[00:00:02.680] - Chris
Welcome back to another episode of the MRM podcast. I'm Chris
[00:00:06.370] - Brandon
and I'm Brandon. Join us as we discuss business, life and legacy
[00:00:11.380] - Chris
its business time
[00:00:13.870] - Brandon
How you doing, brother?
[00:00:14.920] - Chris
You know, I unbutton the second button on my shirt. I'm feeling good.
[00:00:19.540] - Brandon
Oh, jeez, it's getting serious.
[00:00:21.290] - Chris
I'm feeling casual.
[00:00:22.360] - Brandon
It's it's business time, as they say. Have you you've watched the.
[00:00:28.270] - Chris
Oh, my gosh. Flight of the Conchords hilarious
[00:00:31.240] - Brandon
it is the best, the best thing ever.
[00:00:33.880] - Chris
I was like, twenty. You're dating this man. It's like like 20 years ago.
[00:00:38.290] - Brandon
And it's still is hilarious. It's amazing. Remind me sometime that I gotta to tell you a story about the person that introduced me that, the context is great. Well, all right, let's let's dove into this. I got to I got something I want to talk about, my friend.
[00:00:52.870] - Chris
OK
[00:00:53.200] - Brandon
OK, so this has been coming up. Well, honestly, man, I think in some ways our leadership teams in the past were wrestling with this from the very beginning.
[00:01:01.570] - Brandon
And here's the, i'll set the stage. How much information, financial information is appropriate to be giving our people? Right from a leadership goal, setting, strategic initiative, planning perspective. Right. So we're not hanging out and walking our entire team through the balance sheets, things like that. I'm not talking about that for sure. But how many times? And here's where I'm going. I can't tell how often this is an excuse for a lack of proactive engagement versus I'm fearful of what my staff will do with the information.
[00:01:40.270] - Brandon
So now, for instance, when we wrestled with this, because there's these opportunities, we provide some information depending on how many tiers down into the team you go with that information. Sometimes there's just not a lot of context for the numbers that are being provided. And so there's this element of that information almost becoming distracting. Right. So here's an example. We've seen companies, we never did this, but we've seen and heard of companies that literally the entire organization gets to see essentially the monthly P&L.
[00:02:12.430] - Brandon
All right. So you're seeing this is the nuts and bolts of what we made. This is how much we got to keep at the end of the month. Right. And the issue with that was there's not a lot of context for this we get to keep this part section. And so it almost becomes this adversarial piece of information where somebody gets that without enough experience, maybe insight and education around that number. It turns into, well, there's gobs and gobs of money left over.
[00:02:38.890] - Brandon
I want more pay raises. I want more benefits, all the things right. It becomes more a facilitator of disgruntled behavior maybe versus being a helpful piece of information that aligns the team behind a goal. Yeah. So I can see there is probably the possibility of too much information, but more often than not, that's not what we're witnessing. What we're witnessing is really great players on a team, proactive, engaged, loyal team players asking things like, hey, what is the revenue goal that we're shooting for this month in this department?
[00:03:15.340] - Brandon
Or have we broke down our revenue goals, our production goals by project manager? Right. We've got four project managers on the team. How much is it that each one of them is supposed to go out and try to produce in that 30 day period in order to meet or exceed goal? Right. And what we've seen is experiences first hand and second hand of employees asking questions like that in leadership is not able to provide it. And so, OK, it's a failure.
[00:03:42.280] - Brandon
I mean, I think we can look at that and say that's just a failure. But I think the bigger question is why is that information so important? Like what is it about giving our teams specific, measurable black and white information is so helpful? For them, not just for us, but for them. And then also just kind of trying to come at that from a different angle and say, how does it help us as leaders when we're able to provide that level of information?
[00:04:08.090] - Brandon
Right. So here's kind of the idea I want to kick around is is let's identify what is the type of information that's important? Like at what level do we need to at minimum provide in terms of goals, numbers, some significant data? And then I guess look at that and say, why is that important for our employees? How does it equip them, empower them and then us as leaders, what does it do to help us? Like what do we get from sharing that information and leading that way?
[00:04:31.750] - Brandon
That's kind of where I want to go.
[00:04:32.800] - Chris
Well, I got to tell you, I've got some knee jerk reactions. Yeah, because it's interesting. Not all industries feel the same way about this.
[00:04:40.180] - Brandon
Yeah, sure.
[00:04:40.900] - Chris
So in terms of transparency versus privacy, there's actually a lot of different views out there. I have seen I've encountered this a lot as well in this industry, both. I think to a degree it's a topic of conversation with our clients in terms of as we coach them in some of the leadership behaviors and how to build culture and we talk about transparency and bringing people in and what not. Bringing them in on the story help them understand the why behind things.
[00:05:10.380] - Chris
So this ends up coming up a lot in our conversations. I have found in having coached some down line leaders. So companies occasionally in the past would hire me to help develop their downline, like branch managers or GMs or whatnot. And at first I was shocked to find out how little these field leaders understood about their business at all. Outside of the actual service response, estimating and invoicing. Outside of that, they had no clue what was going on in terms of how collections were being done, much less what the gross profit was, what their gross profit is on a certain class of jobs, et cetera.
[00:05:54.190] - Chris
Like I was actually very surprised how often I encountered field leaders responsible for generating revenue, that I had no idea what the business actually looked like. In fact, in a couple of scenarios I'm thinking of, like they didn't even know exactly what their annual revenue was. Which to me is just like minimum. One point eight last year. I'm shooting for two point two this year, like at a bare minimum. Yeah. At least knowing what the target is.
[00:06:20.740] - Chris
And so it is a very common problem. Why is it? I have a hypothesis where it comes from here. I really think I think it's a product of this command and control leadership style that has been so prevalent in our industry since the beginning. I think it's just like a leftover because I think that culture is changing because we're finding... I mean, we spend a ton of time talking about this, right? Yeah, I really do think it's a product of viewing labor as interchangeable.
[00:06:52.320] - Chris
Right? Yeah. Of I think a lot of it's very ego driven and control driven. It's my business. No one needs to know about my business. They just need to do what they've been hired to do. Now, I'm exaggerating a little bit. My tone. I'm not saying that everybody who doesn't show their numbers is jerks or they're like old school dinosaur leaders. That's not what I'm saying. But I think that's been very customery
[00:07:13.590] - Brandon
it's common.
[00:07:14.250] - Chris
Very common. Stay in your lane. You don't need to know that. Yeah. Just go respond to the jobs, do the checklist like we've asked you to do, turn in your estimates. That's not your job. Don't worry about it. Right. You just do your work assignments, man. Yeah. Add your notes to, you name it business software. Yeah. Yeah. Turn in your time sheets. Right. Like, I think we've erred on the side as an industry of telling people what to do, demanding compliance.
[00:07:45.150] - Chris
Yeah. We haven't gotten good at explaining the why and the how of what we're doing. Yeah. And it's just a skill. It's a new skill that we can put on you. You know you and I've done it and I think both you and I have in the past come more from that command and control like...
[00:08:00.570] - Brandon
Oh sure
[00:08:01.140] - Chris
set up a system, tell them what to do. And that's just
[00:08:03.660] - Brandon
that's how it is.
[00:08:04.410] - Chris
That's how it is. You don't like it, go somewhere else.
[00:08:06.540] - Brandon
Yeah, no, I don't I don't disagree. I think there's a lot of that. It would be interesting to get some data if someone's actually pulled this somehow. How much of it is that versus this idea of just: my hair's on fire,I barely know what kind of business I'm running in the first place, I was a skilled tactical technician at some point I decided to go out on my own or I bought a franchise, I whatever. And I've started operating this business that quite honestly, I'm figuring out as I go, which kudos to you for having the gall to do it right.
[00:08:38.910] - Brandon
But because of that, because you're constantly in this reactionary state, the time commitment maybe, or the proactive mental state that you would need to be in to look at your numbers, prepare your numbers, project what the next year's goals will be, and then kind of dissect those into buyable bite size pieces for those who it's relevant to. I just think is a I think it's a it's more a proactive management leadership style task that a lot of folks are just they're just surviving.
[00:09:10.080] - Brandon
Oh, right. They're just running from thing to thing.
[00:09:14.040] - Chris
They are and there's no shame in it. Like you and I...
[00:09:16.580] - Brandon
you'rer not alone.
[00:09:17.740]
You and I were those guys at different intervals where we were really literally figuring it out as we went. And we were winning. So the dream was we were keeping the dream alive. Yeah. We could sell our way out of all the little pinches and cash flow crises that we found ourselves in, we just we just keep building just to stay in the trench. Yeah. I had a client I worked with in the past that when I first met with them, our very first sales meeting, I'm doing my discovery and find out about their business, where they are at? where they're trying to go? All that kind of stuff.
[00:09:45.210] - Chris
And they were literally poised to do close to five million dollars. They'd only been in business a handful of years. Five million bucks they had... This is just so funny. And it's funny because I can relate to it and I know you can too. They were doing almost five million bucks a year. They could not tell me what profit they were going to make off that.
[00:10:08.420] - Brandon
wow
[00:10:09.280] - Chris
and their answer was, you know what's been great...They had kind of a set back in their business that year that I talked to them.
[00:10:17.510] - Chris
They had like a couple months where things went sideways and like what was great about it is business kind of dropped off momentarily. Like what's great about is we finally were able to get quickbooks set up.
[00:10:28.340] - Brandon
Had five million bucks
[00:10:30.110] - Chris
they had five million bucks and I said, wow, how have you guys been doing that ? They said, well, we've just always had leftover in the bank at the end of the year.
[00:10:39.920] - Chris
And i thought this is so cute...You know, it's it's like we all come from somewhere and let's face it, not all of us are the type of people that typically will start a business. Don't get caught up in the details. They have to be coached to him later. And that was our story. Right. we brought in a consultant that was coaching us on some of these best practices. And now here we are , come full circle we're helping our clients set up these just best practices, set up the framework.
[00:11:01.850] - Chris
Because when you're running and gunning, yeah, it's like really you can sell your way out of a lot. You just keep you keep cranking that wheel. Yeah. You can overcome a lot of obstacles when that sales flywheel is turning. And so we encountered a lot of people like that. So, yeah, I think it's possible, like you say, and again, there's no shame in it that some of the owners are listening to this are like dude to I have no idea what exactly my I couldn't tell you my gross profit at a job level.
[00:11:28.820] - Chris
Right. On our MIT jobs. I couldn't tell you a good average loss size. And even now, I mean, it's even recently we've talked to clients and their like, you know, somewhere around like thirty five hundred to five, I mean, and then commercial like, you know. Yeah.
[00:11:44.390] - Brandon
It's all over the, it's all over the...
[00:11:46.430] - Chris
They don't know their KPIs but they know they're winning.
[00:11:48.800] - Brandon
Yeah they know they're falling forward.
[00:11:50.630] - Chris
Yeah. Yeah.
[00:11:51.470] - Brandon
So let's hammer down a little bit on the value of this because I think the reality of it is we're out running businesses, we're growing our companies. You're just choosing what battle do I spend energy on, what battle is going to move the needle and which ones ultimately are more like icing on the cake. And I am I am of the mind that whatever is a number that we're publicly looking at will be a number that moves the needle.
[00:12:17.720] - Brandon
And so I feel like and this has been my experience, I've seen it succeed in many different kind of ways and shapes and and we've watched others be very successful leading this way as well, is that I honestly believe that when we can give our people targets, when they can understand what the objective looks like, they're going to be far more successful at hitting that objective than not. Or what's the I guess, the line there? Is there more often going to hit that end goal than not?
[00:12:42.920] - Brandon
And so I think it does. First off, I think it empowers people. I think that it takes mystery out of what they're spending their energy doing. And now all of a sudden, it's like they have a context for, OK, if I'm doing X, Y, Z today, it should move the ball down the field towards ultimately getting this number or hitting this goal that we know we're expected to hit. So I think empowerment is a big thing.
[00:13:06.500] - Brandon
I think in that empowerment it gives our team members the ability to own the number like now instead of being something which we could very well talk about when we delegate these numbers, when we assign these numbers and I've learned the hard way when you jam the number down their throat, that's not the same level of buy-in as if you have them participate in the conversations. Which I've experienced the wrong way a couple of times, and it wasn't fun. But again, it's empowerment.
[00:13:31.610] - Brandon
It gives them the ability to control what they're doing. They're able to see the impact of their actions. And I'd also go as far as saying is it really sets the stage for succession planning. And I don't mean succession planning from this like take over the company, but it's almost more of.... The goal of a company is it scales and grows larger. You're inevitably going to need more leadership within the organization. Even flat companies need to have key influencers.
[00:13:59.630] - Brandon
And in my mind, even influencers within your organization, they're playing a leadership role. It may not be as formally titled, but you are using them to influence your organization for a reason, its leadership. They're moving people from here to there. Right. So in my mind, it's also critical to the fact that if you really want to have a business that can scale, if you want to develop a company that does not require you to have your hands on every switch, then you've got to be able to deliver information to your team that they can look at and they can say, yes, we're hitting it or no, we're not.
[00:14:35.690] - Brandon
Yeah, right. So let's rap about that a little bit. Let's just look at what some of those things look like. What is it that we need to be providing our people? And I just want to give an example. OK, so I took over, I would say, a hurting branch of a fairly large organization for a while, about a two year, roughly two year clean up with that particular outfit. Smaller team, they were doing sub eight million dollars a year in revenue, and when I showed up to the organization, the team project managers and estimators didn't really know any form of financial goal.
[00:15:12.240] - Brandon
So they didn't really know what the branch was attempting to produce. They didn't know that had never been broke down in any kind of monthly goals or anything of the sort. So they really were running blind. And so it created this sense of anxiety, like they didn't even know really when they're doing well or not doing well. Ultimately, this is part of a performance evaluation, really. And so what we did is we broke down the numbers into monthly goals.
[00:15:36.330] - Brandon
Right. Here's what each department is seeking. This is what we're trying to produce. Here's the goal for each month. And I'm an experienced leader at this point. OK, so at this point, I've been working with leadership teams. I have a lot of these meetings. I mean, this is not first rodeo stage, but it had been a while since I was the leader that was direct handing assignments down to roles such as estimators and project managers.
[00:16:03.960] - Chris
Because previously you were running an 80 plus person right operation, which looks very different than looks very 15 20.
[00:16:12.750] - Chris
Right. A leveraged operation where you guys were a basically a paper contractor right, just to set the stage. You had MIT operations, build back heavily provided by subcontractors. Not a ton in-house.
[00:16:25.170] - Brandon
Right. Very small team. It was pretty much my the entire organization was a direct report. Which I hadn't been in that those sets of shoes for a while. We had over time developed leaders and those leaders then ran... Like think of them almost as generals, and they ran their teams. Right. They were the ones delegating and breaking down the numbers like that was their job. And so it had been a while, and so I'm kind of issuing numbers more from this GM level where it's like, yeah, this is month wide, here's kind of the broad strokes of it.
[00:16:55.500] - Brandon
And I remember kind of the blank stare on everyone's faces as I'm issuing these numbers because the numbers weren't relevant. What they didn't understand is what steps do I take to get there? They're looking at the month and they're going, OK, I got to produce, let's say, three hundred and fifty grand in production, but they don't know how they're going to get there. And so I remember kind of live on the fly as I'm looking at these guys, I'm going, OK, they need more information.
[00:17:20.820] - Brandon
So we jump up on the whiteboard and we start breaking it down. We say, OK, look, the reason we push subcontractor's instead of in-house trade teams is because of these production goals. So let's break it down. If we've got a goal of three fifty, three hundred and sixty grand a month and I've got three project managers, it means that each one of you needs to produce X, Y, Z that month. So let's say what you need to produce is one hundred and twenty or one hundred and fifty grand a month in production.
[00:17:44.880] - Brandon
Then we need to look at that and say, OK, every day, every single day I go out and I manage my schedule, I need to understand I'm trying to produce in completed work one hundred and twenty, thirty hundred and forty thousand dollars in work. How do I get that done? Well, from my perspective experience been in the leadership seat. I'm watching guys send out two man tech crews to a construction job and I'm looking at that production going there's no way that me watching a project manager send out a couple people at a time each day is going to produce enough work in that week to hit the bigger goal for the month.
[00:18:25.530] - Brandon
So there's like this opportunity then as a leader to say, guys, listen, you have to look at your jobs. You have to look at the scope of the project, and you need to identify the subs that you can get out on that job that week to produce the most revenue in order for us then to fall closer to securing our goal for the end of the month.
[00:18:44.460] - Brandon
And so there was this education opportunity to teach these guys to think about how they even manage their schedule. What you can't do that unless they have a context for it. and the context was the revenue goal. What are we trying to achieve?
[00:18:59.550] - Chris
Yeah
[00:18:59.970] - Brandon
OK, well, let's break that mission down into smaller chunks. How do I focus on that during the week? And more importantly, how do I manage my day to day schedule that gives me the ability to get to the end of the month and sit down with my leadership team and say, guys, we did it. Right.
[00:19:14.170] - Chris
And what I also hear you hitting on is you're helping them understand the methods to. Yeah. So beyond just breaking down the goal, it's like this is why we can't prioritize. We can't build this number out of using a couple of trade techs to do onesy twosy things. Like you had to educate them on how the whole essentially paper contractor thing works. So you guys are project managers because how they approached it had a huge impact on whether or not they had any hope of hitting that number.
[00:19:45.270] - Chris
Right.
[00:19:45.810] - Brandon
And this in these kinds of things pop up in this example or many like it. What you see is, is they've gotten really used to using Joe and Fred on the team. They trust Joe and Fred. And Joe and Fred are great guys and they're great trade crews and they do an excellent job. And so that's an easier button to mash out of comfort than it is for me to go out and do the hard work of negotiating a new sub relationship or vetting some new partner and bringing them into the fold.
[00:20:12.660] - Brandon
And if there's no goal that's been projected, if there's no conversation about the target that we're trying to hit...
[00:20:18.180] - Chris
their just going to go with what you know
[00:20:19.320] - Brandon
they're going to default to comfort.
[00:20:20.280] - Chris
it's what You have always been doing right.
[00:20:21.600] - Brandon
And as far as they can tell, they're busy every day. The schedule's packed. They've got plenty... They may even have happy customers. Right. But there's no way that that team will hit the scale that we're looking to hit without that proactive engagement. And I think that's that big piece there. And when we talk about it's empowering them, it's like now they've have a whole new set of tools to use to go after that business and secure their own success.
[00:20:46.980] - Brandon
I think the other thing is that it sets the stage for thinking once we did that exercise, now they can do it like now they know for the next year or two years as they're managing their own performance, they get use to this idea of... We identify what the monthly goal is, I break that down into bite size chunks and I execute with authority. Well, now, like, again, going back to that succession planning, this person may become your future repair division manager.
[00:21:16.140] - Brandon
Right. And so now you get the luxury as a business owner or being a key leader to have a leadership team that you give them the monthly number and then now they go down and they break it up for their team and they equip their team with what those weekly projections look like.
[00:21:32.820] - Chris
All right. Let's take a minute to recognize and thank our MIT/RESTO mastery sponsor Accelerate Restoration S oftware. And I'm fully aware, by the way, that when I say those last two words, restoration software, that that instantly creates heartburn for some of you out there. Right. Because we probably all fall into one of two camps when it comes to software. We've either cobbled together kind of a version of free website tools and spreadsheets just to make our business work, or we're in the camp where we've adopted one of these existing restoration platforms, one that has all the bells and whistles and supposedly does it all.
[00:22:11.580] - Chris
But we can't get our team to consistently adopt it and input information to it.
[00:22:17.490] - Brandon
Yeah, and that's really where Accelerate has honed their focus. They've created a system that's simple, right? It's intuitive and it focuses on the most mission critical information, i.e., guys, your team will actually use it.
[00:22:32.560] - Chris
Let's talk about sales right after years of leading sales and marketing teams. The biggest trick is getting them to consistently update notes about their interactions with referral partners and clients and the essential piece there is there's got to be a mobile app experience. And in our experience, the solutions that were previously out there were just too cumbersome and tricky to use.
[00:22:55.920] - Brandon
Yeah. Imagine, guys, how your business would change if your entire team was actually consistently using this system. Do yourself a favor. Go check these guys out at Excelrestorationsoftware.com/MRM and check out the special offers they're providing to MRM listeners.
[00:23:16.590] - Chris
Here's another thing, that comes to my mind is that we just recently did a post about when to stop taking jobs. Yeah, a lot of the thinking that we kind of coach our clients on is how to pick the right work. Because a lot of times, especially once you get to a place, you've got a good reputation, a lot of stuff starts flowing in and you can't do it all. You have these intervals where you don't have the staff to do everything.
[00:23:41.070] - Chris
How do you pick the right work? Well, if you haven't coached and trained your people on how the numbers work and sort of what's happening behind the scenes with the profit and costs and everything else, top line goals, it doesn't put your people in a position where they can make a good judgment about what kind of work do I want to take and what makes the most sense for us to do rebuild on versus just doing MIT and passing on the rebuild.
[00:24:08.610] - Chris
It's really tough for people, which means then you as the owner, you're stuck is the bottleneck where you've got to review every job. Are we going to do this or not? When if you could just teach your team how numbers work and how the money flows and how we make decisions behind the scenes, then they can begin making those decisions. Right. And the business isn't dependent on you. So now you can go to Lake Havasu or you can go to Costa Rica for a month and your business doesn't fall apart, right?
[00:24:33.360] - Chris
Yeah, well, that's ultimately what we're all trying to do here, right?
[00:24:36.660] - Brandon
Yeah. It's the work on the business instead of in the business. But here's the thing, though, is that there's a human element to this, too. So I think it is when you stop and just give it a glance, I think it's pretty easy to see the nuts and bolts of it, like why there is value in proactively managing numbers and giving your team real clear, measurable targets to go after. But there is. Humanity, peace, it's like the way that that team responded in that scenario the next day, like we're talking immediate change in demeanor and the way that they're tackling their schedule to include, like even better questions being asked, like, hey, boss, here's what I'm considering on this one.
[00:25:15.250] - Brandon
Here's the two choices I have. What do you think? Well, based on a conversation, I think you're on point. Let's chase this target first. They're now operating from a completely different loyalty space in terms of the team, because you've let them behind the curtain a little bit, right? Not again, not to the point where the numbers aren't relevant anymore. And it really serves more to bog them down than to be more productive. But it's like you said, hey, I trust you and I trust your Problem-Solving capacity.
[00:25:42.700] - Brandon
Let me just give you a little bit more information, another set of tools to use to make those decisions. And now all of a sudden, they come to life like they're participating proactively in this thing that you guys call business. And they're now not just taking marching orders from you and executing without giving it their own thought.
[00:25:59.830] - Chris
So you bring up a question for me, which is, what should we not show? Like I mean, I think probably most owners, if they're honest with themselves, I've certainly felt this maybe maybe I'm alone in this, but I was always a little bit sensitive to my team knowing how much I'm making, because as an owner, you're taking all the risk. It's the long play in the early days, you're the last to get paid if you're lucky.
[00:26:27.910] - Chris
Like I've been in a few different intervals, you've got a spouse maybe that's bringing in some static income, but it's like you earn your stripes as an owner. And you know what, by golly, if your take home a half million bucks at the end of the year, well, you know what that's I've earned that.
[00:26:41.470] - Brandon
kuddos to you
[00:26:42.580] - Chris
It ain't always been that way. so but I think that's something that a lot of owners are afraid of is just how many people know how much they make.
[00:26:50.020] - Chris
And they already kind of have to tell a certain people and there are certain people on our team just will know as they start to break out different admin roles and stuff like that. But when you say not to overload people, what do you think? What is information that's not helpful?
[00:27:04.570] - Brandon
I think the rule of thumb is...
[00:27:06.150] - Chris
to Share? Besides the EBITA, where we don't need to talk about that.
[00:27:09.940] - Brandon
I think honestly, I think the rule of thumb for that information is what information can I provide them that they can have a direct impact on. Right. So and it's going to be different depending on the audience. At least that's my perspective. Some companies run more flat and what they're an open book. And I get that. I respect it. We've seen examples of that. And there's some stories regarding companies that have ran that way and you know what more power to you if you can pull that off it's pretty awesome.
[00:27:36.850] - Brandon
But I think just basic rule of thumb is... Is this information that when I give them this, are they going to make decisions and act in such a way that they can have a direct impact on it? So I think like when, for instance, when we're talking about estimators and project managers, let's give them their revenue goals. What are they shooting for? Let's give them the gross profit margin per job. What are they shooting for?
[00:27:58.060] - Brandon
Because those are things that they can see and they can make decisions and take actions that have a direct impact on where that number falls. They can be responsible for it. When you start to poke into overhead related expenses the struggle with that is that the whole is impacting that right. Not just individuals. And I think there's a lot of victim mentality that can be created, whereas if you're responsible for the profit margin of an entire division and you're a single project manager, it can be pretty frustrating.
[00:28:29.740] - Brandon
Or you may see yourself in a position where I can't affect all of that. I can only affect this and it can almost be a detractor versus a positive. And the only thing I hate is, like I say, that example, but I fall into the camp of I really like team environments. I like team accountability. So, for instance, I've always been of the mind that project managers on a team all know where they stand.
[00:28:54.220] - Chris
Yeah, they know with the pecking order they know who the best is. who the most profitable is. Who's Getting the most top line. Yeah. And it created some competition.
[00:29:01.810] - Brandon
It does. It creates a healthy sense of competition and you start to see people mirroring the right behaviors. Right.
[00:29:08.200] - Chris
You see that this is what winners do. Yeah. We've talked about this before, man. Yeah, I agree. And it's funny, I know this is very outside the norm, but I've always been intrigued by companies that are literal open book management style. Yeah. In fact, there's a few examples and right off the top of my head I can't think of a specific brand name, but there are more than one company that everybody knows what everybody makes. All the salaries are public, everything.
[00:29:37.210] - Chris
And I thought about that a lot, not suggesting the restoration companies go that route. But what's interesting about it when I read about it is that if I know let's see, I make fifty thousand dollars and I know somebody else on my team makes one hundred thousand dollars in a, quote, similar role. There's some inherent accountability that sets in when everybody knows what everybody makes and everybody also sees people's results, effort, team contribution, etc., to where I could imagine that it kind of naturally polices itself, that it creates an opportunity for other people in the team to say, hey, I feel like you're not pulling your own weight like you're the most senior person on the team.
[00:30:16.780] - Chris
You make 50 grand more than I do. And I feel like I'm carrying your water. And it creates this opportunity... And I'm sure that theres also some drama that that can stir up as well. Yeah, but is there more drama than what we already see happen in our businesses around teamwork and who's carrying their weight? I don't know. I don't know. But I do find it interesting. These companies that are playing with that transparent model. We had an employee a while back and their husband was an executive at a big company that does open book management.
[00:30:47.610] - Chris
And I remember talking to him about it at a Christmas party or something like that. And he said essentially they go down to the operational level, gross profit at the department level, stay out of overhead and they stay out of salaries. And so they basically go through gross sales, gross profit. They actually look at their categories of expenses and how the expenses year over year or quarter over quarter are showing up, how that's affecting gross profit. And they actually look and they educate their team...
[00:31:18.240] - Brandon
They do
[00:31:18.870] - Chris
...On the basics of how to read a P&L, which I thought, man, that's awesome.
[00:31:23.340] - Brandon
Yeah, it was impressive. Now they're manufacturing
[00:31:25.860] - Chris
they are manufacturing their product company, but they have an immense amount of loyalty. They have A very low turnover. I mean, they have a high roster of people that have been there out of their one hundred employees or so. Twenty five million dollar company, not a giant company, but they've had people there their average employee I think is over 12 years is huge.
[00:31:45.210] - Chris
Who doesn't want that
[00:31:45.900] - Brandon
10,15, 20 years. Yeah.
[00:31:47.400] - Chris
It's amazing.
[00:31:48.070] - Brandon
They also do profit sharing. Yeah. And and that component that P&L reporting is a component of the profit sharing. And actually the interesting thing is, according to them, what they've seen is that they've seen their companies, their employees do massive work to increase production, to reduce costs, to take part in trying to look at the efficiency that's happening on the floor. A lot. Just very, very high levels of employee engagement and accountability in terms of how they're acting, how they're performing, how are they doing their job, because they know there's a tangible way that they all benefit from that.
[00:32:26.850] - Brandon
And they've done a great job from a ceremonial perspective, building that into monthly regimes and things like that. It's actually really, really impressive. And not shockingly, they've been awarded a top company to work for many, many years in a row. Now, so we say that because I think the reality of it is, is that in terms of level of information that we provide our team members, it can vary widely. But I would say this...The more competent and this is going to come off maybe a bit offensive.
[00:32:58.740] - Brandon
Right. But I would say the more mature and competent your skill set is in leadership and your ability to equip people with the information that you provide, you would probably be shocked how much information you could give to a team that they can actually use well. Yeah, but the key there is that you have had to have done enough personal development as a leadership group or team to ensure that you can handle and lead your team with the information that you're providing.
[00:33:30.180] - Chris
I mean, it's like it's like anything else, right? Where in order to delegate effectively, you need to walk through and you need to ensure that you're giving people the resources, the information they need to go do that thing that you're delegating to them. And likewise, everybody in your team has a different level of financial knowledge and just understanding of how money works, how businesses work. Absolutely. Many of them no one's ever even thought to teach them or educate them or coach them on those things.
[00:33:58.830] - Chris
And so, again, I can hear people in the audience. I can hear my past clients and stuff ringing in my ear that, Chris, you don't understand. You don't know what kind of team I have. Like, we've used the term demo donkeys. Right. Just idea sometimes that we can really just think of our people as labor. Just labor units. They tear stuff up, make straight cuts in a wall. Yeah. And I think we really minimize the potential.
[00:34:25.710] - Chris
Yeah. That our teams have. I really do. I think it's a blind spot for a lot of owners and leaders in our industry. We've just become so jaded, we become so jaded because of what people come in offering to the team. Right is so it's so simple and it's so low par what people come in offering. But what we found over and over, of course, not all the time, but over and over, is that when you expect more of people and you give people more often times they're actually, like they blossom.
[00:34:59.690] - Brandon
Right
[00:35:00.160] - Chris
yeah, you put a little fertilizer on that seed. And surprise, surprise, it sometimes grows into something way more complex and beautiful than you thought.
[00:35:09.140] - Brandon
It's totally true.
[00:35:10.400] - Chris
It really is. Yeah. I think some of it's a vote of confidence. Like, I think it feels good when people trust you with something that you haven't historically been trusted with. Right. So a tech1, tech2, tech3 comes in from another x-y-z restoration company...And they've just been, they've always felt like basically a demo donkey. You just, you know. Yeah, I just do what I do.
[00:35:31.020] - Brandon
show up get the orders.
[00:35:32.210] - Chris
Tell me what to do. Their order takers. And they're not order takers because of their potential necessarily. It's just no one's ever seen them as anything more than a do what I say. Right person. Right. You start to give them some information and you start to show them how the money moves and all the costs and things that no one's ever even talked to them about.
[00:35:50.310] - Brandon
Right.
[00:35:50.990] - Chris
You know?
[00:35:51.450] - Brandon
Right. Here's an example. We were just always very aggressive about teaching our techs, how the estimating process worked. We didn't bog them down with making them estimators. They weren't writing sheets or anything of that nature. But we were very diligent, let's say, for instance, creating SCOP sheets that had the line items from exactamate on it, because we're trying to give them more draw more correlation between their behavior in the field and how it affected our team's ability to get paid to invoice for that work.
[00:36:21.320] - Brandon
And so there's all these just little elements of in some people might look at that and said, well, does the technician really need to know the exactimate line item code? Do they need it in order to go out and demo that piece of material? No. But does it empower them to do their role in a way where they understand their behaviors, impact on the next person, on the team? Then I would argue, yeah, I think it is beneficial.
[00:36:43.550] - Brandon
And so I just think that there's a matter of looking at your business and just walking up the notch a couple tics at a time. For those of you that are running around with your hair on fire right now, I get it. You know what? Just hang in there. It's going to be OK one step at a time. We just need to turn on these elements one step at a time. We don't need to be doing a full blown P&L reviews with everyone tomorrow.
[00:37:05.450] - Brandon
But let's at least start by looking at our team members and saying what information will give them the right tool for the job. You're not going to hand somebody a screwdriver when you're telling them to drive a nail. Right. And I think that we need to look at the information that we're giving our teams from that perspective. If I give them clear revenue goals and if I give them clear gross margin goals, can that project manager run their job a whole lot more efficiently?
[00:37:30.110] - Brandon
Yeah. Will they be vested better in the decisions they're making? Yeah, because they'll see how it impacts the outcome, like they're just going to do a better job for you.
[00:37:38.450] - Chris
It's just so funny how we've seen the light bulb come on, we start working with like a restoration manager or something like that and we have been pretty budget. Yeah, they get their sheet together, they build a budget for the job. It's like, OK, this is where I need to get my subs, where I need them to come in and teach them how to negotiate. And that whole process and their eyes just widened like, oh, so this is how you can do it.
[00:38:00.350] - Chris
This is way simpler. And it's not rocket science. Right, right. Somebody taught us that along the way and we implemented it like, woah, this is just way more efficient and makes sense. Right. Right.
[00:38:12.710] - Brandon
we've even gone as far as we really encourage people to show their project management cost on the job and have that project manager see their impact on a project in terms of profit margin. Because, again, it's like you got to think about your team. You got to think about your team's sophistication level. You don't go zero to one hundred. But if you've already moved past the point that you at least are establishing clear revenue goals. OK, well, let's talk about then now the impact of them on that job. Because the opportunity there is ... have you ever had a project manager gets bogged down, kind of doing the last one or two things to get the job wrapped up, but then they delay following up with a new client or then they miss a delivery date or an inspection date because they're busy putting on the face plates of the last job or whatever the case may be right?
[00:38:59.630] - Brandon
Again, we give them the numbers, we give them the revenue goals. They see their impact on the job. But now, instead of just getting caught up in the moment, they can look at that one and say it's going to cost me another forty bucks to send out James to knock this out, but it's going to allow me to go secure this other job and by the looks of the trades on this job, I think I can pull another three or four percent from that one.
[00:39:20.180] - Brandon
Right? like that's a different level of decision making and they wouldn't have that ability to make that decision unless we're giving them numbers. Real numbers, right?
[00:39:29.900] - Chris
Yeah. And people can figure this out.
[00:39:32.000] - Brandon
Oh, man.
[00:39:32.660] - Chris
We've been surprised over and over again that people you can teach old dog new tricks.
[00:39:38.870] - Brandon
Oh, absolutely.
[00:39:39.680] - Chris
I think it's just how all of us, most of us are programed to respond when people put new trust in us. We want to rise to it.
[00:39:47.000] - Brandon
We do.
[00:39:47.450] - Chris
Yeah. So, OK, so here's something coming to my head. For those people who are listening, that are not owners.
[00:39:53.840] - Chris
You know, as I mentioned, I've talked to many senior leaders and executives. In fact the one that comes to mind, was a senior estimator at a fairly large regional commercial restorer. And I was just shocked by how little information and data they had about the gross margin on their jobs, all of this stuff. And part of my coaching was really helping them coach up to ask for the information they need to operate at a higher level. And likewise, I've coached some branch managers.
[00:40:25.410] - Chris
Same thing like, OK, here's what you need to know from your owner. And I've always been very I've never of course, we never pit our owners against...
[00:40:34.320] - Brandon
no
[00:40:34.320] - Chris
I mean, obviously. And so I've always tried to navigate that with, hey, we're all learning as we go. You know, it sounds like these are some question marks and just help them kind of itemize. What information are they missing that would help them execute at a higher level?
[00:40:49.290] - Brandon
[ comment: Leadership strategy and Tactics- Jocko Willink ] Right. That's Jockos lead up the chain of command.
[00:40:51.780] - Chris
That's right. Yeah. You got to manage up. And we do a fair bit of that because ultimately it serves our owner clients and we teach their downline staff how to manage that.
[00:41:00.370] - Brandon
Isn't that I mean, that's kind of what we're all looking for. Don't we want the people that are hungry and knocking on our door? Yeah,
[00:41:06.210] - Chris
we want people to come... I think sometimes we struggle with it because we do, it's like we want to delegate more but than we're afraid of giving too much. People, knowing too much and all that kind of stuff. Yeah, but what do we say to that person? What should they know?
[00:41:19.650] - Brandon
Yeah.
[00:41:20.550] - Chris
What should they be asking for in order to perform better and create better results?
[00:41:25.110] - Brandon
Well, I think the...
[00:41:26.040] - Chris
Talk about it. Give me a goal.
[00:41:27.180] - Brandon
Right.
[00:41:27.600] - Chris
What am I trying to do this month?
[00:41:28.380] - Brandon
what are we shooting for?
[00:41:29.850] - Chris
Am I trying to do one hundred? Am I trying to do two fifty? Am I trying to do seventy five thousand. What's my number.
[00:41:35.000] - Brandon
Right. Right.
[00:41:35.910] - Chris
What else?
[00:41:36.630] - Brandon
Well I think the two bigs are always going to be what's the general number, revenue number that you're seeking, whether it be for a division team, size branch, whatever the case may be? We always want to look at gross profit margin. We want to look at it at job level. I will tell you, this... As many times we've been in scenarios where we're trying to earn two more points on this or make an adjustment in a positive direction here, we just will beat our head up over on the financials.
[00:42:01.260] - Brandon
And we're digging into that, digging into this and looking at that number again and trying to reevaluate how we do X, Y and Z. And I will tell you that nine times out of ten, we always came back to how are we doing at the job level? Because normally when we start to see our numbers get out of skew now, granted, you can have problems in overhead. You've just said yes to too many things. Right.
[00:42:26.820] - Brandon
But I would say nine times out of ten if we went back and looked at our job level, gross profit margin, something had slipped. Right. We had started to deviate from process. A one time thing became a new adopted go to decision maker, whatever the case may be. So I just think that it's super powerful at minimum to establish your monthly revenue goal and then establish what's the gross profit margin that we're looking for, the job level.
[00:42:53.910] - Brandon
And those numbers are going to look different depending on the class of work that you're doing, whether it be in repairs or being mitigation, mold work, whatever the case may be. And just establish those, and you just talk about them all the time. They come up in weekly production meetings. You're looking at individual jobs, you're seeing how they're being produced. You compare that to goal, right? You identify those. So I think that those are the two big ones that you're going to want all the time.
[00:43:17.040] - Brandon
I think along with that, if we're just talking about numbers, I would say that it's absolutely critical then that your team also gets some kind of understanding on their closing percentages. Like we we need to understand that as our teams and our marketing efforts are being spent on and driven, what are we doing with that?
[00:43:36.090] - Chris
What's our cost of sales?
[00:43:37.470] - Brandon
What's our cost of sales? If we're going out and the backdoor's open and we're allowing that client to just walk right through the hallway every time.
[00:43:44.550] - Chris
we pay Two hundred bucks for that MIT lead. Yeah, right. We spent two hours of labor to go do that inspection. If we don't land it, we've got a sunk cost of four hundred and fifty bucks or whatever. Right.
[00:43:56.910] - Brandon
Well, and I think another place that this shows up and probably would have been an awesome opportunity in that little chat we did about sometimes you got to say no to a job. Is that are we saying yes to small work that cost us nothing to get and we're saying no to work that we've already spent money on to try to get in the front door? Right. And so there's these are just some of those numbers, again, that just equips our team with better decision making processes. Right
[00:44:24.570] - Chris
now,here's another example, too. I think there's this process of letting go as your company grows. As you have a general manager and you've got lieutenants under you. You've got a mitigation manager, a restaurant manager, you have office manager and maybe even additional kind of coordinator level roles. You're not going to be doing all the hiring forever. And I think I was like even simple details, like just because we're offering eighteen dollars an hour for a particular role does not mean that's what it cost the company.
[00:44:55.530] - Chris
These little details can really empower our people to help us make good decisions. And just like we all those of us who have that role or that background realize it's not 18 bucks an hour, it's like 18 bucks an hour times 1.2 . You figure in all the payroll burden and sort of the overall costs associated with that employee. And how many people outside of the office manager know that? And maybe the owner, obviously, maybe general manager, because they've had experience running payroll and stuff like that.Sure. But that is a big impact on what the total cost is. Right. So you've got downline staff that are starting to hire people and they have no knowledge. So those are the kinds of little things that we can teach people that in aggregate... So like you were saying, we don't have to dump all this on everybody in time. But when we go talk to our mitigation manager, who we just promoted six months ago, and they're getting ready to hire a new team member, breaking it down for them and saying, OK, well, how much work do we have in the pipeline?
[00:45:56.230] - Chris
Like, so what kind of production is available for this new hire? Do we have work for them? And how much are they going to cost? How much are you thinking of paying them and explaining these different things?
[00:46:06.760] - Brandon
How is it impacted?
[00:46:07.600] - Chris
How is it impacted? Right.
[00:46:09.340] - Brandon
And I know for some of the folks listening, they get it. It's like duh. They probably been dialed. some of it's personality, some of it's natural wiring, they're probably just more. It's just easier for them to do
[00:46:18.970] - Chris
But it may not be duh to your people. That's what we're talking about. It's like like how do we become less of the bottleneck? And I think it's information. It's all coaching.
[00:46:26.650] - Brandon
I totally agree. All right.
[00:46:28.480] - Chris
What do you think, should we wrap it up?
[00:46:30.760] - Brandon
So before we kind of jump in to that summary, maybe that's part of it. I just I want to encourage everybody to remember, like, we're not going zero to one hundred. We often will promote someone into and we use the terminology, my right hand or my left hand. That's great. I love that. I love the sounds of that. I believe it's an awesome opportunity to begin to mentor someone and equip them in a way that they may have not been equipped before.
[00:46:55.990] - Brandon
It obviously shows there's an immense amount of trust there. Just start by educating them. Just open the doors, be really clear and be super proactive about the way that you steward that relationship to this person that you've identified as your right hand or your new mitigation manager. Give them the type of information that they can control. That they can make decisions that they can take, actions that they can hold certain types of attitudes and behaviors towards that will move that in the direction it needs to go.
[00:47:27.730] - Brandon
So I think that's kind of like the starting place. Look at your team right now. Identify the one or two people that are just the key influencers, whether they lead a book, a business. Maybe they're just the one of the most influential team members on a small mitigation team. Whatever the case may be, start there, identify that person or persons and just start equipping them with enough basic information that they understand that the action I take, if I do it in such a way, it's going to give me the highest chance of meeting or exceeding this said goal or objective.
[00:47:58.750] - Brandon
I think that's the start there. And I think what you're going to determine is that once you begin to take little steps like that, you're going to realize there's lots of little ways for you to better and more proactively equip your team to just get better at doing the decision making on their own. And you'll be shocked how many times that decision making actually aligns very well with what your goals and objectives are. Not all the time, but again, it's more likely the more equipped that they are.
[00:48:24.760] - Brandon
So I guess it's kind of a weird it's part summary and it's part just maybe take a baby step. But at the end of the day, look, your team is probably more capable than you're perhaps giving them credit for. And no matter what, when we give people information that they can actually have an impact on, you're going to equip them in a way that makes them make better decisions. And you're also going to really encourage them to be much more committed and loyal to what it is that you're trying to achieve, because they get to see that they have a real impact.
[00:48:54.880] - Brandon
They're not just taking orders, they're not zombies. They actually get to participate in the success of the team. So I think that's just absolutely huge. And again, just don't overthink it. It's just let's give them some basic tools. Let's give them some way. And don't be afraid to jump on the whiteboard and do some back of the napkin training. Like you could do that tomorrow. And it would probably have a profound impact on at least a few people.
[00:49:16.720] - Chris
Yeah, I just think it's so cool. Like the manufacturing company, we talk about actually educating their team because a lot of companies do profit sharing. Yeah. And no one knows anything about how the sausage is made. Right. They're just kind of hoping. If we all work hard, we might get a bonus this year versus that approach of no let's educate you on the financials of the business and how the business works. And if you want to help move the needle, here's how you do it.
[00:49:43.900] - Chris
cut cost. Increase our throughput. Allow us to improve our manufacturing floor, help us make more sales
[00:49:51.280] - Brandon
increase your closing rate.
[00:49:52.900] - Chris
Right. Like admin team, like do a great job communicating with our wholesalers and our clients, and so one order turns into three. right. It's like you start to teach people how it all comes together and surprise, surprise
[00:50:07.890] - Brandon
they perform.
[00:50:08.580] - Chris
They contribute. They perform. It's crazy how that works.
[00:50:13.200] - Brandon
OK, we'll see you next time.
[00:50:16.860] - Brandon
All right, everybody. Hey, thanks for joining us for another episode of the MRM podcast.
[00:50:21.450] - Chris
And if you got something out of it, share it with a friend.Hit Subscribe.Hit follow. Leave us five star review. Thanks a lot.