"Why Can't I Keep Any of My Average Employees?" — Transcript

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1. 0:00I own a pest control company. We're $50
2. 0:02million this year.
3. 0:04>> Big body.
4. 0:05>> I started that I'm third generation. I'm
5. 0:07the one that had the story about the
6. 0:09Undercover Boss
7. 0:11when we acquired a company. And I want
8. 0:14to know how
9. 0:15how do I get it to a billion dollars and
10. 0:17what's holding me back is manpower.
11. 0:21We built a recruiting engine and we kill
12. 0:23it, but honestly
13. 0:25there's these cycles that you run
14. 0:27through and now we've gotten to this
15. 0:28cycle where our A players kill it. We
16. 0:30hire an A player and they get off then
17. 0:32it's they're fine, but we've got
18. 0:34constant churn at the lower levels of
19. 0:37the front
20. 0:37>> It's door knocking, right?
21. 0:38>> Yeah. Well, no, we don't do we don't we
22. 0:40only do about a million dollars a year
23. 0:42in sales from door knocking. The rest of
24. 0:43it's organic acquisitions.
25. 0:45>> Oh, so you're doing M&A?
26. 0:46>> A little bit, yeah.
27. 0:47>> Okay.
28. 0:48>> So, I bought a $3.6 million company last
29. 0:50year. I average around a million, maybe
30. 0:53a half a million a year in acquisitions.
31. 0:55So, probably average.
32. 0:57>> [snorts]
33. 0:57>> So, it's mostly organic. I'm growing
34. 0:59about 20% 21% organic annually and then
35. 1:03the rest of it has been
36. 1:04>> When you say organic annually, what do
37. 1:06you mean?
38. 1:06>> paid LSA organic Google search
39. 1:10>> Okay, so paid ads. Okay, got it.
40. 1:12>> paid, but yes, absolutely. There's a
41. 1:14little bit. SEO
42. 1:15>> Okay.
43. 1:16>> current customer upsell referrals all
44. 1:19those types of mostly a sales
45. 1:20organization is what I would oriented
46. 1:23as, but not like I said, we do about a
47. 1:25million door-to-door
48. 1:26and
49. 1:26>> Out of 50?
50. 1:28>> Yeah, out of 50.
51. 1:29>> So, 2% of sales come from door-to-door?
52. 1:31>> Yep. And I I mean, we do have a budget
53. 1:33to scale it up to about 4 million next
54. 1:34year.
55. 1:35>> Okay.
56. 1:35>> Because we're trying to figure out all
57. 1:37right, how do we get to a billion
58. 1:38dollars? I mean, the guys that are doing
59. 1:39it are either massively funded and
60. 1:41acquiring
61. 1:42you know, hundreds of millions of
62. 1:43dollars or they are been around for 75
63. 1:46years or they're door knocking.
64. 1:47>> What's the EBITDA right now?
65. 1:48>> 20% so we had 8 million last year.
66. 1:52>> So, you got 8 in EBITDA. Do you want to
67. 1:54get to a billion in sales or billion
68. 1:55dollar evaluation?
69. 1:56>> Billion dollars in sales.
70. 1:58>> Okay, so you need 20x.
71. 1:59Um, how many What is each market do
72. 2:02roughly?
73. 2:03>> Uh, the average branch?
74. 2:05>> Yeah.
75. 2:05>> Yeah, 2 million.
76. 2:07>> Okay.
77. 2:09So 950 to go. Uh
78. 2:13>> Exactly.
79. 2:14>> Yeah, yeah. Uh,
80. 2:16only only 475 locations to go. Okay. So
81. 2:21I mean the like I mean
82. 2:23Do you have a time frame or you just
83. 2:24would like to get there?
84. 2:25>> Well, in under 20 years.
85. 2:26>> Okay, yeah. Um, it's likely um, do you
86. 2:30have like some special sauce?
87. 2:33>> Realistically, um,
88. 2:35I would say that we have an excellent
89. 2:36execution on sales. Um, our our supply
90. 2:40is the issue, not the demand.
91. 2:42>> Supply of sales people?
92. 2:44>> Uh, well, that is yeah, absolutely.
93. 2:45That's It's mostly It's not about the
94. 2:47sales people. It's typically about the
95. 2:48delivery of the product.
96. 2:50>> Of like literally just the pest control
97. 2:51services?
98. 2:51>> Yeah, we get backed up, you know, like
99. 2:53every year. That's our constraint.
100. 2:55>> Is that where you're saying the A
101. 2:55players from? That's where you're saying
102. 2:57the constraint is is for them?
103. 2:58>> Uh, no, no. I I think we're killing it A
104. 3:00players. Our our problem is we we we
105. 3:02don't have uh, we're not retaining any
106. 3:04average talent if that makes any sense.
107. 3:06And so our A players are quickly rapidly
108. 3:08rising through the ranks. We end up
109. 3:09promoting them. They end up running a
110. 3:10branch or whatever. And next thing you
111. 3:12know, you you don't have any average
112. 3:14average talent if that makes any sense.
113. 3:18>> not a bad thing, but um, so manpower is
114. 3:21the issue on the delivery side, right?
115. 3:23>> Yeah.
116. 3:23>> Okay. So
117. 3:25what's the
118. 3:27What is the
119. 3:28recruiting methodology that you have for
120. 3:30the deliverers?
121. 3:32>> How are we recruiting now?
122. 3:33>> It's to get the the delivery team.
123. 3:35>> LinkedIn, uh, Indeed, um,
124. 3:38and then we um, Indeed was the majority
125. 3:41the vast majority and then a lot of
126. 3:42outreach, a lot of individual. Like we
127. 3:43we treat it like a sales organization.
128. 3:45>> Yeah, the recruiting.
129. 3:46>> Yeah.
130. 3:46>> So but that's still the constraint is
131. 3:48what you're saying.
132. 3:49>> It's yeah, it's it's the retention of
133. 3:51the employees.
134. 3:52>> Oh, so you can get those deliverers,
135. 3:53they don't stick.
136. 3:54>> They don't stick. That's right. It's a
137. 3:55hard job.
138. 3:56>> Yeah.
139. 3:57>> It's a lot It's a lot of work.
140. 3:58>> Are do they have a career path?
141. 4:01>> They do, but it's so quick that the A
142. 4:03players are like step into that and then
143. 4:06you
144. 4:06>> you say so quick, how many steps are
145. 4:07there?
146. 4:08>> As far as getting identifying an A
147. 4:10player?
148. 4:10>> Well, how many promotions are there in
149. 4:12the career path?
150. 4:13>> Oh.
151. 4:14Let's see, team lead, branch manager,
152. 4:16regional manager. Um that's
153. 4:18>> Three?
154. 4:19>> So three.
155. 4:19>> Okay. So I'll give you a little
156. 4:22little little tactical Tuesday.
157. 4:24Um
158. 4:31>> [sighs]
159. 4:32>> So beyond what I would consider the soft
160. 4:34cultural stuff, which is probably beyond
161. 4:35the scope of an answer that would be
162. 4:36reasonable and actually actionable for
163. 4:38right now. Um the way that I like to
164. 4:40think about career ladders, and this
165. 4:41applies to roles that are repeated
166. 4:43within an organization. So this is
167. 4:44sales, this is video editors, whatever,
168. 4:46right? Is that you've got title
169. 4:50and you've got pay.
170. 4:55And so I like to think of each one of
171. 4:57the rungs that you just had, there's
172. 4:58three. I think that you could make this
173. 5:00into nine or 18 rungs.
174. 5:03And what ends up happening is that
175. 5:04instead of it being like oh, I'm in, I'm
176. 5:07not an idiot, so I got promoted, and I'm
177. 5:09better than not being an idiot, and I
178. 5:11got promoted again, that's it, and now
179. 5:12I'm going to leave because there's no
180. 5:13other there's no career advancement for
181. 5:15me, right? That's probably one of the
182. 5:15reasons the literally the reason they'll
183. 5:17cite on the way out, right?
184. 5:18>> Yeah.
185. 5:19>> Okay. So we just need to create
186. 5:22career advancement. So So I'll just use
187. 5:24I'll use sales cuz everyone kind of
188. 5:26understands that, but you can translate
189. 5:27it over. So if we have or delivery, it
190. 5:29doesn't really matter. So I have junior,
191. 5:33normal, and then senior
192. 5:35for each role.
193. 5:37And so we say
194. 5:39the first thing you're going to do is
195. 5:39you're going to go from junior to
196. 5:43junior that's paid
197. 5:45more.
198. 5:46And then you're going to go to we're not
199. 5:48going to call you junior anymore and
200. 5:50they're like thank god and that comes
201. 5:51with a perk which is that you don't have
202. 5:52to work on Saturday nights. Great.
203. 5:54>> [snorts]
204. 5:55>> Then from there we're going to go to
205. 5:56here with a little pay bump.
206. 6:00Then we're going to say great after you
207. 6:02get your pay bump you're now a senior
208. 6:05pest deliverer.
209. 6:06>> [laughter]
210. 6:07>> Non non pest Yeah, not delivering pest
211. 6:09like here's some rats.
212. 6:10Um
213. 6:12And then here we have our senior plus
214. 6:14right?
215. 6:15But all of this could be
216. 6:18the first title that you had and then
217. 6:21you repeat this at title two you repeat
218. 6:23it at title three.
219. 6:24And so what happens is they're always
220. 6:26three to six months away from another
221. 6:28promotion.
222. 6:30And so it's like whenever you're about
223. 6:31to leave that way there's there's like
224. 6:33there's always career advancement that
225. 6:34exists and so and by alternating title
226. 6:37{slash} perks that would cuz if you just
227. 6:39do title people I mean to be fair people
228. 6:40will just take a title bump and they'll
229. 6:42still go out and have a steak dinner
230. 6:43with their girlfriend. It works. But if
231. 6:44you can have that and a great parking
232. 6:46spot or that and you don't have to work
233. 6:47Saturday nights or that and you can pick
234. 6:48your calendar and or that you know like
235. 6:50there's always a couple of perks you get
236. 6:51a better truck whatever it is right?
237. 6:53Um those things you can scatter around
238. 6:56and
239. 6:57on the first day or the orientation
240. 6:59process we like to say like you are
241. 7:01here.
242. 7:02This is where you're going to be if you
243. 7:04do this. This is where you're going to
244. 7:05be if you do this. And so we tie these
245. 7:07two objective measures.
246. 7:09And what I really like to do with these
247. 7:11is that I like this with total volume.
248. 7:13So think about it like uh
249. 7:16in the deliveries it's like
250. 7:18once you get your first
251. 7:21you get your first uh you know 25 stars
252. 7:25you get to junior plus and we get and we
253. 7:27want that first one to be like right
254. 7:28there right? Cuz that's where some of
255. 7:29the the biggest turn is right in that
256. 7:30first you know 30 to 45 days I'm
257. 7:32guessing right?
258. 7:33So it's like how do we get the how do we
259. 7:35get how do we make the first one a 6-in
260. 7:36putt? Okay great. So we have this one
261. 7:38they get their first win. Hey I think I
262. 7:40I my job great. And then here we're
263. 7:42like, okay, now you got to get to 100.
264. 7:45And so then we basically start expanding
265. 7:47the reinforcement cycle for each of
266. 7:49these roles, so that it's always just a
267. 7:51little bit further, but there's always
268. 7:52something to look forward to.
269. 7:55And this is what There's a lot of
270. 7:56There's a lot of solutions for your
271. 7:58issue or there's a lot of elements to
272. 7:59the solution. This is one that I can
273. 8:01deliver to you in 6 minutes.
274. 8:03>> Perfect. No, that's great. I [snorts] uh
275. 8:06I think our our our main constraint
276. 8:09really has been we haven't been very
277. 8:10creative.
278. 8:11>> Yeah.
279. 8:11>> Really. I mean, and that's what That's
280. 8:13one thing I'm I'm really seeing. A lot
281. 8:14of people quickly rose
282. 8:16>> Yeah.
283. 8:16>> rose like they they came in, they
284. 8:18performed really really well, ended up
285. 8:19moving up really fast, making a lot of
286. 8:21money.
287. 8:21>> Yeah.
288. 8:21>> But then you have people that are real
289. 8:23slow and they bounce.
290. 8:24>> Yeah.
291. 8:25>> Right. So, just give them more ways to
292. 8:26win.
293. 8:27>> Yeah, that's great. Thank you.
294. 8:29>> Yeah, you bet.
295. 8:30>> [laughter]
296. 8:31[applause]
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