Pest world 2013 managing people for profit

Maximizing Proﬁt Through People
Management

Donnie Shelton

Raleigh, NC

donnie.shelton@trianglepest.com

@donnieray3

Let’s take some time to focus

Turn off or do not disturb…. Don’t be offended!

© Triangle Pest Control LLC. All Rights Reserved

The purpose of this presentation is
how to increase profits through
productivity and efficiency

“Any intelligent conversation begins with
defining your terms” – my old statistics
professor


Deﬁnition of terms

What is your deﬁnition of winning in
business?



What is winning in business?

“Proﬁts and cash are the only true
measure of health of your business”
-- George Cloutier



What is winning in business?

•  For the purposes of this discussion, winning is

•  How much proﬁt does your business generate

•  How much cash you have for emergencies

•  The sustainability of your proﬁt model



What do you consider a “healthy”
proﬁt (before taxes)?



What do you consider a “healthy”
proﬁt?

Regardless of size for the purposes of this discussion

>15-20% on the bottom line

•  After owner salary

•  It is ok to re-invest proﬁt for growth (but you
should be able to pull it if needed)



How is productivity deﬁned for this
discussion?

- How many people measure this?
Care to share?



How is productivity deﬁned for this
discussion?

Rev/Stop*/**

•  >$100k per stop

*Note that large one-time revenue spikes can skew this number. It should be calculated by service line to identify
these anomalies

**Note that you can also look at revenue per hour


Some ﬁnal disclaimers…

1.  This is what has worked for me and my
company

a.  That does not mean that it will work at
yours

2.  This presentation has both opinion* and
facts

*The facts are well researched. The
opinions are well… opinions


Part I

The thought process of how
we run operate our business
(the theory)


How many of you know a business owner like this?

•  Very frugal

•  Dissects the P&L for proﬁt leaks

•  Will send a rep packing over $0.30

•  A true price shopper

•  Refuses to pay much over minimum wage for
technicians

•  Has technicians driving around just
wasting time


What is the largest expense on the P&L?


What is the largest expense on the P&L?

Payroll

In my example, some business owners have misplaced
enthusiasm for making a proﬁt


Proﬁt comes from productivity

What do we really sell customers?

-  Operationally speaking? This is not a marketing
presentation!


What do we really sell customers?

Time


Proﬁt comes from productivity

What is the point?

To win on the bottom line, you have to be really good
at managing your expenses

Revenue – Expenses = Proﬁt

•  Spend your time on the largest expense on the
books (not small game)


Do you see a trend?


Principle #1: Profit comes from high productivity

Profit

Your ability to do more with less is directly
proportional to your profit (assuming pricing is
in line)


We are going to talk about pirates


Why are we talking about pirates?

This is a logic fallacy

Sometimes we have the tendency to confuse
causation with correlation…

Causation ≠ Correlation**

**Interestingly… The number of pirates in the last 8 years have skyrocketed. As such, the planet
has been cooling


Quick question

Have you ever came back from a conference with
a great idea, implemented it and then a few
months later it….. Just….. Died?

What’s he
looking at?


Which is more important?

Strategy

•  Techniques that you use
to compete and gain
customers

•  Are based on multiple
factors: market,
positioning, etc…

•  Change as market
conditions change

Culture

•  How your people work

•  How your people interact
with your customers

•  How your people view
you, your customers, and
their role in the
organization


Who are these guys?


Who are these guys?

Mark Fields

•  Next CEO of Ford

•  Responsible for Ford’s
turnaround

Peter Drucker, PHD

•  Medal of freedom

•  Professor of business

•  Famous Author

“Culture eats strategy for
breakfast”


Causation vs. Correlation

Where do we get into problems in our business?

We tend to assume proﬁt is a result of strategy, but
actually it is not quite that simple…

•  Strategies are the cause (Correlate)

•  Culture will take care of itself (Cause)

What it means is that no strategy can be executed
without a strong foundational culture

I personally think both are important. It is the order
that really matters.


Culture vs. Strategy

Think about it.

•  You can have the most genius
strategy in the world, but if
you don’t have the culture
you cannot execute

•  It is like having a great

Broken computer
(not an Apple)

program but a broken
computer.


Culture eats strategy for breakfast

Jack Welch

•  Arguably one of the best CEOs ever

•  30 yrs in the job

•  GE’s value rose 4000% on his watch

How he operated

•  20-70-10 vital curve

•  80% of his time was on culture (not strategy)

•  Public hangings for bad culture

•  Biggest mistake looking at numbers and not
culture ﬁt for acquisitions


Principle #2: High productivity is a ﬁrst a function of
culture and then strategy

Proﬁt

High Productivity


How many have read this book?

Jim Collins

•  Massive research project of “great” businesses

•  Determine principles makes companies “great”

•  Outperform the market by multiples


Good to great

Key ﬁndings

•  “Sustained great results depend upon building a
culture full of self disciplined people who take
disciplined action”

•  “A culture of discipline is not just about action.
It is about getting disciplined people who
engage in disciplined thought and then who
take disciplined action.”


Good to great

This makes sense

•  How many successful, undisciplined
business owners do you know (that
have been in business >10yrs)?

•  Disciplined people will debate and ﬁnd
the right strategies

•  Discipline is the bedrock upon which
strategy is built


Principle #3: A disciplined culture produces high
productivity

Proﬁt

High productivity

Disciplined culture


Part II

How we developed our culture and
productivity to support a high proﬁt
company


How we created a disciplined culture

Proﬁt

Theory

Execution

High productivity

Disciplined culture


My typical day

I have ideas - I get them

•  The morning run

•  The morning shower

•  On the way to work

•  When I read an article

•  While I am reviewing a operational reports

Patience is not a virtue that I was blessed with



What did this behavior create?

•  Staff that never fully executed anything

•  Lots of activity but little work

•  A constant place of shifting priorities

•  We suffered from “CADD”…. And I was the cause



It all starts at the top

As a leader, I had to develop management discipline

•  Decide what was really priority

•  Stay the course, even though it was killing me

•  Learn how to say no when I really wanted to
say yes

•  Realize that I had to involve others in decisions

•  Create “stop doing” lists



Change #1: I had to be disciplined myself in how I
managed the company and how I engaged my
managers



Have you ever taken the time to get very clear on
what type of people and culture you want at your
company?

Can anyone in your company recite what’s
in it?



I am sure that you know where you want the
business to go and how to get there.

You know what type of people you want to be there

The problem: As you grow staff, it becomes very
difﬁcult to communicate that vision with absolute
clarity



Strategic Objective

•  A document that details

•  What kind of company you want to be

•  Your values

•  Your culture

•  Your customers

•  What you do and more importantly, what you
don’t

This is not a mission statement or a platitude of values(though it
contains both) to be put on a wall



Change II: We created a “real” Strategic Objective

•  Clarity on where you are going as a company

•  Every employee is tested on it

•  Every company meeting I talk about it

•  When people start rolling their eyes, I know
that I am talking about it just about enough


Riddle

What cost us 4k in three weeks (with $0 return on
capital) and only increases exponentially each and
everyday that it exists?



A BAD HIRE

• 
• 
• 
• 

It will happen to everyone

Approach recruiting much like you do marketing

What is the demographic? (age, likes, dislikes, etc)

Market relentlessly to that person



Disciplining people

Disciplined people

Step 1: Creating a disciplined culture
starts with stafﬁng with
disciplined people



How do we hire disciplined people?

•  The following is required for consideration

•  Usually have hobbies outside of work that
require discipline (sports, intellectual)

•  Usually is already employed

•  No prior experience in our industry

•  I hate “the way we did at “_______”

•  Ownership

•  Demonstrated ownership in something



What is the point?

Make hiring the disciplined people priority #1

-- Hint: It is!

•  We select based on our culture (from Strat Obj)

•  We use personality proﬁles

•  We use scorecards (that line up with our culture)

•  Probing questions that dig (and then dig more)


Jim Collins, How the mighty fall

How companies move from great to irrelevant

Same approach as Good to Great (researched
declining companies with comparisons)

Key marker of a company on the decline:

“There is a declining proportion of the right people in key
seats, because of losing the right people and/or growing
beyond the organization’s ability to get enough people to
execute on that growth with excellence” – Jim Collins



Change III: We completely revamped our hiring
systems to produce disciplined people

•  Clarity on who those people are (Strategic Obj)

•  Systems to attract those people

•  Systems to ﬁlter the wrong people (Scorecards)

This is not something you want to delegate.
Remember Jack Welch and 80%?



Go through the process and you do the following:

1.  You create a strategic objective to get clear on the
culture you want and what your business stands
for

2.  You re-vamp your recruiting and hiring systems to
produce disciplined people

3.  Now what?



During the tenure of a politician, what is the most
productive time?



90- Day Objectives

•  All positions at Triangle Pest Control have them

•  Talk about a 1st impression of how we do things

•  Clear document that details

•  A clear path to success in the ﬁrst 90 days

•  Clear communication of what is expected

•  Clear communication of performance
expectations

•  Clear communications for where the lines of
responsibility lie (training, performance, etc…)



Change IV: We got very deliberate about the onboarding process of each team member

This

Not This


How we created a disciplined culture Summary

1.  Start with yourself as a leader

2.  Develop a “real” Strategic Objective

3.  Build a targeted recruiting and hiring system that
attracts disciplined people

4.  Manage the on-boarding process to clearly
communicate and set expectations


How we improve and manage productivity

Proﬁt

High productivity

Disciplined culture



Would you like to watch or play the following game?

•  None of the players know the score

•  Feedback is given at the end of the game

•  No clear out of bounds, no clear score lines

•  Rules are pretty much made as you go along



Total transparency & frequent feedback

•  Don’t be afraid to tell people where you are out

•  My experience is that oftentimes employee views
of their performance are over inﬂated

•  It is easy to be “real” when everyone knows what is
going on

“Meatin” our goals (idea from Harden Blackwell)



Change #1: We completely opened our books to let
everyone on the team know what the score is

•  You can use ratios

•  No one needs to know your salary

•  If you cannot measure it, you cannot manage it

•  You will get more people who play the “game” vs.
just playing for themselves



If you want have high performance team, everyone
must always be getting better (otherwise they are
getting worse)

•  Being in a car traveling uphill with no brakes. The
only choices are moving forward or backwards.
There is no holding steady.


How we created a high-proﬁt company

Proﬁt

High productivity

Disciplined culture


Parting thoughts

“Everything in our strategy our competitors could copy
tomorrow … but they can't copy the culture – and they
know it.” Herb Kelleher, Founder, Southwest

What is the point?

•  You have to build the proper foundation
before you can expect to see the results


Triangle Pest Control Business Framework

Proﬁt

Culture of execution

Disciplined people


Resources to help you get started

Managers

•  Good to great, Jim Collins

•  E-Myth, Michael Gerber

•  Entreleadership, Dave Ramsey

•  How the mighty fall, Jim Collins

•  Who: Hiring “A” players, Geoff Smart & Randy Street

All Staff

•  Making yourself indispensible, Mark Samuel

•  Super Service,Val & Jeff Gee


Questions?

Donnie Shelton

Raleigh, NC

donnie.shelton@trianglepest.com

@donnieray3

Pest world 2013 managing people for profit

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