EntreLeadership - The Best Calls of 2024

Episode Date: December 30, 2024

Today we’ll hear about:  A son who is fed up with his dad for draining their business’s profit  A business owner considering sharing the profit with his team  A brother wanting to buy out his brother who hasn’t worked in four years  A man who struggles with hiring the wrong people    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  💼 The Ken Coleman Show    Learn More About Your Ad Choices   Ramsey Solutions Privacy Policy  Learn more about your ad choices. Visit megaphone.fm/adchoices

Happy New Year from the headquarters at Ramsey Solutions. You're listening to the Ontario Leadership Podcast, the show where I take calls from business owners and leaders just like you about what it takes to win at any stage of business. I'm your host Dave Ramsey with 30 years of real life experience, founding, leading, and growing successful businesses. Our team has compiled a list of top calls and best interviews from 2024 to launch you into another year.

of hard work and impactful leadership. First up, a call from Gary in Seattle, Washington. Gary and his father co-own a business, but Gary's frustrated about his dad continuing to take home a large sum of the profits without doing any of the hands-on work anymore. Let's take a listen. So I own a dewatering company,

which is a specialty contracting business, and have about 12 employees, and I'm the 49% owner and my father owns 51%. Okay. Okay. We do about $3 million annually and this is a 15-year-old success story. We started from Ashes in 2009 and here we are and we're just, we're doing really well. But my problem is that over the last five years, in 2019 I tried to buy my dad out and it didn't work.

and we've been very successful since then. However, my dad doesn't participate in the business. He just rakes in all the money. So he takes about $20,000 a month, and so do I. And then we split it at the end of the year if we have any profits. The problem is I've come to the end of my rope on allowing him to continue to take, take, when I feel like I can't grow my business because all of my profits, or a lot of them are going to my father, who doesn't participate.

Okay. There's two or three elements to this process. The first thing is, is we need to break apart the idea of ownership and working at the company. You can be an owner of a company and not work there. Okay. That's perfectly fine. There's nothing wrong with that. You can be a member of the family and not work there. and not be an owner. So in family business, the famous family business guy that wrote probably some of the books,

the longest to go is a guy named John Ward out of, I believe it's Minnesota, if I remember. Anyway, John put together the Venn diagram that a lot of people use, and it's got three circles. One circle is family, one is owner, and one is team member or employee, okay? You can be all three of those, which would be where the three circles interact, intersect on the Venn diagram,

if you can see that in your mind. Or you could be two of those. You can be a family member, an owner, but not an employee. You can be, in your case, you're all three, okay? And your dad is just an owner and a family member, but not an employee. So when you break that apart, then you go, okay, owners get distributions of profit. So where Euro's model is broken is that Gary is not being paid a salary for being the CEO. Mm-hmm.

You should be getting on a $3 million business, a couple hundred thousand dollar of your salary before we talk about splitting up profits. Mm-hmm. And I do get that, but he also gets it too. So basically he doesn't get a salary. He doesn't work there. Right. Right now he does, though. My point is that's the problem.

I know. That has to stop. That has to stop. We're not going to pay someone a salary that doesn't work in the business. Now, they can get distribution of profits after the salaries are paid. So he should get, so let's say, what is, do you have a salary plus the $20,000 a month? No, uh-uh, we just call it a, uh, that's what I'm talking about. You just call it.

You've completely screwed this up. So that's where the problem's coming in. So you need to get on the payroll of the company. as the CEO and president of the company, and the payroll needs to pay you a quarter million dollars a year. Yeah. Okay? Then what is left after the CEO is paid is called profit.

And the profit can be distributed not to the employees, but to the owners, of which your dad would get 51% of the profits that are distributed, and you would get 49% after the CEO is paid. Mm-hmm. That's how this should be set up. I agree. Now, once it's set up that way, then you could still have the complaint that your dad won't let you buy you out.

And that's another discussion. Mm-hmm. As a matter of fact, I just got the business evaluated. I haven't got the number yet, but that is my next move, is to get him to the table and buy him out. Yeah. And tell him that I've been awful nice letting him basically, you know, No, that's not going to be good at all. Your dad doesn't feel like you've been awful nice.

And you're saying that is not going to do anything but rile him up, dude. Okay. It makes you feel better, but it's not going to, what are you trying to accomplish here? Rile him up or are you trying to get the deal done? I want the deal done. All right, then quit riling him up. Quit whining. All right.

So sit down with him and just say, look, you're an incredible businessman. You and I built this thing from the ashes. and now you want to be at home, and I have to, for the sake of my manhood, for the sake of my dignity, I have to be running this thing now, and I have to work out something to buy you out. I can't do it this way anymore.

I want to honor you. You're one of the founders. You know, you help me get here. You taught me what I know, and I want to be, I want to honor you, but I can't go forward with this anymore, Dad. So help me figure out a way, that I can buy you out in a way that makes you smile

and that is not, that does not violate me in the process. And let's sit down and talk about that and not go, you know, I've been doing you a big favor, it's over. You know, that doesn't work, man. Understood. Now, I have hired an M&A attorney. If I did it to you. Right.

I agree. Now, I wouldn't hire an M&A attorney, but this time, compared to last time five years ago, this time we hired them together. See, and I think that's the key to me buying them out. There is no Gary's attorney or David's attorney. It's our attorney, and he's got our best interest to get across the line. We need a cup of coffee.

We don't need an attorney. You can have an attorney teach you how to put it together. But if you've got to have an attorney do the negotiation, you really, you're already screwed. Yeah. The two of you ought to be able to sit down father and son man to man and say, this is how this is going to happen. And then you call the attorney in,

tell him what to do. Attorneys are employees. They don't drive the bus. Y'all got to drive the bus on this. Now, the good news is you don't have two different attorneys, to your point, talking at each other, trying to represent you two who should have sat down over a cup of coffee and battled this out.

Dad, look, here's the thing. We've got to look at this. Now, how you want to work this through? We've got to work this through, and then we're going to tell this attorney how to put it together, all right? and if he can advise you on some possible structures, well, that's okay. I don't mind that.

But this attorney's not in charge. You and your dad are. Mm-hmm. And believe me, some of them think they're in charge. So we've got to get rid of that problem too. But, yeah, I think it's a good sign. I agree with you that you both agreed on someone to look at a merger or an acquisition. But, you know, it's a $3 million company.

We don't need to spend a ton of money on, attorney fees to transfer this thing. It should not be that complicated or that difficult. But y'all sit down and work on it together and just, you know, I can't go forward this way. And, but for those of you out there listening, the way you don't get to this point is you do two things in your succession and transition plans when you're in the legacy phase,

when you're in the legacy phase of your business, the last phase, which is where Gary's dad is. Okay. Number one, you lay out a clear succession plan, transition plan, and here's how it's going to go down. And here's who's going to end up for it with it. Here's how it's going to be paid for. Here's how it's not going to work. Here's how it is going to work. And then two, you have to do what we talked about there with the Venn diagram. You keep the ownership portion of the business separate from the employment of the business. Now that, you know, so for instance, my son Daniel works here. We mentioned that a minute ago. He is paid as the president. His sister Rachel works here as a personality. She is paid like the other

Ramsey personalities. The same percentage on book sales, the same percentage on speaking fees, and so on. So she gets paid there. However, both of them are owners of this company. They also get money as owners from the profits. That has nothing to do with them working here. That's a separate issue. So owners can be absentee owners or they can be on-site owners. Both are owners. You know, stockholders in publicly traded companies, none of them are on site. You want a share of Home Depot. You don't work for Home Depot, but you're going to be distributed some of the profits in the form of dividends.

Assuming Home Depot did a dividend distribution. But anyway, that's how that works. So that's what Gary is running into. So you start with that and you start with a succession plan, a transition plan, and then you don't get all the way up to, I've had it, I'm sick of this guy, I'm milking the business. And this guy is my dad, you know,

and you keep from getting there by laying this out in a much smoother, gentler grade on the transition. And that's how we do that stuff. So really, really good question, Gary. And what you're facing is fairly normal among small businesses. So you're doing a good job.

You've obviously grown it to great revenues. Now we've just got to work this through so your dad feels honored. It's always good idea to honor the founder. As much as you can honor the founder, it'll help the conversation. Shaming them usually won't get you anywhere. Next, let's hear from Shane in Myrtle Beach, South Carolina. Shane is curious about profit-sharing practices with a growing construction business that brings in 26 million a year.

A co-owner of a residential housing company that is an on-your-lop builder, We have about 25 employees and our top line revenue for 2023 was 26 million. So, and we are in the beginning stages of being in the legacy stage. And we don't, we feel like we're probably five or six years away from, you know, trying to pull away from the business. and we don't have any obvious choices to take over the entire company. We realize that someone will have to have some management help, and we've got two or three key employees that are really shown a lot of leadership and growth. And we're trying to figure out the best way to include them in some profit sharing

to help continue to motivate them in their growth. Okay, you said you had 2016 members. 25. 25. And two of them are what you're considering being eligible for this. Yeah, we have kind of three locations throughout eastern South Carolina, coastal South Carolina. And we have one location where kind of the sales manager and our superintendent have

really really shown a lot of growth and are at least showing potential that we could not be involved in the day-to-day operations of at least that one location. So you think about dividing the profits up by location and sharing them or sharing them across the whole thing? Well, we sort of, we have the profits divided up by location anyway. And then, so we know what our profit is each. Yeah. We actually have it divided up in two ways at each location because we actually have our company set up as a construction company and a sales team.

So our construction company gives the cost of each project to the sales team, and then the sales team gets paid and shows a profit on whatever they sell it over that construction crossed. And then the construction team gets paid on the profit that they create by building it for less than what. what they told the sales team. So the price they're giving them includes a margin, and then the sales team's marking it up again and making theirs, and you're running that as two separate profit centers. Yes, sir.

Okay, all right. So how are you thinking about paying the senior team member that's leading a location that has those two different things in it? Well, I know that, well, from their very numbers oriented, so we wanted to be sunk, because I've heard you talk about profit sharing in the past, the problems that you've had and you kind of went back and sort of made it a more of a thing that could be changed moving in time.

But we also wanted to be some concrete numbers that we can show them. So our thanking was to pay these two members off of our construction profit, but basing them getting this additional bonus off. of this construction profit, it would also be based on them hitting some sales goals. Does that make sense? Yeah, but it's messy. It's messy because they also are managing the sales team if they're managing the whole area, right? Right.

Yeah, they're managing their sales team and basically the sales office. Yeah. And so we want to take that. And they're managing the building team. They're melding the whole location, right? Both streams of income. Right. Well, pay them off of both streams of income then.

Okay. Like, that's how you get paid. You can make them a partner without giving them stock. Uh-huh. If they were a partner and as a general partner of that location or an operating partner at that location, they got X percentage of the bottom line of those two income streams, maybe different percentages for the two different income streams. I don't care.

It might be 3% on one, 5% on the other. It might be 22%. I don't know, whatever it is to get them back to their income level. but you kind of got to back into it to get them to at least where they are now, right? Right. And so what does the guy at one of the locations make now, as an example? They're both able to, they're both right around that 150 a year, Mark. Okay, and what percentage, okay, and if I took the sales profit at that location and the builder profit at that location,

what would those two things add up to? Percentage. No, total dollars. Total, okay. I believe last year at this particular one, it was like one and about 1.5. Okay. So right now they're making 1%. And so if you gave them 1.5% of the bottom line and they could see the entire P&L

and had some say-so over the entire P&L, meaning they can create the revenue and they can help manage the expenses and keep them down, which are probably already doing. they're running that location, then they are controlling their own income. And they get a raise. You don't think that, well, my only concern that we had with that was, you know, sometimes people can get, well, we're doing all of this and we're getting this one and a half percent and y'all are just kind of watching us do it.

Well, there's that part where I own it. Do what? There's that part where I'm the owner. You are right there. I mean, come on. I mean, you know, if you want to go own something, go on something. But this is, right now you're making 150. I'm offering you two and a quarter on percentages.

But part of that is you have to have the emotional maturity to realize you're going to be living off of 1.5% of the net profit. For now, we might make it more later. But one and a half percent of the net profit gives you a raise, dude. And so the first thing you need to be doing, smiling. Okay. And if the guy doesn't have the maturity to run, run the numbers and see his part in the numbers, then, you know, maybe that's not the answer.

So it sounds like we were trying to make it probably too difficult in order to not show them the full books. Well, if you want them to run something for profit, they got to see the books. Right. Okay. So I've got 14 people on our operating board here. They all are paid off the bottom line of the whole company. Everything at Ramsey goes into a pot.

Eventually, it's split up all over the place, but eventually it ends up landing in my pocket, right? And so once it comes down through all the different gyrations and everything, so they get paid off the same line I get paid off of. And it's not a huge percentage, but it's a huge amount of money. And they see every detail of the books. Their job is to help me run this large and complicated business and keep all the dead gum toggles toggling, right?

Right, right. And so, yeah, because if I'm going to call someone a, you know, if they're at the level where I, if I, that I might want to have actually shared ownership with them, then I need to at least be able to share the books with them. Yeah, okay. And if they're not, then they're not. That's okay too, because not everybody can make it, you know, can be on my operating board because some of them can't handle looking at the numbers and going, well, that's only what I make.

Yeah, well, you weren't here when I started it either. and you weren't here in those 16-hour days before I lost my hair and all that stuff. You know, I mean, there's all that thing. So it's a good question. It's very interesting. And it might not be that that's the right model for y'all. You may want to just say, you know, we're going to pay you off of this and you can just start showing certain numbers. I don't care what it is that are, that create the same situation.

But I still want them motivated to run the business. Keep expenses down and revenues up. That's running the business from a business. from an accounting standpoint. I want to make a profit, and that's keeping expenses down, revenues up in your area. If you're not doing that,

you don't get to be here, if that's your job. I mean, your job is keep expenses down, revenues up, and everything that that entails. That means all kinds of different things, but that's what it comes down to. And that's what I have to do.

If I don't do my job, I get to go home because we're broke, you know? So that's how the whole thing unfolds. So, yeah, I think, yeah, what I would encourage you to do is, number one, nothing's in stone forever. Number two, I have, you know, have them sign non-disclosures and non-competes if they're going to be at that level. And if they sign those two things, then we can talk about all kinds of stuff.

Now it's time to revisit a call from Jeff in Bowling Green, whose brother quit the family business, but still wants a check. Take a listen. I talk about partnerships. I've got a family business. I'm part owner. It's an HVAC and appliance repair company. We've been in business for 30 years. I have 10 team members. Last year we did a little over 1.2 million in revenue. I am 49%. My brother's 49% and my dad is 2%. And for 30 years, our division of duties, I pretty much handled the HVAC and business stuff. my brother handled the appliance side of it. And when COVID hit and the shutdowns happened, that March of 20, my brother came in one day and said, cancel Mike Bowles. I'm going home. And he did. And he has not been back to work in four years. Why? He has no interest in coming back. We do have some real estate together. And he does do some of the managing of that. And that's kind of his

excuse for not coming back to the service company. He still expects to get a paycheck, and he still expects to have a company vehicle. He still expects to get half the profits. Four years later, I'm kind of tired of that setup, and my question to you is, what's there that can be done about it? I intend to reach out to him. Is it just the two of you involved? Who owns the other 2%? My dad. Is your dad still involved? Not much.

He's about 90 years old. So he was just at 2% to kind of break disputes and break ties and that sort of thing. Yeah. And so what's he say about all this? Well, since my brother hasn't been at work for four years, he's been spending a lot of time with my dad. So my dad thinks he hung the moon. So whatever he says, my dad's pretty much on board with him. Okay.

So who makes all the operational decisions on paychecks? so forth. I do. Okay. Okay. So you're ready to force everybody's hand? Because I think it's time. Yeah, I think it's more than time. Okay. So just tell him, turn in his keys for the truck. Bring the, bring the truck back, and you're no longer on payroll. No worky, no payee. And yes, you own 49% and yes, you will get 49% of the profits. And the profits will occur after we pay my increased salary. Because I'm now the CEO of the whole freaking place. You guys are out.

None of you have access to the business. I'm running the business. If you don't like that, buy me out. You and Pop, go over there and play your Jen Rummy, and y'all figure out how you're going to send me some money because I'm done doing this. I'm done supporting your dead butt weight. I'm over it.

So no more paychecks, and the profits will be distributed according to the partnership agreement, which is 49% of the profits. But there's not going to be a lot of profits warning because after you pay my salary that's increasing, there's not going to be a lot of profits left. Because I'm going to convert profits into my pay. And there won't be anything getting to the bottom line.

Ding, ding, ding, ding, ding. Just fixed you, buddy. And that's going to go over like a lead balloon. Yeah. Well, guess what? Anything you do is going to go over like a lead balloon other than continuing this madness that you're doing now. That's true.

Anything you do that stops giving him stuff that he doesn't deserve is going to piss off this dead weight parasite, isn't it? I agree. Okay, so you got a choice. You either keep doing it to keep him happy. God help us, we want him happy. But at some point I'm you, I don't care anymore. So I would, you know, if you want to before you do that, sit down and go,

okay, guys, the three of us are going to meet, and we've got to decide something different because I'm not okay with this. and sit down in person and try to work it there. I'd love to maintain relationship with your dad. I'd love to maintain relationship with you, brother. But this is unreasonable for you to continue to get a paycheck in a truck when you don't work there anymore. If you want to work there, that's fine.

I was going to offer a buyout to them. That's fine. I would prefer to do that, but I was kind of wanting to get set up for the plan B because I don't know how well that's going to go over because they like the way, especially my brother likes the way it is. Yeah, it's an, okay. So here's the thing. Sometimes in a negotiation, you have to establish the rules. Here's the rules. It's not going to continue like it is.

Something's going to change. Now, we get to decide together what's going to change because I'm not going to continue the way it is. So you can buy me out, I'll buy you out, or I'll shut you out. These are our three options. shutting you out is the most violent and harsh of the three. But I'm kind of at that stage right now, but the fact you've been taking advantage of us, of me and my family,

with no conscience whatsoever for the last few years. But we don't have to go to step three, but we can escalate to step three. No, I like it the way it is. No, you don't understand. The way it is is no longer an option. There's three options, and the way it is is not one of them. I buy you out, you buy me out,

or we get violent with a reset. you decide which one do you want to play one of these three things is going to happen starting now we need to decide that in the next two weeks i'm done and that's the time frame i'm looking at yeah but i can't keep them out of the business can i i can't tell them to stay away from the why not why not you're the guy running it but they've got part interest in it so what so what i just thought that that would give them legal right till he's do what they don't know they don't have legal right to do that. All they've got legal rights to is 49% of the profits and 2% of the profits.

If there's 90 profits, they don't have any rights to anything. But there's nothing, do you ever, I assume you guys don't have any written agreements, right? No. I figure, no. Yeah, this is a train wreck. It is. Yeah. So, I mean, there's nothing that says, there's nothing that says you're the operating partner, so I just changed the locks. Okay. I got control of the checkbook.

Good luck with this. sue me. This just got violent. I'm cutting you out, dude. Bring your truck back, or I'm going to turn in a report for theft on it. Grand Theft Auto. You want that one? We can do that. Seriously, that would go? I don't know. I'm just kidding. The point is, that's not the point. We're not going to get there. The point is, you got to jostle this thing loose with a personal, in-person conversation with the two of them, and leaving it the way it is is no longer an option. You've got take that off the table. So something's going to change.

I'd love for us as three grown men to decide what that is reasonably, because I'm not going to continue the way it is. I can buy you out, you can buy me out, or I can shut you out. Which one do you want to do? And just tell them that up front. I would. Okay. I'm getting ready to do one of these three things.

So I'm forcing you to decide to not. to decide one of the good options, so I don't have to go to number three, which is the violent bad option. Okay? I'm going to pick up the truck, put it back into our fleet, and start using it again to make money.

I'm going to change the locks, and I'm going to raise my salary and stop your paycheck to where profit distributions are going to equal close to zero. That's the violent third option. Y'all don't want me to do that. It's not good for you.

It's going to hurt our family, it's going to hurt our relationships, but my relationship with y'all is already hurt, by the way you all are treating me. That's exactly right. And so now we're going to change that, so we can begin healing in the relationship and we can begin to move forward.

Now, does this partnership that doesn't have any written documents own, does it have a name? I guess it has a name. Yeah, it's an S corporation, yes. Oh, okay. And does it own real estate? It does not. We have a separate LLC, just my brother and myself, that owns real estate. We've got about $2 million in real estate. Okay. All right.

So that'll be the next issue problem. And then the next, and the way you do that one, it's very simple if it goes violent, is you're going to have to go before a circuit judge. It's going to cost you about 10 grand in court costs and attorney's fees. And the judge is going to demand the disillusionment of this partnership, which means the real estate's going to be liquidated and everybody gets their part. if we don't voluntarily sell it off or buy each other out or split it up. How many pieces of real estate is? Can you all split it off the pieces 50-50? We could probably work it out at least close, I would think, yes.

If I were you, I'd take a hit. Or as a matter of fact, you could shovel some of the real estate his way in return for the 49% of the company, right? I could. You could do some trading that way if this guy wants to be reasonable. Once he understands, clearly we're not going. to continue as it is. Not an option. I'm not going to do that. I'm going to blow this up if we don't, if we don't, with good conscience and as two adults or three adults, figure this out together.

So I'll shovel you a bunch of the real estate in return for your 49% of the company, and we can call this a day. And then you go make your money on real estate. I'll make my money on the business and the little bit of real estate I got left and we'll split that LLC up. But we're not going to continue the way it is. You, not working here and getting paid is bull crap. That's a nice way of putting it. Yeah. Yeah, it's pretty clean.

Yeah, it's gone on too long. Yeah, it has. It has. And the problem is he waits until you get so angry about it that you're ready to sever your relationship with your own brother because he's being such a putz. And that's where it's come to. I mean, that's, I don't like that. I don't either.

I hate it. I hate it. But it speaks to his lack of character. It does. Yeah, Thanksgiving dinner sucks. You're right. Yeah. So anyway, I would sit down with them and say, guys, look, I'm sorry.

I should have come to y'all sooner before I got this frustrated, but now I'm really, really, really frustrated. And I'm at the end of my row. So we're not going to continue the way we are. I think the best scenario is that the brother, you and I, I end up with a company, you end up with more real estate than half, and we'll figure those numbers out. I'll set some of the real estate and the LLC over to offset your 49%. I'm going to buy you out at the company.

You're going to end up with a pile of real estate. I'm going to end up with a little bit of real estate or whatever the numbers work out. And we're going to call, and then you can go on, and I can go on, and we can still love each other and be kind. And Thanksgiving dinner will be great. I sure hope we can sit down and work that out because I need you to really understand I'm not going to go forward with this. or if you want the company, you can come over here and run it, and I'll take a bunch of the real estate.

We can reverse the process. I don't care, whichever way you want to do it. But it sounds like he didn't want to run the company, and so there you go. And if we cannot come to some kind of reasonable, fair distribution of this stuff, I'm going to blow it up. I'm going to blow the whole thing up.

It's going to get nasty. Let's don't do that. Please don't do that. Please don't do that. because we're not going to continue the way it is. You just got to take the thing off the table. You're going to tell him like six times because he's not going to hear it. That's why I'm doing this.

Because I can tell you this guy. He thinks he can blow you down and you're just going to, this guy thinks he can keep this in deal intact. And you're going to have to remind him there's hand grenades all around your belt. You get ready to drop them right there on the floor. This is going to blow. Now it's time for caller number four. Tom in Atlanta who's disappointed in 50% of the people he hired.

Let's hear what he has to say. My question is, is why do I end up letting go half of my people, 50%. They're not team players. They lack technical or human skills. The emotional intelligence that Pat brought up. Also, part of my question is, you know, we look for hungry, humble, and smart, but I can't seem to get the smart part down. They're qualified.

I give them a Myers-Brick test. They score great. disc test, working genius test. I even got certified as a working genius coach. And I hire these guys, I vet them, we interview them, and then two or three months later, it's like, what have I done? Wow. Well, I want to sit down and spend some time with you to help you figure this one out, Tom.

But I think there might be, I'm going to channel some Dave Ramsey here, and there might just be some inconsistencies about the way you're interviewing people and the way you're managing them. In other words, because if you're doing all those things and you're vetting them and good for you. But if that many of them aren't working out, I don't think it's the vetting. I think it might be the reality of what's happening once they start there. But I don't say that glibly. I want to help you figure this out.

So what kind of industry are you in? I'm a custom home builder and remodeling. Okay. And how many team members? Right now I have six. Okay, so you hired like two or three people that didn't work out. Four. Oh, okay.

This helps me. I was amazingly going into the dozens or hundreds. Okay, and the four people were doing construction work or doing the office work or what? Office. Are you in the field with your pickup? A couple of project managers and a couple office people. Okay. Are you in the field with the pickup managing the jobs?

No. You're in the office. In the office. So you've got custom work going on, and you have superintendents or project managers on each of those jobs physically, and you're not physically on the job? Correct. Okay. And so they get there and they're having relational trouble inside the office because they're not people smart on the hungry, humble smart model. Is that what you're describing?

That's part of them. They're not, they're posers. They're not really qualified to do what they're doing. and I ask them questions. We take them out in the field. I let them spend time with other project managers. Everyone gives them a thumbs up. But when they get down to business,

it's like perplexing. Like, what are you doing? And you're even using the working genius. Oh, yeah. Oh, yeah. So, yeah, but that's different than you're saying they don't have the skit. So you're hiring a project manager that doesn't know how to manage a project. They don't understand construction as well as they,

as they let on. I mean, one thing we try to do is we're using Tranual, and I'm getting all of the positions, and we're doing all kinds of training videos and those types of things with testing. That'll help, but it just seems like an awful lot to go through. It used to be you could just, you know, somebody would come in the door.

I've had people that have been referred to me by, you know, other trades that I've known for years, and they're just, I don't know, they're just not, they're not the speed. I'm spending so much time, I think, trying to vet them on the person. side. How quickly, okay, a new person starts, how quickly do you turn them loose in the wild without training wheels? Typically, they're with me or with one of the other guys for about six weeks.

Are you noticing the problems during those six weeks, or is it after that? No, no, it's after that. It's when they get let go on their own and they start doing. Tom, first let me back up a little and say, since this is a relatively small sample, you know, applying the percentages like 50% or whatever else. So you've had a hard time hiring a handful of people and getting them to stick. Yeah, that's all it is. It's not like you're a 50% failure. It's like you screwed up on three.

Right. You know, that's different. I agree with Pat on that. So, because I screw up on three a week. So, I mean, you know, that's just, but we're running with larger numbers. Sure. Yeah. Three for me is a lot more.

I know. I know. I'm just saying. It's a serious problem. It's a problem because it carries so much weight percentage-wise inside your organization, but to indicate that somehow what you're doing is 50% off, I don't think that's the indication. So I agree with that. So it feels like that when you are walking with them during their training period, you suck.

Yeah. It feels like you're not doing a good job, getting them to do the job the way you want it done. because we've got like a Ramsey way to do things. So if you come in and do sales and you're a good salesman, that's different than doing sales at Ramsey. And so you're going to walk with one of our salespeople for a little while, and you've got to learn the Ramsey way to make that sale. And it took us a while to get good at that.

We sucked at it at first. And so we would have salespeople doing sales five different ways, and we had all these inconsistencies and different kinds of complaints from different kinds of, depending on who their rep was. And so, yeah, somebody can function with them, their personality, but we've got some core tenants on accounting or some core tenants on project management

or some core tenants on sales that if you're going to do it the Ramsey way, if we're going to do it the Tom way, you've got to do it this way. And I don't think you're doing a good job of transferring that. One is the actual processes that we use to manage the project, record things, you know, change orders, purchase orders. They have to understand that a week.

They do all that stuff great. Yeah. It's actually the technical knowledge of, you know, this is how a piece of trim is supposed to look. We don't leave drywall looking like that. You know, we cover floors. That's what I'm talking about. It's just basic.

You're a custom home builder, and you may be hiring somebody in this, built mass homes, and they don't, they're not as hard on quality as you are. You know what's interesting, Tom? Well, so many people would call in and they'd say, I'm hiring these people and their technical skills are so good,

but they don't fit on the team and behaviorally. You are so indexed on the behavioral stuff, which is great, but there is a point at which they might not be technically as good as you need. Can I ask you a couple questions, so, Tom? Sure. What's your working genius? Galvanizer and discerner. Okay, okay.

And what is your Myers-Briggs, do you know? It's not good. It's not good. They have that. I didn't know they had that. There's no such thing. I didn't know they had that. There's no such thing.

Okay, well, see, the Myers-Briggs, I use this construction, this company that vets people and gives them a test and that sort of stuff. And I'm looking for, it's all the personality qualities, you know, the blame and honesty and those types of things. And it pretty much gives me the, you know, they're this percentage of a good hire. Tenacity is my working frustration. So to really get in the weeds, I'm like, I'm the big cheerleader, you know, it's, I'm, I'm, I'm, I get everybody fired up and it's go time and let's do it. Absolutely. Yeah.

And then you're shocked that I don't know what quality looks like. That's right. But his tea is down here with mine. So here's the deal, Tom. I want you to feel good about this. What you just need is somebody close to you that has tea. Because you have good discernment, but you're like, ready to go, let's go. Yeah, I can see this.

Come on. But you can't cheerlead a person who doesn't understand. You in some cases, what I think I'm hearing is you're the type of guy that wants them to succeed, in some cases more than they want to. Yes, I cast on them what I want them to be. Exactly. You said in your book, Dave, that, you know, you don't hire people anymore because you're terrible at it. Because you spend more times selling them along the company, which I do the same thing.

It's like, this is such a great place. We're such an awesome team, you know. Yep, yep, you're right. So my only suggestion is from my, and I'm just looking at this through the practitioners' eyes only, is I'm probably going to change some of my interview questions that you're using. I think you're asking them how many years of construction experience they have, and you're assuming based on that that they know how to put up a piece of trim the way it looks in an expensive home, not necessarily a cheap home.

And so I'm going to be saying, okay, our values are extreme detail and quality because we're dealing with rich people's houses and they are pissed when things aren't excellent. So how do you feel about that in the construction world? And they go, well, I never done that. I mean, all we did was just put some nails in the board, you know. And that's, you know, all of a sudden you got a 20-year guy who's not qualified to work for you.

Yeah. And Tom, I want to say... There's nobody out there. I want to say to you, okay, because like when you came on and you said the 50% stuff, you're probably kind of tough on yourself and you're feeling bad about this. So get rid of that because you've learned stuff. I mean, you've learned stuff.

I think you're making more progress than you realize. Right. So now based on what you've learned, just take that going forward and say, I have to be more tenacious. Hopefully somebody around you can help you with that about making... You can now check and take somebody into a place of work

and say, what do you see here? See if they noticed the stuff that the other ones didn't. Yeah, you've done a fabulous job for a company your size on figuring out the character qualities and the personality pieces of who's going to be involved. I don't think I've ever talked to anybody with six or seven people that does as much assessment as you guys do. That's amazingly good. But probably where you are, as reaching over into your values and communicating out of those values,

what that looks like on a technical application to do this way. And so, you know, you can't do it the way it's done over those other. place just and still call it nail on a board it doesn't work because we are in a completely different world here. Hey, I have a question for you, Tom. How long did those people work there before you got rid of, they left? So I had a guy that worked for me for three and a half years and just broke my heart. I even gave him two months severance. He was, he tried so hard. He tried so hard. He did he did everything right, but he just made bad decisions and he was insecure. And he was a burden everybody because he called everybody because he didn't want to call me because

he just didn't want to bother me. So finally I let him go. And then the other the other guys, one lasted for about, let's say after his initial, you know, startup and training and everything else, he probably lasted for about four or five weeks. And then another fellow lasted for about five or six months. And I tried really hard to get him to work out. And then I had a cat operator and he just wouldn't engage with anybody ever. It was quiet and just

withdrawn and... How long did that one take to fix? That one, but when I let his direct supervisor go who was doing estimating and assisting with project management initially estimating, I let him go and then after he left

probably about three weeks later, I let the official. So one thing, congratulations for some of those people moved out quite quickly because if you made the wrong hire, the worst thing you can do for them and for you is to keep them around for a long time while they're suffering and you're suffering and you're trying to do that.

The guy that was there three and a half years sounds like you loved on the guy and he's a good person and all that and you finally realized you just couldn't do it. I think you go forward just with your eyes wide open and learn the things you've learned and realize you're probably, I can't believe I'm saying this,

you're probably over-indexing a little bit on the behavioral stuff. I think you're right. And that's okay. I've been to two summits and I've listened to what you've said and I've listened to your stories and it's like the technical side

everybody wants to go to and they don't want to do the person. side. So I probably, I think you're right, I think I've overdone it on the personal side. And that's an easier fix than the other way. Also, let me just tell you, after I haven't done this for 30 years, hiring people and at varying degrees of years or violence, they work out or don't work out, right? I mean, it's, you're probably a whole lot better at this than you think you are right now. Now that I've talked to you a little while, yeah, I do think. think there's something about the way you're communicating your expectations of how to execute the technical thing that probably could use some work. I think that's probably there.

But I think you're probably better overall than you think you are. You're being pretty hard on yourself to pass the point. But yeah, it's, it's, it is the hardest part of business. Business is easy till people get involved. That's the title of the chapter on hiring and firing. Yeah. I mean, it's just, it's hard. So, uh, I'm not going to tell you it's going to get easier, but you're going to get better at it, and it is going to get easier. And it's not going to rip your heart out as much every single time as it does right now either, because you'll get better at that process too.

Not calloused, but just better. Be explicitly clear about the quality of work you expect. The right employees should meet company standards in both behavior and skill. Well, it's been another fantastic year of helping you grow as a leader and win in business, and there's no better time to level up than at the start of a new year. So join us in 2025 as we do it all again. A huge thank you to all of our brave callers, our guest hosts who take the time to invest in the next generation,

and every viewer or listener who tuned in this year. We appreciate your support and your desire to lead well. 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.