The Game with Alex Hormozi - How To Have Hard Conversations in Hard Times | Ep 200

Episode Date: April 24, 2020

If people don't get why you made the decision, they resent the decision. Today, Alex (@AlexHormozi) shares with us some advice on how to talk to your employees about hard decisions that were made for the betterment of the business, how to deal with those who react negatively towards these decisions, and ultimately learn how to inspire these people despite these difficult times.Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned on his path from $100M to $1B in net worth.Timestamps:(1:58) - Remind of vision, present options after announcing change.(3:40) - Be forthcoming, offer options, including leaving if uncomfortable.(4:44) - Present options, allow participation, negative reaction means resentment.(8:05) - Give information leading to decision, show understanding.(10:22) - Hard decisions, disagreement, but together we'll overcome.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

It really doesn't work well when you do that because then they just get really pissed off. Welcome to the Jim Secrets podcast where you talk about how to get more customers, how to make more per customer and how to keep them longer, and the many failures and lessons that we have learned along the way. I hope you enjoy and subscribe. Hey, what's going everyone? Happy Monday. Hope you guys are rocking and rolling and steamrolling through the week with a strong start. I wanted to make this quick video, how to have hard conversations and hard times because I had, sorry for my voice. sounds worse. I've just been on calls all day long. I just got off a one-hour call with our gym

owners because I'm doing these every day now to just make sure everyone's cool and everyone's, you know, just everything can get answered within a day, right? That's kind of my goal. So anyways, and I had a gym owner who came up and was like, hey, you know, I had all my trainers get together and they were like, hey, we're not happy with what we're getting paid. We want a 60-40 split on the revenue from the gym, right? And I got literally like so visibly pissed off. Like I, I felt like it was happening to me. And so I wanted to kind of walk you through what I think has been. And like I'm somebody who a lot of, like I have gotten better over time as I've been more weathered.

But I used to get really angry with that kind of stuff. And so I've kind of adapted. And so typically what I found is that when people have these really harsh responses to decisions that we've had to make in hard times, like a lot of us are making a lot of hard decisions right now. And it's just part of the circumstances. You know what I mean? It comes with the territory. And so we have to accept that.

But I think there's definitely a good and a bad way of doing it. And so the way that I think I used to do things was I would make decisions and then I would come down the hill and then like show them the commandments. You know what I mean? Like I was I was the almighty in my business. But the reality is it really doesn't work well when you do that because then they just get really pissed off. And they're like, screw this guy. He doesn't know the blah, blah, blah. And then they start forming these little coalitions, these little factions behind your back.

And so I think it's far more productive to kind of do it in this framework. And so first off, whenever I have to introduce a new change, we remind them of the vision, right, which is like, where are we trying to go? Right? So it's like, hey, guys, like, before we get going, we got a lot of stuff we got to get through. But I sort of like, like, because everybody here's still in it to try and help people, you know, change people's lives really better than communities. Everyone here's still on the same page. Everyone still want that goal. And if everyone's like, yes, it's like, okay, cool.

So that's, so we've kind of put that as the light post, right? Like that's where we're headed. That's where we're trying to go. All right. And so because of that, like because we're still trying to accomplish that mission, things outside have obviously changed, right? Would you guys agree with that? Like circumstances have changed.

Right. Okay, cool. And so right now we're bringing in less than what we're spending. And so if we want to accomplish that goal of transforming the community, et cetera, we have to change something. And so this is what I'm, these are the variables I'm considering right now. All right. And so it's like we're still we still have to pay rent.

We still got to pay these marketing costs. We still got to pay this and this and this. And so there's kind of, these are the three options that I see, right? Option number one is that everyone here takes two weeks off a month, right? So that's one option. All right. Option two is we just have to let go of half the staff so that when we come back, that there's something to come back to, right?

And that's me literally trying to keep that vision alive because otherwise we won't, we won't be able to stay, we won't be able to stay afloat, all right? And then option three is, you know, we structure this new way where everyone, everyone works full time, but for half pay. And I'm starting with my own pay. All right. So I'm taking a pay cut. I'm taking half of what I normally take or less than that. Or I'm taking home zero right now.

All right. So I'm starting like, you all are going to get paid. I'm getting paid nothing. Okay. And so if you start like that, it's like we're in this together, right? And when you say that, you can present the options, you can be fairly forthcoming. is like I honestly like I'm leaning more towards like hey if you guys are all still in this with me I'm taking zero if you guys can take half then like we can make it through this right if

you'd rather me just say like you know if half of you are comfortable with that then like if if you want to leave then that works and I can keep you know the other half of you at full pay like that's one that's one solution but I just want to know what you guys want real quick guys if you can think about how you found this podcast somebody probably tweeted it told you about it, shared it on Instagram or something like that. The only way this grows is through word of mouth. And so I don't run ads. I don't do sponsorships. I don't sell anything. My only ask is that you continue to pay it forward to whoever showed you or however you found out about this podcast that you do the exact same thing. So if it was a review, if it was a post, if you do that,

it would mean the world to me and you'll throw some good karma out there for another entrepreneur. Now obviously only offer options that yet you would support, right? And I think why this kind of approach works is because you're not presenting your decision. You're presenting options and allowing them to participate in the decision and then they have ownership over the outcome. And so then they get more bought in and they understand why. Because most times when I've given a decision from the mountaintop and be like this is how it's going to be, if people don't get why you made the decision, they resent the decision or they think you're an idiot. And it's usually because they just don't have the information you had. So I'm going to give you a different example that still illustrates this

and it's another kind of hard conversation that some of you may have already had or will have in the future, which is sometimes you have to let a trainer go, right? Sometimes it just doesn't work out. It's okay, it's part of business, right? But I've let trainers go and then had a swath, you know, or whatever the term is, a gaggle, you know,

of clients come up to me like, that was a big mistake. Rachel was awesome. We loved Rachel. I only came here for her, right? And just point their finger at me, right? And I took that and I was like, man, this really sucks. And so rather than like lash back or talk shit, right, which you shouldn't do, you can't do it as an employer, right?

Which, you know, it sucks because you'd love to just tell them why you're letting them go, but you can't in virtually every state. And so you got to be like, you know, Mrs. Thompson, I totally understand where you're coming from. I can tell you that this is, this decision really weighed on my heart. And so I just want to ask you a couple questions that might make this, you know, make the decision makes more sense to you. So first off, is there anybody who you think has a higher investment in having you have an amazing experience here than me, the owner of the business, right? Yes. Okay, cool. The fact that you are distraught that Rachel left shows me in some way that you care, which I really appreciate, right? So thank you for caring enough to even tell me. And for, you know, in some way having the faith

that like if you liked Rachel, you kind of liked the selection that I made for the trainers that we had because I was the owner-hire. So I really appreciate that. So I just want you to know, like, thank you for coming to number one. Now, the sad part of just kind of business ownership, one of the hardest part of bender's ownership is that I cannot share all of the information around a decision because of legal reasons, right? So for example, and I'm saying nothing about Rachel, she's an amazing person. But for example, if Rachel had stolen something, if we had concerns with theft, I wouldn't be able to share that with you. If we had a sexual complaint from a member, that would you think that I would be something that I should handle, right? Of course, right? If I had that,

I could not disclose that to you, right? I'm not saying Rachel did that, but I'm saying, So do you think that it may be possible that I have more information that I'm working with than you are to make this decision? Do you think it's possible? Yes. Okay. So here's what I would bet. I would bet that if I were able to open up the kimono and show you all of the information that I have had, you probably would have come out to the same decision that I had and probably even sooner than I am. You probably would have made the decision sooner.

And so all I'm asking you is to trust me that I really want this business to see just as much or probably more than anyone else. B, I appreciate that you cared enough to even bring this up to me. And see, just understand that like if you had the same information I do, I'm sure that you probably would have come to the same decision But have faith if you liked Rachel I will find a trainer that you will like just as much as you did her I know it sounds unrealistic right now, but there's always a way And we're dedicated to having an amazing experience for you, all right? And so Once you like, and so explaining to someone that like we don't make these decisions in a vacuum Right is that we have information that they don't have to make this decision and if they had the same information

they would have come to the same outcome, right? And so just like we're explaining to the upset client about Rachel leaving, it's the same thing when you're talking to your trainers, when you're like, listen, these are the variables, right? And so the gym owner who brought this up had his trainer say they wanted a 60-40 split of the revenue. And I was like, you guys probably assume that I just like take 60%, I just walk my way to the bank, right?

That's what I'm assuming that's what you think, right? So let's walk through this. Of $100 that comes in the door, I was like, do you know what the margin this business is? Do you know? I was like it's 12%. That's the margin. So if we've lost 20%, currently, just through this whole corona thing, we lost 20%. You guys show up to work and you get paid, right? I show up to work and not only do I not get paid, I lose money. So I work as many, we're more hours than you, and I lose money. Do you feel like that's fair? No, of course it's not fair, but that's how business is, right? And so we have to make these adjustments. because it's just math, right?

And so if you think that giving 20% to you for this, you're getting 20% actually getting paid this month. The 80% is to keep the fucking doors open, right? I'm getting zero. 80 is what it takes to run this thing, right? And so it's just understanding, I'm not laughing my way to the bank as you're getting paid. You're getting compensated for this, right?

And you also don't have to take on risk. I sign my name on a $400,000 or a lease. Like, do you guys want that? I have a lease for my equipment. So you guys want to sign your name on that? Of course not. They can take my house. You do a bad job, you go home.

I do a bad job. I lose my home. You understand the difference? And that's why these decisions are hard to make. So explaining that to someone a lot of times can give them clarity because most people aren't stupid. Right now, they may not operate with all the information. But typically, if you have a sane individual who is invested in the same outcome, you

have the same mission and values, once you present them the same information, many times they will come to the same conclusion you do it. And they'll be like, all right. all right, I understand why you did that. And that's all you need is understanding. Right. And so that being said, you're like, listen, there's going to be a million hard decisions you might not agree with all of them because shit, I don't agree with half the decisions I'm making right now because it sucks. Right, but I'm doing the best I can and I promise you I'm going to make a ton more mistakes too. But as long as you're still in this with me to get where we're trying to go, we're going to make it out of this.

All right, not only that, there's going to be a lot of gyms who aren't as unified as we are. They don't have the culture we have. They don't have the mission we have. They don't have the values we have and they're not going to be able to make it out. So don't let the virus and the flu and the pandemic win. Don't let it break us apart. Let us make us stronger. The other side of this, as dedicated, even more dedicated to the goal because now the hardship made us stronger. All right.

So that's what I'm asking for you guys. So big picture, that's kind of the framework that I think you can use to have hard conversations as hard times. Hopefully that was valuable before you. Maybe you have a trainer or coach or clients that you have to talk to. I think the easiest thing is helping them make the decision with you. Not that you are actually necessarily listening to what they're going to say. but more so presenting the options as you saw them with the information that you had.

A lot of times they're going to understand why you did what you did. Maybe they won't agree, but they'll understand why. So anyways, I hope you guys have an amazing Monday. I hope that was viable before you please drop a like or comment. And if you're listening on the podcast, please leave a review. Otherwise, have an amazing day. And I'll get you guys on flip side. Bye.