Ep 10 - Knowledge Is Power

0:02 Welcome back to another episode of the MRM podcast. I'm Chris. And I'm Brandon. Join us as we discuss business, life, and legacy. It's business time. How you doing, brother? You know, I unbuttoned the second button on my shirt. I'm feeling good. Oh, geez. It's getting serious. I'm feeling casual. It's business time, as they say. Have you... You've watched the... Oh, my gosh. Flight of the Conchords. Oh, man. Hilarious. It was the best thing. The best thing ever. It's like 20... You're dating us, man. It's like... I know. It's like 20 years ago. Yeah. And it's still as hilarious as it was. It's amazing. Yeah. I got to remind me sometime.

0:43 I'm going to tell you a story about the person that introduced me to that. The context is great. All right, let's dive into this. I got something I want to talk about, my friend. Okay. Okay, so this has been coming up. Well, honestly, man, I think in some ways our leadership teams in the past were wrestling with this from the very beginning. And here's the... I'll set the stage. How much information, financial information, is appropriate for to be giving our people from a leadership, goal setting, strategic initiative planning perspective. So we're not hanging out and walking our entire team through the balance sheets, things like that. I'm not talking about that for sure.

1:25 But how many times... And here's where I'm going. I can't tell how often this is an excuse for a lack of proactive engagement versus I'm fearful of what my staff will do with the information. So now, for instance, when we wrestled with this, because there's these opportunities, we provide some information, depending on how many tiers down into the team you go with that information, sometimes there's just not a lot of context for the numbers that are being provided. And so there's this element of that information almost becoming distracting. So here's an example. We've seen companies, we never did this, but we've seen and heard of companies that literally the entire organization gets to see essentially the monthly P&L.

2:13 So you're seeing, this is the nuts and bolts of what we made. This is how much we got to keep at the end of the month. And the issue with that was there's not a lot of context for this, we get to keep this part section. And so it almost becomes this adversarial piece of information where somebody gets that without enough experience, maybe insight and education around that number. It turns into, well, there's gobs and gobs of money left over. I want more pay raises. I want more benefits. All the things, right? It becomes more a facilitator of disgruntled behavior, maybe, versus being a helpful piece of information that aligns the team behind the goal. So I can see there is probably the possibility of too much information.

2:56 But more often than not, that's not what we're witnessing. What we're witnessing is really great players on a team, proactive, engaged, loyal team players asking things like, hey, what is the revenue goal that we're shooting for this month in this department? Yeah. Or have we broke down our revenue goals, our production goals by project manager? We've got four project managers on the team. How much is it that each one of them is supposed to go out and try to produce in that 30-day period in order to meet or exceed goal? And what we've seen is experiences firsthand and secondhand of employees asking questions like that and leadership is not able to provide it.

3:39 And so... Okay, it's a failure. I mean, I think we can look at that and say, yeah, that's just a failure. But I think the bigger question is, why is that information so important? Like, what is it about giving our teams specific, measurable black and white information is so helpful for them, not just for us, but for them? And then also just trying to come at that from a different angle and say, how does it help us as leaders when we're able to provide that level of information? So here's the idea I want to kick around is, let's identify what is the type of information that's important. At what level do we need to at minimum provide in terms of goals, numbers, some significant data? And then I guess look at that and say, why is that important for our employees?

4:23 How does it equip them, empower them? And then us as leaders, what does it do to help us? Like, what do we get from sharing that information and leading that way? That's kind of where I want to go. Well, I got to tell you, I've got some knee-jerk reactions. Yeah. Because it's interesting. Not all industries feel the same way about this. Yeah, sure. So in terms of transparency versus privacy, there's actually a lot of different views out there. I have seen, I've encountered this a lot as well in this industry, both, you know, I think to a degree, it's a, it's a topic of conversation with our clients, you know, in terms of, as we coach them in some of the leadership behaviors and how to build culture. And we talk about transparency and bringing people in and whatnot, bringing them in on the story, helping them understand the why behind things.

5:10 So this ends up coming up a lot in our conversations. Mm-hmm. I have found in having coached some downline leaders, so companies occasionally in the past would hire me to help develop their downline, like branch managers or GMs or whatnot. And at first, I was shocked to find out how little these field leaders understood about their business at all. Outside of the actual service response, estimating, and invoicing. Outside of that, they had no clue... what was going on in terms of how collections were being done, much less what the gross profit was, what their gross profit is on a certain class of jobs, etc.

5:54 I was actually very surprised how often I encountered field leaders responsible for generating revenue that had no idea what the business actually looked like. In fact, in a couple scenarios I'm thinking of, they didn't even know exactly what their annual revenue was. Mm-hmm. which to me is just like minimum, right? I did 1.8 last year. I'm shooting for 2.2 this year. Like at a bare minimum, at least knowing what the target is. And so it's a very common problem. Why is it? I have a hypothesis. Okay. I don't know where it comes from. Yeah, let me hear. I really think... I think it's a product of this command and control leadership style that has been so prevalent in our industry since the beginning.

6:37 Sure. I think it's just like a leftover because I think that culture is changing because we're fine. I mean, we spend a ton of time talking about this, right? Yeah. But I really do think it's a product of... viewing labor as interchangeable, right? I think a lot of it's very ego-driven and control-driven. It's my business. No one needs to know about my business. They just need to do what they've been hired to do. Now, I'm exaggerating a little bit my tone. I'm not saying that everybody who doesn't show their numbers is jerks or they're like old school dinosaur leaders. That's not what I'm saying, but I think that's been very customary. It's common. Yeah. very common. Yeah. Stay in your lane. Yeah. You don't need to know that.

7:18 Yeah. Just go respond to the jobs. Do the checklist like we've asked you to do. Turn in your estimates. That's not your job. Don't worry about it. Right. Yeah. Just do your work assignments, man. Yeah. Add your notes to, you name it, business software. Yeah. Yeah. Turning your timesheets, right? Like, I think we've erred on the side as an industry of telling people what to do, demanding compliance. Yeah. We haven't gotten good at explaining the why and the how of what we're doing. Yeah. And it's just a skill. Yeah. It's just a new skill that we can put on. Mm-hmm. You and I've done it. And I think both you and I have in the past come more from that command and control.

8:00 Oh, sure. Set up a system, tell them what to do. And that's just... That's how it is. That's how it is. You don't like it, go somewhere else. Yeah. No, I don't disagree. I think there's a lot of that. It would be interesting to get some data if someone's actually pulled this somehow. How much of it is that versus this idea of just, my hair's on fire. I barely know what kind of business I'm running in the first place. I was a skilled tactical technician at some point. I decided to go out on my own or I bought a franchise, whatever. And I've started operating this business that quite honestly, I'm figuring out as I go, which kudos to you for having the gall to do it. But because of that, because you're constantly in this reactionary state the time commitment maybe or the proactive mental state that you would need to be in to look at your numbers, prepare your numbers, project what the next year's goals will be, and then dissect those into bite-sized pieces for those who it's relevant to, I just think it's more a proactive management leadership style task that a lot of folks are just surviving.

9:10 Oh, right. They're just running from thing to thing. They are. And there's no shame in it. Like you and I, you're not alone. You and I were those guys at different intervals where we were really literally figuring it out as we went and we were winning. So the dream was, we were keeping the dream alive. Yeah. We could sell our way out of all the little pinches and cashflow crises that we found ourselves in. We just, we just keep building, just stay in the trench. Yeah. Yeah. I had a client I worked with in the past that when I first met with them, our very first sales meeting, I'm doing my discovery and finding out about their business, where they're at, where they're trying to go, all that kind of stuff. And they were literally poised to do close to $5 million.

9:51 They've only been in business a handful of years. 5 million bucks. They had... this is just so funny. And it's funny because I can relate to it. I know you can too. They were doing almost 5 million bucks a year. They could not tell me what profit they were going to make off that. And their answer was, you know, what's been great, they had kind of a setback in their business that year that I talked to them. They had like a couple months where things went sideways. And like, what was great about it is, business kind of dropped off momentarily. Like what was great about it is, we finally were able to get QuickBooks set up. Had five million bucks. Had five million bucks.

10:31 And I said, wow, how have you guys been doing that? I said, well, we've just always had leftover in the bank at the end of the year. And I thought, this is so cute. We all come from somewhere. And let's face it, not all of us are... The type of people that typically will start a business don't get caught up in the details. They have to be coached to them later. And that was our story, right? Sure. I mean, we brought in a consultant that was coaching us on some of these best practices. And now here we are, come full circle. We're helping our clients set up these best practices, set up the framework. Because when you're running and gunning... Yeah. It's like, really, you can sell your way out of a lot, right? You just keep, you keep cranking that wheel. Yeah. You can overcome a lot of obstacles when that sales flywheel is turning.

11:14 And so we encounter a lot of people like that. So yeah, I think it's possible, like you say, and again, there's no shame in it, that some of the owners that are listening to this are like, dude, I have no idea what exactly my, I couldn't tell you my gross profit at a job level. Right. On our mid jobs. Right. I couldn't tell you a good average loss size. Right. And even now, I mean, it's even recently, we've talked to clients, they're like, you know, somewhere around like 3,500 to five, I mean, and then commercial, like, you know. Yeah, it's all over that. It's all over the... They don't know their KPIs, but they know they're winning. Yeah. They know they're falling forward. Yeah. Yeah. So let's hammer down a little bit on the value of this because I think the reality of it is we're out running businesses.

11:58 We're growing our companies. You're just choosing what battle do I spend energy on? What battle is going to move the needle? And which ones ultimately are more like icing on the cake. And I am of the mind that whatever is a number that we're publicly looking at will be a number that moves the needle. And so I feel like, and this has been my experience, I've seen it succeed in many different ways and shapes. And we've watched others be very successful leading this way as well. is that I honestly believe that when we can give our people targets, when they can understand what the objective looks like, they're going to be far more successful at hitting that objective than not. Or what's the, I guess the line there is, they're more often going to hit that end goal than not.

12:43 And so I think it does. First off, I think it empowers people. I think that it takes mystery out of what they're spending their energy doing. And now all of a sudden, it's like they have a context for, okay, if I'm doing XYZ today, it should move the ball down the field towards ultimately getting this number or hitting this goal that we know we're expected to hit. So I think empowerment is a big thing. I think in that empowerment, it gives our team members the ability to own the number. Like now, instead of it being something which we could very well talk about, when we delegate these numbers, when we assign these numbers, and I've learned the hard way, when you jam the number down their throat, that's not the same level of buy-in as if you have them participate in the conversation, which I've experienced the wrong way a couple of times and it wasn't fun.

13:30 But again, it's empowerment. It gives them the ability to control what they're doing. They're able to see the impact of their actions. And I'd also go as far as saying is it really sets the stage for succession planning. And I don't mean succession planning from this like, take over the company. But it's almost more of the goal of a company is it scales and grows larger. You're inevitably going to need more leadership within the organization, right? Even flat companies need to have key influencers. And in my mind, even influencers within your organization, they're playing a leadership role. It may not be as formally titled, but you are using them to influence your organization for a reason.

14:11 It's leadership. They're moving people from here to there, right? So in my mind, it's also critical to the fact that if you really want to have a business that can scale, if you want to develop a company that does not require you to have your hands on every switch... then you've got to be able to deliver information to your team that they can look at and they can say, yes, we're hitting it or no, we're not. Yeah. Right. So let's wrap about that a little bit. Let's just look at what some of those things look like. What is it that we need to be providing our people? And I just want to give an example. Okay. Okay. So I took over, I would say, a herding branch of a fairly large organization for a while.

14:54 Did about a two-year, roughly two-year cleanup with that particular outfit. Smaller team, they were doing sub $8 million a year in revenue. And when I showed up to the organization, the team... Project managers and estimators didn't really know any form of financial goal. So they didn't really know what the branch was attempting to produce. They didn't know that had never been broke down in any kind of monthly goals or anything of the sorts. They really were running blind. And so it created this sense of anxiety. They didn't even know really when they're doing well or not doing well. Ultimately, this is part of a performance evaluation, really. And so what we did is we broke down the numbers into monthly goals.

15:36 Right. Here's what each department is seeking. This is what we're trying to produce. Here's the goal for each month. And I'm an experienced leader at this point. Okay. So at this point, I've been working with leadership teams. I have a lot of these meetings. I mean, this is not first rodeo stage. But it had been a while since I was the leader that was direct handing assignments down to roles such as estimators and project managers. Because previously, you were running an 80-plus person operation, which looks very different than 15, 20. Right. A leveraged operation where you guys were basically a paper contractor, right?

16:17 Just set the stage. You had mid-operations, you had build back, handouts, heavily provided by subcontractors. You have a ton of in-house. Right. Very small team. It was pretty much my... The entire organization was a direct report, which I hadn't been in that, those sets of shoes for a while. We had over time developed leaders And those leaders then ran, think of them almost as generals, and they ran their teams. They were the ones delegating and breaking down the numbers. That was their job. And so it had been a while. And so I'm issuing numbers more from this GM level where it's like, yeah, this is month wide. Here's the broad strokes of it. And I remember the blank stare on everyone's faces as I'm issuing these numbers because the numbers weren't relevant.

17:02 What they didn't understand is what steps do I take to get there? They're looking at the month and they're going, okay, I got to produce, let's say 350 grand in production, but they don't know how they're going to get there. And so I remember kind of live on the fly, as I'm looking at these guys, I'm going, okay, they need more information. So we jump up on the whiteboard and we start breaking it down. We say, okay, look, the reason we push subcontractors instead of in-house trade teams is because of these production goals. So let's break it down. If we've got a goal of $350,000, $360,000 a month, and I've got three project managers, it means that each one of you needs to produce XYZ that month. So let's say what you need to produce is $120,000 or $150,000 a month in production, then we need to look at that and say, okay, every day...

17:47 Every single day I go out and I manage my schedule, I need to understand I'm trying to produce and completed work. $120,000, $30,000, $140,000 in work. How do I get that done? Well, from my perspective, experience, been in the leadership seat, I'm watching guys send out two-man tech crews to a construction job. And I'm looking at that production going, there's no way that me watching a project manager send out a couple people at a time each day is going to produce enough work in that week to hit the bigger goal for the month. So there's this opportunity then as a leader to say, guys, listen, you have to look at your jobs.

18:31 You have to look at the scope of the project and you need to identify the subs that you can get out on that job that week to produce the most revenue in order for us then to fall closer to securing our goal for the end of the month, right? And so there was this education opportunity to teach these guys to think about how they even manage their schedule. Well, you can't do that unless they have a context for it. And the context was the revenue goal. What are we trying to achieve? Yeah. Okay, well, let's break that mission down into smaller chunks. How do I focus on that during the week? And more importantly, how do I manage my day-to-day schedule that gives me the ability to get to the end of the month and sit down with my leadership team and say, guys, we did it, right?

19:14 And what I also hear you hitting on is you're helping them understand... The methods, like the how-to. Yeah. So beyond just breaking down the goal, it's like, this is why we can't prioritize. We can't build this number out of using a couple of trade techs to do onesie-twosie things. It's like, you had to educate them on how the whole essentially paper contractor thing works. So you guys are project managers because how they approached it had a huge impact on whether or not they had any hope of hitting that number, right? Right. And these kinds of things pop up. In this example, or many like it, what you see is they've gotten really used to using Joe and Fred on the team. They trust Joe and Fred.

19:55 And Joe and Fred are great guys. And they're great trade crews. And they do an excellent job. And so that's an easier button to mash out of comfort than it is for me to go out and do the hard work of negotiating a new sub-relationship or vetting a new partner and bringing them into the fold. And if there's no goal that's been projected, if there's no conversation about the target that we're trying to hit... You're just going to go with what you know. They're going to default to comfort. What you've always been doing. Yeah. Right? And as far as they can tell, they're busy every day. The schedule's packed. They've got plenty. They may even have happy customers. Right? But there's no way that that team will hit the scale that we're looking to hit without that proactive engagement. And I think that's that big piece there.

20:36 And when we talk about it's empowering them, it's like now they have a whole new set of tools to use to go after that business and secure their own success. I think the other thing is that it sets the stage for thinking. Once we did that exercise... Now they can do it. Like now they know for the next year, two years as they're managing their own performance, they get used to this idea of we identify what the monthly goal is. I break that down into bite-sized chunks and I execute with authority. Well, now, again, going back to that succession planning, this person may become your future repair division manager. Hmm. And so now you get the luxury as a business owner or being a key leader to have a leadership team that you give them the monthly number.

21:24 And then now they go down and they break it up for their team and they equip their team with what those weekly projections look like. All right, let's take a minute to recognize and thank our MitResto Mastery sponsor, Accelerate Restoration Software. And I'm fully aware by the way, that when I say those last two words, restoration software, that that instantly creates heartburn for some of you out there, right? Because we probably all fall into one of two camps when it comes to software. We've either cobbled together kind of a version of free website tools and spreadsheets just to make our business work, Or we're in the camp where we've adopted one of these existing restoration platforms, you know, one that has all the bells and whistles and supposedly does it all.

22:11 But we can't get our team to consistently adopt it and input information to it. Yeah, and that's really where Accelerate has honed their focus. They've created a system that's simple, right? It's intuitive, and it focuses on the most mission-critical information, i.e., guys, your team will actually use it. Let's talk about sales, right? After years of leading sales and marketing teams, the biggest trick is getting them to consistently update notes about their interactions with referral partners and clients. And the essential piece there is there's got to be a mobile app experience. And in our experience, the solutions that were previously out there were just too cumbersome and tricky to use.

22:56 Yeah. Imagine guys, how your business would change if your entire team was actually consistently using the system. Do yourself a favor, go check these guys out at xlrestorationsoftware.com forward slash MRM and check out the special offers they're providing to MRM listeners. You know, here's another thing that comes to my mind is that we just recently did a post about when to stop taking jobs. Yeah. And, you know, a lot of the thinking that we kind of coach our clients on is how to pick the right work. Because a lot of times, especially once you get to a place, you've got a good reputation, a lot of stuff starts flowing in.

23:36 And you can't do it all. You know, you have these intervals where it's like, you know, you don't have the staff to do everything. How do you pick the right work? Well, if you haven't coached and trained your people on how the numbers work and sort of what's happening behind the scenes with profit and costs and everything else, top line goals, it doesn't put your people in a position where they can make a good judgment. about what kind of work do I want to take? Right. And what makes the most sense for us to do rebuild on versus just doing MIT and passing on the rebuild? Right. It's really tough for your people, which means then you as the owner, you're stuck as the bottleneck where you've got to review every job. Are we going to do this or not? When if you could just teach your team how numbers work and how the money flows and how we make decisions behind the scenes, then they can begin making those decisions.

24:25 Right. Right. And the business isn't dependent on you. So now you can go to Lake Havasu or you can go to Costa Rica for a month and your whole business doesn't fall apart. Right? Yeah. I mean, that's ultimately what we're all trying to do here. Right. Yeah. It's the work on the business instead of in the business. But here's the thing though, is that there's a human element to this too. So I think it is when you stop and just give it a glance, I think it's pretty easy to see the nuts and bolts of it. Like why there is value in proactively managing numbers. And giving your team real clear, measurable targets to go after. But there is a humanity piece. It's like the way that that team responded in that scenario the next day, like we're talking immediate change and demeanor and the way that they're tackling their schedule to include like even better questions being asked.

25:12 Yeah. Like, hey boss, here's what I'm considering on this one. Here's the two choices I have. What do you think? Well, based on our conversation, I think you're on point. Let's chase this target first. They're now operating from a completely different loyalty space in terms of the team because you've let them behind the curtain a little bit. Yeah. Right? Again, not to the point where the numbers aren't relevant anymore and it really serves more to bog them down than to be more productive. But it's like you've said, hey, I trust you and I trust your problem solving capacity. Let me just give you a little bit more information, another set of tools to use to make those decisions. And now all of a sudden they come to life. They're participating proactively in this thing that you guys call business.

25:54 And they're now not just taking marching orders from you and executing without giving it their own thought. So you bring up a question for me, which is, what should we not show? Like, I mean, I think probably most owners... if they're honest with themselves, I've certainly felt this. Maybe I'm alone in this, but I was always a little bit sensitive to my team knowing how much I'm making because as an owner, you're taking all the risk. Yeah. It's the long play. Yep. In the early days, you're the last to get paid. Yep. If you're lucky, like I've been in a few different intervals, you've got a spouse maybe that's bringing in some static income. Right. But it's like you earn your stripes as an owner.

26:35 And you know what? By golly, if your take home is a half million bucks at the end of the year, well, you know what? That's... Yeah, I earned that. Kudos to you. Yeah. It ain't always been that way. Right. Right. And so, but I think that's something that a lot of owners are afraid of is just how many people know how much they make. And they already kind of have to tell of certain people on there or certain people on our team just will know as they start to break out different admin roles and stuff like that. But when you say not to overload people, what do you think... What is information that's not helpful? I think the rule of thumb is... To share. Besides the EBITDA. We don't need to talk about net, net. Yeah. I think, honestly, I think the rule of thumb for that information is what information can I provide them that they can have a direct impact on?

27:20 And it's going to be different depending on the audience. At least that's my perspective. Some companies run more flat and you know what? They're an open book. And I get that. I respect it. We've seen examples of that. And there's some stories regarding companies that have ran that way. And you know what? More power to you. If you can pull that off, it's pretty awesome. But I think just basic rule of thumb is, is this information that when I give them this, are they going to make decisions and act in such a way that they can have a direct impact on it? So I think like when, for instance, when we're talking about estimators and project managers, let's give them their revenue goal. What are they shooting for? Let's give them their gross profit margin per job. What are they shooting for? Because those are things that they can see and they can make decisions and take actions that have a direct impact on where that number falls.

28:05 They can be responsible for it. When you start to poke into overhead related expenses, the struggle with that is that the whole is impacting that, right? Not just individuals. And I think there's a lot of victim mentality that can be created. Whereas if you're responsible for the profit margin of an entire division and you're a single project manager, it can be pretty frustrating. Or you may see yourself in a position where I can't affect all of that. I can only affect this. And it can almost be a detractor versus a positive. Okay. Now, and the only thing I hate is like I say that example, but I fall into the camp of I really like team environments.

28:46 I like team accountability. So for instance, I've always been of the mind that project managers on a team all know where they stand. Yeah, they know the pecking order. They know who the best is, who the most profitable is, who's getting the most top line. Yeah. And it created some competition. It does. It creates a healthy sense of competition. And you start to see people mirroring the right behaviors, right? You see that this is what winners do. Yeah. And we've talked about this before, man. I agree. And it's funny. I know this is very... Outside the norm, but I've always been intrigued by companies that are literal open book management style. In fact, there's a few examples and right off the top of my head, I can't think of a specific brand name, but there are more than one company that everybody knows what everybody makes.

29:35 All the salaries are public, everything. And I've thought about that a lot. Not suggesting the restoration companies go that route. But what's interesting about it when I read about it is that if I know, let's say, I make $50,000 and I know somebody else on my team makes $100,000 in a quote, similar role. There's some inherent accountability that sets in when everybody knows what everybody makes and everybody also sees people's results, effort, team contribution, et cetera. Yeah. To where I could imagine that it kind of naturally polices itself, that it creates an opportunity for other people on the team to say, hey, I feel like you're not pulling your own weight. Like, you're the most senior person on the team.

30:16 You make 50 grand more than I do. And I feel like I'm carrying your water. And it creates this opportunity. Now, I'm sure that there are also some drama that that can stir up as well. Yeah. But is there more drama than what we already see happen in our businesses around teamwork and who's carrying their weight and stuff? I don't know. I don't know. But I do find it interesting, these companies that are playing with that transparent model. We had an employee a while back and their husband was an executive at a big company that does open book management. Mm-hmm. And I remember talking to him about it at the Christmas party or something like that. And he said, essentially, they go down to the operational level, gross profit at the department level.

30:58 They stay out of overhead and they stay out of salaries. And so they basically go through gross sales, gross profit. They actually look at their categories of expenses. And how the expenses year over year or quarter over quarter are showing up and how that's affecting gross profit. And they actually look and they educate their team. They do. On the basics of how to read a P&L, which I thought, man, that's awesome. Yeah. It was impressive. Now they're manufacturing. Yeah. They are manufacturing their product company, but they have an immense amount of loyalty. They do. Like a very low turnover. I mean, they have a high roster of people that have been there out of their 100 employees or so.

31:38 $25 million company, not a giant company, but they've had people there. Their average employee, I think, is over 12 years. Oh, it's huge. Who doesn't want that? 10, 15, 20 years. Yeah. It's amazing. They also do profit sharing. Yeah. And that component, that P&L reporting is a component of the profit sharing. And actually, the interesting thing is, according to them, what they've seen is that they've seen their companies, their employees do massive work to increase production, to reduce costs, to take part in trying to look at the efficiency that's happening on the floor now. just very, very high levels of employee engagement and accountability in terms of how they're acting, how they're performing, how are they doing their job?

32:22 Because they know there's a tangible way that they all benefit from that. And they've done a great job from a ceremonial perspective, building that into monthly regimes and things like that. It's actually really, really impressive. And not shockingly, they've been awarded a top company to work for many, many years in a row. Now, so we say that because I think the reality of it is that in terms of level of information that we provide our team members, it can vary widely. But I would say this, the more... competent and this is going to come off maybe a bit offensive, right? But I would say the more mature and competent your skill set is in leadership and your ability to equip people with the information that you provide, you would probably be shocked how much information you could give to a team that they can actually use well.

33:16 Yeah. But the key there is that you have had to have done enough personal development as a leadership group or team to ensure that you can handle and lead your team with the information that you're providing. Yeah, I mean, it's like anything else, right? Mm-hmm. In order to delegate effectively, you need to walk through and you need to ensure that you're giving people the resources, the information they need to go do that thing that you're delegating to them. And likewise, everybody in your team has a different level of financial knowledge and knowledge. just understanding of how money works and how businesses work. Absolutely. Many of them, no one's ever even thought to teach them or educate them or coach them on those things.

33:58 And so, again, I can hear people in the audience. I can hear my past clients and stuff ringing in my ear that, Chris, you don't understand. Like, you don't know what kind of team I have. Like we've used the term demo donkeys, right? There's this idea sometimes that we can really just think of our people as labor, just labor units that tear stuff up, make straight cuts in a wall. And I think we really minimize the potential. Yeah. That our teams have. I really do. I think it's a blind spot for a lot of owners and leaders in our industry. We've just become so jaded. We've become so jaded because of what people come in offering to the team. Right.

34:40 It's so simple and it's so low-par. Yeah. what people come in offering. But what we found over and over, of course, not all the time, over and over is that when you expect more of people and you give people more, oftentimes, they're actually like, they blossom. Yeah. You put a little fertilizer on that seed. Right. Right. And surprise, surprise, it sometimes grows into something way more complex and beautiful than you thought. It's totally true. Yeah. It really is. Yeah. And I think some of it's a vote of confidence. You know, like, I think it feels good when people trust you with something that you haven't historically been trusted with, right?

35:20 So a tech one, a tech two, tech three comes in from another XYZ restoration company. And they've just been, they've always felt like basically a demo donkey. Yeah. They just, you know, I just do what I do. Show up, get the orders. Just tell me what to do. They're order takers. Yeah. And they're not order takers because of their potential necessarily. It's just no one's ever seen them as anything more than a do what I say person. You start to give them some information. You start to show them how the money moves and all the costs and things that no one's ever even talked to them about. Right. You know? Right. Here's an example. We were just always very aggressive about teaching our techs how the estimating process worked. Now, we didn't bog them down with making them estimators.

36:02 They weren't writing sheets or anything of that nature. But we were very diligent, let's say, for instance, creating scope sheets that had the line items from Xactimate on it. Because we're trying to give them more, draw more correlation between their behavior in the field and how it affected our team's ability to get paid to invoice for that work. And so there's all these just little elements of, and some people might look at that and say, well, does the technician really need to know the Xactimate line item code? Do they need it in order to go out and demo that piece of material? No. But does it empower them to do their role in a way where they understand their behavior's impact on the next person on the team? Then I would argue, yeah, I think it is beneficial.

36:43 And so I just think that there's a matter of looking at your business and just walking up the notch a couple ticks at a time. You know, for those of you that are running around with your hair on fire right now, I get it. You know what? Just hang in there. It's going to be okay. One step at a time. We just need to turn on these elements one step at a time. We don't need to be doing full-blown P&L reviews with everyone tomorrow. But let's at least start by looking at our team members and saying, what information will give them the right tool for the job? You're not going to hand somebody a screwdriver when you're telling them to drive a nail. And I think that we need to look at the information that we're giving our teams from that perspective. If I give them clear revenue goals and if I give them clear gross margin goals, can that project manager run their job a whole lot more efficiently?

37:30 Yeah. Will they be vested better in the decisions they're making? Yeah. Because they'll see how it impacts the outcome. Like they're just going to do a better job for you. Yeah. It's just so funny how we've seen the light bulb come on. We start working with like a restoration manager or something like that. And we have them pre-budget. Yeah. Yeah. They get their sheet together. They build a budget for the job. It's like, okay, this is where I need to get my subs, where I need them to come in. And you teach them how to negotiate and that whole process. And their eyes just widen. They're like, oh, so this is how you can do it. This is way simpler. And it's not rocket science, right? It's like somebody taught us that along the way. And we implemented it and we're like, whoa, this is just way more efficient and makes sense.

38:11 Right. Right. But we've even gone as far as we really encourage people to show their project management cost on the job and have that project manager see their impact on a project in terms of profit margin. Because again, it's like you got to think about your team. You got to think about your team's sophistication level. You don't go zero to 100. But if you've already moved past the point that you at least are establishing clear revenue goals, okay, well, let's talk about then now the impact of them on that job. Because the opportunity there is... Have you ever had a project manager gets bogged down doing the last... one or two things to get the job wrapped up, but then they delay following up with a new client, or then they miss a delivery date or an inspection date because they're busy putting on the faceplates of the last job or whatever the case may be.

38:59 Again, we give them the numbers, we give them the revenue goals, they see their impact on the job. But now instead of just getting caught up in the moment, they can look at that one and say... it's going to cost me another 40 bucks to send out James to knock this out, but it's going to allow me to go secure this other job. And by the looks of the trades on this job, I think I can pull another three or 4% from that one. Right? Like that's a different level of decision-making and they wouldn't have that ability to make that decision unless we're giving them numbers, real numbers. Right? Yeah. And people can figure this out. Oh man. We've been surprised over and over again that people, you can teach old dogs new tricks. Oh, absolutely.

39:39 I think it's just how all of us, most of us are programmed to respond. When people put new trust in us, we want to rise to it. We do. Yeah. Okay. So here's something that's coming to my head. For those people that are listening that are not owners... You know, as I mentioned, I've talked to many senior leaders and executives. In fact, the one that comes to mind was a senior estimator at a fairly large regional commercial restorer. And I was just shocked by how little information and data they had about the gross margin on their jobs, all of this stuff. And part of my coaching was really helping them coach up to ask for the information they need to operate at a higher level.

40:22 Yeah. And likewise, I've coached some branch managers, same thing. Like, okay, here's what you need to know from your owner. And I've always been very, I've never, of course, we never pit our owners against, I mean, obviously. And so I've always tried to navigate that with, hey, we're all learning as we go. It sounds like these are some question marks. Yeah. And it just helped them itemize what information are they missing that would help them execute at a higher level. Right. That's Jocko's lead up the chain of command. That's right. Right. Yeah. You got to manage up. And we do a fair bit of that because ultimately it serves our owner clients when we teach their downline staff how to manage up. Isn't it? I mean, that's kind of what we're all looking for.

41:02 Don't we want the people that are hungry and knocking on our door? Yes. Yeah. We want people to come. I think sometimes we struggle with it because we do. It's like we want to delegate more, but then we're afraid of giving too much, people knowing too much, all that kind of stuff. Yeah. But what do we say to that person? What should they know? Yeah. Yeah. What should they be asking for in order to perform better and create better results? Well, I think that... You talked about, give me a goal. Right. What am I trying to do this month? Yeah. What are we shooting for? Am I trying to do 100? Am I trying to do 250? Am I trying to do 75,000? What's my number? Right. Right. What else? Right. Well, I think the two bigs are always going to be what's the general number, revenue number that you're seeking, whether it be for a division, team size, branch, whatever the case may be.

41:46 How much profit. We always want to look at gross profit margin. We want to look at it at job level. I will tell you this, as many times as we've been in scenarios where we're trying to earn two more points on this or make an adjustment in a positive direction here... we just will beat our head up over on the financials. And we're digging into that and digging into this and looking at that number again and trying to reevaluate how we do X, Y, and Z. And I will tell you that nine times out of 10, we always came back to how are we doing at the job level? Mm-hmm. Because normally when we start to see our numbers get out of skew, now granted, you can have problems in overhead. You've just said yes to too many things, right?

42:26 Yeah, yeah. But I would say nine times out of 10, if we went back and looked at our job level gross profit margin, something had slipped. Yeah. Right? We had started to deviate from process. a one-time thing became a new adopted go-to decision maker, whatever the case may be. So I just think that it's super powerful at minimum to establish your monthly revenue goal and then establish what's the gross profit margin that we're looking for at a job level. And those numbers are going to look different depending on the class of work that you're doing, whether it be in repairs or be in mitigation, mold work, whatever the case may be. And just establish those and you just talk about them all the time. They come up in weekly production meetings.

43:06 You're looking at individual jobs. You're seeing how they're being produced. You compare that to goal. You identify those. So I think that those are the two big ones that you're going to want all the time. I think along with that, though, if we're just talking about numbers, I would say that it's absolutely critical then that your team also gets some kind of understanding on their closing percentages. Yeah. We need to understand that as our teams and our marketing efforts are being spent on and driven, what are we doing with that? What's our cost of sales? What's our cost of sales? If we're going out and the back door is open and we're allowing that client to just walk right through the hallway every time, right? We paid $200 for that mid lead, right?

43:47 We spent... We had two hours of labor to go do that inspection. If we don't land it, we've got a sunk cost of $450 or whatever, right? Well, and I think another place that this shows up and probably would have been an awesome opportunity in that little chat we did about sometimes you got to say no to a job is that are we saying yes to small work that cost us nothing to get? And we're saying no to work that we've already spent money on to try to get in the front door. Right. And so there's, these are just some of those numbers, again, that just equips our team with better decision-making processes. Right. Yeah. Here's another example too. I think there's this process of letting go as your company grows.

44:29 As you become a general manager and you've got lieutenants under you, you've got a mitigation manager, a resto manager, you may have office manager, and maybe even additional kind of coordinator level roles. You're not going to be doing all the hiring. Mm-hmm. forever. And I think I was like, even simple details, like just because we're offering $18 an hour for a particular role does not mean that's what it costs the company. These little details can really empower our people to help us make good decisions. And just like we all, those of us who have that role or that background realize that, yeah, it's not 18 bucks an hour. it's like 18 bucks an hour times 1.2, right? You figure in all the payroll burden and sort of the overall cost associated with that employee.

45:15 And how many people outside of the office manager know that? Right. And maybe the owner, obviously, maybe a general manager, because they've had experience running payroll and stuff like that. Sure. But that has a big impact on what the total cost is, right? So you've got downline staff that are starting to hire people and they have no knowledge. So... Those are the kinds of little things that we can teach people that in aggregate, so like you were saying, we don't have to dump all this on everybody at the same time, but when we go talk to our mitigation manager who we just promoted six months ago, and they're getting ready to hire a new team member, breaking it down for them and saying, okay, Well, how much work do we have in the pipeline?

45:56 So what kind of production is available for this new hire? Do we have work for them? Right? And how much are they going to cost? How much are you thinking of paying them? And explaining these different things. How's it impact? How's it impacted, right? Yeah. Yeah. And I know for some of the folks listening, like they get it. It's like, duh, you know, they've probably been dialed in some of its personality, some of its natural wiring. They're probably just more, you know, but it may not be done to your people. Right. That's what we're talking about. It's like, it's like, how do we become less of the bottleneck? And I think it's all information. It's all coaching. No, I totally agree. All right. What do you think? Should we wrap it up? Yeah, let's wrap this one up. Yeah. So before we kind of jump into that summary, maybe it's part of it. I just, I want to encourage everybody to remember, like we're not going zero to 100.

46:38 We often will promote someone into, and we use the terminology, my right hand. Oh. or my left hand. That's great. I love that. I love the sounds of that. I believe it's an awesome opportunity to begin to mentor someone and equip them in a way that they may have not been equipped before. It obviously shows there's an immense amount of trust there. Just start by educating them. Just open the doors, be really clear, and be super proactive about the way that you steward that relationship to this person that you've identified as your right hand or your new mitigation manager. Give them the type of information that they can control. that they can make decisions, that they can take actions, that they can hold certain types of attitudes and behaviors towards that will move that in the direction it needs to go.

47:27 So I think that's kind of like the starting place. Look at your team right now. identify the one or two people that are just the key influencers, whether they lead a book of business, maybe they're just one of the most influential team members on a small mitigation team, whatever the case may be, start there, identify that person or persons, and just start equipping them with enough basic information that they understand that the action I take, if I do it in such a way, it's going to give me the highest chance for of meeting or exceeding this said goal or objective. I think that's just start there. And I think what you're going to determine is that once you begin to take little steps like that, you're going to realize there's lots of little ways for you to better and more proactively equip your team to just get better at doing the decision making on their own.

48:14 And you'll be shocked how many times that decision making actually aligns very well with what your goals and objectives are. Not all the time. But again, it's more likely the more equipped that they are. So I guess it's kind of a weird... It's part summary and it's part just maybe take a baby step. But at the end of the day, look, your team is probably more capable than you're perhaps giving them credit for. And no matter what, when we give people information that they can actually have an You're going to equip them in a way that makes them make better decisions. And you're also going to really encourage them to be much more committed and loyal to what it is that you're trying to achieve because they get to see that they have a real impact.

48:54 They're not just taking orders. They're not zombies. They actually get to participate in the success of the team. So I think that's just absolutely... huge. And again, just don't overthink it. Let's give them some basic tools. Let's give them some why. And don't be afraid to jump on the whiteboard and do some back of the napkin training. You could do that tomorrow and it would probably have a profound impact on at least a few people. Yeah. I just think it's so cool. That manufacturing company we talk about, actually educating their team. Because a lot of companies do profit sharing. Yeah. And no one knows anything about how the sausage is made. Right. They're just kind of hoping. Right. If we all work hard, we might get a bonus this year. Right. Versus that approach of, no, let's educate you on the financials of the business and how the business works.

49:41 And if you want to help move the needle, here's how you do it. That's how you do it. cost, increase our throughput, allow us, you know, improve our manufacturing floor, help us make more sales. Yeah. Increase your closing rate. Yeah, that's right. Like admin team, like, you know, do a great job communicating with our wholesalers and our clients. And so one order turns into three and right. And it's like you start to teach people how it all comes together and surprise, surprise. They perform. They contribute. They perform. Yeah. It's crazy. Right. How that works. All right, man. Okay. We'll see you next time. Until next time. All right, everybody. Hey, thanks for joining us for another episode of the MRM Podcast.

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