Today, we’re gonna be taking a deep dive into Five Wage and Hour lawsuits that we’re seeing from actions employers took related to COVID-19. We just want to go through these, hit the highlights, see if there’s a place you can fix this now before people start contacting lawyers. Before we go too deep, I want to ask you please subscribe to our podcast. You can find us on iTunes, Google podcast, Spotify, Stitcher, pretty much any podcatcher of your choice. You can also subscribe at peopleprocesses.com which will give you exclusive subscriber-only content. I look forward to seeing you there.
Now, let’s dive in. Employers are forced to make tough decisions often at really fast speeds as they operate during the pandemic and resulting economic shutdown that we’ve had by making tough decisions without consulting legal counsel. Well, people can get involved in very expensive lawsuits specifically Wage and hour suits. Particularly, class actions are the most common and expensive for employers. There was a great webinar by Seyfarth Shaw LLP, called Litigation Trends in the Post COVID-19 World. Lynn A. Kappelman is a partner with the firm in their Boston office. She discussed these Wage and Hour issues that arise as employers look to control payroll costs while maintaining operations. And also, as they look ahead to reopening as the crisis is, Kappelman followed up with labor and employment law daily about common Wage and Hour traps that can befall employers during this unprecedented crisis and I’m stealing a lot of info from her. Not stealing but she had a great webinar. So I’m trying to make sure we plug her but man, some good stuff.
So Kappelman just basically put out there over and over, that plaintiffs attorneys are already focused on these issues. They’re already publishing on their website, FAQs, guidelines for potential plaintiffs, marketing for potential claim plaintiffs who may have experienced any of these traps. So it’s out there and we’ll talk about which states are most at risk, but it’s the ones you think about when you think about this stuff. So we’ll go over those at the end. But basically, it’s up and running and they are looking.
The most common wage-hour risk.
This is Number 1. It’s going to be with respect to exempt employees who are losing that exempt classification. This can have a long-term consequence for your liability, including having to pay overtime going forward, pretty much forever to these formally exempt salaried employees. Many companies have reduced employees’ pay across the board to spread the pain of a forced bell typing. Cool. An employer that imposes a salary cut, though, must be careful not to reduce exempt employees’ pay below the minimum salary level. Now, the Federal FLSA salary threshold is $35,568 per year, but many states have a higher floor, you got to check that. So if you’ve cut your salaries across the board, and you’ve cut below that exempt level, you now have non-exempt employees. You got to track their hours. Make sure you’re paying overtime. Make sure you’re paying minimum wage out.
Most employers, maybe they’ve imposed a 20% pay cut. A lot of them want to also reduce work hours. So maybe you’ve said, “All right, we’re going to take Fridays off”. Monday through Friday cut everybody’s pay 20%. However, to do so for exempt employees runs afoul of the FLSA salary basis test. It’s okay to reduce someone’s pay by 20%, but you can’t reduce their duties by a commensurate level because you’ll undermine the salary basis and lose the exemption, explained Kappelman.
So here’s what’s come up the most. You furloughed exempt employee, so that’s I think, one primary issue. You don’t want to cut, you’re gonna have to think about the salary level but you also got to think about the duties test. A kind of flip on that and this is probably the most common issue I see at our level, not like a giant, you know, 100,000 man companies at the smaller level. What we see a lot is furloughing an exempt employee. So when you let somebody go or temporarily let them go, even if an employee works one hour during that week, they must get paid for the entire week. That’s a key thing to understand, exempt people are paid by the week. Furloughing exempt employees for anything less than a full week carries a huge risk of violating that salary basis test. So if an employer furloughs an exempt employee on a Wednesday, it must pay for the full week or the employee will lose her exempt status. You may very well see a class action for all those hours you didn’t pay folks during their workweek, said Kappelman.
So another piece of that which is quite common I’m seeing is, you furlough and exempt an employee but you’re still constantly reaching out to them or heck, even doing it once a week, asking to respond to emails. “Jack, can you tell me where we kept those files? What’s our usual practice of doing this thing?” In effect, Jack is on furlough. But if he’s answering emails, then he’s working. And therefore, again, even one hour, they are entitled to pay for the entire week, even if they only answered an hour’s worth of emails and calls and that kind of stuff. That may not be a lot of money for one person. But if that’s happening with a bunch of company employees, these class actions can add up quickly. So part of that, those are the primary issues around exempt.
The third error that we’re seeing around exempt is happening primarily at retail and service establishments. It’s called duties dilution. If you’ve been forced to furlough part of their workforce, and then you’re asking your managerial staff to take on the additional tasks, let me give you an example. Let’s say that you have a retail establishment and your managers are now stacking shelves, working the register, sanitizing the workplace. You have to be careful. If an exempt employee performs more non-exempt work than management work more than half, there’s a danger that the employee’s primary duty is no longer managerial. And that would remove the exempt status. They’re an hourly worker. So you’ve got to keep a close eye on that. Okay.
I only called that issue one, it’s all-around losing the exempt status. So losing exempt status, let’s recap it. You underpaid, you go under that salary floor, you reduce someone’s hours by 20%. And then because of that, you’re saying that they have hours, right? And that’s gonna run afoul of the salary basis test as well. Or you furlough partially through a week, and you don’t pay for that whole week, or you furlough and then have the employee work an hour while they’re on furlough. You can’t do that. That will also invalidate the week. So those are the key pieces around your exempt employees. Okay.
Now, for non-exempt employees. There’s a lot of different things that could be a problem here, but I think one of the key ones is off the clock claims. Let me go back to this Kappelman. The largest issue for non-exempt employees is that it will take them longer to prepare to work cleaning and sanitizing the workspace, getting temperature scanned, and donning PPE. Employers may make the mistake of not paying for that time, she said. But employers employees generally must be paid for that time it takes to don and doffs protective gear or work clothes and again, unrecorded time for one person isn’t too costly. But the unrecorded time for 100 or thousand can be quite a costly class-action lawsuit. So just to recap, their time to prepare the workplace cleaning them, donning protective equipment must be paid to your hourly workers.
If you’re going to have employees line-up and you’re going to do temperature checks before you open, it may take only two minutes but if they had to stand in line and wait You need to compensate them for that time, they may need to spend more time sanitizing their workplace putting on face masks, cleaning the face mask, it’s compensable. You must also pay non-exempt employees for the time spent getting up to speed with post COVID changes in the workplace, you’re gonna wind up having training, a lot of times on this, you’re gonna talk, you’re gonna have a staff meeting, when they come back, that’s paid time. If they need to learn new software, new equipment, that’s all conferences, so that’s going to be your primary issue for your non-exempt people. Little less burdensome than the exempt but a lot of companies will run afoul of that. Okay.
Now let’s talk about what’s called State Law Requirements. So this is the third thing that we’re seeing a good bit here. There are a lot of state-specific problems. The most common is the meal and rest breaks. Most states, like California, are going to have a meal and rest breaks impacted by the need for social distance. Imagine you have an employee, and she says she can’t take her break because she doesn’t want to go into the break room and be sitting around a bunch of other people she wants to remain socially distance. Or maybe she says. “You didn’t provide a place that was safe for me to eat lunch. So I’m eating my lunch at my desk. But I keep getting interrupted because people think I’m on the clock.” You have to provide uninterrupted meal breaks, in many states. So if you’re in California, for example, you need the employee to a test that their break was uninterrupted that kind of thing. So that’s going to be a bigger problem, right? So if you have a meal and rest period requirements in your state and uninterrupted one, in particular, you need to take a close look at how you’re going to comply with those even though they’re going be heading out.
Another state-specific thing is that there are new laws governing expense reimbursement. Well, new and old. But if your state focuses on expense reimbursement, that would require an employer to reimburse anything purchased by the employees that are attended to remote work, cell phone, computer monitors, printers. For on-site employees, the cost of employees supplied at PPE would also have to be reimbursed, almost definitely. Failure to pay these previously, unanticipated expenses will invite lawsuits. So, if you’re sending people to work from home and they need the stuff to work from home, most states not all states. But this is gonna check your laws, require that if you have employees work from home, you have to provide the equipment. So check that out, you may need to reimburse. Okay.
The final kind of state-level one is, many states have laws governing when commission agreements can be changed. So you need to take look at your commission plan and make sure that you didn’t unilaterally make a change without enough notice under those state laws. So say you used to pay people when an order came in, and then under this COVID thing, like 60,70,80,90% of your orders are canceling. So you decide to tell your commission employees. “Look, we’re still gonna pay commissions,” but it’s gonna be when they pay, right? Rather than upfront of you the money. That’s a cool idea, except some states say, you got to give 60 days’ notice in writing before changing a commission plan. So if you just rapidly change that plan, you could get super screwed. So keep an eye on your commission plan, review it and comply with it, Kappelman caution. Those are the key things that are state level. Again, it’s not gonna apply to everybody but you need to research your state that’s gonna be meals and brakes, rent expense, reimbursement, and commission policies. Alright.
Next up is Wage Non-Payment. This is straightforward, but I just want to throw it out there because people are messing it up. Do not pay your people if you decide you’re not going to pay somebody going forward, you can do that in terms of, you’re fired today, whatever today’s date is. But that doesn’t mean you can’t give them their next paycheck, right? It’s all about the pay period. What days are you compensated for? This is an obvious violation, and there is little opportunity to avoid liability. And many states have, I mean, like treble damages on this stuff, especially if it’s willful, which a lot of these would be hard not to say you didn’t know. So highly recommend, just make sure if you’re in a cash flow situation, I understand there’s a lot of problems but you got to pay your people what you already promised to pay them. Very important. All right.
The final one is what we call Class Action Risks. COVID-19 in the adjustments that employers have made in response to the pandemic are rife with opportunity for the plaintiff’s bar, eager to bring class claims. Those are faster, they’re easy to pursue and result in quick settlements. Every industry is at risk capital and even law firms can run afoul of the exempt salary basis and duties dilation issues. And non-exempt workers in every industry will need to deal with time recording issues involved with necessary changes to meal breaks, rest breaks, and donning and doffing PPE. I expect to see retail and hospitality hit the hardest since their workforces, so public-facing and visible, Kappelman said. And the return to work issues will be very similar for these groups of employees, which will put employers at greater risk of class-wide liability.
So another place that she’s expecting problems is independent contractor misclassification class actions. Many COVID related state and federal government orders were grouped independent contractors and employees in the same world in terms of benefits, unemployment notices, leave payments, all that many employers followed suit. They said, “Alright. Independent contractors are like employees, we’re going to keep paying them even though they’re not supposed to, they’re not doing any work or we’re going to provide them with FFCRA levy when they’re not supposed to do that, or we’re gonna put them on the benefits because they need insurance.” If you did that, that’s gonna be a problem because there’s a case to be made there. One of the tests is what’s called commonality. If you treat your independent contractors the same as employees, you’re likely to require that they all become employees, right? So it’s called Rule 23 Certification.
So since everyone was affected the same time by many of the same issues surrounding COVID, and many employers issued company-wide policies to address the virus to both employees and independent contractors, it could be an issue there. I haven’t seen any of those suits pop up. Kappelman was highly concerned about them. There may be some good defense, arguments that come out of that, but that’s the other thing we’re kind of keeping an eye on, are these independent contractor reclassifications. So let me recap for you. Losing your exempt status for falling under the salary threshold, running afoul of the salary basis test, i.e. the duties assessment. Furloughing an exempt employee mid-week or working them even a little bit when they’re on furlough requires full week payment. For your non-exempt employees, you got to make sure you’re not screwing up their timekeeping, you got to pay him for donning and doffing time, cleaning time, training time. So that’s a big change. You got to think about depending on your state expense reimbursement, you got to think about meal and rest requirements. And you’ve got to think about commission plan changes. And then pay your employees what you promised them. You can always make changes, but don’t make them retroactively. And then just keep a close eye, especially if you’re in those restaurant and hospitality areas because those can be the most likely to get hit by broad class-action suits. The wage and hour class actions are primarily going to be in my states, I would think that you can assume in California, Massachusetts, New York, New Jersey, because those are easy to bring on a personal basis. It’s not like the state has to act. They can just be sued by anybody for those things like in Tennessee. For example, it would have to be the Tennessee Department of Labor that enforces action but in California, anybody can do it. And there are tons of attorneys trolling for it right now. So they also allow for very lucrative penalties. So if you think about it, in a lot of these states, it’s like you owe that guy $10,000. Well, you’re going to owe $16,006, I was going to go to the attorney now. So there’s a lot of pieces to that. So those states, you just got to look very closely about how you’re going to handle these.
I hope this was helpful to you. I know it was a lot of information on our website and People Processes. We have a great layout of this, we do a transcript of the recording. We have downloadables that can help you do checklists against this stuff. If you need anything, please let us know. We’re happy to help. I hope that you guys are all doing well, staying safe, doing the best you can to keep your businesses up and running and getting prepped for the return. I can’t wait until we’re all back to rockin’ away and growing our companies. And we’ll talk about scaling and growth that way. Thank you for tuning in. My name is Rhamy Alejeal, I’m the CEO of People Processes. Now it is time for you to go out there. Get your work done and have a great day.
Today, we’re going to be diving into the interactions between Unemployment and the Paycheck Protection Program or the CARES Act. We’re going to talk a little bit more about that in just a second. But before we go too deep, please subscribe to our podcast. You can find us on iTunes, Google podcast, Spotify, Stitcher, pretty much any podcatcher of your choice. You can also subscribe at peopleprocesses.com which will give you access to subscriber-only content, lots of links on these pages, supporting documents, checklists and special discounts on things like our in-depth deep dive into the termination process, including 30 and 32 part lesson, state-specific information, all the forms you need. If you wind up going down the route of layoffs or terminations could be super helpful for you. For that, we have a 50% coupon code for subscribers to bring that price down a ton.
Now let’s dive in. The CARES Act has had far-reaching implications for our clients and listeners. I, personally, have tried to stay out of advising people on the CARES ACT loans. My company People Processes in the HR world and the Paycheck Protection Program, which is part of the CARES Act, are the BANK’s jobs to administer, and they’ve had a heck of time presenting even marginally standardized processes or advice over these first two weeks of the PPP.
But the dust is settled now, I’m not going to be going into the ins and outs of how the PPP to warrant loan works. If you don’t already know you’ve missed the boat. Funds ran out last week. So this is more about our decision making now for that 20 % or so of companies that have gotten a PPP loan. So our current question has been coming up.
I’ve been getting emails about, for those of you who have applied for the PPP, and actually gotten funds or at least an SBA guarantee, and you’re waiting on deposit, CONGRATULATIONS! I mean, you’re in a small minority of businesses and I really do think it can be very helpful to you.
However, it seems some of those people didn’t quite read the fine print on those loans. The PPP loans are forgivable, but ONLY if you :
>Spend 75% of the money in the eight weeks following the loan on the payroll.
>And you have to keep 75% of your headcount that you applied with on your loan, which is really last year’s average headcount 2019.
>And then you have to actually spend the other 25% on qualified expenses.
So if you get a pile of money from them and you don’t spend it over the next eight weeks on payroll, rent, mortgage interest, those sorts of things. You’re going to have a problem. Let’s say you have a business like a restaurant. A month ago you laid off the vast majority of your staff. Now you receive the PAYCHECK PROTECTION PROGRAM that’s what it’s called money. But you have no staff to pay, no work to do. How do you get the loan forgiven?
Well, the short answer is you don’t. I mean, I hate to say it, but the loan is forgivable only when you have payroll to support it. If you are a hair cutting salon and under a mandatory shelter in place order, having employees come in to cut hair is “not an essential service.” If you receive the funds this week, but your payroll is only 5% of what it was last year, well, you’re probably gonna have to pay this loan back rather than have it forgiven.
Your alternative is to “hire” your people back to say, “All right, well, look, we laid off all of you. Come on back.” Rather than have them claim unemployment. You can pay them to work from home, too. The haircutting salon, the restaurant, the residential floor company that asked us about what they do like floor refinishing, they can’t go into people’s houses right now. They originally did some major cuts, they CAN put people back on the payroll. Consider having daily or weekly happy hours or strategic meetings (over the web!), “Brainstorm – Plan – Execute” meetings that can make sure you are ready to roll when things come back online.
I know for a lot of small business owners, it’s hard to imagine paying your staff when there’s no work to be done, but that is what the PPP is for. It’s there so that companies who would otherwise not have the revenues to keep staff, WILL keep (or rehire them.)
There’s a fly in the ointment though:
There’s a problem that, well, let’s just call it the rule of unintended consequences. The increased subsidies to workers through the Federal Pandemic Unemployment Compensation (FPUC) was part of the CARES Act, it’s gonna make it harder to retain workers under the PPP: The FPUC provided an additional $600 per week across all sectors and income levels of the amount that these workers would be receiving from their state Unemployment Insurance programs. That means that for many lower-wage and even middle-wage workers, those roughly earning less than $44,000 a year in many states, they’ll make more on Unemployment than they would through their employment. And isn’t that a… Wow… Well, it’s what they did.
So the result will be more money in the pockets of the lower wage and even middle-wage workers. However, it will blunt retention under the PPP. We’re going to know over the next few months the extent to this trade-off.
But for those of you in the situation, that haircutting salon, your employees may be better off on it under unemployment rather than coming back to “work.” What about the situation? How are you going to fix it? Well, you have two options. I mean, on paper the option is you hire new people, but that’d be a heck of a thing, and probably not possible. If your old employees won’t come back to make less money to work rather than be unemployed, you’re not gonna find new people that you want to have. And again, you can’t get them to work. Or you don’t need the PPP.
If you got funds already, you applied under this saying, “Hey, we’re gonna use this to protect paychecks.” You can’t hire your people back because their unemployment pays better than you would. Well, it’s a loan now. Set that money aside, consider it a great low-interest loan to blow out your marketing when you reopen or provide a nice easy ramp so that you can bring your people back on. So that when you reopen, you can rehire, you got plenty of money set aside. For companies in this situation. You have to understand the PPP is there to be an ALTERNATIVE to unemployment. If your people are unemployed and the unemployment is really good, well, you got a nice loan, NOT a forgivable grant.
I know it’s hard and a lot of people kind of went into this thinking that this will be helpful. I reopen my restaurant, but it’s meant to be this temporary short term thing. And if you can’t spend it right now, well, it’s still a lot of help. You’re well-capitalized. Now, maybe you weren’t before. But now you have a great loan. And if you don’t want to use it, that’s okay. You can just give it back to the bank and boom, you paid off your loan. So it didn’t hurt you at all. You didn’t have to pay an application fee, you didn’t pay any points on it. So if you just decide this isn’t for you, that’s okay. But most of you, you want that money in the bank and the 1-4% interest rate that you’re going to pay on it is cheaper than you would get on anything else. So when it’s time to reopen, awesome, you’re in great shape to do so.
Ladies and Gentlemen, my name is Rhamy Alejeal, I’m the CEO of People Processes. And we help companies with software, administrative services, and HR consulting all across the people processes world. That’s from onboarding to retirement and really recruiting to retirement. We can handle payroll benefits. We have been so overwhelmingly busy these last few weeks because of the CARES Act and the FCRA. But it’s been amazing to see how our clients have reacted and been able to keep people on some have had to do layoffs. Some have had to just heroic measures to keep these businesses up and running. And I’m so excited to see over the next few weeks or months as the country reopens the explosion of growth that’s going to come from our clients and other businesses like them across the United States. You can reach us at service at peopleprocesses.com, go to peopleprocesses.com and subscribe. I’d love to see you there. Join our community so that we can grow together, learn together, and have a great day and get your work done. Thanks For listening.
Today we’re going to be interviewing Rocky Romanello. He has had an illustrious career spanning more than 40 years focused on supply chain logistics, retail sales, sales operations, all kinds of things at UPS, including the UPS Store franchise network. He became the Chief Executive Officer and Board of Directors for UniTek Global Services, a provider of engineering construction management and he is currently the founder and CEO of 360 Management Services, LLC. He’s an experienced CEO, he’s led one of the largest rebranding initiatives in franchising history. The UPS Store revolutionised the $9 billion retail shipping and business services market. And we’re going to talk to him today about leadership and his journey and the advice he can give us for our growing companies. Before we go too deep though, I want to ask you, please subscribe to our podcast. You can find us on iTunes, Google, podcasts, Spotify, Stitcher, pretty much any pod catcher of your choice. You can also subscribe at peopleprocesses.com, which will give you exclusive subscriber only content, including a follow up summary on this very episode.
Rocky, thank you so much for coming on. Welcome to the show.
Rhamy, thank you very much for having me.
So Rocky, you have I mean, you’ve done a ton. You’re not a green new business owner who just started up last week. I’d love for you to tell me how you got to where you are today. I know you spent a lot of time at UPS. What was that like? And why did you wind up striking out on your own
Well, of course, it was a great career at UPS. It had a promotion from within policy, which I took advantage of. I actually started out as a part timer unloading trailers. I was working my way through college and I actually was going to college to be a high school history teacher and a baseball coach. And as I was working my way through school, I realized that the best leaders were those leaders that could get their people to connect the dots. So I never gave up my passion for coaching or my passion for teaching. To me, I just did it in a different classroom, which was the business setting. And so I always felt like I was still pursuing those passions of coaching and teaching. As I said, UPS had a promotion from within policy and my dad told me two things when I started the job. He has since passed, but he told me two things. He said, “Whatever they asked you to do, say yes and thank you, and then learn your job and learn some more.” And so for me, as I was working my way up through UPS, I learned and your passion is people in the processes. So for me, one of my most valuable lessons I learned early on, was I may not have felt ready for that promotion that UPS tapped me on the shoulder for, but what I realized is that there are times when you have to believe in your people until they’re ready to believe in themselves. And you bridge that gap maybe of confidence, or you bridge that gap maybe of knowledge. And that to me, was probably one of my greatest lessons. As I was growing and developing and learning how to manage and manage large groups of people, I never forgot that lesson that I was taught firsthand by me being that person who was a little bit nervous and a little bit scared. But UPS, believing in me until I was ready to believe in myself.
And then of course, I mean, you started with like, loading the docks. I mean, you started at the bottom and worked your way all the way through. I mean, you’ve learned every lesson along the way. Not every job.
Yes, yes. And you know that, that valuable lesson for me was that it empowered me and gave me that confidence to manage because I was a part timer. I became a UPS driver. I drove from Plainfield, New Jersey. And so for me that valuable lesson, Rhamy was around me, was the fact that every new job I took on and as you spoke in the introduction, I was tapped on the shoulder when we purchased mailboxes and etc. We consequently, we branded the UPS Store, I took on that responsibility. And the first thing I did was go work a day in the store because I never forgot that the thing that helped me as a new supervisor was the fact that I could unload and I did unload trailers, I was a UPS driver. And that was such a valuable lesson to me.
So in every job I ever got from that moment forward, the first thing I always did, especially if it was a job I didn’t have experience and I went and spent the day. We purchased mailboxes, etc. I worked in a store, we purchased over 20 companies and built what’s up today, UPS Supply Chain Solutions. I integrated those companies and had decided the world for UPS. Well, first thing I did was, “Let’s go pick some orders. Let’s go down on the floor.” So I think that was a valuable lesson I learned as I grew and developed inside of UPD. And then as you said, I retired from UPS. And then I was recruited to be a CEO of a telecom company, we built cell towers, upgraded cell towers. And so every chance I got I went out to a site. I certainly wasn’t qualified to climb, but I wanted to understand that firsthand and then started my own business 360 Management Services.
So when you decided to branch out and kind of run your own company, what was the impetus there?
Well, during my tenure at UPS and during that time when I had the MB/ UPS stores, the direct report. I met some of the most amazing entrepreneurs, some people that were just the best. I mean, they taught me so many wonderful things and I have such great respect for it. Printers and I looked at them. And I thought to myself, I don’t know if I could do this job. I mean, there’s nobody more all-in than an entrepreneur that a small business owner, right? I mean, at big companies, we say we have P&L responsibilities, but nobody has more P&L responsibility and a small business owner. At the end of the day, you hit the cash register to drop and pay your people, pay your vendors. What’s left is what you take home for your family. And so I had such great respect and admiration for them. And so I thought if I ever had the chance, I would try but even today, I mean, I have a wonderful pension from UPS. So I mean, I’m not nearly as all-in as they are. And so I will always be that person that says, “I have great respect for that small business owner and I’m not sure I could do it.” The way they’ve done it with taking everything they own and sliding across the table and saying, “I’m all-in.” So I never kid myself that I believe I am as committed as they are. I’m committed to grow in this business and I’m excited about growing my own business but they have everything on the line.
Rocky, you’ve had this great career and now you’ve started a very successful company you’re keynoting, you’re interviewed constantly. But before you got here, I know you had to have had some hard days. So I think that our listeners, they look forward to this because we always have this as a recurring segment because everyone listening has made some pretty big errors and they want to learn from other people’s. So Rocky, what I want you to do is take us to the experience, tell us the story of your worst entrepreneurial or management moment and how that happened. And what the mistakes were that you made to get there. It’s a hard question. And I just want to preface because what I found in terms of response and listeners and everything else is the more you can illustrate the story the more results and feedback we get from our listeners.
Well, for me the biggest disappointment or biggest error always centers around the people side of things for me, because I think you can work through operational issues, you can work through P&L issues, but to me, the hardest and most difficult and most disappointing are the ones where you’ve identified an individual and I won’t use their name, obviously, but it’s crystal clear in my mind. We identify this individual and you believe in them so much. But the mistake was early on is that I believed in them more than they believed in themselves. I wanted more for them and they wanted it for themselves. And so what ends up happening is, you take this individual who has such promise, but is good where they are right now. And in fact, frankly, they’re very happy where they are right now. And I see so much more than them. And so you’re working and of course, they don’t want to ever let you down. So you’re talking to them about the next level promotion, taking on additional responsibility, maybe moving their family. I moved nine times with UPS and inside of UPS, everybody was moving, right. That was part of the promotion process.
So here’s this individual that I’m almost convincing them, that they want that next level and not because it was my best intention, where to help them get to that next level. But I quickly realized that the mistake I made and a disappointment for me was we took a good employee, someone who was very, very good at what they did. And now we moved into that next level, a level that they may not want it or they may not have felt comfortable with. And eventually they ended up quitting. And the sad lesson there for me was, I wanted more for them than they wanted for themselves. And I saw more of him or her than they saw themselves and that happens sometimes. And that disconnect is a terrible disconnect. Because not only do you have an unhappy person or a person that doesn’t feel fulfilled, you actually end up potentially losing a very good person in your care or in your organization. And so for me, that’s the valuable lesson. It happens a lot in small businesses too. By the way, you’re the owner of the business and let’s face it. What’s your strength as a small business owner? Nobody’s more committed. Nobody knows the business better than they do. Nobody could do the job better. And what’s your biggest weakness? Nobody knows. Nobody’s more committed than you who knows the business, right? So you have that employee and you’re not allowing them to grow and develop into that job because you want them to be you. But you forget how long it took for you to get to be you. And so I think that those expectations are sometimes difficult and when you lose that good employer, you lose that good person is probably a better way of putting it. You really look at yourself in the mirror and you say, “Boy, I really failed this one, this was not good for that individual. Certainly not good for organization. And frankly, I made a bad decision.”
Yeah. So I guess what would you have done differently if you’re trying to grow an organization you’ve got, you need leaders, you need people who you can move up and you find someone who’s outstanding at their current job. That’s the normal way of figuring out who to promote, what would you have done differently with this particular employee that maybe would have helped you keep them well from them? Because maybe in two years, they would have been perfect for it.
Yeah, tha’s true. That’s true. Well, I’ll tell you. So from that, you’re the people process, so you have the two most important things, people and process, that you take care of which is excellent. So for me, whenever something doesn’t go the way I planned it to or hoped it to, it’s all about process. Well, what’s the process? So out of that disappointment or out of that failure came my people process. I appreciate you allowing me to use that. So from that moment forward, I had this process. When people would bring me a person for promotion or I would identify a person for promotion, the first question I’d ask myself, well, “Do I want more for them than they want for themselves?” Or if you brought me a name of an individual ready to be promoted, I would ask you, “Hey, do you want more for them than they want for themselves?” “No, no, no, they really want this.” Okay. Do you see more in them than they see in themselves?” “No, no, no.” Okay. So you get past those first two, then the three next key questions come in. And I’ve used this through probably of my 40-year career, probably 30 of them. As I kind of grew and was more involved in those decisions. The first question I’d always ask and this one seems a little almost rude, but it’s not meant to be and the first question is, “Hey, if they didn’t come to work when anybody noticed and then you like, “What? Are you kidding me?” All right, well, that’s good. Okay. That’s the first question.
How about the second question? What wouldn’t happen if they weren’t here? So what’s uniquely theirs? What’s uniquely them? What processes in place? What wouldn’t happen if they weren’t here? And that’s so important, because that starts to speak about a person beginning to be that next level before they are that next level. And then the last question I would always ask them is, and I would ask this to myself. As I identify key players, I would look at myself and say, “Okay, if we’re in a room, if we got a meeting of 50 of our leadership team and the two or three of us, leaders that are running the meeting have to leave. And now somebody walks in and says, “We have a problem. We’ve got to take this. We’ve got to build a solution to this problem.” Well, they’re all peers. Well, Who’s that? Who are the two or three informal leaders that step-up and take over? Are you that leader? Before you are the next leader and so that became my process to prevent what happened. And when I think back to that individual, he or she clearly was a great contributor and had some really great skills but they weren’t the informal leader yet, they weren’t the next level before they are the next level, there really wasn’t a signature thing that they could call their own. They were beginning that process. And so I look back and I think, I was more excited about getting them to the next level than they were ready to get to that next level. And so I think that’s where the process would have helped that situation because I would have had that conversation with him or her and said, “Listen, let’s talk about your creative element. Let’s talk about the next step. Let’s talk about the additional responsibility.” And then we would have talked about, “What’s your signature element? What are the things that differentiate you from everybody else? How does your brand differ from everyone else’s brand?” So I think that process is what I kind of put in after that. That difficult moment where we lost a really good individual.
Exactly. And you hit it on the head. And you’ve been on operations, you’ve been on the sales and acquisition side, entrepreneurs, business owners, when they bring on a client and they spend a ton of time and effort getting that client, they get them through the system. They onboard them then they lose that client. They immediately understand, I’ve got to put something in place. At some point along the way, I don’t know if it’s because we marketed to the wrong person. We didn’t qualify that. That potential client or sale. We didn’t figure it out. We didn’t onboard them, right. We didn’t set our expectations. They realize there’s a problem in their process, but small business owners and even larger companies, they don’t think in terms of people processes. You hit it on the head, which as you went through an experience, you lost a great employee who you spent time, significant money and investment on. And then you went back and said, “Where did we mess up?” And where you’ve kind of identified in your people processes cycle was there at the qualification stage, “Hey, before we put people into this position, we need to have a little process in place to say, do you meet these qualifications? And for leadership, you identified ways of getting there.” That’s outstanding. That’s exactly what needs to happen. And that’s why oftentimes, losing a client or losing an employee is the most important thing, the trigger for how you improve your company. When you lose a client, it makes you go back and go, “Alright, what did I do wrong?” The same thing should happen when you lose someone who you shouldn’t. And you know who that is, that person on your team where you’re like, “Man, I can’t believe they quit and went somewhere else. Where did we go wrong?” Going back to that process is outstanding.
Absolutely. And if you think about true empowerment, is when people discipline themselves. And so for me, I think it starts there, the way you develop those processes is, I disciplined myself, I was more disappointed in myself. It’s like, for example, at that time I was not at the most senior level, I went to the manager I work for and I’m explaining what happened. He’s like, “Well, if he really wasn’t ready or she wasn’t really ready, we would have found that out eventually.” And I’m thinking, though, it has nothing to do with that, I put them into position at the very least, we shouldn’t have lost them at the level they were at. And so I appreciated them trying to be supportive of me but I was more disappointed in myself than he or she was with me. And I think exactly, I think that’s the true sign. Are your people empowered to where they’re disciplining themselves, where they’re more disappointed in themselves? Because what ends up happening, you become the person who piles on as the leader, you become that person that helps them through that. Okay, well, what could you have done differently? But to me, it’s always important when someone takes responsibility and ownership, it’s okay, we make mistakes. It’s okay, didn’t work out. But do you own it? Do you feel as bad about that person leaving? Before you got to me, I shouldn’t feel worse about that person leaving than you do as the person who put them in that position. So I think that’s the thing I always look for, especially as the person making that decision. As an owner, are you more upset than that person left than the manager who was the direct report for that person?
Exactly. And it can apply to not just people but even operations. Same thing if you’re looking at a subordinate manager and they let you know, “Hey, we screwed this thing up.” And you are more messed up. You’re like, “Oh, my God.” This is a real problem and you don’t feel like the person whose responsibility directly, his is emotionally on the hook for it, then it’s like you may have the wrong person there. Someone needs to own us.
Very good.
Well, Rocky, so you’re now in the management consulting world, right? So, tell me a little bit about what you’re doing now. I know you’re doing management, what kind of companies are you working with? And how does that work?
Well, on the keynote speaking, I mean, I certainly enjoy that part of it. It’s kind of my teaching fix. And the same with the leadership training. I mean, we work with large companies like CBRE or Prudential Seton Hall University. I enjoy working with universities and coming in and doing a class or two. I absolutely enjoy talking to juniors and seniors in college, as well as juniors and seniors in high school because after 40 years of business, they all kind of look at you like, “Oh, no, well, today, what would you do different or how did you begin this process and those kinds of things?” I feel like you can leave this a little bit of a legacy. So for me this concept of legacy is you leave things a little better than you found them are people better because of their time with you or your customers better because of their interaction with your company. And so for me, this business 360 management services allows me to kind of continue on with that legacy.
I wrote the book, “Tighten the Lug Nuts,” that supports the training and supports the keynote speaking. So those are the two main legs of the stool. And then we have a consulting piece of our business and we really focus as you do on processes. So because you want to fix things once and you’ve identified the problem with the two problems, are you identifying the fixes now? What’s the process that you put in place that ensures consistency and longevity to that fix? And so for me, it’s always about the processes and so I enjoy that we enjoy that part of the business and that we get to fix things from a longer term perspective. And I absolutely enjoy working with small businesses, I would say we do work with some larger companies. But at the end of the day, it really comes down to helping those small business owners and helping them kind of understand what’s going on inside your business. And maybe I enjoy the part of maybe helping them. What’s that next step, I always find that some of the biggest, toughest decisions for small business owners is we’re in a good spot right now we’re kind of in the zone. But we’ve identified more business, we’re learning, we’re growing and you know, we’ve got the chance to win that new business. But that next step now adds capacity. It’s like when airplanes are flying at 80% capacity, you’re making money. The minute you need that second airplane, now you’re back at 20% on that airplane, now you’re losing money, how fast can I fill the airplane back up to 80% capacity? Kind of?
Exactly.
And I think we enjoy that piece of working with small businesses to help them identify, when’s the next step? And then how do you kind of close that gap between that next step and where you get back in that zone again.
Well, so if we had a listener here, who was exactly as you described, that’s a common situation, although right now things are in crisis. And everybody’s working on that. This episode probably will come out for a couple weeks and they may not be in that position anymore. But if you’re looking around and going, “Things are good. We’re making money. Things are holding together, maybe we’ve been a little stable, haven’t grown quite as fast as we used to, but we’re rocking out.” We see the next big opportunity, but the cost is so high. We were afraid to risk what we have now. What advice would you give them?
Well, I think the first step is you’ve got to take a step back and kind of identify what you want to look like in the next six months, 18 months and 3 years from now. So what is that vision? Right. Are you being pushed? Are you being motivated because of a need that you’ve identified? Were you being pushed and pulled because of a need identified by your customers or one of your customers? Both are bad, it’s just that you tend to be more in control of the situation when you’ve identified the strategic place where you want to be next and how you want to get there. Now, many new products and services, as you know, are developed by needs in a marketplace where a customer may come to you and say, “Hey, this is what I’m looking to do, folks.” So for me, I have a process. So every time we have this conversation with small businesses or in my job as CEO or President, I would always go through a series of questions and when someone would bring me a new opportunity or bring me a new vision of what we want to do. The first question I’d ask is, “Well, who’s the customer?” People always kind of look at me and laugh when you ask that question. Smile with a little bit of a smirk but that’s such an important question. I’ll give you a quick example. We’re building a process for a healthcare client when I was on the Supply Chain side at UPS and so, you asked that question, Who’s the customer? Well, third of the people say it’s a distribution channel. You know, CVS, Walgreens could be mer-source Bergen, someone like that, well, a third of the people in the room say, “No, no, no, it’s not. It’s a doctor, the doctors prescribing our medication.” But a third of them looked at and said, “Well, wait a second, you two thirds are wrong. It’s really the patient.” So once you identify who is your customer, it changes though it kind of changes everything, right? Because if you’re 99% on time, but CVS or Walgreens, that’s a great frequency, you don’t want to be 99% on time to that patient because you don’t want to be the one patient who didn’t get your meds.
Right.
So it changes that. So the first question for me always is, “Who’s the customer.”? Then the second question for me always ends up being. “Okay, well, what are our core values that we won’t compromise? Is it safe in this particular case, is it quality, integrity, what are our core values we won’t compromise?” Because customers will push and pull you in different directions. But you have to identify what your boundaries are, what are the things that you won’t compromise? And then you go through that series of questions, “Who are our customers represented in this new strategy, are our people represented in the new strategy?” For example, we may have a great product and we go to market on that product. Everyone thinks it’s the right product that fits into the portfolio, CFO sitting here, she’s banging out a calculator. This is a great product, we can make money before anybody leaves. I say, “Wait a second, how about our people? Are they representative? What’s the training they’re going to need? How they handle a service disconnect.” They understand why it fits in a portfolio and then the very last question I always ask and it’s not as dramatic when you’re talking to a small business owner, but inside a large corporation. We’re inside of a much larger business. The last question I always ask is that person presenting me with that information. Should I look at them and say, “If this was your candy store, if you were writing a check out of your checking account, would you do?” And it’s interesting 80% of the time, they say, Yes. But you know what, 20% of the time people have told me No.
Oh, really, even though they’re willing to go to bat for it. When it comes down to them, they’re like, “No, no, I wouldn’t do it.”
Well, yeah. I can do what comes to mind. I said to one individual, a minute now, you asked me to do this, you told me this is the right business. Why are you saying that? Wow, you know, there’s a lot of problems as well. You said we need a new revenue stream. Okay. But we need a new revenue stream. But I mean, I would hope that you would think this is the right one. So it’s interesting when you ask that question and it’s a way to drive down that ownership. You make many different decisions when you think like an owner and so for me, this kind of bounce leadership model that I preach is, you think like a customer, you feel like a valued individual, but you act like an owner. And all your decisions and then process ties it all together.
Nice. Well, Rocky, a couple of quick rapid fire questions to wrap up our interview. If you were to recommend one book to go alongside “Tighten the Lug Nuts” for a small business owner to read, what book would you recommend?
I would recommend “Lessons from the Mouse” by Dennis Snow. Great book.
I have not had that recommended before, hang on, “Lessons from the Mouse” by Dennis snow. Excellent book. All right. We’ll have that link down in the description. Check that out. If you could go back in time and tell yourself one thing when you opened your new business 360 Management, what would you tell yourself?
To clearly understand who you are, what you stand for and what are the things you won’t compromise, because I think what happens is you have a vision of what you want to do. But then because it doesn’t happen as quickly as you want trying to be all things, all people and that’s really the problem.
That’s a good one. Now going forward, what’s got you most fired up? What’s your next three months? Six months, whatever it is, what’s your next big strategic goal?
Well, unfortunately, all my keynote speaking has been the same. But actually, we have two, two clients we’re working with right before this, we’re going through some M&A deals. And so we’re working on the integration piece with them. We, the whole integration and cultural piece is such an important piece. And I think that, coming out of all of this, I think a keen eye on your people is going to be so important because there’s going to be concerns about safety in their minds. And they need to get back to work but their concerns and so your ability as a leader, to give your people that sense that you care about them, they’re important to you and you would never do anything to put them in an unsafe position is going to be so important as you move forward out of this difficult period that we just went through.
Absolutely. Now Rocky, the last question I have for you, if there’s about 1000 people who are going to listen to this, maybe more, maybe 2000 because it’s you. But if there’s someone listening, what business are they in? What size of company? What’s going through their mind right now that would make them think, “Hey, you know what, I need to go to Rocky’s website,” reach out to him on LinkedIn, we probably need to have a further conversation. What’s that client look like?
Well, it’s a client that is a constant improvement type of person, you know, they’re constructively dissatisfied. They’re always trying to improve not only their organization, but also their people. And I think that’s what’s so important to me. Three constituents always have to represent customers, people, stay with shareholders and stakeholders. And I think it’s so important that if you’re that individual that understands that your business is propelled, your number one asset is your people. I think we really fit together because you know we’re going to fix a problem but it’s always going to end up being your
Today we are interviewing Ralph Peterson. He is the owner and operator of Ralph Peterson LLC, which is a Management Development Company. It specializes in helping mission driven organizations, built five star management teams, primarily in the long-term care industry. In addition to Peterson LLC, Ralph was also a number one bestselling author, internationally syndicated columnist, highly sought after Management Development coach and a public speaker. So we’re excited to have him on. We thought with his intersection between the long-term care world’s medicine and management in general, he’d be a great guest on today’s podcast. Before we bring him on though, I want to ask you, please subscribe to the podcast. You can find us on iTunes, Google podcasts, Spotify, Stitcher, any pod catcher of your choice. You can also subscribe at peopleprocesses.com where you will get exclusive subscriber only content. I look forward to seeing you there.
Now let’s get over to Ralph. Ralph, welcome to the show.
Thank you so much for having me.
Man. I’m excited to have you. You have such an interesting and long career in Long-Term Care Health words, which I guess is another word for like nursing homes. Right
Nursing homes. That’s right.
And so why do you think you focus on that versus management of long-term care in nursing homes? Like, how did that happen?
Well, what happened was, I was always looking for, I’ve worked in everything. I started out in housekeeping. It was my first job. I was 16 years old working on housekeeping and then I went into fast food. I’ve worked in construction. Excuse me. And then I ended up in the Marine Corps. And then when I got out of the Marine Corps, I answered a blind ad for a management. For a company looking for a manager. There was a company that was growing by leaps and bounds working in management. And it was super intriguing to me. I’ve always wanted to be in charge. I got my first management job. When I was 16 years old. It took like weeks to get my boss to ask me, and said, “Hey, I’m expanding. I got a couple of other jobs, but I need somebody to run the day crew doing the lawn mowing,” and I was six, I cannot tell you. I’m the youngest of four. I’ve never been in charge of the remote control. You know, where we’re going, what games were playing? Nothing. So when he said, I’m thinking about putting you in charge making you the foreman. My head just went. I got so excited. Like I couldn’t believe I was another opportunity to be in charge. He finally puts me in charge on a nice rainy Monday morning and about Eight minutes later, I get fired for fighting with my employee.
Oh, well, an auspicious start.
I lost my first manager job in eight minutes. And he said something really interesting when he was bringing me home, he was driving me home. And he said, you’re never going to be able to be a manager, if you don’t understand you have to be better than everybody else. And the idea that I had to be better than everybody else kind of pissed me off, kind of like, “Why do I have to be better than everybody else? Why? Why do I have to hold my time when other people aren’t holding their time? Why do I have to do the right thing? Why do I have to be the bigger person?” And the truth is, of course, that’s what separates managers from non managers, good leaders and bad leaders. But logically….
Yeah, so you were 16. You try. You had that and then let me ask you this then. So how would you think, obviously, management principles, there’s a whole study of management, right? There’s all kinds of great things to learn. Do you think that in the nursing homes or managers for nursing homes, do you think that there’s any specific differences between management styles purely because of the medical profession you’re in? Or do you think it’s pretty universally applicable?
I think it’s pretty universally applicable. I think we all struggle with the same challenges. And we all are drawing from the same recruitment pool. A lot of times, the biggest challenge in management, especially for new managers, is that they come to us really great at a job. And we take them; we promote those really great workers into a supervisor position, and they fail miserably. And it’s always the whole caddy response. Well, just because they’re good at the job doesn’t mean they’d be good managers. And while that is on its face, true, it’s completely lacking the real scope of things, because we don’t have any other choice. We have to look to the best employee as the one we’re trying to promote and grow within our organization. Nobody goes, “Hey, you know who would be really great for this management job? What’s her name? She’s not here today, because she called out again, and she gets her job done. But she’d be really great.” Nobody ever does that. We always have to look to the person who is responsible, who smiles, who’s good natured, who is smart, who is hardworking, who we don’t have to constantly micromanage and be over on top of, we don’t have any choice. We always have to promote the super worker into a supervisor. But of course, they don’t have any idea. We all come into management, thinking that everybody works just like us. And when we got in charge, oh my god, I thought people were no longer going to have an alarm issue. I didn’t think anybody was ever going to have all my power gone. I don’t think anybody’s gonna have it. Or a car breakdown. I thought everybody was gonna love going to work for me. Boy, was I naive, nobody worked like me. That’s why I was promoted. Nobody else was. Right.
Right.
I think the child care issues, the call out issues, the alarm clock issues to cart, they all increased when I got from….
So, Ralph, so the penultimate question that I get a lot of times is you know running the HR company, I do. Should people you know, everyone talks about promoting from within they want to, rise through the ranks and bring people up. But on the other hand, that takes a lot of skills training and investment, like you mentioned in these manager protocols, right? Because just because someone’s good at my business processing payroll, doesn’t mean they’d be good at leading a team of payroll processors or being more. We’re like an operations manager with lots of different pieces. So what would you say to those who are trying to decide between promoting internally and trying to develop the training or hope that they can turn this person into a good manager and recruiting externally, someone who’s already got these management principles now?
I would say two things. Number one, I’m a huge fan of promoting from within. I think finding somebody who already knows our business, who is already committed to our customers, who already fits, is a good fit already. I think those are wins win win win win. I think the challenge is, distance in your departments. If your company is big enough that you can promote somebody, not only up but away from their current group, there’s a big success factor. But if you try to promote somebody up, they’re staying in the same group yesterday, they were the employee along with everybody else, maybe a little better, but, still just like everybody else, and then you pull them up. it’s very hard for the rest of the team to give them the time of the day. Give them the respect that they’re trying to give them any kind of breaks if they make mistakes. I mean, we’re super critical of people who work with us, and they get promoted. And we didn’t all of a sudden we’re super hyper focused on all the mistakes that person makes. And all we’re doing is whether it’s intentional or not, we’re undermining. We’re back talking. We’re setting each other up for failure. So if there can be some distance, I think that’s always better.
The challenge with hiring a manager is similar to an outside manager. When I went to the Marine Corps into boot camp I was not familiar with shooting weapons. However, my bunkmate grew up in Kentucky. I didn’t grow up in a country setting where he did and he was very scared at shooting and we got to the shooting range. They wanted to be able to teach how Marines are supposed to shoot, which they could easily show me because I’ve never handled a gun. But they couldn’t show my bunkmate because he knew everything already. And that is the challenge with bringing in a manager with all that experience is they’re going to come in. The first thing they’re going to do is going to try to change everything. So like one of my roles when I hire a new manager from outside the organization is, I swear, do not change anything. I appreciate your ideas. I appreciate your experience. I appreciate your knowledge. I want you to put it in your pocket for at least three months, run my operation exactly how I asked you to. Don’t do it any other way. Just if you see a thing you want to fix. Great. Let’s talk about it in three months. Yeah, but any new managers want to change right away. Yeah.
No, no, no, you’re exactly right. We have the same rule when we bring in specialists, right. Technical specialists, that kind of thing. It’s like you can’t come in and immediately override. how all taxes are calculated or even HR processes, these kinds of things. You have to give a couple of months to exist inside the organization to figure out what’s going on.
You have no idea why we set those up, you have no idea. You don’t have the experience to see why we’re doing it that way. It may seem a little odd or goofy to you from the outside, but there’s probably a good reason.
Probably.
Here’s one thing that I think a lot of people don’t highlight, especially when it comes to management, training and development is the math behind the success of new managers. And here’s the math. Approximately 5 million people a year are promoted to leadership. Some of those are first time managers never been promoted to a leadership position. And some of those are transitional leadership positions. They went from the assistant to the manager, they went from the frontline manager to the district manager or the district manager to the regional. Right? Like, there’s those transitions as well. Two thirds of all of those management transactions, those promotions fail in the first 90 days. In American, two thirds, 3.3 million people who got promoted today are going to get promoted. They’re going to be asked, “Hey, would you be in charge? Hey, you look like you could do it. I’ve been watching you for a while, I think you’re going to be really great at this, do you mind doing it?” And then within 90 days, they’re either going to be demoted, that means they go right back to where they were, which is very painful or worse, maybe they’re going to get terminated.
Right, right.
In 90 days. So the question then becomes, what can we do is those of us who are in Management Development, I spend all my time, “How do I recruit good people who can be managers? How do I identify good people who can grow up into the organization? And then how can I train them? How can I give them the tools they need to be successful? The last thing we want to do is find our best worker and have them quit or get fired or have to demote them in 90 days. Nobody wants to do that.
Absolutely. What would you say? So our listeners vary in size from five man shops up to 5000 men shops and often, when I’m talking to someone like you, I try to think about the extremes. In a 5000 man company, they’ve already normally got some management processes. They’ve got strong leadership development or at least some level of leadership development. I’m sure they could improve it, but they’re thinking about that. But I often think about, like the five and 10 man shop. And what I find when I see promotion of management over there, you mentioned it’s normally a skilled worker, their favorite person also we’re going to promote up to manager, they don’t necessarily have much of the way of what the manager should do, only they should do what the boss did be in charge. And the other thing I see is, they are often promoted to management along with maintaining some portion of their labor level responsibility. So, say they are a CPA firm, and it’s like this is tax season. I have a client like this. They’ve got what they call them, junior associates, senior associates, and then junior partners and all these different kinds of levels. But maybe this guy is in charge of 1000 tax returns and he’s done 1000 tax returns, year one next year. He rocked out, he did 1200. It’s now year three, and they’re saying, All right, bud, I want to give you three Junior associates, you’re in charge of their work. And instead of doing 1000 tax returns this year, you only got to do 600 yourself, but your whole team is going to do 3000, right? Like it seems like there’s some carryover of labor a lot of times in smaller companies. What do you think about that and should it be absolutely avoided? What are your thoughts around this?
Well, a couple of things. I am guilty of the same thing. So I have done the same thing where we’ve had an opportunity for somebody. Somebody leaves or gets promoted to another position, we have an opportunity to bring somebody up. But we don’t have the need for the manager right now. And I have the person I want to put in a position, but I don’t have the person yet to replace the person, I want to move into the position. Right? So I’ll try a hybrid. I’d be like, “Can you do both for just now and I’m going to work hard to get your position behind you so that you can do this full time.” And it’s very rarely worked for me. I wish I had better success with it. And I wish I could be a little dishonest and say that it wasn’t me. It wasn’t mine. But the truth is, it is my fault. And here’s the reason it’s my fault. The reason it’s my fault is as soon as I get that person promoted into the leadership role, and they’re doing their own job. I lose four focus on the need of replacing their job. If I just moved them out completely, then all my focus would be on that empty position that’s open. I would have no choice. But as soon as I can take my eye off that ball and it always hurts the person I’m trying to promote. The second thing that I would say is, that it’s my expectations that always get in the way. I should know that I am the man, the new manager. First of all, everybody who wants to be promoted to a leadership position gets the nod even if it’s a semi nod. It is so hard not to go to your head. It is so hard not to take. You’ll feel that pride and can’t wait to tell everybody and flex your new management muscles. It’s so hard not to do it. And when you’re not fully in the leadership position, it just expands. It makes it even worse. You know, it’s bad already.
I’m doing my job and my new job.
That’s right and all of a sudden the cattiness creeps into their own voice. And it’s very hard. I started this conversation with us, everybody expects you to be better than them. They expect you to complain less, to eat more crow, to take more garbage, to do more work, to get in earlier, to stay later. They expect it whether they say or not. They expect you to be better than everybody else.
And replying to someone’s subordinates complaints that they’re stressed out or worked out, I just feel like I’m at my limit with, “Well, I do all that and 10 times more buddy. Never is great, man.” Right? That never really gets you very far.
I’m guilty of that, too. I think I have made every poor decision.
Yeah. We’ve been in business 11 years. I’ve been running teams and every one of these, if you’re listening, you’re going, “Oh, God, I promoted that person.” I did that last year. All right.
Yeah, exactly.
There’s a specialist position, and they’re really good. And I want to promote up to management. And I’m like, “But I just need you to keep doing that other thing a little bit,” and now it’s a year later, and they’re still doing both. So we’ve all done these things.
It’s what makes us experts.
Right. Right. Yeah, that’s cool hard knocks. I mean, I’ve read a lot of books. I’ve got a lot, both of us have degrees in this stuff. Yeah. There was no book in my MBA course that was just like, “Hey, you know, what’s gonna happen when you promote this person?” Because they can’t lay it out that simply, right? It’s got to be a broad framework for thinking about things. That’s your education and then you go in and you actually do it and you go, “Oh, yeah, that’s what that meant. I should not have done that.”
It’s so true. I’ve been going back and I have some of my old business books, I have a degree in business and in organizational leadership, I have a Master’s organizational leadership. And I go back and I’m just looking through my notes and I’m looking through some of the textbooks and the books that we’re reading. And I feel like when you go back and you look at it 20 years later, in retrospect, it’s not that they do a bad job. It’s just so difficult to even get a student to understand the dynamics of who’s in charge. It is super hard. You go ahead. I’m sorry.
I was running a similar thing. This was about two years ago. I got my MBA in 2011, I think. And I was reviewing here like two years ago. We were working on a new system for project management. Right? We were trying to figure out implementation for new clients and a faster and better way of communicating information and I’d ordered a couple of business ebooks like amazon.com bestsellers on client onboarding, and I liked them, but they weren’t giving me quite enough. And I walked past my bookshelf and I found the giant thick textbook operations management, from one of my master’s degree courses, I can’t remember what’s in that book. I know I got an A in the class. But I opened that thing up, man, and the page I open to was like, implementing complex changes in service based industries. And it’s like 20 pages of charts and graphs and like flowcharts and things because it was so freakin good. I was just like, “Oh my god, it’s like they knew I needed this but I had not even considered taking it back to what I learned. Because at the time I learned it was like I memorized what was good next. So I guess I’ve been shocked. Since then, I’ve reread most of my MBA curriculum. Some of it is outdated, some of it. I still don’t understand why I had to learn that. But a lot of it, man, I go, Wow, now that I’ve got a company with, that’s a going concern and a lot of people, some of this stuff is really, really good. Some of those management principles are really really, really good. Yeah.
Yeah, but it all changes when you get into the position. I’ll tell you. There’s one of the main things I talk about is the five things I wish I knew. Before I became a match. I wish somebody was able to tell me a couple of simple things before I got into magic because it would have made the learning curve way flatter, right? I would have just been able to figure stuff out. I’ll give you an example. We’re all taught and I’m sure your parents did a good job teaching you as well that you’re supposed to treat people the way you want to be treated. So you want people to treat you with respect, you treat them with respect. You want people to be kind to you, you are kind to them. You want people to be nice to you, you be nice to them, right? We’ll treat people the way you want to be treated in management. It just simply isn’t the case. I wish that I could manage with high fives, good jokes and bubblegum. I wish there, every day was just smiles and rainbows like I was typing. Can’t wait to go to work and toss a ball, just can’t. It’s super fun. It’s not true. Managers have to have difficult conversations with difficult people. I have to talk to people the way that I do not want people to be talking to me. I have to treat people the way that I would never want to be treated. It’s not like I’m rude, that I’m abusive. No, I have to be firm. I have to eyeball somebody. I have to write people up. I have to do performance reviews, not good performance reviews, negative one, I have to suspend people, I have to terminate people. I have to have conversations about people, about questions of legality, sexual harassment, theft, theft of time theft of property. These are conversations I would never want someone to have with me that I have to have with other people.
So, that whole idea that we think we come into management, I certainly came into management. I love the idea. I mean, being in charge of people is the greatest job in the entire world, the greatest job in the entire world. Because you get the whole idea about being in charge. You get to serve others, you get to help others be successful. I cannot tell you how much I enjoy that. I love it. However, there are some people I wish I never had to manage. There are some people I don’t want to have a conversation with. There are people who are showing up to the office today that I am dreading knowing that I have to go in the pit of my stomach. I’m gonna have to go talk to them again about being late again, about what it does to the rest of the team again, you know, poor work performance. So the noble idea that you should treat people the way you want to be treated, man, not management and manager, you treat people the way they need to be treated. And that’s sometimes, it’s way different. Right? So that’s what I mean. Like, that’s just one of a few things that I wish people told me. I wish I had that.
You know, here’s one. Here’s a funny one. Praise publicly and reprimand privately. I would never want to be reprimanded publicly. I would never. If you have to talk to me, please take me into the deepest, darkest room with no windows and the six foot door, you know? Like, just quietly tell me. I’ll straighten up whatever I did wrong. I’ll correct it. On the other hand, if I do something right, oh, if you just yelled it from the rooftops for me and let everybody know how great I was yesterday. That’d be fantastic. The truth is in Management, it is not always good to praise publicly. And it is not always good to reprimand privately. There’s a dichotomy in that. I have been in a situation where I have said, “Oh, you did it so great again, like you always do. You’re like, my favorite.” And then everybody turned against me. Right? “Oh, she’s your favorite.” Did I say that? I was trying to make a compliment one direction and got stabbed by eight people in the back. Right? Like, not good. On the other side. I have talked to people privately about calling in or being late or quality of work, and then overheard them talking in the employee break room. Somebody said, “Hey, did Ralph talk to you?” “He said he was gonna go, No, he didn’t say anything to me. He brought me into his office. He wanted to show me like some stupid thing but he would never yell at me.” All of a sudden, you hear the category like, “Oh, there must be something going on with Ralph, I’m that girl because you know if that was me, if I was the one who was always late, if I was the one, he would have written me up, he would have certainly talked to me about it.”
I have employees who lie to other employees about getting in trouble. Even though they got in trouble. They’re not going to tell anybody. They’re gonna go, “Oh my god, I got in so much trouble yesterday. Ralph was so mad. No. Like, no, Ralph didn’t say anything. I’m not in trouble. What am I in trouble for? Because I was a little bit?” Big deal. It’s a big deal to everybody. Everybody is mad. I always explained things like this. If somebody comes up too close to you and they step on your toe, and you’re like, “Oh my gosh, I’m so sorry about that. Are you okay?” Even though it hurts, you’re totally forgiving. You’re like, “Yeah, I know. You’re no big deal.” But then if that same person everyday came in and stepped on your toes, like, even like for the love of God, well, somebody talked to this guy about stepping on my toe. That’s what it’s like when you’re late every day. That’s what it’s like when you’re not doing the type of quantity or quality work and everybody else has to pick up your slack. And everybody else is looking to the one person who has the authority, the job, the responsibility to speak up, and that’s the manager. If the manager speaks up, and nobody hears it, did it count? The answer is no. So I don’t reprimand them with a bullhorn. I don’t stand in the hallway in a long-term care facility in nursing. I’m like, “Alright, I’m gonna write up Kelly,” but I’m pretty good. I’ve been getting pretty good about a couple things. Number one, I will talk to somebody in front of everybody, but we’re off to the side. Everybody can just see we’re talking. That’s good. At least I see. We’re talking, right? Or I might accidentally you know what I’m really good at. I’ve learned this trick. If I’ve got to write up a manager, I’ll go to another managers office and ask them for a write up form. “Hey, do you ever write a form?” “Yeah, why do you write to me?” I’m like, “No, no, I just need to write up friends to give it to me.” And you watch them while they’re watching me out. Like, all of a sudden everybody knows.
Playing that game, man. Well.
You got to, you got to.
Well, that makes me think. So one thing that I’ve noticed, this is recorded March 31.
Here we go.
Yeah, I gotta put this on, their cars may not air for about a month. But there’s a whole world of now. Remote work, right? And of course it’s been going on for years, a lot of our clients and us have been remote for a long time. But many companies are experiencing this for the first time. We actually got this question in our performance management system. We have goal settings, we have kind of weekly reviews of some of the key tools that are needed to keep up with performance management, KPIs, those kinds of things. And in the office environment, a lot of that should be and is very private. But yet people kind of know where everyone stands because of the office cooler. Talk and you just kind of know, but in the work from home environment, you’re a little bit more isolated in terms of knowing the actions that are occurring to another employee. And like this comes up because you talked about the kind of more public reprimand or at least the social knowledge of having a reprimand. But that’s not really possible in a work from home or distributed workforce situation. What do you think the remote work effect has? Should some of those things that we maybe did a little more, I don’t know, it just happened because it was in person and everyone knows that Jack was in your office for an hour long meeting. How do we replicate that in a more technology and remote work setup?
Well, I think a couple of things. One, there are still some settings where I work in a nursing home. Weren’t they there?
They’re not there.
We don’t have the ability. And the second thing is, the best thing that we can do from a remote management point of view, is to simply over manage “Micro.” I’m going to use air quotes, “micromanage” the employee as far as what they have to have done, when they have to have it done and how you’re going to communicate that it is done. But that generally speaking, isn’t going to overflow somebody else. So if I have three employees, and they’re all in different locations, and they’re all doing the same reports, you’re going to do those 10, you’re doing these 10, you’re doing these 10. If this person doesn’t do their 10, those two others aren’t picking up their slack, generally speaking, and so they wouldn’t even know. They wouldn’t feel the effects and so they wouldn’t need to be exposed to that difficult conversation as it were with the person who is not living up to par. So it’s different. It just changes it a little bit.
Yeah. When you’re, let’s say that someone listening right now has got 15 or 20 employees and maybe they’ve got one quote/unquote manager and the two owners are doing a lot of this. But it’s a very informal process of management. If there were three things that they could implement right now, after listening to our conversation that would help them get started down the track of having a management system. What would be kind of your first, “Hey, guys, you came to the 30 minute meeting. Here’s two things, three things you can do that would make this worthwhile to go back and implement in your teams.” What are your thoughts?
Well, the first thing I would say is if you have a loose management system right now, and it’s working, I don’t know that I would change a whole lot. I’m a big fan of things working, but big fan of measuring results. How do y
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