Pest world 2013 managing people for profit

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!

© Triangle Pest Control LLC. All Rights Reserved

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


Definition of terms

What is your definition of winning in business?


Definition of terms

What is winning in business? “Profits and cash are the only true measure of health of your business” -- George Cloutier


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


Definition of terms

What do you consider a “healthy” profit (before taxes)?


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)


Definition of terms

How is productivity defined for this discussion? - How many people measure this? Care to share?


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


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


Part I The thought process of how we run operate our business (the theory)


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


What is the largest expense on the P&L?


What is the largest expense on the P&L?

Payroll In my example, some business owners have misplaced enthusiasm for making a profit


Profit comes from productivity

What do we really sell customers? -  Operationally speaking? This is not a marketing

presentation!


What do we really sell customers?

Time


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)


Do you see a trend?


Principle #1: Profit comes from high productivity


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


Why are we talking about pirates?

This is a logic fallacy Sometimes we have the tendency to confuse causation with correlation… Causation ≠ Correlation**


**Interestingly… The number of pirates in the last 8 years have skyrocketed. As such, the planet has been cooling

Quick question


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


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?


Who are these guys?


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.


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.


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


Principle #2: High productivity is a first a function of culture and then strategy


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


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.”


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


Principle #3: A disciplined culture produces high productivity


Disciplined culture

Profit

High productivity

Part II How we developed our culture and productivity to support a high profit company


How we created a disciplined culture


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



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



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



Change #1: I had to be disciplined myself in how I managed the company and how I engaged my managers



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?



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



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



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


Riddle

What cost us 4k in three weeks (with $0 return on capital) and only increases exponentially each and everyday that it exists?



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



Disciplining people Disciplined people Step 1: Creating a disciplined culture starts with staffing with disciplined people



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



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)


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


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%?



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?



During the tenure of a politician, what is the most productive time?



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…)



Change IV: We got very deliberate about the on-boarding process of each team member


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


How we improve and manage productivity


Disciplined culture

Profit

High 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



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)



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



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.


How we created a high-profit company


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


Triangle Pest Control Business Framework


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


Questions?

Donnie Shelton Raleigh, NC

[email protected] @donnieray3

Pest world 2013 managing people for profit

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