Be an Ethical Entrepreneur, Marketer, and Business Builder

Improve employee teamwork by picking a fight!

Ok, I didn’t exactly pick the fight on purpose… It just sorta happened because in my normal read-a-book-and-instantly-implement-a-great-idea method I didn’t bother to inquire of the team what they thought…

Anyway – maybe I was a bit over-excited about Sam Carpenter’s suggestion about PTO (Paid Time Off) in his book, Work the System… After all, as I stated before, that single idea was worth reading the entire rest of the book (yes, including his hippie woodstock stories). So why didn’t my team love the idea as much as me??? Did I present it wrong? Not explain it well enough? Not review the benefits clearly? Possibly I should have asked them to participate in the decision to implement PTO to improve team buy-in…

Possibly all of those… Or possibly none of those… Actually, it doesn’t really matter to me why they hated the idea. Let me explain.

First off, PTO is simply paying someone immediately for their vacation and sick time so they don’t have any “accumulated” sick or vacation days. In other words, if you pay someone $10 per hour, they earn 40 hours of vacation per year, and you pay them bi-weekly (26 times per year) then each paycheck will include a PTO Earned bonus of $15.38 (40/26*10). That means that they earn 1.538 hours of Paid Time Off per paycheck and multiplied by their hourly rate of $10 they have earned $15.38 hours of “vacation” that I paid them for immediately.

For my business, I loved the idea for a few reasons:

  1. Since people are paid ahead of time and generally aren’t great savers, the chances they can afford to leave the office and take a 2-week vacation all at once are pretty slim. When someone who is an integral part of the business takes such a long vacation all at once it hurts the business, stresses the team, and our customer complaints instantly go up. In theory I thought PTO would take care of that.
  2. We offered Sick/Personal days as part of a perk. That always seemed silly to me… How can I know how many Sick/Personal days a person will need at the beginning of the year for that year? And if they don’t “need” any then people feel obligated to take them which negates the whole point of a Sick/Personal day. It’s not meant as a day to just use even when you’re not sick since you have it available. With PTO if they take off a day, they don’t get paid since they were already paid ahead of time… So according to Mr. Carpenter, in his office absenteeism dropped 80%. Makes sense to me.

Lucky for me, the Team Building exercise the week after I implemented the PTO was a review of The Five Dysfunctions of a Team as taught in the book of the same name by Patrick Lencioni. Part of that was a review of the first rule being, “an absence of trust”. Without getting too caught up in the lessons of that book, one idea is that a team that trusts each other is not afraid to “argue” and bring up points of disagreement. It’s important that everyone brings up any frustrations or varying point of view during meetings so that an open debate can ensue and everyone knows that their opinion matters. That allows everyone to then buy-in to the final decision discussed whether they originally agreed with that or not. You see where I’m going with this?

I implemented PTO unilaterally. Some team members hated the idea and several others were indifferent. No one was on my side. :-/

So we hashed it out. I let everyone speak their mind and then I explained the 2 reasons listed above that were important to me as benefits that PTO provided. I then asked them to give me a better program or system for allowing the above 2 goals to be met without PTO. So they did. They suggested to adopt as policy that no one could take off 2 weeks of vacation at once and that no 2 people in the same department could take off a week of vacation each back-to-back during peak season. They also suggested that we just ditch Sick/Personal days altogether. Seriously – I never even hinted at that. Someone suggested it and I verified with everyone that, that was acceptable. Everyone agreed. 🙂

At any rate, we no longer have PTO, however we don’t have to worry about someone taking off 2 weeks in a row and we won’t have a problem with someone abusing sick/personal days. Moreover, the whole team made that decision together as a team so everyone bought-into the new policies and felt better about being able to reason with the Team Leader…

Maybe implementing PTO, even for its short-lived glory days of 1 week, was actually a brilliant idea… 😉

To your success, Bryan

Work the system – the WHOLE system

In the spirit of Dale Carnegie’s How to Win Friends & Influence People, I will recommend Sam Carpenter’s book Work the System and I certainly felt reinvigorated about the systems I’m working on in my business. (Dale Carnegie suggested that before you critique someone you always offer a positive so as not to put them on the defensive.)

I recommend the book to people who don’t need or want to have a big picture of generating wealth – to people who just need to understand the importance of systems, but not everything else that comes along with being able to grow lots of businesses.

If I can pull a single good idea out of a book, then I consider it worth the $20 and time invested. It wasn’t until the last few chapters that I found that great idea from “Work the System”. It’s a concept Carpenter calls “PTO” or Paid Time Off. The way it works is that with every paycheck your team members accumulate vacation or sick days or both. Well Carpenter found out that caused a problem with people just taking one of those sick or vacation days because “i don’t feel like working today.” So instead of that, he wrapped both into Paid Time Off and paid the employee for that time immediately as an additional line item on each paycheck. That way when the employee takes off a day or week, they don’t get paid for that day or week since they’ve already been paid ahead of time. He claims it reduced absences by 80% and I believe it. I read that last night and this morning I was working with my accountant to get it into our Quickbooks program! Brilliant idea!

Beyond that, let’s call it what it is – Sam Carpenter’s “System” was an effective way for 1 man to take 1 small business (currently $2 million in annual revenue) in 1 area of the world in 1 specific industry to his own personal definition of success. God bless him because he’s living his American dream and I absolutely LOVE to hear how people are able to do that. The thing is, Carpenter tries to convince the world that what has worked in his very limited world and experience is the answer to all business owners’ prayers.

There are a few reasons his systems approach was so effective for him:

  1. He had absolutely none to begin with. I felt really bad for him reading the first few chapters about how his life and business were in such shambles. It was rather depressing.
  2. His business has a recurring revenue business model. In other words if he doesn’t sell another X this month he’ll still make payroll and there are a LOT of businesses that don’t have that luxury.
  3. His business is relatively simple. He mentioned they can take someone off the street with decent typing skills and have them handling calls for his 24/7/365 call answering business within 3 days. There are plenty of small businesses that require much longer then that just to get someone acclimated.
  4. His business is a necessity for its clients. Its not a luxury.

So let’s face it, he misses some VERY important points in growing a business that no business owner should be without. Here’s a quick list of just a few things he doesn’t address that are important to a business:

  1. Unique Selling Proposition and guarantee.
  2. Testing and Measuring particularly with lead tracking.
  3. He grows his customer base mostly through buying other businesses but gives no weight to the value of doing that. I’m curious as to how many new accounts he signs up every year through his marketing and sales system since they’re never mentioned.
  4. His first systems to fix were his operation’s systems not his sales/marketing systems (he had that luxury because he had a recurring revenue business).
  5. He never really reviews team-building other than to find people who buy into his systems mantra.
  6. NLP, Proximity, marketing, scripting are all missed.
  7. He doesn’t review any method for maintaining the systems or the business with important financial numbers such as a daily break-even, the cost of “buying” your customers, the 4 ways to grow revenue, lead conversion ratios, lifetime value of each customer, etc. etc. etc. How can you manage what you don’t know?
  8. Back-end Sales, cross-marketing, additional income streams
  9. Commission and employee incentives for productivity. For as much time as he harps on the necessary mechanics of life in that everything is controlled by systems, it seems ironic that he doesn’t have an incentive based pay-structure for his managers. Instead he seems to rely on the “pay my people a good salary and make them feel good and they’ll perform to their full potential” model. Wasn’t his whole hippy-to-reality conversion based on feeling good doesn’t produce results?

You get the point. The list can go on and on. Let’s face it, Sam Carpenter may be the McDonald’s brothers, but he’s no Ray Kroc. The McDonald’s brothers created a fantastic systematized business that made them both millionaires in a relatively short amount of time. However the McDonald’s business didn’t make it big until Ray Kroc bought them out and applied all of these other principles to their beautifully systematized business to become a billionaire.

If his systems are that good, and he’s looking to develop a lot of credibility so he can write books and charge people $3k to attend his workshop in Oregon, I’d recommend spending the next 2 years buying a competitor a month and applying the systems. Or just franchise his systems out to other call center businesses since his systems approach is the way you develop and sell a franchise. Within a few short years his business could grow ten fold into a $20 million operation. I have no doubts he could do that very successfully with the well developed systems he has in place. Then again he is more than twice my age so maybe at that point in my life I’ll be more interested in living comfortably than creating an empire. 🙂

Again, his systems approach has its place and is certainly a crucial point for every business – but its not the guiding factor for success and certainly can’t be taken on its own. Maybe it’s because I personally know and have consulted with at least half a dozen people who make a lot more money than him, work when they want, and take vacations wherever they like without his obsession for systems. Especially since many of those business owners I’ve worked with understood that their first priority and most important systems were the ones that generated leads and closed sales (something he never addresses).

Michael Masterson in Ready, Fire, Aim: Zero to $100 Million in No Time Flat probably points out the biggest flaw in Mr. Carpenter’s approach and that is that a Stage 1 business’ main priority is to sell. In Stage 2, once you’ve proven that you have a viable product and a willing market, you focus on systems’ development.

The freedom, comfort, and happiness that Mr. Carpenter has found through HIS approach to HIS business is awesome – this blog is just a fair warning to people who think that by reading his book you know all there is to becoming a successful entrepreneur. His book is excellent for what it is – a book on the importance of systems to small businesses – but that’s about it.

It’s worth the read and a decent book so check it out but only after you read the other 5 books on my list of books that make you wealthy so that you have a picture of the WHOLE system that a business owner needs.

To your success, Bryan

P.S. I can’t stop thinking that Brad Sugar’s is by far the greatest entrepreneur of the last 100 years (maybe longer). Eight years ago when Mr. Carpenter had his epiphany about systems, Brad Sugars was retiring at the ripe age of 26 with $10 million cash in the bank. He has since owned 54 businesses all over the world and is only 34 or 35.