, Mission, Culture and setup a time for a more thorough interview.
  7. Then I call references from the application and prepare for the interview.

That covers the “intial recruitement”, so why use this method? In a nutshell, it’s automated and it’s cheaper. The phone line costs me about $5/month and now I don’t take up my office staff’s or my own time fielding basic questions about the position, pay scale, benefits etc. etc. It also allows me to get an idea of the recruits oral communication skills through the voicemail instead of just reading their “skills” on a piece of paper.

The next time I need to recruit it’s simply a matter of rewriting and recording a new voice mail message with 2-3 more questions and writing a new help-wanted ad with the description of the position. Obviously as the business grows I’ll be recruiting new people for the same positions over and over again so those positions will become very automated with my time investment being listening to messages (at my convenience) and interviewing those who seem to be a great fit for our team. Eventually I’ll be replaced by another Team Leader and I can quickly teach them how to work our recruitment process.

It’s worth mentioning that our “14 Points of Culture” (yeah, I added 2 more points since my blog on the topic) are introduced very early in the recruitment process. As soon as I determine that the recruit seems to be reliable, well-spoken, and has the potential to be an asset to our team (i.e. he wasn’t fired from his last 3 jobs for not showing up to work) I pull out my business card with my title of “Team Leader.” Then I briefly explain that my position is that of General Manager, CEO, President or whatever other fancy term you can come up with – however my greatest responsibility is to help everyone on our team do what they do to the absolute best of their abilities. My responsibility is to LEAD the team, not manage it. Then I reach into my desk and pull out a copy of our Points of Culture, Vision, Mission, and Company Philosophy. These are not top-secret words that should be guarded. They’re very public documents that I have no problem sharing with anyone who might benefit from them. Besides, chances are very slim that any other interview they go through will include reviewing the Vision, Mission, and Culture so it immediately sets us apart. 🙂 After all, you have to sell them on the idea that your team is the best one for them because if they’re as good as you hope, they will also have other job offers to entertain.

I believe Brad Sugar’s recruitment process doesn’t include spending time on Vision, Mission, Culture until after you’ve hired them, however I think that’s too late. The recruit needs to know before she wastes a whole lot of her or my time that this is what’s expected of her and if she think it’s just a bunch of “hog-wash” then I can quickly wish her well at someone else’s business. I guess only time will tell if my timing of the Vision, Mission, Culture review is optimal.

To your success, Bryan