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Rethink Culture is the podcast that shines the spotlight on the leaders who are rethinking workplace culture. Virtually all of the business leaders who make headlines today do so because of their company performance. Yet, the people and the culture of a company is at least as important as its performance. It's time that we shine the spotlight on the leaders who are rethinking workplace culture and are putting people and culture at the forefront.
[00:00:05 – 00:01:35] Andreas:
Good morning, good afternoon, and good evening. Welcome to another episode of Rethink Culture, the podcast that shines a spotlight on leaders of businesses that people love to work for. My name is Andreas Konstantinou. I'm a micromanager turned servant leader with a passion for workplace culture. At Rethink Culture, we help companies build a high performance culture by finding out what stops their people and teams from doing their best work. And today I have the pleasure of welcoming to the podcast Rob Gallaher. Rob leads five companies across multiple industries, construction, plumbing, restoration, HVAC and car washes. And he has seen the incredible impact of aligning employee success with company success by using profit sharing schemes, which he innovated and created. He recently put this experience into a book called Profit Sharing the Power to Shared Success. And we're gonna talk a lot about profit sharing today and how it works, we help align people with company success. But besides that, Rob is a father of eight children. And in his spare time, he likes to raise cars on dirt trucks with his father and children. So Rob, very welcome to the Rethink Culture podcast.
[00:01:36 – 00:01:38] Rob:
Thank you very much, excited to be here.
[00:01:39 – 00:01:49] Andreas:
I would like to hear your journey as brief as you want to before we start. So how did you get to become an entrepreneur?
[00:01:49 – 00:05:30] Rob:
Well, I lost my job and I lost my income and I needed that. My wife was pregnant with our second child. The 08, 09 housing crisis was hard on my employer's business. So eventually he didn't have any work and I needed to do something else. So I started my company and we were very successful. We worked really, really hard. My wife and I did it together. She handled the books and the AP and AR and I was hiring guys and chasing customers down to get work. Then that's how it started. We had so much success so fast that three years into it, I looked up one day and I had 30 employees. I was working 60, 80 hours a week. I was not spending enough time with my children. My marriage was stagnant. It wasn't a bad marriage. We just didn't have time to spend together and to talk about just the basic things or even really talk about our kids that much. And I thought to myself, there's got to be a better way to this. How can I be successful in business, make a good income for my family, but also be a good father and husband? So that set me on this journey of trying to learn what that looked like and figure that out. And so my first step was talking to other business owners that I knew, vendors that I worked with, subcontractors that I used, business owners and the family that I knew. And I wasn't happy with the answers I was getting. I was getting the same. The answers they were getting my questions were the answers that I was currently doing. You gotta work hard and employees suck, good looks are hard to find. It was a very negative attitude about their teams and that there was no easy way to do this. There was just only the hard way to do it. And I didn't accept that. So I started reading more books and I got online a lot to learn other business owners that were talking about this stuff. And that's when I came across this concept of profit sharing. Once I learned about profit sharing, I wanted to look to know more so I can do this in my business. And I did not find a black and white process on exactly how to do this. It was a lot of theory. The concept, the theory of profit sharing sounds exciting. Everybody wants to talk about profit sharing. Everybody wants to do it, but the question was, how do you do it? And so I couldn't find a very good guide on how to do it. So I just decided that I was going to figure it out on my own, because it wasn't available. And in 2015, after, so to do that, I took two of my leaders together. And we sat in my office and we just said, I want to do a profit sharing program. What does that look like? How does this, we came up with the first rendition of profit sharing. And we cut our first checks in 2015. I did a lot of things wrong in 2015 and did not get the results that I was expecting. So we went back to the drawing board and we redid it and we made some tweaks. And then fast forward about three more years in 2018, after multiple renditions and multiple heartaches and a lot of heartburn and some gray hairs, we started to figure out what was working and what wasn't. And we started to see direct results from a properly set up profit sharing program. And then since 2018-
[00:05:30 – 00:05:36] Andreas:
How long did that take? Like from first trying the profit sharing to actually seeing it by results?
[00:05:37 – 00:05:51] Rob:
Probably four years. It wasn't like a light switch. I feel like every time we did it, there was progress made. But it's hard to have like a exact timeframe. But I would say that from the concept, the really seeing direct results was four years.
[00:05:52 – 00:05:57] Andreas:
And then were your people suspicious initially or puzzled?
[00:05:58 – 00:07:51] Rob:
Yeah, because I did a horrible job of explaining it to them. I didn't have a lot of clarity on it. All the issues I had were my fault. They were things that I was learning too. And so try to take, imagine a scenario where you have a teacher that doesn't really know what they're teaching, trying to teach something to students that know nothing about it, right? So there was a lot of learning going on both sides. But one of the stories I tell in my book is the first profit sharing check that I cut was a quarterly profit sharing check. And one of my producers, he was a good guy. He was a hard worker. He was upset. And the long story short is that he left the company because of frustration. And it wasn't, no one is mad about extra money. He didn't give the check back. But it wasn't clear how he earned it. And he thought it was supposed to be different. And the expectation he had worked for is I didn't really give him those expectations. So it's a part of the lessons learned about clarity and communication, reminders, and all these things that I did wrong in the beginning. So fast forward to today, I've learned so much about profit sharing. We have a really good system that's proven to be extremely successful. And I thought other people should know this because I think about the heartache that I went through to learn it and all the mistakes that I made to come up with this. If I can save someone time and years and money to do it, and not only save the money, but all the money that they could potentially earn more from it being done faster, I think would be a great way for me to pay forward all these things that I've learned from other business owners that I've read their books and learned stuff from them and hear speak that has really helped me along this journey.
[00:07:52 – 00:08:10] Andreas:
So when you got it right, what does a profit sharing do for people? Like if implemented well, what behaviors do you see from people? How do expectations change? How do motivations change? How do people see their employer and the business they're in differently?
[00:08:10 – 00:09:33] Rob:
The number one thing that I hear business owners complain about is my employees don't think, care, or work like I do. I don't think you're going to find a business owner that at some degree to some extent is going to have that issue. Profit sharing when properly done bridges that gap. You take an employee and turn him into a team member. In my company, we don't use the word employee. If I see it on a document from HR, I fight, I go, hey, I want to change this word. I don't even like the word manager. I would prefer coach or leader. And I think those words are important, but when they answer your question, a profit sharing program properly implemented gets your employees to become team members who think, work, and care about the business like the owner does. And so it creates alignment. It creates unity. It creates motivation. You're not the only one trying to make the culture, everybody wants the culture to be better. Everybody wants to serve as the customer. And so you'll think that you go alone, you'll go fast, but together you'll go farther. It creates that unity to get the goals of the company because now with profit sharing, you're aligning the goals of the company with the team members. I see a lot of winning just happening.
[00:09:34 – 00:09:52] Andreas:
What's an example? Like what are some stories of what things you noticed? Like how did your staff, not to use the word employee, but how did your team members start behaving differently once they understood that you wanted their success to be aligned with a company's success?
[00:09:53 – 00:12:37] Rob:
Yes, I have a story. It's not a big dollar amount story, but the idea and the thought process is there. So at my car wash, we mow our own lawns. And so we have our own lawn mower. And I visit the car wash often. And one time I was there, I noticed the lawn wasn't mowed. It's supposed to be mowed every Tuesday. So I was probably there on a Friday and it looked like it hasn't been mowed in over a week. I didn't say anything. I came back the next week and it still wasn't mowed. And I asked my manager, I said, "Hey, what's going on with the mowing schedule? Did we fall off of it? Is the maintenance guy sick or what's going on?" And he goes, "Oh no, our lawn mower broke." And I'm like, "Okay, well, what'd you do?" And he goes, "Well, first the maintenance manager and the assistant manager wanted me to buy a new lawn mower, and that's $300." And I said, "Well, what happened?" And he goes, "Well, we got together and they requested it." And I said, "Well, how is that going to affect?" "So this is my manager, not me, my general manager, asking the lower level managers, how is buying that $300 lawn mower going to affect our profit sharing check this month?" And they thought about it and they go, "Well, it's going to make them lower." Which I'm glad they think that way. They, instead of buying a new lawn mower for $300, they got on YouTube to watch videos about fixing this lawn mower and figured out that for a $12 carburetor rebuild kit on Amazon in a 10 minute YouTube video, they could fix the lawn mower. So the next week I came by, the lawn was mowed and we did not buy a new lawn mower. And for $12 and a little bit of their time, they fixed it. And I love that story, even though it saved the company $288. They all got a piece of that. And that's just one small story of where your team members will start thinking about the cost of the business, increasing revenue, but also reducing costs. And when they do those two things, they are getting bigger profit sharing checks based on their efforts. The best part about that story is that I never got a phone call about it. I never got a text message or an email or any of my leadership or experience was needed. I just changed the way that they were thinking about business and what they can do to impact the bottom line. That's a, that's a fun $288 story, but I have many, many more across all the different companies of how this stuff is happening every day. When a profit, when a profit sharing program is correctly implemented.
[00:12:39 – 00:12:55] Andreas:
So let's say someone who listens to us now says, I want to experiment with profit sharing. Where do they need to be in order to roll out a profit sharing scheme? Like I'm sure it's not for everyone. So what kind of business is this best suited for?
[00:12:55 – 00:15:02] Rob:
You know, I've get this question asked. I don't see where it couldn't work in most businesses. Let's say this. I haven't ran across a business where it hasn't worked when the owner has put an effort to do it. But there are three things that a business owner should have done before considering profit sharing. Number one is you need a business that makes money. You know, typically is you have employees. Obviously, if you're a one man show, there's no one to share the profits with. So you don't need a profit sharing program. But if you have employees and you have some leaders you're developing, profit sharing would be a good thing to help you with that. But that's the first thing you need. You need a business that works well and or is working and making profit. Number two, you need to be a good leader. You need to be an example. You need to be willing to lead people, help them with their lives, not just at work. I think a lot of business owners make this mistake where they just focus on their work performance. What's going on in their home? Because I can tell you from my experience that the more productive and happy and successful is someone who's at home directly relates to their success in the workplace. Happy people just work better. That they they're more coachable, they're more team oriented. They're not they're less selfish. There's less ego and pride going on. So and as a leader, you can help them with that. And you will benefit the company would benefit too. The third thing that you need before a profit sharing program is you need to have a good accounting system and the business owner needs to understand their accounting and their financials. I see a lot of small business owners where they struggle in this area. And so if you're considering a profit sharing, you're listening to us today and you like this theory and you like this idea, which is not really a theory and idea no more. I've proven that it works and other people have too. Those are the three things that you should focus on if you're not comfortable or feel like you're sufficient in those areas.
[00:15:03 – 00:15:21] Andreas:
So then how do you help, let's say an entry level employee or even a manager understand how a company makes profit because I imagine they need to have some sort of financial literacy to be able to appreciate how profit is made.
[00:15:22 – 00:18:01] Rob:
Yeah, that this is a good question because not everyone's job. Needs to have this financial literacy of the company financials. So I have people on my profit sharing program that did not see the financials because, you know, for example, a construction superintendent, he needs to know how to get the job done and lead the guys and read the plans and order the right materials and make the right measurements and do all the right scheduling to do his job. He doesn't need to understand a balance sheet or a profit and loss statement or how depreciation affects those numbers. That doesn't help him. So what we do here is we have our group of DMs that we call DMs stands for decision makers. And those are the leaders or the people in the company that can pull and push the right levers to increase or affect profit the most. And that's who is on the profit sharing plan. Some of those people do see the financial and they do have a deeper understanding. So to answer your question to Bruce, I coach about what they need to know or what they need to see, because I think a huge disservice happens when someone who doesn't understand what a profit and loss statement is or how a balance sheet works or how receivables are. When you show them these numbers, it can create confusion, misunderstanding, and then a false pretext of what's really going on. I think some people see these large numbers on P&L sometimes, and then they automatically include some things. The owner is putting all this money right in their pocket, and I'm getting paid X amount and it's a very, very, very small percentage, but I'm the reason for all the success. So there can be a lot of problems that come out of that misinformation or at least uneducated viewing of that information. But I'll talk about it. I'll coach them. We have meetings, company-wide meetings or individual department meetings where I'll sprinkle some of this educational stuff in if I think it's important. Just the other day, I was with my restoration team and we were talking about volume and how volume affects the percentages on the different line items on P&L. So if we can increase our top line revenue, all the percentages below it of cost gets smaller, but we didn't really reduce the cost. We just reduced the ratio of that cost compared to our revenue. So I try to get them to think about these, understanding a little bit of math and numbers and ratios and percentages and how that kind of helps grade bottom line.
[00:18:03 – 00:18:24] Andreas:
So let's say someone has a business that is profitable. They want to help their people develop. What are the first three things or five things they need to put in place as part of a profit-sharing scheme? So how do you architect one?
[00:18:24 – 00:21:58] Rob:
I think that business owners in that position are probably already huge fans of self-education. They're already invested in themselves. They probably already read books about leadership, business operations, marketing, mindset type things. They need to be sharing that wealth. I read a book. I like it. I think it's a lot of relevance in it. I'll buy 20 copies and put it on the bookshelf in the office for anybody to grab. Then I will highlight a chapter and spend 20 minutes in a production meeting talking about the lessons in that book and just constantly pouring into them about leadership and mindset and success and how this works. That's a huge step is getting your team caught into this fever of self-education. Like you said earlier, I like to read. You've rattled off a bunch of books that you've read. Most of those books I've heard of or currently own or have read myself. That spirit would be a huge help as a leader in the team. The other thing that they need to do is they need to get their business operations really dialed. Your SOPs, your KRAs for your team members, your mission statement, your core values. You need to do these properly because a lot of people, I think, make the mistake as they Google mission statement and then they come out of thin air. Something that sounds like another big corporation has a mission statement, but it didn't come from the owners, art and soul. It just feels very corporate and not personal. So there's ways to do it where it is a personal mission statement or personal core values. I think that's important because the business owner is human. If you have a big business or a growing business, new team members and leaders, they think of you as a scary boss or this very important CEO that doesn't have time for his team and good leaders know that that's not true. They do a lot of things that they can to prevent that mystical figure that they're not accessible, they're not human. So these are little ways by having your core values and your mission statement come from the owner to connect yourself with your team and foster that unity that you need to be successful. There's that. I think accounting, financial education is really important for the owner himself. I see a lot of owners that they have a bookkeeper or they pay a third party to do their bookkeeping, but they don't truly understand what these numbers mean or every line item on their P&L. And I know if you're listening to this, that sounds like a lot. It can be, but you don't need to learn at all today. There were years where I was spending 30 minutes a day either by a podcast or a book, or talking to a financial expert about balance sheets, assets versus liabilities, what depreciation is. And then that continues into tax education. That's another thing business owners need to be aware of is taxes and how this works and doing that legal and ethically. And it's a lot, but you can chip away at it and get an understanding. I still learn every day on this stuff, but it's very fruitful for the business owner and very vital to their success and your team's success.
[00:21:59 – 00:23:09] Andreas:
It took me years to learn about this notion of trust and validate. So I am an engineer by background. So anything that involves technology, I'm very good at understanding and asking the right questions from my team, but a lot of other stuff, which is most of it. I had to pick up, how do you manage a team of marketers? How do you manage HR? How do you manage operations? So each of these things, you can delegate, you can trust people, but ultimately, as a CEO or owner, you have to be able to validate. And validating means asking the right questions to know that the business is going in the right direction. And we just, we're people and we only specialize in two or three things, but a business needs so many different areas. So we cannot be jack of all trades.
[00:23:10 – 00:25:51] Rob:
Correct. One of the things that I do is, let's just take an HR department, for example, the leader of that department I will spend time with and not talking about work to create that trust. And then also one other thing I do is if there's an HR summit or a webinar or a conference, I will go with that leader through these events so that they're getting their hearing speakers, they're seeing the latest and greatest technology in their field. They're seeing the whole world of HR or whatever it is, plumbing or restoration. It could be trade Pacific or not. And that has created, so I learned things too. And I asked questions, what do you think about this? This speaker mentioned this system, you think that would benefit us and it keeps me involved without having to go learn and research it on myself and then bring it back. We do it together. And that shows that I care. And I know that if I care, the more that I care about them and their success, the more that they care about their job and the company. And so I think you made a big point there, but you glossed over it is we can't be the jack of trades and good at everything at one time. We have our specialties. You know, my wife, I just told someone yesterday, the only job in my company that I never did was bookkeeping. It was my wife. And then when she became a full time mother, we hired someone and she trained that person. I was never directly involved in that day to day stuff. But I asked when I get these financials, we'll look through the details and I'll spend, you know, a couple hours a month asking pointed questions, even if I know the answer. I want them to know that I am paying attention and that I care about things. And I care that they're doing it well. And then also, I also encourage them to educate themselves. I encourage them to go to seminars. And, you know, a lot of your vendors are going to have webinars. Like our HR lawyer sends me webinars once a month on new HR laws or new cases that came up. And so my HR manager is at all of those to stay on top of these things. And then we talk about it. Hey, give me an update. Give me a five minute Snapchat summary of what you learned. And then I'll pick something that she says and tell me more about this. Do you think we should learn more about this? Can we dive into that? Showing true care about her position and her struggles and her challenges and her wins.
[00:25:52 – 00:26:08] Andreas:
Going back to profit sharing, let's take a practical example. And let's say a company has, I don't know, a million a year in profits. How does the owner think about handing that out or part of that out to employees?
[00:26:09 – 00:29:42] Rob:
That's a big question that we can talk, we can break down for an hour. I think, so let's say we take a company owner, you know, a mom and pop, let's say it's a flower store. Okay. So they're making bouquets, they're ordering flowers, they're selling flowers to big advance people. They have a retail store, people are walking in, he has employees, people making bouquets, people ringing up customers in the retail store. So let's take that scenario. And he's making a million dollars a year. First of all, I would want to look into the flower business myself and see how he's doing this. It sounds like a lot of money for a one-site operation, but I would encourage that owner. So obviously, in taking that scenario, his business operations are doing well. He's probably a very good leader. His finances are probably with that kind of money, very accurate and detailed and done properly. Now he wants to, let's say this owner is working 60 hours a week. He's opening the store and closing the store six days a week, for example. And now he wants to maybe only work 40 hours a week. And so he needs to be investing in his leaders, teaching them about responsibility, accountability and integrity. And then I think he would take his baseline profit, so a million dollars a year. You divide that by 12 to get a monthly number. And if he shares a percentage of that or what I teach is actually to take your current existing profits and create a threshold that includes the cost of the profit sharing plan so that when you roll it out to your team members, the additional profits, because they're going to be motivated and excited about a profit sharing plan, that is the dollar amount that you share. Because one of the issues that business owners bring up to me or the first questions they ask is, "How much is this going to cost me?" That's the typical small business owner's mindset. They're getting pelted all day long with sales calls and a better bookkeeping system or more marketing here or more SEO on Google and everybody wants money to do these things. So it's always like, "Well, what is this going to cost and what's my ROI?" What I tell them for a profit sharing plan, it's not going to cost you anything because the benefits of this profit sharing plan you wouldn't have without it, if that makes sense. So the ROI is 100%. You're only going to benefit from this. There's no downside. You're not going to lose money by having a profit sharing plan. And I go through that in the book and how to set that up and the rules that I put around that to protect the mothership, which is the company, because the owner is in that ship too with all the team members. So if we're hurting the ship, everybody's hurting and that would be the opposite of anyone's goals or plans. That owner would read the book or take the course and then use those guidelines to set it up and then practice the tools that I put in there and coach their team on the profit sharing plan to implement it and make more money and motivate their team by having a motivated team.
[00:29:43 – 00:30:05] Andreas:
And let's say you allocate, let's say five or 10% of profits and you give them out to employees. Do you give them out to all employees and do you give them out to employees based on their base salary or you divide them equally to the employees that receive that?
[00:30:06 – 00:34:20] Rob:
This is a great question that doesn't have a black and white answer. So I can tell you what I've done and it's evolved over the years. I talked about in the book how our profit sharing program gets adjusted every year, we review it and there we have some rules when we make an adjustment to make it better. We want to make profit sharing checks bigger. How do we make them bigger, which means we have to create more profits for the company to share. And we'll get the team member involved in this conversation too. So when I first saw really true success of a profit sharing plan, we did a flat profit sharing check of a thousand dollars through all the DEMs in the program. So for example, we had a threshold of profit every month. If we hit that threshold of profit, everyone in the program received a thousand dollars for that month. Now percentages is different depending on what your base salary is. For example, if you make a hundred thousand dollars a year and we hit the profit sharing threshold 10 months out of the year, that's ten thousand dollars they made. So that individual made 10% more of their base salary for the year, which is a good chunk. If they made eighty thousand dollars a year, that percentage would be a little higher, but they were still getting the flat rate of a thousand dollars a month. That's how we started. And we did that system for three years in most of my companies. One of my companies I do test on, I will do some trial and error with profit sharing. So when we come up with a new or some adjustments to profit sharing, we'll implement it in one of my companies first for a year to see if it works, if we're actually getting the results from it before we roll it out to all the other companies. So in case there's a mistake or it doesn't work, I didn't just hurt all of my companies at one time. So we do some testing on one of them. And luckily so far, it's always been a hit and we've always made good adjustments where the profit sharing check was, you know, got bigger and the profits responded accordingly and they got bigger too. So currently we still have the thousand dollar minimal, but on top of that, when they go beyond that threshold, we do percentages on top of the thousand dollars. One of the rules is that the profit sharing check has to be substantial enough to remove their financial needle. One of the stakes that I made in the early days was giving out profit sharing checks that I was doing it quarterly, which I'm against now and I teach against doing quarterly bonuses or quarterly profit sharing. So they would get, let's say they got a $1,500 bonus profit sharing check every quarter. Well, that's $500 a month and $500 a month doesn't really change people lives like a thousand dollars a month does. Obviously every dollar or more helps, but when you get to that four digit number, a thousand dollars, depending on your situation, because everyone's a little bit different, that could be your rent. It could be your grocery budget for the month. It could be the payment on a really nice car. And that we found was much more motivating and unifying for our team members than $500 or $300 a month. And so that's always a minimal is the thousand dollars. And then on top of that we've built in the percentages. And then we sometimes, depending on your position, we would count change those positions. For example, my GM will get a higher percentage of profits past the threshold than a superintendent, for example, will. So just to kind of even out that the more levers that person is capable of pushing and pulling to affect profits, we want to kind of relate the effects that they have on profit to their profit sharing check. That makes sense.
[00:34:21 – 00:34:28] Andreas:
So that means that people who are lower in the hierarchy, they are not part of the profit sharing scheme.
[00:34:29 – 00:35:47] Rob:
Depends if you're talking about management hierarchy. So for example, what I've done is let's talk about my plumbing company, for example, my plumbers that are driving the vans, going to the customers, doing the work, they are not on a monthly profit sharing program. And there's a couple of reasons for that. And people ask me, well, why? Well, when you have 10 people, the more people that are on the profit sharing plan, the smaller those checks get, and the harder it can get those thresholds, there has to be a balance. And I don't know if I have the perfect answer to that balance yet. I'm working on it. And I think every company is different. But what we decided to do is that our plumbers, we're going to make a very competitive wage in the marketplace. They have a hard time going to another plumbing company in my market and making more money. So they're already at the top end of their marketplace as far as their wages. So then I do not do profit sharing there. Another side note here for business owners listening is that profit sharing is not a supplement for a low salary. This is not a position where...
[00:35:47 – 00:35:47] Andreas:
Oh, certainly.
[00:35:48 – 00:39:10] Rob:
Yeah, this is not a sales position where you have a low base and then a very heavily commissioned pay. That's not what... I don't find that to be very productive. I find a lot of problems in that system. But anyway, that's a side note. Don't think of profit sharing as, "Oh, if a plumber should make $35 an hour in your market, I'm going to pay him 25, but I'm going to have this profit sharing program untaught." That's not a good system. I feel that if someone's in the field, they're tradesmen, they're working with their hands every day, they're very important to your operation, they are your product that you're selling. They need to be paid very competitively every minute of every day that they work. The profit sharing program that I use is for the leadership and the people making the decisions every day that affect profit the most. A plumber doesn't decide where he's going or what job he has to do that day. All that is figured out by the project manager or estimator or the manager of that department from the customer. So I lean towards the profit sharing paying those people that are making those decisions like an owner would make those decisions. Estimating that job, if an estimator makes a mistake on an estimate, that can be extremely costly. So you want to make sure they're motivated to not make those mistakes or a project manager has to serve or account manager needs to service that customer to the best of their ability. That's a huge lever to pull if that customer is happy or not when it comes to making profits in a company. So I do not have everyone on the profit sharing program. We do leadership. We do the roles that are doing the big estimating project managing or handling the all sales accounts, not just big accounts, but small accounts too. Those are the people that we're trying to influence their daily activities so that they can go the extra mile in taking care of our customer. For example, you have an estimator who drives to job sites to look at projects, provide estimates for. He spends two to three hours a day in the car that you're paying for, right? What is he doing with that time in the car? Is he listening to music and zoning out? Or is he making a phone call safely, of course, to a previous customer or following up on a project or following up with the foreman in the field? How's this job going? Did you order the doors yet? Did you get the paint sample approved? These little details that they can spend all day doing when a lot of average people just listen to music and zone out so they get to the site, do what they have to do, and then zone out the way back to the office. Office sharing, the goal is to bridge that gap we talked about was the thinking, caring, and working like an owner. An owner is going to be in that vehicle driving, following his guys, checking on this order, being very effective with his time because he's extremely motivated for the success. That's why my profit sharing program is to influence those minutes of every day of your high top producers that are pulling the biggest levers to create that profit.
[00:39:11 – 00:39:49] Andreas:
Makes sense. Something I wanted to comment on is this, that sometimes we, as owners, incentivize people to work harder for a bonus or a team bonus or a profit share, but that actually sends another message, which is that I expect you to do average work unless you want the extra money and you do really good work. But I'm okay if you do average work, I just won't pay you extra. And who wants that?
[00:39:49 – 00:39:50] Rob:
Yeah, that's it.
[00:39:51 – 00:40:53] Andreas:
We just don't think of the behaviors we're incentivizing by using these financial levers. Same thing I used to do as a business owner, I used to do performance bonuses as a standard. And now I realize that the performance bonus firstly creates competition between people, because how much bonus did you get and how much bonus did I get? And we're not going to get the same bonus. So why should I care about the work you do versus the work that I do? And we don't consider team bonuses or profit sharing. And this is why I love profit sharing, because it says no matter what you do, you contribute to a team. And it's like a sports team. So the team is either going to win or it's going to lose. If you win and the team loses, then guess what? Everyone's lost, including you.
[00:40:54 – 00:44:35] Rob:
Yeah, Tom Brady won a lot of Super Bowls, but he did not do those by himself. He had linemen, receivers, running backs. He had a whole team of defense that helped him do that. But we always think about Tom Brady. That's the name that comes to mind. And I asked a football fan the other day, who says, I was curious, I was like, "Hey, Tom Brady won all these Super Bowls. Can you name one lineman that played one of those Super Bowls?" And this guy's a football fan. And he knows a lot about football. He stays current. His news feed is full of it. He could not name one lineman on one of those teams through all those Super Bowls that Tom Brady has won. And I thought to himself, do you think, I asked him, do you think Tom Brady would have won those Super Bowls if he was missing one of those people on the team? And he goes, "Well, obviously not." And I was, "Well, why did we always focus on this guy, Tom Brady?" But he had 10 other people feel with him that he needed to win. And when I talk about teamwork and unity, that's what we're talking about. Yeah, there's the owner and there's the company name and the reputation and the brand that typically gets all the glory. And the owners that think that way, fail. Or they don't even get to a level of success because they don't appreciate or knowledge the team that is helping them get there. And that goes along with the point that you're saying. And it's extremely important. As a leader, when I implement profit sharing programs in my businesses, I talk about it often and I talk about teamwork and unity and communication. Those are probably my three biggest things I talk about, communication and teamwork. Because I just saw a video this morning of John Gruden, who I don't know if you know who he is, but he's an NFL coach that doesn't coach anymore. But he tells the story. He's talking to a bunch of college students, a football team. And he goes, "Imagine there being a big boulder in the front of this room." Big boulder, 800 pounds. And if the quarterback, the star of the team, is pushing on that boulder, is it going to move? No. Okay, bring in the wide receivers. Now have them push on it. Is it going to move? Not going to move. Bring in everybody on the team, the coaches, the water boy, the girls laying out the uniform, the cleaners. Bring everybody that's employed by this team and push on that boulder. Now will it move? Yes, it will move now. But it takes everybody in that organization to move forward. In the construction world, you have the foreman, you have the the very experienced carpenters, and they've been doing it for 30 years. And there's typically a bad attitude towards the new guy or the rookie amateur. And they quickly forget that they one day was that guy too. There was the first day that they swung a hammer and there was the first day they had to cut a piece of wood. And I hate the fact that we're negative towards them or we make them do jobs that are sweeping all day long and they were not investing into these people because at one point someone invested in you and you should pay that forward. Because the better that new guy is, the better you're going to be. So you should be in your vested interest to help them along and get caught up to speed to help the company be successful, which will make you successful at the same time.
[00:44:36 – 00:44:40] Andreas:
And that's why good leaders take the blame but pass the glory.
[00:44:41 – 00:45:13] Rob:
Yes, exactly. Another lesson I've learned is everything is my fault, no matter what. One of my guys getting a car accident, it was my fault. I didn't train or teach or engage them enough to drive safely. And then when we win, we profit share. That's the glory we're passing along. We have a meeting about it and we cheer and we go over the numbers and it's a fun, exciting thing that everybody loves to do. And at the end of the meeting, I pass out all the profit sharing checks.
[00:45:14 – 00:45:20] Andreas:
Rob, where can we find out more about you and your book about profit sharing?
[00:45:21 – 00:47:02] Rob:
Well, the book goes on Amazon. We'll include the links in the show notes below. You can find me on Facebook and Instagram, Rob Gallagher. We're currently setting up the ProfitX's website, which is the name of the company that's going to help business owners implement this. We're in the middle of, we're actually not in the middle, we're actually close to the end of a course where you'll be able to take that will teach you step by step everything that you need, the spreadsheets that I've used, the formulas that I've used to create the threshold, templates of coaching your team on the profit sharing to implement this in your business. Anyone can use this. It doesn't matter if you're a flower store, a doggy daycare, a construction business, a car wash. There are nuggets in there and systems in there that are universal that you can use to implement a profit sharing plan. And so we'll include all that in the show notes. The ProfitX website is not done yet, but when it is, we can update that and give you more access to figure that out. But I would love you to join me on Facebook or LinkedIn and follow along and get more nuggets about profit sharing. I think the book though, I didn't just write a story. I put concrete information in there and I put the 10 rules that I put together for implementing profit sharing correctly. And those 10 rules weren't just some fluff that I thought of to fill up a book. They're actually lessons that I've learned and mistakes that I've made from doing this profit sharing for over 10 years now.
[00:47:03 – 00:48:03] Andreas:
Rob, thank you for sharing your story. Thank you for helping more of us see how to help the people in our business act and think more like owners because it's our fault if they don't. It's our fault as leaders if they don't. To anyone that's listening, thank you for giving us your undivided attention all this time. If you liked the show and if you enjoyed hearing about profit sharing and getting to meet Rob here, do give us a five-star rating because that's how more people get to find out about the show. If you'd like to get in touch or maybe you're even thinking about building a high-performance culture, you can get in touch with me at andreas@rethinkculture.co and keep leading, keep creating better workplaces for you and especially for those around you. Take care.