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"Why Can't I Train Good Culture Fits to Do the Job?" — Transcript

by MoreMozi · 2,342 words · 394 segments · language en · Watch on YouTube

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0:00Hey Alex, my name is Jordan and I'm the
0:04owner of a multi lawn care franchise
0:06locations. We make tall grass short.
0:10>> [laughter]
0:12>> We've been in business for 1 year and
0:15reached 600k in revenue.
0:16>> Nice. Nice Ben.
0:17>> I like I'd like to copy and paste that.
0:20>> Uh-huh.
0:21>> And reach 25 million.
0:23>> Okay.
0:25Um And that's
0:27You're good.
0:29>> My biggest constraint is people.
0:33>> Tracts.
0:33>> hire experienced technicians
0:36they aren't always a culture fit.
0:37>> Mhm.
0:38>> And when I hire culture fits that aren't
0:40experienced
0:42we've been unsuccessful in training
0:43them.
0:45>> So this is lawn care, correct?
0:47>> we were seasonal, we lose half the
0:49workforce.
0:49>> Yeah, and so this is lawn care, correct?
0:53>> Correct.
0:54>> Okay, so what I mean this is not me, you
0:56know, being insulting here. I want to be
0:58really clear.
1:00How are you unable to train people who
1:02are good culture fits on how to mow
1:04lawns?
1:07>> Um
1:09it's probably the pressure of the short
1:12timeline.
1:14>> Okay.
1:15>> And
1:17with the lower margins, you have to be
1:21really efficient to be successful in our
1:23process.
1:24>> Uh-huh.
1:26Okay.
1:28Um
1:30How are you paying them?
1:33>> I'm using pay for performance.
1:35>> Okay.
1:36>> So we have a a low base pay.
1:39>> Mhm.
1:40>> And then a option to earn a percentage
1:42of revenue.
1:44>> Okay. Um and that option is based on
1:47what?
1:50>> Uh
1:50>> [clears throat]
1:51>> basically the budget hour
1:55has a a cost for the customer.
1:58>> Mhm.
1:59>> And if they complete that work inside
2:01the budget hour,
2:03>> Mhm.
2:04>> they get a percentage of that.
2:05>> Of the of the like excess, right? So,
2:08they're incentivized to do more jobs
2:09faster.
2:11>> Absolutely.
2:12>> Does that Is that actually working?
2:16>> It is for the A players.
2:19>> Okay. So, right now, like you have a
2:22cleaning business. I'm just going to
2:23tell you right now. You have a cleaning
2:24business.
2:26Um
2:26the business will always be constrained
2:28by talent. It's not hard to have people
2:30who would rather have somebody else mow
2:31their lawn.
2:33And so, you will always be in the
2:34recruiting and training business. And
2:35so, this is a feature, not a bug.
2:38And so, to your point of like wanting to
2:39be able to copy and paste this, the
2:41thing that you need to nail before you
2:42scale is your recruiting, hiring, and
2:44onboarding process. Like the fact that
2:46you're getting customers and you can
2:47sell them, all that stuff, like that's
2:49very easy. Also, if you're in a
2:50supply-constrained industry, which you
2:52are, you likely have more pricing power,
2:54even though you feel like um you know,
2:56margins are thinner, right?
2:59>> Mhm.
3:00>> If you can barely take on more business,
3:01then you are supply-constrained, right?
3:04And when you have supply and demand and
3:06supply's constrained, you can typically
3:08raise prices. What are your close rates
3:10right now?
3:13>> Um we are like right at 70%.
3:15>> Okay. So, if you're familiar with my
3:18pricing guide, if you're at like
3:19basically everything above Basically,
3:21every 10% above 35, you usually have
3:24like a 25 to 50% lift in pricing.
3:27All right?
3:28>> Mhm.
3:28>> So, what are you charging right now?
3:33>> I'm charging $75.
3:36>> An hour? Okay. Um you could probably go
3:39up to like, I don't know, 85, 95 and get
3:43away with it because you're closing 70%.
3:45I doubt your close rate's going to cut
3:47in half if you go to 95. What are your
3:48margins right now?
3:51>> Um my margins on the direct cost of
3:54labor is about
3:5755%.
3:58>> Okay.
4:00And so, that means
4:03Hold on. One moment, please.
4:06All right, so we've got
4:0775 an hour, you're making uh 55, so you
4:11you pay them 34 bucks an hour, roughly?
4:16>> Yeah, there's some there's some
4:17inefficiencies that come that cost us.
4:20>> Driving between place to place and all
4:21that kind of stuff, right?
4:23>> Correct.
4:23>> Yeah, yeah, got it. So, but for you
4:25though, if you could add an extra $10
4:28per hour or $20 per hour, it'd be pretty
4:30material, right?
4:33>> Yes, I I think the reason why we're
4:37at the price we are is we still have um
4:39extra capacity, and we wanted to fill
4:41that before we raise prices.
4:43>> Okay, so do you have a lead gen issue?
4:45Or do you have a talent issue?
4:48>> No, we we will reach that.
4:50>> Okay.
4:51>> Um, once the the like in the next month.
4:54>> Okay.
4:56>> But that would in it would include me
4:58adding like
5:00eight new technicians.
5:03>> Wait, you just said that you're you
5:05already have you need to fill up
5:07what you already have, correct?
5:10>> Uh, for for like a physical capacity or
5:13equipment.
5:14>> For equipment capacity, not headcount
5:16capacity.
5:18>> Correct.
5:19>> Okay.
5:20So, okay. So, right now
5:25you cannot take on more business,
5:26correct?
5:30>> Incorrect.
5:32I guess without
5:35with
5:36>> All right, listen listen to me real
5:37quick.
5:38This is feeling complicated.
5:40You're closing 70%, you're going to hit
5:42capacity, you need to raise the price,
5:44you need to raise the price so you can
5:45pay people better so you can get better
5:46talent. That's the process. That being
5:49said, on the recruiting side,
5:51um what are you doing right now to bring
5:53people in?
5:56>> Um indeed ads.
5:58>> Okay. I mean, there's nothing really
5:59wrong with that.
6:01>> I mean, the thing that I tend to reject
6:03is just like at the onset you said like
6:05people are good culture fits I can't
6:07train. Like how how hard is this to
6:09train?
6:12>> Um it's
6:13it's not hard, and that's why I I put
6:16culture into the
6:17>> Uh-huh.
6:18>> question.
6:20Cuz it seems like uh the
6:22where we really fall apart is you we're
6:23trying to raise the level of
6:25professionalism in the industry.
6:26>> Mhm.
6:27>> So quality is really big.
6:29>> Yeah.
6:31>> And we train them they they they show us
6:34they can do the work.
6:35>> Mhm.
6:36>> And then when they're on their own, the
6:37quality falls apart.
6:39>> Okay. So part of the incentive, right?
6:42How do you know the quality falls apart?
6:45>> Uh complaints from customers and audits.
6:47>> Really, really easy. So the problem is
6:49your incentive plan is only one-sided,
6:51not two-sided. So whenever you have a
6:53KPI, it always has to have a past to be
6:54a paired metric. So the classic is
6:57quality and speed.
7:00Right? So you have a speed performance,
7:02but you don't have something that weighs
7:04out the other side. So in the cleaning
7:06world, it's you get X per clean, and you
7:09want to clean as many times as you can.
7:10But if you have a one-star review or a
7:13complaint, you got to go back and clean
7:14it again.
7:16Right? And so in your situation, it's
7:18going to be if you get a complaint, they
7:19don't get paid for the whole day.
7:23>> And we do that, but we only
7:26hit them for the work they have to
7:28complete.
7:29>> Okay, just make the make it make it for
7:31the week. I mean, you know what I mean?
7:33Like you just like you have to enforce
7:34this.
7:36>> Yeah.
7:37>> And to be clear
7:39you probably Do you teach them like how
7:40to talk to customers?
7:44>> Um yes, but I would say that 75% of the
7:47time they don't have to.
7:49>> Okay, so then like what are the
7:51complaints about that they just like
7:52literally cut corners, quite literally?
7:56Or don't cut corners.
7:57>> [laughter]
7:58>> Yeah, the the short grass that we're
8:00supposed to make is still long.
8:02>> Yeah, got it. Okay, so I would say you
8:04got to do two Number one, if I'm going
8:07to pay you this performance thing, if
8:08you cut a corner, you got to go back on
8:10your own time and do it.
8:12Zero, I'm not paying you for it.
8:14Number one.
8:15That would probably be my first level of
8:17defense. If that doesn't fix it, I would
8:18say that and you don't get you don't get
8:21your performance bonus for the whole
8:22day.
8:26>> Right, so I I just got to be a
8:29a little bit more
8:30>> You need to enforce
8:31Rules without enforcement are not rules,
8:33they're suggestions.
8:36>> Mhm.
8:38>> Like you sound like you want to be a
8:39nice guy cuz I'm just listening to you
8:40on the phone. Um but like
8:43you it's like you have to protect the
8:44business. And the thing that you have to
8:46protect protect most is the reputation
8:48cuz that goes fast.
8:51>> For sure.
8:52>> Right? Okay, zooming out.
8:55We're going to raise the price by at
8:56least $10 an hour. Please commit to that
8:58one.
8:59Cuz you have 70% close rate, it's not
9:01going to be an issue. I bet you can go
9:0225 an hour more, it still won't matter.
9:04Number one. Number two,
9:06we have to add a second pairing to this,
9:08which is that if they [ __ ] up, they got
9:09to go back and do it on their own time.
9:11If that doesn't, you know, reinforce you
9:13know, basically punish the adverse
9:14behavior, you also pair in that if they
9:16have to do it, you know, two times in a
9:18month or I mean you would know the
9:19cadence better than me, two or three
9:20times in a month, uh they'll miss their
9:22bonuses for that and on the third time
9:24they lose their job.
9:25Right?
9:26>> Yeah.
9:28>> The third thing that um we need to do is
9:31that you need to be very you need to be
9:32more
9:34specific about the training uh in terms
9:38of the actions they need to take, but I
9:39think a lot of this just comes down to
9:41like if you just put the incentive right
9:44from what it sounds like if they're
9:45never even talking to the customers you
9:46got just got to get them to do the job.
9:48You just got to incentivize them well
9:49and that's basically it. And if you want
9:51to you can put a third piece of this
9:52which is that they have to take a video
9:53on their phone of the whole lawn it
9:55probably takes about 5 minutes and and
9:58then that includes it.
10:01>> And
10:02and if they aren't
10:04demotivated or incentivized by money,
10:07does that mean they're not the right
10:08person?
10:09>> They should be incentivized by what you
10:11reward publicly.
10:14Money is going to be a portion of that
10:15needs to align with it, but if you allow
10:18people who cut corners, I love that
10:19that's literally like what this is. If
10:21someone actually cuts corners in your
10:22business and you don't publicly, you
10:25know, give kudos to people who are
10:26consistent and you don't punish or
10:28remove the people who are not, you
10:31basically reinforce that it is okay to
10:33cut corners.
10:35>> Mhm.
10:36>> It's unfortunate but like you have to
10:37make an example and vast majority people
10:39do not know how to build culture.
10:43>> For sure.
10:44>> Like you need to be
10:45>> If I understand you.
10:46>> Yeah, go ahead.
10:47>> Is
10:48so by setting that example that's how
10:50you're building culture?
10:52>> Yes.
10:54You have to define exactly what you want
10:55into observable terms, you have to
10:57demonstrate it in front of them, you
10:59have to
11:01get them to actually do it
11:03and then you have to see what they did
11:05and then you have to immediately correct
11:07the people who [ __ ] up, you have to give
11:08kudos to the people who do it well and
11:10you have to keep repeating it until it
11:12sticks and then you'll move on to
11:14reinforcing people for giving kudos to
11:17each other. And as soon as they start
11:19giving kudos to each other in public,
11:21that is when you'll know that you'll
11:22start to have built the culture. And
11:23then after that what ends up happening
11:25is they start punishing each other in
11:26private meaning they say, "Hey man, you
11:28[ __ ] that up. Don't let him see that.
11:30It's It's to get all of us in trouble.
11:34Awesome.
11:36Like those are the behaviors. That is
11:37how you do it.
11:40Cool?
11:42>> Cool and easy.
11:43>> All right. Thank you very much.
11:44>> Rock and roll, Jordan. Appreciate you.
11:46>> If you are a business owner and you are
11:48not growing as fast as you like, I'd
11:50like to give you a free gift. So, my
11:52team and I put together the $100 million
11:54scaling road map, which is basically 200
11:56hours of us looking over all the
11:57portfolio companies we've had and what
11:59stages of growth they went through and
12:01more importantly where they got stuck
12:03and how they got past it. And so we
12:04broke it in these 10 stages and we made
12:06this little kind of quiz thing where if
12:08you put in your business information,
12:09it'll tell you where you're at and the
12:11most important part for you, what to do
12:13for each of functions of the business
12:14across product, marketing, sales,
12:15customer success, recruiting, IT, human
12:17resources, and finance. And so, no
12:19matter what you're struggling with,
12:21someone else has already struggled with
12:22it and solved it. And so I'd like to
12:24give you this thing absolutely free. You
12:25can go to acquisition.com/roadmap,
12:27plug in your business information, and
12:29if you want us to actually help you
12:31de-constrain the business and you're
12:32trying to scale, we'd love to help you
12:34out. On the thank you page, you can just
12:35book a call with my team and we will
12:38look at the business, see if we can
12:40help, and if we can, we'll invite you
12:41out to Vegas and we'll do this in person
12:43live.

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