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PestWorld presentation that I gave in Phoenix AZ. The presentation focuses on how to manage your people to establish a culture of performance and accountability.
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Maximizing Profit Through People Management
Donnie Shelton
Raleigh, NC [email protected]
@donnieray3
Let’s take some time to focus
Turn off or do not disturb…. Don’t be offended!
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The purpose of this presentation is how to increase profits through productivity and efficiency “Any intelligent conversation begins with defining your terms” – my old statistics professor
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Definition of terms
What is your definition of winning in business?
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Definition of terms
What is winning in business? “Profits and cash are the only true measure of health of your business” -- George Cloutier
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Definition of terms
What is winning in business? • For the purposes of this discussion, winning is • How much profit does your business generate • How much cash you have for emergencies • The sustainability of your profit model
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Definition of terms
What do you consider a “healthy” profit (before taxes)?
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Definition of terms
What do you consider a “healthy” profit? Regardless of size for the purposes of this discussion
>15-20% on the bottom line • After owner salary • It is ok to re-invest profit for growth (but you
should be able to pull it if needed)
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Definition of terms
How is productivity defined for this discussion? - How many people measure this? Care to share?
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Definition of terms
How is productivity defined for this discussion? Rev/Stop*/** • >$100k per stop *Note that large one-time revenue spikes can skew this number. It should be calculated by service line to identify these anomalies **Note that you can also look at revenue per hour
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Some final disclaimers…
1. This is what has worked for me and my company
a. That does not mean that it will work at yours
2. This presentation has both opinion* and facts
*The facts are well researched. The opinions are well… opinions
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Part I The thought process of how we run operate our business (the theory)
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How many of you know a business owner like this? • Very frugal • Dissects the P&L for profit leaks • Will send a rep packing over $0.30 • A true price shopper • Refuses to pay much over minimum wage for
technicians • Has technicians driving around just
wasting time
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What is the largest expense on the P&L?
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What is the largest expense on the P&L?
Payroll In my example, some business owners have misplaced enthusiasm for making a profit
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Profit comes from productivity
What do we really sell customers? - Operationally speaking? This is not a marketing
presentation!
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What do we really sell customers?
Time
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Profit comes from productivity
What is the point? To win on the bottom line, you have to be really good at managing your expenses
Revenue – Expenses = Profit
• Spend your time on the largest expense on the books (not small game)
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Do you see a trend?
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Principle #1: Profit comes from high productivity
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Profit
Your ability to do more with less is directly proportional to your profit (assuming pricing is in line)
We are going to talk about pirates
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Why are we talking about pirates?
This is a logic fallacy Sometimes we have the tendency to confuse causation with correlation… Causation ≠ Correlation**
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**Interestingly… The number of pirates in the last 8 years have skyrocketed. As such, the planet has been cooling
Quick question
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Have you ever came back from a conference with a great idea, implemented it and then a few months later it….. Just….. Died?
What’s he looking at?
Which is more important?
Strategy • Techniques that you use
to compete and gain customers
• Are based on multiple factors: market, positioning, etc…
• Change as market conditions change
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Culture • How your people work • How your people interact
with your customers • How your people view
you, your customers, and their role in the organization
Who are these guys?
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Who are these guys?
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Mark Fields • Next CEO of Ford • Responsible for Ford’s
turnaround
Peter Drucker, PHD • Medal of freedom • Professor of business • Famous Author
“Culture eats strategy for breakfast”
Causation vs. Correlation
Where do we get into problems in our business? We tend to assume profit is a result of strategy, but actually it is not quite that simple… • Strategies are the cause (Correlate) • Culture will take care of itself (Cause) What it means is that no strategy can be executed without a strong foundational culture I personally think both are important. It is the order that really matters.
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Culture vs. Strategy
Think about it. • You can have the most genius
strategy in the world, but if you don’t have the culture you cannot execute
• It is like having a great
program but a broken computer.
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Broken computer (not an Apple)
Culture eats strategy for breakfast
Jack Welch • Arguably one of the best CEOs ever • 30 yrs in the job • GE’s value rose 4000% on his watch How he operated • 20-70-10 vital curve • 80% of his time was on culture (not strategy) • Public hangings for bad culture • Biggest mistake looking at numbers and not
culture fit for acquisitions
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Principle #2: High productivity is a first a function of culture and then strategy
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Profit
High Productivity
How many have read this book?
Jim Collins • Massive research project of “great” businesses • Determine principles makes companies “great” • Outperform the market by multiples
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Good to great
Key findings • “Sustained great results depend upon building a
culture full of self disciplined people who take disciplined action”
• “A culture of discipline is not just about action. It is about getting disciplined people who engage in disciplined thought and then who take disciplined action.”
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Good to great
This makes sense • How many successful, undisciplined
business owners do you know (that have been in business >10yrs)?
• Disciplined people will debate and find
the right strategies
• Discipline is the bedrock upon which strategy is built
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Principle #3: A disciplined culture produces high productivity
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Disciplined culture
Profit
High productivity
Part II How we developed our culture and productivity to support a high profit company
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How we created a disciplined culture
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Disciplined culture
Profit
High productivity
Theory Execution
My typical day
I have ideas - I get them • The morning run • The morning shower • On the way to work • When I read an article • While I am reviewing a operational reports Patience is not a virtue that I was blessed with
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How we created a disciplined culture
What did this behavior create? • Staff that never fully executed anything • Lots of activity but little work • A constant place of shifting priorities • We suffered from “CADD”…. And I was the cause
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How we created a disciplined culture
It all starts at the top As a leader, I had to develop management discipline • Decide what was really priority • Stay the course, even though it was killing me • Learn how to say no when I really wanted to
say yes • Realize that I had to involve others in decisions • Create “stop doing” lists
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How we created a disciplined culture
Change #1: I had to be disciplined myself in how I managed the company and how I engaged my managers
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How we created a disciplined culture
Have you ever taken the time to get very clear on what type of people and culture you want at your company? Can anyone in your company recite what’s in it?
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How we created a disciplined culture
I am sure that you know where you want the business to go and how to get there. You know what type of people you want to be there The problem: As you grow staff, it becomes very difficult to communicate that vision with absolute clarity
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How we created a disciplined culture
Strategic Objective • A document that details • What kind of company you want to be • Your values • Your culture • Your customers • What you do and more importantly, what you
don’t This is not a mission statement or a platitude of values(though it contains both) to be put on a wall
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How we created a disciplined culture
Change II: We created a “real” Strategic Objective • Clarity on where you are going as a company • Every employee is tested on it • Every company meeting I talk about it • When people start rolling their eyes, I know
that I am talking about it just about enough
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Riddle
What cost us 4k in three weeks (with $0 return on capital) and only increases exponentially each and everyday that it exists?
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How we created a disciplined culture
A BAD HIRE • It will happen to everyone • Approach recruiting much like you do marketing • What is the demographic? (age, likes, dislikes, etc) • Market relentlessly to that person
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How we created a disciplined culture
Disciplining people Disciplined people Step 1: Creating a disciplined culture starts with staffing with disciplined people
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How we created a disciplined culture
How do we hire disciplined people? • The following is required for consideration • Usually have hobbies outside of work that
require discipline (sports, intellectual) • Usually is already employed
• No prior experience in our industry • I hate “the way we did at “_______”
• Ownership • Demonstrated ownership in something
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How we created a disciplined culture
What is the point? Make hiring the disciplined people priority #1 -- Hint: It is! • We select based on our culture (from Strat Obj) • We use personality profiles • We use scorecards (that line up with our culture) • Probing questions that dig (and then dig more)
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Jim Collins, How the mighty fall
How companies move from great to irrelevant Same approach as Good to Great (researched declining companies with comparisons) Key marker of a company on the decline: “There is a declining proportion of the right people in key seats, because of losing the right people and/or growing beyond the organization’s ability to get enough people to execute on that growth with excellence” – Jim Collins © Triangle Pest Control LLC. All Rights Reserved
How we created a disciplined culture
Change III: We completely revamped our hiring systems to produce disciplined people • Clarity on who those people are (Strategic Obj) • Systems to attract those people • Systems to filter the wrong people (Scorecards)
This is not something you want to delegate. Remember Jack Welch and 80%?
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How we created a disciplined culture
Go through the process and you do the following: 1. You create a strategic objective to get clear on the
culture you want and what your business stands for
2. You re-vamp your recruiting and hiring systems to produce disciplined people
3. Now what?
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How we created a disciplined culture
During the tenure of a politician, what is the most productive time?
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How we created a disciplined culture
90- Day Objectives • All positions at Triangle Pest Control have them • Talk about a 1st impression of how we do things • Clear document that details • A clear path to success in the first 90 days • Clear communication of what is expected • Clear communication of performance
expectations • Clear communications for where the lines of
responsibility lie (training, performance, etc…)
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How we created a disciplined culture
Change IV: We got very deliberate about the on-boarding process of each team member
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This Not This
How we created a disciplined culture Summary
1. Start with yourself as a leader 2. Develop a “real” Strategic Objective 3. Build a targeted recruiting and hiring system that
attracts disciplined people 4. Manage the on-boarding process to clearly
communicate and set expectations
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How we improve and manage productivity
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Disciplined culture
Profit
High productivity
How we improve and manage productivity
Would you like to watch or play the following game? • None of the players know the score • Feedback is given at the end of the game • No clear out of bounds, no clear score lines • Rules are pretty much made as you go along
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How we improve and manage productivity
Total transparency & frequent feedback • Don’t be afraid to tell people where you are out • My experience is that oftentimes employee views
of their performance are over inflated • It is easy to be “real” when everyone knows what is
going on
“Meatin” our goals (idea from Harden Blackwell)
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How we improve and manage productivity
Change #1: We completely opened our books to let everyone on the team know what the score is • You can use ratios • No one needs to know your salary • If you cannot measure it, you cannot manage it • You will get more people who play the “game” vs.
just playing for themselves
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How we created a disciplined culture
If you want have high performance team, everyone must always be getting better (otherwise they are getting worse) • Being in a car traveling uphill with no brakes. The
only choices are moving forward or backwards. There is no holding steady.
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How we created a high-profit company
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Disciplined culture
Profit
High productivity
Parting thoughts
“Everything in our strategy our competitors could copy tomorrow … but they can't copy the culture – and they know it.” Herb Kelleher, Founder, Southwest What is the point? • You have to build the proper foundation
before you can expect to see the results
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Triangle Pest Control Business Framework
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Disciplined people
Culture of execution
Profit
Resources to help you get started
Managers • Good to great, Jim Collins • E-Myth, Michael Gerber • Entreleadership, Dave Ramsey • How the mighty fall, Jim Collins • Who: Hiring “A” players, Geoff Smart & Randy Street All Staff • Making yourself indispensible, Mark Samuel • Super Service, Val & Jeff Gee
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