EntreLeadership - My Husband Isn’t Pulling His Weight in Our Company

Episode Date: January 27, 2025

Today we’ll hear about:  A wife frustrated that her husband won't step up in their business   A young business owner looking for advice on how to market his small business  When it’s time to make your first hire  How Dave Ramsey compensates his team     Next Steps  📞 Have a question for the show? Call 844-944-1070 or send us a message: https://ter.li/ask-us  📚 Learn about the EntreLeadership System: https://ter.li/system-p  💻 Get EntreLeadership Elite for your business: https://ter.li/elite-p  ✉️ Sign up to receive tactical tools, advice and resources in your inbox every week: https://ter.li/enl  🏢 Attend EntreLeadership Summit: https://ter.li/summit   🎤 Attend EntreLeadership Master Series: https://ter.li/masterseries     Offers From Today's Sponsors  💼 Go to BELAY Solutions or text ENTRE to 55123 for their free resource!  💻 Visit NetSuite today to learn more.  🧾 Visit Payority for a free consultation!  📝 Use code ENTRE15 to get 15% off your first year of Trainual.    Listen to More From Ramsey Network  🎙️ The Ramsey Show  💸 The Ramsey Show Highlights  🧠 The Dr. John Delony Show  🍸 Smart Money Happy Hour  💡 The Rachel Cruze Show  💰 George Kamel  🪑 Front Row Seat with Ken Coleman   Learn More About Your Ad Choices   Ramsey Solutions Privacy Policy  Learn more about your ad choices. Visit megaphone.fm/adchoices

From the headquarters of Ramsey Solutions, this is the Entree Leadership Podcast, where I take calls from leaders like you about what it takes to win at any stage of business and leadership. I'm Dave Ramsey, your host, with over 30 years of experience leading in the trenches right alongside you. The phone number here if you want to talk is 844-944-1070. That's 844-944-1070. Or if you want to leave us a question on the line, you can do that. at entreleadership.com slash ask, and we'll make you one of the callers here on the show. Brooke is with us in Greenville, South Carolina.

Brooke, welcome to the Entree Leadership podcast. Hi, Dave. I met you a few weeks ago, actually, at Master Series, which was an amazing experience, by the way. Thank you. And if you don't mind me, given an unsolicited marketing plug, I would highly recommend that anyone consider going to go, and I will be there again next. year. Well, thank you. Thank you very much. We enjoy Master's Series. It's a long, tough week. You guys are tired when you leave. We're tired when you leave, but we teach a lot and we talk a lot. We have a lot of

group discussions, and you leave with way more information than your brain can hold in one week, but we want to make sure we over-deliver, so we're glad you came. Thanks for coming. How can I help today? Very, very accurate. So I am a CEO of a residential construction company. We did $3.6 million in revenue last year. Good. And I have a team of five, and that includes myself and my husband, who's the co-owner with me, and he's also the senior project manager. So we're currently in the trailblazer phase, and my husband's really having a hard time transferring

into more of a leadership role from being a hands-on and on the job site. So my question is, how can I get him on board with this transition into that more leadership role instead of, you know, swinging a hammer on a job site, so to speak. So he's physically doing work. He's not project managing. Well, he's project managing. So that's a, but he is, he likes to get in there with his subs a lot of times as well. But he is primarily project managing. I just need him. to be more in the office and helping me with the strap planning and the things that we're developing to move us into that next phase of Pathfinder. So I need him in more of a leadership role in delegating more of that project managing duties

to our other project manager. Okay. So you don't need two project managers? Correct. And that's what I keep telling him, that I just, I need him to be co-owner. slash CEO with me and out of project management, but I'm having a hard time. He really enjoys, I mean, he and I built his business,

so he enjoys that day-to-day work in relationships with our subcontractors with the clients and those sorts of things. So he's having a really hard time leading that aspect behind. He likes building houses. Yes, he does. My first inclination is to let him build houses. What is it that you need help with that you can't get done? So as we're developing into more of our strap planning,

we actually are working on that two days coming up. I took that from your master series, by the way, so we're working on it. So him and I really are the face of the business. And so as we develop that strategic plan out, I think there'll be some things in there that him and I will need to go out and be the face of the company, let's say,

with real estate agents and things like that to sell them when they have clients moving into the area. We have a lot of people moving into this area who are often looking for builders. And so I need him as a team member to go and with me to make those relationships, so to speak, part-time, not all the time, just at least part of the time.

And that's where he's having his struggles with allowing our project manager to actually project manage and him helping me make more of those types of connections and decisions just on moving the business forward. Okay, I think maybe we need to reframe this if I were in your shoes, okay? he probably in his day job need you know as a team member what is his role his KRA it probably needs to be 80% project manager he enjoys building houses he's good at it it's how it's how y'all got here it's what brought you to the party and he doesn't want to do the other stuff he's been pretty clear about that then the other part of the discussion though is that there's a different thing so i'll use our family

as an example okay my daughter my oldest daughter runs our family foundation that's her day job okay and so she does all handles all that everything having to do with philanthropy and generosity and so forth she is also one of the owners of ramsie solutions as an owner of ramsie solutions she has things that she does as the owner. Because when you're an owner, you go see clients in your case. And you're the face of the business. And in her case, what she's doing is she sits on the operating board and she sits on a couple of our key work groups internally as an owner.

She does not work for Ramsey Solutions, but she's the owner. Okay. So he needs to pick up or he should pick up, I think, some of the owner duties, which is what you're looking for. Right. But this idea that he has to be co-CEO in order to do that. No, he doesn't. He can just go, my wife and I owns this.

She's the CEO. She runs all the ops. And we both together go dealing with and meet the real estate agents as the owner. As the owner of the company, we're co-owners. So I run the projects in the field. She runs the office back home. She helps lead the stratop, lead the overall team and strategy. I love being hands-on as a builder, and that's what you're going to get.

And this is him talking to the real estate agent with you. Right. And so he needs to carve out part of his work week to be an owner. Yes. And that's where the struggle's been. I think the difference is he keeps thinking you're trying to drag his butt in the office and he doesn't want to live over there. I think you're right.

Yeah, so you need quit saying that because he's not going to do it. So I think instead you say, hey, as a co-owner would make, here's what we need to do as owner. But that doesn't mean you're going to be co-CEo in the office. Okay. That's different. Instead, you need to be the best project manager we got because you love building.

You're the reason we build. This is how the whole thing started was because of your love of swinging a hammer. And you're going to swing a hammer less and less. You know that as we get bigger and bigger, but you don't have to be in the office to keep from swinging a hammer. But you do have to come with me on these client visits.

and we go to the realtor lunch and you've got to go be the face of it. Because if I wasn't here, that's what you'd have to do as the owner. Right. You know, there's some of the parts of executing your strategic marketing plan that involves the owner in a small business like this, going and doing some owner jobs. And then he has a team member job, which is project managing. I think if you can designate that differently,

then he gets away from the worry that you're trying to make him sit in an office all day, which would make him want to shoot himself, right? He didn't want to do that. I can sympathize with that. And so, yeah, let's redefine this and say, okay, there's some things that we're going to do together, not as our position in the company, but as our ownership position.

As owners, here's what we do. As owners, I need to do this, this, and this. And so, like, we have things, after 90 days, our new team members all come into a room and we talk to them. and some members of the Ramsey family that are owners come in and talk to that team. Sometimes it's my son Daniel, who's the president,

sometimes it's Rachel, who's a, I'm there if I'm in town. Sometimes it's Rachel, who's a personality, and sometimes it's Denise who runs our family foundation. But that's their day jobs, but as owners, they show up and talk to the team members at Ramsey Solutions, that kind of thing. So, yeah, designating that and bifurcating that out, I think will help you in this overall process. I think that's where we're going to go to.

So that's a really good question. Sounds like a cool business. I think you guys are doing really good, Brooke. Way to go. And again, thank you for coming to Entree Leadership Master Series. We love that week, and it's an incredible, incredible time. It's almost sold out for next year, folks. If you want a ticket, you probably need to jump online right quick.

This is the Entree Leadership Podcast. I'm Dave Ramsey, your host. This is the Entree Leadership Podcast. Thank you for joining us. If you want to help us out, you can do that by leaving a nice five-star review subscribing to the show. Click the subscribe button. It's a big deal. Click the follow button.

That's a really big deal. Click the share button or cut the link out and send it to someone and say, hey, listen to this show. You're our only marketing plan. You're our only hope. So thank you. We appreciate you. A bunch of you have been doing this because our numbers are way up. We really, really appreciate you hanging out with us.

Nate is in Raleigh, North Carolina. Nate, how are you? Hey, Dave, I'm doing pretty good. How are you doing today? Better than I deserve. What's up? Oh, actually, I'm calling on that marketing plan you were just talking about there. So, in brief, I own a small plumbing company here in Raleigh, North Carolina.

I've got three-time team members, including myself. And basically, I've hired another full-time plumber on, and I found that I have enough work to keep him busy, but not enough work to keep myself busy all the time. And so I'm trying to figure out where's the best ROI to, you know, start marketing the company a little bit more than just word of mouth. Who's your customer? Residential and commercial service plumbing. Okay.

So commercial is businesses. Yes. And residential as individuals. What percentage of your business is commercial? What percentage is residential? I would say about 70 is residential and 30 is commercial. Okay. So are you doing repairs or new on residential?

Repairs. Repairs. It breaks, I fix it. Okay. So people call up with a broken plumbing issue and your team goes out. Yep. How do those people find you? a lot of it's just been word of mouth.

You know, the only advertising I have done is I've gotten my trucks painted up with like the company name and the number on the side of it and stuff. But, you know, I want to keep growing this thing. So you're keeping two or three plumbers busy doing repairs in houses off of painted trucks, off of painted trucks and word of mouth? So two plumbers, including myself, and then an office lady who works from home. Oh, okay. So the new plumber was the first hire you've done that does plumbing.

Yes, sir. So prior to that, you were keeping yourself busy. Yes, sir. I've been wearing out that treadmill. Okay. Gotcha. Okay, good. Hmm.

Well, the reason I ask all these questions is my first inclination is always just to do more of what you are already doing. How can we throw fire on the word of mouth, the referral business? And so I think the first thing I'm going to do is just as you're wrapping up the job and they're paying you, they usually pay you right then, don't they? Yes, sir. I'm handing them a flyer or a business card and saying, hey, a young guy, I'm starting a new business here. It's just growing.

Anybody you can tell about this, I'd be really appreciative. Spread the word for me. And let's take the existing word of mouth and just add a... You'll double it by just asking them to help you. Okay. Because what's happening now is they just think of you when something comes up. But nothing prompted them to do that.

I want you to prompt them to do that, and that'll increase the numbers. Okay. That's the first thing I would do. You got a good website? It's okay. Okay. We live in a website world, my friend. Okay, doesn't cut it anymore.

So let's, if you want to do a little bit of investment in advertising, let's build that website a little bit cleaner, a little bit crisper, easy to find you, easy explanation of your services, easy to contact you. And if someone contacts you on that website with your email, you answer immediately. We live in an instant world. People have zero patience.

You email me back the next day, I have a plumbing problem. I've already got someone else to do the job. Absolutely. So you have to answer right now. If you're on a job and your phone buzzes, you stop a second and you answer that client and then you go back to fixing that job. And that's what you, because you're answering the phone is what it amounts to. And they're probably not going to call you. They're probably going to email you or even text you and make that very easy on the website. Don't make it where they have to fill out a form with their problem. Yeah.

The people don't do that. They move on to the next site. So make it no friction. So let's spend a little money on the site and create a clear contact. And then your next stage would be some basic SEO, search engine optimization. How can we get people in our area to find my website when they're searching, I need a plumber? And that's an SEO function. and you can hire someone outside the company.

Do not hire a full-time person at this stage, but just hire someone that does SEO consulting and, you know, pay them $400,500 to get your basic SEO, where your website will show up when someone types that in Google. And it's really not hard to do because, you know, you're not in New York City, so there's not 5,000 people. There's you and a handful of other people in Raleigh. So it'll show, you'll show up,

four or five other people will show up. So if I type in heating and air in Google, it'll tell me, sometimes it'll say near me, right? And it knows, you ever done that? And when you're looking for something, a restaurant near me. I need a biscuit near me, right? And it'll pop up biscuit places near me. Well, that's called SEO. That's called search engine optimization.

That's a search engine. When they type that in, it needs to pop up your site. and you know what I would do when they find your site, I would put on their small business owner, support local small business, make this kind of a patriotic thing, meaning we're not big corporate plumbing America. We're a little guy.

We're a little guy. We respond really fast. We're small and our prices are very reasonable. Okay. And see if you don't get some response to that when people find you on the site. I think if you do that basic thing, that's the very first steps in digital marketing,

very primitive steps that I gave you. Nothing sophisticated about what I told you at all. And you ask your current customer every time you're there to send you business and help you. I'm a young guy trying to get started. Please help me out. People like to help other people out,

especially if you do a good job for them. You know, and you don't have to do a big sales pitch. You're not trying to get them to subscribe to something. You're just going, hey, I'm a little guy. If I helped you, please tell people about me. I'm trying to grow my business. They like doing that, you know. They like helping people that are getting started.

And they feel like they're a part of your operation then, where if you're a huge company, they don't feel like that you need their help. Yeah. That's an advantage for you. If I can ask just a little bit more just for direction, Sure. Would you suggest that I stay more residential because that's where bulk of my business has been or try to get more into the commercial because that's a lot more of like return business.

I like having a mix. I like that you've got a mix. Now, marketing to the commercial is going to be more referrals, less search engine optimization stuff. What I was describing a while ago was more of a retail, what we call B to C, business to consumer. your commercials B2B business to business. And you're right, that's a return business. And that's probably, the way you're going to get that's probably like through property managers. Okay.

People managing commercial properties. Because a lot of the, a lot of businesses are tenants. They're not necessarily the owner of their business. And so the property managers, who sends out the plumber. Okay. So I start calling on, if you got a little time on your hands, find out who's managing commercial properties in your area and drop by with a box of donuts and say, hey. Yeah. Duncan and Krispy Kreme, everybody speaks that language, I'm just saying.

No, especially around here, Christopher Cream especially. Hey, you're a good man, Nate. I love what you're doing. You're thinking, you're hustling and grinding. You're exactly who we are here to help. for hanging out with us, brother. I love it. This is the Ontario Leadership podcast.

On this podcast, I talk a ton about the Entry Leadership System, the small business roadmap that takes the guesswork out of growth. It includes the five stages of business, treadmill operator, pathfinder, trailblazer, peak performer, and legacy builder, and the six drivers of business that literally drive your business forward. personal, purpose, people, plan, product, and profit.

Now, we've seen this system work for tens of thousands of business owners like you, and we want to reach even more. So we have an exciting announcement. In February, we'll be starting the pre-sale of my new book, Build a Business You Love. The book breaks down each stage of business and the unique challenges you'll face in that stage, so you'll learn how to solve the right problems at the right way and the right time. Build a business you love is the essential guide for a business owner like you

who wants to grow your business the right way and leave a legacy you're proud of. If you'd like to be the first to know when the book is available for pre-sale, well, join our interest list at entreleadership.com slash book. Or just click the link in the description if you're listening on YouTube or the podcast and we'll get you signed up. One of the things that comes up around here a lot is when am I able to make my first hire? So there's a lot of factors in that.

Let's discuss a couple of them. The first hire I ever made in this business was 30 plus years ago, and it was a guy named Russ Carroll. And Russ came on as a financial counselor. I was doing financial counseling, helping people that were in crisis, and I was doing a little radio show, and I was doing a little bit of speaking here and there.

And I had a little book I was selling out of the trunk of my car. Those were my income streams. And I was booked all day long, solid and had no time left for financial counseling. And I had people trying to get in that I couldn't get in. So I had more counseling than I had time to do. Meaning, that's rule number one. Do you have enough work for the person you're thinking about hiring? I'm sick of doing this or I've got too much of it to do and I can turn it over to them and never look back.

And so a friend of mine introduced me to Russ. He came up and visited our church. We went out to lunch afterwards, then came over to our house. Our kids played together in the backyard. We kept talking for hours. It's not how you do an interview, but it's how I did that one. and I told him I don't want employees, employees come late, leave early and steal while they're there. I need people partnering with me in this. I need team members. I need people to walk with me.

And so they'll do it the way I do it. That'll do it like they care. That'll pour into it. And Russ certainly was that. He was that and many things more. He stayed with us almost 20 years and retired from Ramsey. He was the first person hired and the first person to retire here. Pretty cool. Great guy, by the way, still friends. He and Joy are still friends of ours. And so number one is, do you have more work than you can do? And so I had more work than I can do. I did not have double.

And so I told him some of the, you know, some of the coaching counseling slots, you're going to have to fill up. You're going to have to hustle out there and go talk to some marriage counselors that need, has a marriage couple of their counseling that need financial coaching and let them know you're here. You're going to go talk to some pastors

and tell them that you're here because they need help. They have people come in that need help with financial counseling. And so you've got to go out and generate some leads to fill up the rest of your book because I can't fill it all up,

but I can give you a few of my overflow because I'm not going to quit doing it. I'm just not, I just can't get to what I have. And so do you have enough work and do you have a method for them to have enough work to keep them busy? Otherwise you wouldn't want to hire somebody.

And so oftentimes you feel completely overwhelmed with the work that you're losing because you don't have enough help before you hire the first person and that's okay. You don't want to hire the first person and both of you starve because you don't have enough work. So I'm fine if you're like stuff just splashing all around you and you go, okay, I really do need another bucket here. You know, and you're probably going to feel some stress right before you make the, hire and that's good. That means you've got, because there's just stuff flying everywhere and you've got to have some help, that kind of thing. Not, oh, I hope, I hope this all works and I'm kind of bored,

and so let's get two people in here that are kind of bored. No, I don't think that's a plan, all right? So make sure, number one, do you have enough work? Then number two, people always ask, do I have to have money in the bank? No, but you have to know how you're going to get money to pay them. And so, again, that goes back to the first thing. Do I have enough work for them to do? That work should be generating money and that money gives me money to pay them with.

Pretty simple. So our last guy hired a new plumber. Can he keep that plumber busy? He was already a plumber. Now, he added a plumber, and he's keeping that guy busy, but he's not quite busy yet. Okay?

Yeah, but he can pay the other guy. But he may be taking a little bit of a pay, cut to pay the other guy right now until he gets his volume of production back up. But he at least made the move. So you don't need six months of their salary in the bank, although it wouldn't be bad, but I prefer you have just that you see a way that you're going to monetize on the hire, meaning I'm going to pay them X number of dollars and I'm going to make Y number of dollars above what I pay them. That's why we pay them. We don't hire people to lose money on them. We want everybody that you hire, you should make more on them than they cost.

Otherwise, you go broke. So it's either direct revenue, if it's someone like that plumber that's producing, or it's indirect revenue, like you hire office staff so you can go do more plumbing instead of doing paperwork back at the office, which makes you no money. But that person doing the paperwork is freeing you up to make more money. So revenue is increased by either administrative staff freeing up people

or people actually doing the task. So we need to have revenue increase more than enough to pay the person that you're hiring and see your way to cause that to happen. Do we have enough work for this plumber? If I think I can keep him busy, now you've got to have money in the bank to cover that part of I think. But if you're like, God, I definitely keep him busy. A thousand percent I keep him busy. Yeah, well, then you're going to make money on him and it's easy to pay him.

It's pretty easy. So that covers that. No, you don't need a certain amount of money in the bank. Now, every small business needs to start building retained earnings. You need money in the bank, period. But do you have to have a certain amount in the bank before you do a hire? No, you need to see a way that you, with integrity, honesty, know that you can pay the person what you've promised to pay them.

You're not going to have to lay them off four weeks later because you didn't do math before you brought them on. And they, you know, they don't produce anything. and you had no way for them to produce and there was a wing in a prayer. No, that's not fair to them. So if you're going to do that crap, you do need six months on money in the bank, and then you're going to burn through that

and still be screwing up. So no, find a way to create the revenue. Know that the revenue is coming in on what it's going to cost them. Number three, your first hire is by far your scariest hire because you don't have any idea what you're doing. When I did my first hire, I was dumber than a rock,

but I was a little bit smarter than Russ. Sorry, Russ. But, I mean, seriously, I mean, my interview was bad. We go to church, go to lunch, and all afternoon. This is the interview. And then he started two weeks later. We moved the card table on the other desk out of my living room and a U-Haul into a tiny little 800-square-foot office

and Ramsey Solutions was born, although we didn't call it that back then. So it's something you've never done before, and any time you're doing something you've never done before, it's scary. Or you're dumb, one of the two. I mean, if it's not scary, you're unwise, right? If you're doing something you've never done and you're cocky, you're getting ready to lose your deadgum heads, so don't do that.

But I'm saying, walk in, you can be confident, go, I believe in what I'm doing, and I need some help, but I've never done a hire before, and you're the first one. and you know you don't necessarily have to be the interview professional and know all the trick interview questions like some corporate hr goob or something but but expected to be stress inducing and by the way the first person you ever let go fire super stressful the hundredth time you do it not stressful at all for you is for them but not for you not because you become heartless and callous but because you finally figure out after doing that 100 times,

nobody's going to die. I'm not going to die, and he's not going to die. She's not going to die for not working here. We're all going to be okay. As a matter of fact, a year from now, we'll both be better from them not being here because they need to leave. And so you reach that point, right?

And so the more you do something, the better you get at it, and the more you realize it's not the end all to be all. It doesn't shut down and mess up your whole life. And so same with your first. hire. If you screw it up, you can do another one. God blessed me, and I found a really unusually wonderful person with my very first hire. And he stayed with me almost 20 years, like I said. And that may not happen, and that's okay.

The second person I hired did not stay with me 20 years. They didn't even stay with me 20 months. The third person I hired stayed with me two years. the fourth person I hired, I don't know who that is. I can see the other three very clearly, but I don't remember the fourth one. I'd have to go back and look it up. So you see my point. It gets easier, okay?

So it's not the other world. It feels different, but you're not God and you're not their provider. You're simply hiring them for a job. and you're not asking them to commit their entire soul and their life and mortgage their house for you, they're just coming to work there. That's all. It's so chill out. It doesn't have to be so freaking stress-inducing and just have some fun with it.

Do I like this person? Do I want to work with them every day? Because by definition, it's a small business and we're going to spend a lot of time together. I don't want to hang out with you. I don't like this person. They're icky. Well, don't hire them. It's a small business.

The last thing I'll tell you that I did a lot, and I always do it a lot more when I'm in a stressful situation, a new situation where I don't know what the flip I'm doing. And that is I pray, and I ask God for help. God, I don't have any idea what I'm doing. But you're not surprised with this. Can you help me? Can you send me some good people?

And please, God, keep your crazy children away. Because, God, you have some crazy children. Some of them are nuts. And he knows that. He knows which ones they are, and he knows if you're one of them. And so there you go. Which list are you on, right?

So, I mean, have some fun with this, guys. But your first hire is, it's like the first time you drive a car. It's the first time you're out of bicycle. It's the first time you do a speech. First time you stand in front of a microphone. The first time you do anything, It's, you know, you freak out.

Your vocal cords tighten up. Your stress, all your physical stress symbols, signs are there, everything like that. That's normal. But do it anyway. Because otherwise you're going to be a solopreneur, which I got to tell you, is fun for a while, but pretty quick you get tired of it. Doing everything yourself. You're the CEO, the chief everything officer.

No, thanks. That's a lot of work, y'all. Get somebody to help you. do the work, give them some of your money, give up some of your money and get some of your life back. And that's what your hires are. I'm going to give up some more of my money. I'm going to get some of my life back and I'm going to get a little bigger. And then I'm going to give up a little bit more of my money and I'm going to get more of my life and I'm going to get even a little bigger. And every time you do it, that's what you should be doing in thinking. This is an investment

into people and into your business and into having a quality life. So you definitely want to go that way for sure. So first hires nerve wracking Do it anyway, boys and girls This is the Entree Leadership Podcast Thank you for joining us America This is the Entree Leadership Podcast Brad is in Lake Charles, Louisiana

Hey Brad, what's up? Hey Dave, thanks for taking my call Sure, how can we help? Hey, look, I want a small construction company We do about $6 million worth of work a year I have about 20 employees the end of the year is approaching, and this is the time we normally issue yearly bonuses and pay raises.

My question is this. How should we be calculating end of the year bonuses and pay raises for our team? Should we factor in the company profit, their performance, company performance, and how long had they been a team member? I'd like to develop a formula for calculating this year in and year out for consistency purposes. any advice you may have would be greatly appreciated.

Good for you. It's a great question. Rases are different than bonuses or profit sharing, okay? Raises are based on performance and based on what it takes to keep that job full. What would I have to pay to hire someone if I didn't have this person here? They're worth at least that and a little more. Okay? So if they left, what's the purpose?

prevailing job market on that position. You follow me? And so raises are based on that plus a little replacement costs plus some because they're more valuable than somebody coming in and off the street that doesn't know your company. And two, raises are based on, you know, their performance, how good they are at their job and that kind of a thing. Now let's set that aside. And I don't do that at the end of the year. I do that on their anniversary. So if they were hired in June, I review them in June. We're having meetings all throughout the year talking about things that need to get better and things that they're doing right. But then in June, we confirm all of those meetings and have an annual review. Ask them how they're doing what we can do better and tell them what they're doing

right. I don't do a bunch of correction in the annual review. I would do correction long before I got to the annual review. But I do give my raises then because it reminds me that I don't go four years accidentally without giving somebody a raise just because I didn't pay attention. You did that one time, but we don't do that anymore. So raises are done on an annual basis. Now, so bonuses and profit sharing, I would lump into the same thing, and that is not based on performance only. We sat down and started doing that monthly, the month following.

So like we close up, for instance, February's books, and we see what our profit is for February, and then we apply the formula that you're going to develop to that profit, and we pay that profit sharing out March 15th, two weeks after the books are closed for February. Does that make sense? Yeah, okay. So we pay it out monthly.

Because if they only get it once a year or once a quarter, they disconnect it from where profits come from. They just see it as like money that just flew in from nowhere that they've got no control over. But monthly, we remind our entire team, profits, we stand on stage in staff meeting and say profits happen when revenues go and everybody says up and when expenses and everybody says it goes down. So we all are self-employed. We all are trying to get revenues up and expenses down.

There's more profit and then we can share that with you. We're all self-employed. so we remind them, and then we tell them what the profit sharing looks like for that month. It's going to be up or down or whatever. And so we do that once a month so that everybody's tied into getting revenues up, expenses down, because that's what lands in my pocket next month. So that frequency and that reminder helps them help us run the business, because everybody's involved in keeping expenses down that way.

Everybody's involved in making sure revenues go up, the customer's happy, and so on. So now, when we first instituted that, we did it quarterly and people didn't count it. Before that, we did it once a year at Christmas and people didn't count it. Now, if you just want to give a Christmas bonus, that's fine. You just give them some money. And there's not a formula for that. You just figure out what you can afford and you give everybody $100 or by $1,000 or whatever you give them, right? And that's just a Christmas bonus and you're just Santa Claus's helper, right?

That's all you're doing. but I'm talking about sharing profits literally. So what we do is we take a percentage and we might change the percentage and we don't disclose the percentage of our net profits and we share it with the team. We dump that number into the formula. Now, when we first started doing this,

we had to develop the formula and we took a person that was a high performer that had been with us 15 years, and we took a person that was a high performer that had been with us a year. And we took one that had been with us seven years. And we ran the formula based on that

and said this is what they would get. And then it just, how does that feel? Does that feel right? And honestly, we looked at it and we went, no, this person that's been here a year is getting way too much compared to the person that's been here 15 years with us. And we realized

that people that have been with us a long time have been helping us carry the water. And we don't have anybody here that's just here because they take up space. If you're just taking up space, you get to leave. So if you're here 15 years, it's because you're a stud, right? Or a stud-et. And so, you know, we don't have 15-year people

that aren't excellent, incredible people. And they've been here, you know, all this time, put up with all kinds of crap like I have and you have. And, you know, they've been scratching and clawing with us a long, long time. And so we feel differently about someone 15 years than we do one year. We're not mad at the one year people, but we just feel like we owe that 15-year person more.

You may not feel that way. But when we ran the formula out, we figured out that time on the job was more valuable to us. And so we weighted our formula mathematically more to time on the job. The second thing that we did was we, we wanted part of the formula to be on their attitude. That has turned out to be a waste of time. We said, okay, how's their attitude and their work ethic and so on,

their overall feeling about them? Are they a one, two, three, four, or a five, a five being beyond excellent, a one being we're getting ready to fire them, right? And, but a three is you're just doing your job and you're fine. and everybody basically ought to be a three. Occasionally something's going on, and it's been an unusual season,

and they might jump up to a four or a five for a couple of pay periods, and then they drop back down to a three. But a three at Ramsey is an excellent person. Okay? If you're at a two or a one, we're probably talking to you about whether you're going to stay or not.

And so what we figured out is we don't want to cut the pay on a two or a one. We want them to straighten up or leave. And so we don't really like that part of the formula, and we have taken that part of the formula that used to be in there out. We don't use it anymore. That makes sense? Yeah, it makes sense.

But that's the process that we went through. We thought we want to gauge that and reward them based on just their general attitude, effort, demeanor, so forth. Likeability, whatever it is. The third thing was the profitability of their area. and I thought that was a really important thing, and again, I was wrong. Meaning, if Entree leadership is super profitable, that the production team in here on the thing is going to get more in their profit sharing check than the production team in an area that's not profitable, or as profitable, because they helped create that profit, was my theory.

but it turns out that the person doing accounting in entree leadership has very little to do with whether there's profit or not and a good accounting person in entree leadership should get as much as a good accounting person over in Financial Peace University even if it's not as profitable and by the way both are very profitable but that's not the point but so I thought I was kind of rewarding the team that was winning that made sense in my mind but then when we actually ran the formula out and went, that doesn't feel right, because that accountant over there is doing their job, they're doing a great job, or that personal assistant over there is doing a great job, and it sucks for them that they signed up with the wrong team, you know, that's not as profitable. No, that's not what we

want to do. That's not how we want this to work. And so again, we weighted that much smaller. So I take that back. The attitude thing, the one through five is still in the formula, but it's weighted very small. Most of the weight, it turns out now in our current formula is time on the job. So across the whole company, if you look at 1,100 team members, the people that are getting our profit sharing, a person who's been here 15 years is going to get a profit sharing check that's much more sizable than a person has been here 15 months. That's what we end up waiting it on more than anything else.

Even though the other two things when we first started this, we thought that was the cool way to do it, Brad. Now, you can add whatever you want to add. I just made those up. You know, they were not, they're not unique. I didn't even study another company that did it. We just made it up and say, okay, that, but we do have a math formula that says,

number of years on the job, multiplied times this, and let's say our pool is, I'll just make up a number, is a million dollars we're going to distribute, okay? In your case, it might be $40,000 or $10,000 you're going to distribute. I don't care what it is. and then here's what they get as a percentage of that based on this formula. And so the math automatically then creates the payroll. We don't even have to look at it.

Yeah. Yeah, and that's kind of, that's really what I'm kind of driving towards. If I can develop this formula, it should make it easy and it should, I want it to be fair to our personnel, but also towards the company as well, right? But what I'm telling you is, and you're exactly right, that's a perfect way of saying it. When you run the formula, run some samples. out and put people's names beside the sample and go, wait a minute, that doesn't feel right, or that feels exactly right.

And so we had to adjust the porridge until it was just right. It was too hot and then it was too cold, right? And so, like, you know, I'm even thinking of the person's name. I'm not going to say it. That was with us at the time. We kept looking and go, she's incredible. She's been here 15 years and she's only getting this tiny bit more than the person that's been here seven years.

no that doesn't feel right and that's up to you to have that feeling because what's fair to you is all that matters because you're the freaking owner you're the one deciding what's fair and because there's not a set moral standard on this or ethical standard on this you know you want to you want to give everybody that qualifies something oh i'll tell you what else we did we took all leadership out of the formula. None of them get profit sharing. Because they all share in the profits other ways in their comp plan, right? So they're not, the profit sharing is not spent on them. We took all the salespeople that are on commission. You want some more money? Go sell more. They're out of the plan. Now, if they're, if they're just been here a little while and they're, you know, they're on the base and they hadn't

started making commissions yet, we'll put them on it for a little while. But once they start making bank, and somebody sells people make good money, you know, then they could, they could control their own destiny. But this is for somebody that isn't directly affecting their own income with their actions. And I want to share with that person in marketing. I want to share with that production person. I want to share with the folks in the booth right now. I want to share with, you know, people that aren't out there necessarily on a commission of some kind, but yet are helping to create the profits that are here. And that's what I'm looking for. So we carved out certain people, and that left more for the ones that are in it. Oh, and you don't get profit sharing

do you've been here a year? That helped too. So number of new people coming into the plan each month, number of old people dropping out of the plan each month. That, you know, so what's the net enough? So we have 32 people more in the plan this month than we did this time last year, or whatever the deal is. And so you just talk about. that through. And again, we tell the team everything except the numbers, the actual dollar amounts and the percentage of profits. We don't share that. Because we might change it. It might be more later. And so, but yeah, you're on to something, Brad, when you say, I want a formula that's automatic, but you need to run the case studies out in the formula, and you and a couple of your leaders that are privy to

the numbers, look at it and go, how does that feel? We're looking at Bob over here. We're looking at Bob over here. We're looking at George over here. We're looking at Laura over here. And does that feel right that they're getting that much versus the other one based on how we want our company to place our values? And, you know, that's the whole process. So very, very well done, sir. Proud of you, man. Six million dollar construction company in Lake Charles, Louisiana. Whoop! There we go, baby. Hey, folks, remember better a weary warrior than a quivering critic. This world needs more high-quality leaders, so take courage and lead. I'm Dave Ramsey, your host.

Thanks for listening to the Entree Leadership Podcast.