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This business coaching session explains the importance of incentivizing your employees.

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Featured Coaching Excerpt - Notes & Transcript, Part 1
  • Lesson Nugget: In a startup, your compensation plan should demotivate C and D players.
  • Lesson Nugget: One benefit of working with a startup or a smaller company is the level of freedom and creativity that is given to employees.
  • Notable Quotable: "They that can give up essential liberty to purchase a little temporary safety, deserve neither liberty nor safety." - Benjamin Franklin (American Founding Father)

-Paige Taylor here. And in this series, we're with Clay Clark and Thriver of the month winner Steve and AJ Hulsey. They own a residential window and glass company located in Tulsa, Oklahoma. In this session, Clay will be talking about employee compensation, how to get good people on your team and how to train them effectively. If you're in need of help with getting employees, then this series will be perfect for you. Let's go. -All right, here's the deal with employee compensation. Just be real. Here's a little diagram that shall set you free. Please draw your own variation of this. Over here, this is big business. This is Apple. We have a ton of cash. But we are going to offer very little autonomy, very little ownership, very little equity, and very little reward in the great scheme of things to employees, because we have a ton of cash. So let's give an example. This guy Spence, videographer, he's a very talented videographer. Is he the best in the world? No, but every week he gets better and I really believe in what he's doing. But in the startup where Zoellner and I and different guys, we might spend $15,000 a week of our own money funding something until it gets to where it needs to go. What I can do is I can say, you know what, buddy? There's a reward for you here. This reward is massive. Now, the payment to you might be lower because we're a startup. It wouldn't make sense in a startup to pay a guy a boatload of cash because it's a different mentality you need. So in my mind, you guys are somewhat in a startup mind. Even though you've been around for a few years, you're kind of a startup culture. So if you can extrapolate that over your business and we hire a new guy, and we'll call the new guy Jeff. Jeff's a good guy. He wants to work for you. He was referred to you by a friend. You met him. You interviewed him, whatever that process was. But let's go ahead and look at this real quick here. And I'm going to have you, if you can, can you go ahead and read Point A here? -Yes. In a startup, your compensation plan should demotivate C and D players. -Yeah. So anybody who's not an A player, a top performer, should be incredibly demotivated by that plan. They should be like, that's crazy! So, example. I talked to a guy there today who I have very little good things to say about this person. I have a real problem with non A players, so I'll call him a Carp. The Carp comes in. He just like, so you guys are only going to pay me as a developer? If I'm going to come work for you as a web developer, you're only going to offer me $80,000 a year? I can make $120,000 right now, over here in the great state of California. So he says, I can get $120,000 right now. Or over here in Oklahoma, you're offering me $80,000. Well, one, Carp, if you move to California, the cost of living is higher. Two, how much creative liberty do you think you're going to have at Apple? You'll be able to go in there and say, hey, I would really like to enhance our customer service experience. Or hey, try going into a board meeting and putting your hand up when Mr. Cook is talking and say, hey, I have an idea. Try having anything at all that you do that makes a mark. Try even explaining to your mother what you do for a living. You're going to be working on the most minuscule part of that business. But you know what you will get? $120,000. Come work at Thrive. I shall pay you $80,000 and you should be able to chime in and have creative liberty over what you're doing. You can offer insight. I can't say we agree with everything, but you can have your advice, your feedback. When your mother says, what did you do? You can say, go to the website on this page. I made it. This is me. And when Thrive has 50,000 subscribers, you're going to have a paycheck that far dwarfs that of this. Now, we only live once, and if you want to live that secure thing, all right. So the guy's like, well, I kind of want to be-- no, no, no, no. You cannot now. You've already decided. You cannot. But I really want the reward. No. No. This is how your plan should be. It should be where the reward is so high that it sort of piques the interest of people. But ultimately the B and C player will not take it, because they would rather have security. I think it was Thomas Jefferson that said that, and correct me, I think it was Jefferson. Fact checker, you have to check this. But he talks about anybody that's willing to give up freedom for a little bit of comfort will get neither and deserve neither, that kind of thing. That's sort of how my plan is going to be.

Featured Coaching Excerpt - Notes & Transcript, Part 2
  • Action Step: Come up with plans that will allow A players to be self-policing and will also provide the opportunity for them to achieve rewards for their hard work.q
  • Lesson Nugget: A telling sign of an A-player is an employee who is motivated by performance-based rewards rather than hourly wages.
  • Notable Quotable: "I've built a lot of my success off finding these truly gifted people and not settling for B and C players, but really going for the A players... I found that when you get enough A players together, when you go through the incredible work to find five of these A players, they really like working with each other. Because they've never had a chance to do that before... - Steve Jobs (Former CEO of Apple Inc.)
  • Notable Quotable: ...And they don't want to work with B and C players and so it becomes self-policing and they only want to hire more A players. And so you build up these pockets of A players, and it propagates." - Steve Jobs (Cofounder and former CEO of Apple Inc., which is currently valued at over $700 Billion)

[THEME MUSIC] -So for you guys, let's look at this. So, point B, Steve Jobs. He says, your competition plan should invigorate your A players. Let me read the quote. -Because they've never had a chance to do that before. Like in school, we always had this group projects where I was assigned with idiots. -Right. -I was like, fine. I'll write the project for you guys. Just show up and-- -Don't talk to me. -Yeah, absolutely. He says, -So this is the whole deal. So now, let's look at Jeff. I say Jeff, you're going to install some windows. In your industry, what does someone get paid, per hour, roughly, to install windows? -It ranges from, to start, about $10 an hour up to $18, $20. Yeah. -How many hours does it take to install a window. -The average guy can usually get a window installed in about 30 minutes. -Example-- Jeff, my man, my buddy, you can make $10 an hour working somewhere else. You could. However, we here at this beautiful company, we do things differently. Oh no, we are not mediocre. We will not pay you $10 an hour. Because $10 an hour is stupid. You, my friend, are worth $27 an hour. So here's what I do. I pay $7.25 per hour. And if you install the window to the standards, where the customer signs off that it's properly installed, and that I inspect and it's done properly, I shall give you a $20 bonus on each window. Thus, you shall make $27. Why? Because we want A players here, man. I don't do windows a second time. I don't go back and fix stuff. Now, to get this bonus, you have to be on time. The quality control has to be to those standards. You have to be on time, which I realize, in the contracting industry, is usually weird for these guys to handle. Right? In the DJ world, try getting a DJ to show up on. This is what you have to do for a DJ. On time, quality controlled, you do that, $27, bro. That's like two and a half times the industry average. Now what's crazy is if you generate a referral, any kind of referral, anybody who gets another window as a result of you putting the sign out in front yard while you're installing it. What we're going to do in our company, is when we pull to house we install the window, we've got the system called 360 Degree Marketing. And you have to put a sign up on the yard of the person you're working with. And then you have to put a door hanger on every house that's within one house. Door hanger. Door hanger. So let's repeat, 360 Degree Marketing. If we install a window at this house in Bixby, address 11007 Something or Other Street, you'll put a sign in that yard where we're working. And you shall put a door hanger on all the houses within one house of it. If you ever get a job from that, we shall pay you an immediate bonus, when they pay, whenever they do the bonus, we're going to pay you a bonus right here of $25 for a new job. And because we're really, really, really, really crazy people, we shall give you a monthly bonus of $250, if you are not late, or whatever, that you can use to go buy your own insurance, or whatever you want to do. But you come up with these sort of plans, that are policing, where A players love them. B players cannot stand them. Because they're like, you mean I actually have to do my job to get the stuff? So these ass clowns they want, like, Santa Claus, and want free stuff. You know, the 53% of our population that votes for Santa Claus every time. Those people are going to not like the system. But be A player will like it. Furthermore, once you land the A player, he cannot stand the mediocrity, the stench of a B and C player. So in my office, recently I moved a guy into our office named Eric. Eric is an alpha. He's an A player. So Caleb's like, I like Eric. I'm like, I know you do. Because he's an A player. He's like, I really do. Like, he's awesome. I know. Eric's compensation plan is like, he can make about $1,800 to $2,000 a week, or like $300 a week. It's all based on his performance each week. So he's just like [CAR NOISE], let's go. He loves that plan. He loves that idea. He used to work at Rieser's. Now he's making a $1,800 a week. [CAR NOISE] Let's do it. Now the guy used to be in that job is like, well is there any way we can get a higher hourly rate? Because I just-- Oh, my wife just called again. I got to head out. And then I've overslept. And my car wasn't working. And I just wanted to see. And he's voting for Santa Clause. Does that make sense? So you need to rewards to be just [LASER NOISE], cash to be [LASER NOISE].

Featured Coaching Excerpt - Notes & Transcript, Part 3
  • Lesson Nugget: Getting A players on the team who care about their job will also help you weed out the C players because they do not want them on the team.

[MUSIC PLAYING] CLAY CLARK: In my DJ business, essentially, this is how it worked. If you DJed for me and you did a terrible job, I paid you a $100 base. And if you did a good job, essentially, you got $300. This is roughly how it worked out before I sold it, roughly. So we had guys that would make-- I remember Josh use to collect $2,000 and $3,000 checks every week. he thought it was great, because he would get referrals, and he would always get a perfect review. Other guys, bottom feeders, were like this job's horrible. And the A players tell me though. They come to me. So two months ago, we had a guy in our video department come up to me and he's like, hey-- the guys had nicknamed him The Destroyer, because he was like breaking stuff. And they're like, hey, dude, The Destroyer needs to be fired. I'm like, why? Because he destroys things. But they came to me. I didn't have to go to them. You see what I mean? Just yesterday, when I was in San Diego, I got an email from somebody. He says, hey, I have a little concern about this new person. Here's why. It's self-policing, because they don't want anyone to contaminate their garden. So if I come to the job interview, how do you know-- and I'm going to read this, because I want you to know. How do you know? Well, example, bonuses for performance, mystery shopper reviews. Have people mystery shop at your own company. Then you could offer poor pay for poor quality when you do a survey. Great pay for great customer service reviews. But what you should do-- how do you know if the system works? I offered one of our employees. I said I'll pay $10,000 if you can land this guy. He's like, oh, yeah. That's how you know if it's a good bonus or not if someone gets excited. But if it's like, well, whatever, it's not good enough. Is that making sense? STUDENTS: Yeah. -That's how you want to make your policy there. I hope that gives you clarity there. That cool? STUDENTS: Uh huh.

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