WEBVTT NOTE This file was generated by Descript 00:00:19.273 --> 00:00:21.013 Hello, my entrepreneurial friends. 00:00:21.133 --> 00:00:27.613 Today's episode, we are going to talk about the three slippery slopes that 00:00:27.613 --> 00:00:34.813 you need to be cognizant of and make sure that you are not falling victim to 00:00:34.813 --> 00:00:40.993 letting the profitability of your company bleed from these three slippery slopes 00:00:40.993 --> 00:00:46.273 that just kind of take it and you just ride with it and then go What happened? 00:00:46.428 --> 00:00:52.368 these slippery slopes all relate to probably the largest. 00:00:53.728 --> 00:00:58.468 Expense category on your income statement or your profit and 00:00:58.468 --> 00:01:01.558 loss report, and that is payroll. 00:01:01.828 --> 00:01:02.188 Yep. 00:01:02.218 --> 00:01:03.538 We're talking employees. 00:01:03.538 --> 00:01:04.678 We're talking payroll. 00:01:04.858 --> 00:01:08.158 The biggest expense on most businesses. 00:01:08.663 --> 00:01:12.563 Income statements and profit and loss reports is payroll, and 00:01:12.563 --> 00:01:14.783 that is employee related, right? 00:01:14.963 --> 00:01:18.323 And it's how big your team is and who your team is. 00:01:18.323 --> 00:01:23.993 so the three slippery slopes that you need to avoid, number one, is you need 00:01:23.993 --> 00:01:29.603 to be cognizant of what the cost of a mis hire is because I too often see. 00:01:30.808 --> 00:01:36.988 Employers hire people by half-assing their recruitment and hiring and 00:01:36.988 --> 00:01:39.208 saying, well, they seem good enough. 00:01:39.268 --> 00:01:41.668 We'll give them 90 days and we'll figure it out. 00:01:42.068 --> 00:01:45.848 usually after those 90 days, they didn't figure it out. 00:01:45.848 --> 00:01:47.738 And you really did make a mishi. 00:01:47.888 --> 00:01:51.728 So when you hire someone and think, oh, we'll just give them a 90 day 00:01:51.728 --> 00:01:55.628 probationary period, that's the sign right there that you shouldn't be hiring 00:01:55.628 --> 00:01:59.708 them because if you do make a great hire, they should hit the ground running. 00:01:59.903 --> 00:02:03.773 They should be going 60 miles an hour on week one. 00:02:03.923 --> 00:02:05.753 They should be going 70 miles an hour. 00:02:05.753 --> 00:02:10.883 By week two, they should be at a hundred miles an hour by like weeks five or six. 00:02:10.943 --> 00:02:12.923 You don't need to give someone 90 days. 00:02:13.073 --> 00:02:16.193 You want people who are ready to go outta the gate fast. 00:02:16.373 --> 00:02:24.578 So if you do make a mishire though, let's calculate the cost of a mishire Now I know 00:02:24.578 --> 00:02:28.868 you could Google it, but I'm gonna break it down for you how I get to the cost of 00:02:28.868 --> 00:02:37.448 a mishire And in this case we're gonna say that the cost of a mishire is $23,000. 00:02:37.853 --> 00:02:44.513 Yeah, the cost of one miss hire on the modest end is $23,000. 00:02:44.993 --> 00:02:46.223 How do we break it down? 00:02:46.403 --> 00:02:52.583 Well, if you're paying someone $25 an hour, $25 an hour times, 40 hours a 00:02:52.583 --> 00:02:57.453 week, times 90 days equals $12,000. 00:02:57.563 --> 00:03:02.438 So right there it's $12,000 in just salary. 00:03:02.948 --> 00:03:11.918 Then we've gotta add another 20% on that $12,000 for employer taxes and benefits. 00:03:11.978 --> 00:03:15.578 So that's another $2,400 added on to the. 00:03:15.918 --> 00:03:17.538 $12,000. 00:03:17.988 --> 00:03:20.898 And then what about your time? 00:03:21.078 --> 00:03:25.098 What about the time of the other people in your team that were 00:03:25.098 --> 00:03:28.518 involved in the recruiting, the interviewing, the hiring process, 00:03:28.758 --> 00:03:31.068 the training and onboarding process? 00:03:31.068 --> 00:03:34.758 I mean, let's just put that at a modest $5,000. 00:03:35.248 --> 00:03:35.698 Okay. 00:03:36.208 --> 00:03:41.218 Then one more piece to the equation is loss, customer confidence. 00:03:41.608 --> 00:03:45.718 When you have someone who's not a five star fit for the role, who's kind of, 00:03:46.198 --> 00:03:51.418 eh, muddling along and such, you are gonna lose some customer confidence. 00:03:51.808 --> 00:03:56.638 A ball is gonna get dropped, something's not going to go well, and you know what? 00:03:56.788 --> 00:04:02.338 That's gonna be worth probably $3,600 in lost customer confidence. 00:04:02.688 --> 00:04:04.818 So how did we get to that? 00:04:05.118 --> 00:04:07.968 $23,000 in the cost of a mis hire? 00:04:08.268 --> 00:04:15.858 $12,000 in three months of wasted salary, $2,400 in employer taxes and 00:04:15.858 --> 00:04:22.663 benefits, $5,000 in onboarding and training and recruitment and hiring. 00:04:23.543 --> 00:04:30.023 Time spent by you and your team and another $3,600 in 00:04:30.023 --> 00:04:31.733 lost customer confidence. 00:04:31.823 --> 00:04:37.943 So make sure that when you make a hire, it's not a, well, maybe they'll 00:04:37.943 --> 00:04:40.913 work out kind of thing, because that's your answer right there. 00:04:40.913 --> 00:04:42.293 It's not to hire the person. 00:04:42.323 --> 00:04:46.223 If you get this kind of high pitch, well maybe. 00:04:46.528 --> 00:04:50.808 Then please don't make that hire Go back cast a wider net. 00:04:50.898 --> 00:04:57.288 Go fish in other ponds and find that ideal 5-star fit employee for the role, and then 00:04:57.288 --> 00:05:00.378 avoid the cost of a mishire going forward. 00:05:01.068 --> 00:05:03.753 The second slippery slope that you need to avoid. 00:05:04.978 --> 00:05:09.208 Is, uh, existing employee entitlement. 00:05:09.418 --> 00:05:16.148 So when you made your first hires, and they've stuck with you through getting to 00:05:16.148 --> 00:05:21.308 the first million, getting to the next 2 million, maybe to 3 million that's great. 00:05:21.398 --> 00:05:22.508 And that's nice. 00:05:22.748 --> 00:05:24.968 And they have worn many hats. 00:05:24.968 --> 00:05:28.798 They've done lots of things But if you're trying to take a company from. 00:05:29.683 --> 00:05:33.253 One, two, $3 million to $10 million. 00:05:33.493 --> 00:05:38.183 Well, my friends, the people that got you to one, two and $3 million are 00:05:38.183 --> 00:05:44.643 probably not the people who can get you to $10 million dollars because 00:05:44.873 --> 00:05:49.403 these people that started with you don't necessarily have the experience. 00:05:49.673 --> 00:05:53.573 You guys have figured it out while you were figuring it out, and that 00:05:53.573 --> 00:05:56.393 works and that's fine, but no one. 00:05:57.038 --> 00:06:02.588 At a company of any size should be the linchpin to your company 00:06:02.738 --> 00:06:04.238 that you can't live without. 00:06:04.598 --> 00:06:10.358 So if you have people who feel threatened, when you try to bring in other people who 00:06:10.358 --> 00:06:17.978 have more experience, who are savvier, who have done the things that you want to 00:06:17.978 --> 00:06:22.478 do going forward, and they've been at the places that you wanna take your company 00:06:22.478 --> 00:06:25.298 to be, then you shouldn't be beholden. 00:06:26.233 --> 00:06:31.243 to employees who feel entitled that, Hey, I've been around here the longest. 00:06:31.543 --> 00:06:33.553 I should be the vice president. 00:06:33.823 --> 00:06:36.223 I should be the chief operating officer. 00:06:36.463 --> 00:06:38.083 I should be the one in charge. 00:06:38.083 --> 00:06:39.943 'cause I was around here from the beginning. 00:06:40.498 --> 00:06:46.798 That right there is a recipe to just kind of be stuck where you are because 00:06:46.798 --> 00:06:52.588 that person, again, doesn't have the knowledge, the experience, that been 00:06:52.588 --> 00:06:58.258 there, done that, that you need to get to that next level because if they did, why 00:06:58.258 --> 00:07:00.838 are you stuck at one, two, or $3 million? 00:07:00.838 --> 00:07:01.288 Right? 00:07:03.108 --> 00:07:11.448 Loyalty is good, but just because someone has a job with you doesn't mean that they 00:07:11.448 --> 00:07:13.938 should be a lifer in your organization. 00:07:15.018 --> 00:07:18.588 Some people want to grow, and that's great, and some people 00:07:18.588 --> 00:07:19.878 just like being comfortable. 00:07:20.028 --> 00:07:24.618 So I too oftentimes see those people with entitlement that 00:07:24.618 --> 00:07:25.998 I've been here the longest. 00:07:26.238 --> 00:07:28.668 I'm entitled to the next big role. 00:07:28.878 --> 00:07:31.218 I'm entitled to a raise. 00:07:31.218 --> 00:07:35.718 Now I'm entitled to make more because I've been around the longest. 00:07:36.178 --> 00:07:41.998 are the people that are the wrong people for your organization. 00:07:44.438 --> 00:07:49.218 and I oftentimes see people that try to be the linchpin and 00:07:49.218 --> 00:07:50.478 have this sense of entitlement. 00:07:51.513 --> 00:07:56.193 Try to like close in on everything and say, I got this. 00:07:56.193 --> 00:07:56.913 I got this. 00:07:56.913 --> 00:07:57.903 Don't worry about this. 00:07:57.903 --> 00:07:58.653 I got this. 00:07:58.803 --> 00:08:03.933 And if you have an employee who is like, I got this and is wanting 00:08:03.933 --> 00:08:08.083 no one involved and even you out of it and their hands are up. 00:08:08.693 --> 00:08:13.133 and then when you talk about bringing someone else in, they get really sort 00:08:13.133 --> 00:08:18.013 of desperate seeming and panicked of like, Hey, no, I'm capable. 00:08:18.043 --> 00:08:19.543 I got this, I got this. 00:08:19.903 --> 00:08:24.073 That right there is a red flag that they're hiding something. 00:08:25.108 --> 00:08:29.368 if you bring someone else in, they're threatened and feeling 00:08:29.368 --> 00:08:31.018 like they could be found out. 00:08:31.858 --> 00:08:38.478 No one in any organization should be the one that you are wholly dependent upon. 00:08:39.048 --> 00:08:40.698 You should be able to. 00:08:41.303 --> 00:08:44.663 Let anyone go at any time and be okay. 00:08:44.723 --> 00:08:45.023 Yeah. 00:08:45.023 --> 00:08:49.818 It'll be rough for a week or so, but you should be able to recover from that 00:08:49.908 --> 00:08:55.998 because whether that person leaves because they take another job or something else. 00:08:56.813 --> 00:09:00.783 something tragic could happen and that person could be gone because 00:09:01.083 --> 00:09:05.043 I mean, the proverbial, they got hit by a bus tragically story. 00:09:05.253 --> 00:09:11.733 that's why you need great people in your organization who are not going to have 00:09:11.733 --> 00:09:16.923 this sense of entitlement, not have this sense of, I've got this, I'm in control. 00:09:16.923 --> 00:09:18.663 I'm not gonna share with anyone. 00:09:19.013 --> 00:09:23.003 I'm going to keep this all a secret so that you're dependent upon me. 00:09:23.303 --> 00:09:28.973 That right there, again, huge red flag that is going to cost you the ability 00:09:28.973 --> 00:09:34.733 to scale, to grow, and might be costing you some other things like possibly, 00:09:34.963 --> 00:09:39.303 embezzlement or other waste, fraud and abuse in your organization Again. 00:09:40.473 --> 00:09:46.443 I'm speaking from the experience of working with hundreds of companies and 00:09:46.443 --> 00:09:53.043 entrepreneurs over my 25 plus years of being an entrepreneur and a consultant. 00:09:53.093 --> 00:09:57.633 then, the third slippery slope to avoid is, failing to 00:09:57.633 --> 00:09:59.913 hire to scale to new heights. 00:09:59.973 --> 00:10:05.323 So if you have a vision that you wanna take your company from one to 3 00:10:05.323 --> 00:10:12.988 million to 10 million, well then you have hire people who have been where 00:10:12.988 --> 00:10:16.198 you want to go, and those people. 00:10:16.328 --> 00:10:21.078 can help you bring up your processes, your systems, your selling, your 00:10:21.078 --> 00:10:23.148 marketing, your scalability. 00:10:23.958 --> 00:10:27.228 It has to be someone who has experience. 00:10:27.278 --> 00:10:32.618 so do not be afraid to hire people who are more experienced than you. 00:10:33.428 --> 00:10:35.558 The thing is, is they're not a threat to you. 00:10:37.483 --> 00:10:42.613 There's very few people in this world who are crazy enough to be entrepreneurs. 00:10:42.913 --> 00:10:46.753 Most people don't like the risk that we as entrepreneurs. 00:10:47.773 --> 00:10:48.883 Thrive on. 00:10:49.243 --> 00:10:53.033 So the people that you hire, as long as they've never had their 00:10:53.033 --> 00:10:54.773 own business, they're fine. 00:10:54.773 --> 00:10:56.003 They're never gonna be a threat to you. 00:10:56.003 --> 00:11:01.213 They're not gonna wanna start their own business at the age of 40 or 50. 00:11:01.563 --> 00:11:07.593 so make sure that you are really going after people who have that 00:11:07.593 --> 00:11:13.053 experience and that knowledge of where you want to take your business and. 00:11:13.333 --> 00:11:17.653 The plus side of hiring someone who's experienced like that working for 00:11:17.653 --> 00:11:23.653 your smaller organization is you're gonna be a delight of an employer. 00:11:23.863 --> 00:11:27.283 There's going to be less bureaucracy in your organization. 00:11:27.283 --> 00:11:30.803 You're not gonna be this corporate behemoth that, has. 00:11:31.798 --> 00:11:36.328 Kind of held them back to certain degrees, things will move a lot faster 00:11:36.328 --> 00:11:39.058 in your smaller, nimble organization. 00:11:39.058 --> 00:11:44.028 And that is an attraction factor to people who are just kind of sick of 00:11:44.028 --> 00:11:48.878 the corporate games and the politics, and the bureaucracy So don't be afraid. 00:11:49.208 --> 00:11:54.518 And don't think that you can't hire someone who comes from a larger 00:11:54.518 --> 00:11:58.603 organization and has the experience of where you wanna take your organization. 00:12:00.128 --> 00:12:08.508 So how do you fix and avoid these, slippery slopes when it comes to 00:12:08.508 --> 00:12:13.698 hiring, and building your team to take your organization to that next level? 00:12:14.208 --> 00:12:20.058 It takes getting really clear on what you want and what you need 00:12:20.058 --> 00:12:24.708 for the organization and how people are spending their time, right? 00:12:24.948 --> 00:12:26.268 Because again. 00:12:26.803 --> 00:12:32.013 every payroll dollar should be producing a return on that investment of what you're 00:12:32.013 --> 00:12:34.413 paying someone in terms of their salary. 00:12:34.863 --> 00:12:39.603 So we say that payroll should produce a 3.5 00:12:39.633 --> 00:12:41.943 x return on salary. 00:12:42.153 --> 00:12:47.823 So if you're paying someone $50,000 per year, they should be having 00:12:47.823 --> 00:12:53.013 $175,000 positive impact on revenue. 00:12:53.643 --> 00:12:54.063 Okay? 00:12:54.273 --> 00:12:55.623 That's 3.5 00:12:55.623 --> 00:12:57.538 x $50,000 in salary. 00:12:58.608 --> 00:13:04.548 And that $175,000 positive impact on payroll, you should know exactly what 00:13:04.548 --> 00:13:06.518 they need to be doing to hit that. 00:13:06.968 --> 00:13:11.478 What I like to do when I'm considering a new role, or I'm working with 00:13:11.478 --> 00:13:15.348 someone who's adding a new role to their organization or making a 00:13:15.348 --> 00:13:20.838 new hire, is, Hey, let's look at what their week should look like. 00:13:21.168 --> 00:13:23.898 Let's look at what their month should look like. 00:13:24.308 --> 00:13:26.108 are there things that need to happen in the quarter? 00:13:26.308 --> 00:13:31.528 get out a calendar with time blocks for the day and really 00:13:31.528 --> 00:13:37.528 block out what you envision them spending their actual time on. 00:13:38.198 --> 00:13:45.898 You are paying them per hour to spend on and really get it dialed in of how 00:13:45.898 --> 00:13:49.588 they should be spending their days and what needs to get done that drives 00:13:49.588 --> 00:13:51.418 that positive impact on revenue. 00:13:51.853 --> 00:13:57.403 then from there, you are gonna see really clearly when you map out someone's ideal 00:13:57.403 --> 00:14:02.443 week of how they should be spending their time, hey, it kind of boils down to 00:14:02.593 --> 00:14:05.953 these three to five key responsibilities. 00:14:07.213 --> 00:14:07.333 Great. 00:14:09.238 --> 00:14:15.248 75% of what your employees are doing should be in the three to five key 00:14:15.248 --> 00:14:16.898 responsibilities of their role. 00:14:17.258 --> 00:14:20.588 And when you have those three to five key responsibilities, then we're 00:14:20.588 --> 00:14:25.568 gonna quantify what success looks like for each of those responsibilities. 00:14:25.848 --> 00:14:31.863 you're gonna quantify it with a number, a dollar value, a percentage, a timeframe. 00:14:33.378 --> 00:14:39.588 So for example, with my team of claims adjudicators, when they're processing 00:14:39.768 --> 00:14:47.838 long-term care claims to either pay or deny a claim, they need to produce 98% 00:14:47.838 --> 00:14:52.638 financial accuracy, and they need to process on average 42 claims per day. 00:14:53.148 --> 00:14:57.888 I've quantified with numbers and percentages what success looks 00:14:57.888 --> 00:15:03.198 like when they are adjudicating and processing long-term care claims. 00:15:03.628 --> 00:15:09.433 and when you give those success metrics to each responsibility, here's the best part. 00:15:10.273 --> 00:15:15.103 Your employees in those roles that are quantified with success 00:15:15.103 --> 00:15:17.233 metrics can manage themselves. 00:15:17.893 --> 00:15:21.253 Everyone is on the same page of what success looks like, and 00:15:21.253 --> 00:15:23.123 so they can manage themselves. 00:15:23.123 --> 00:15:25.313 They can know, Hey, did I hit 42 today? 00:15:25.373 --> 00:15:26.663 Oh, darn, I hit 40. 00:15:26.843 --> 00:15:29.073 That means I'm below my average that I need to be. 00:15:29.073 --> 00:15:32.433 I kind of need to squeeze out maybe 44 tomorrow to get back to 42. 00:15:34.698 --> 00:15:37.458 Five star employees are savvy. 00:15:37.488 --> 00:15:41.238 They're smart, they're driven, they are made for the role. 00:15:42.408 --> 00:15:44.178 They are perfectly suited. 00:15:44.178 --> 00:15:46.578 They are ideal fits for the role. 00:15:46.878 --> 00:15:50.448 And when they know what's expected of them and how they should spend 00:15:50.448 --> 00:15:53.898 their time and what numbers they need to hit, they'll hit 'em. 00:15:55.188 --> 00:15:59.268 And if you've got someone who's not hitting it well, then you're on that 00:15:59.268 --> 00:16:00.738 slippery slope there, my friend. 00:16:00.918 --> 00:16:02.328 You've made a mishi. 00:16:02.418 --> 00:16:04.518 You've got someone who feels entitled. 00:16:04.698 --> 00:16:10.698 You've got someone who is just not getting it and not a right fit. 00:16:11.418 --> 00:16:15.348 So the challenge to you is fix this. 00:16:15.438 --> 00:16:19.938 Let's make sure that you are building a team that scales and grows with 00:16:19.938 --> 00:16:23.688 your organization and you've got this. 00:16:23.838 --> 00:16:29.388 So if you would like to get the resources associated with today's episode, then 00:16:29.388 --> 00:16:31.883 please visit profit first nation.com 00:16:31.903 --> 00:16:33.378 and click on resources. 00:16:33.808 --> 00:16:37.738 And if you'd like to connect with a profit, first, professional 00:16:37.918 --> 00:16:42.658 bookkeeper, accountant, or coach, again, go to Profit first nation.com 00:16:42.718 --> 00:16:44.338 and click on contact. 00:16:44.728 --> 00:16:46.468 Cheers to another profitable day. 00:16:46.468 --> 00:16:48.208 My entrepreneurial friends.