https://www.youtube.com/watch?v=AH\_R5cZNFFc

1 00:00:00.000 --\> 00:01:00.000 a good friend of mine in my building
had a really really interesting way of managing talent to get and drive
higher performance and output this will be a short video um but i wanted
to share with you so if you're new to the channel my name is alex from
rosie owen acquisition.com we do about 85 million a year and i have
nothing to sell you um and so the reason i wanted to make this video is
because at the end of the day every entrepreneur has the same problem
which is they need better people and they need to get more out of the
people that they have and a lot of that comes from culture and training
but every once in a while you stumble upon a process that has teeth and
so i haven't implemented this yet um it's not normal for me to make a
video about something like this but we will be implementing uh something
like this in our holding company and so i think it's super cool because
it it is reinforced through multiple different psychological uh levers
and it's got really cool stuff to it so let's dive in one of the things
that he shared with me that he did is that he has a level of variable
compensation that's not new it means that there's some level of
performance check marks

2 00:01:00.000 --\> 00:02:00.000 etc that they have to hit in order to
get paid makes sense now the way that most companies do this and i'll
tell you that what we've done up to this point for us is that in
positions where that are not direct like sales for example it's very
easy to have a commission structure etcetera but for let's say
leadership and executive positions uh and so this is important if you're
trying to build your you know your solo partnership into an actual
company that has values you need to have people who are all aligned and
driving hard like owners towards the same goal and honestly it's much
more enjoyable that way and so the way that we have split our things up
to this point is that we do something called mbos which is management by
objectives which are for the company and then uh also for the individual
so we usually split them 50 50. so let's say we've got a leader who
let's say like a director of marketing it's gonna they're not going to
like get a sale but we know that they're in charge of all of the you
know rain making for that particular business line they might get let's
say let's just use round numbers let's say they're making their targeted
earnings is two hundred thousand dollars we're gonna give them a hundred
thousand dollar base and we're gonna give them a hundred thousand
dollars of variable compensation right

3 00:02:00.000 --\> 00:03:00.000 now of that variable compensation that
half we split that again in half half of that which would be 25 of their
total comp is gonna be of whether the company grows overall so if we hit
x y and z uh metrics they'll get you know of growth or new sales or
profitability then they're going to get those things right and the other
half is going to be on whether they did something personally that they
have control over so it might be adding a new channel or a new platform
or creating some sort of process that we want to automate um or bringing
in a new xyz manager right those would be things that they have complete
control over that we can checkbox even if the business doesn't do well
or doesn't hit the goals of growth or just you know marginally grows
they can still get half of their variable comp so if you've got 100
grand they got that guaranteed and they've got 50 that as long as they
do their all their stuff they've got and then they get to participate in
the upside of the business if the business overall grows right and so
that is how we've done it up to this point it's worked well right but
what he presented was a different way that i really really really liked

4 00:03:00.000 --\> 00:04:00.000 and a key part of this is that the
management by objectives and the things that we set we set for our team
okay so they don't have a choice in it they just accept it or you know
they might try to negotiate a couple terms but that that's more or less
how the compensation structure works right with the way that he sets it
up is that every position has a level of variable compensation that
level you can determine you know you can say you want it to be 10 or you
can be 20 or it could be 50 you know it depends on the role but maybe
let's say a frontline customer service rule let's say we wanted to make
a you know let's say 15 of their compensation variable so if they're
targeting let's say 50 000 a year then that would mean 7 500 would be
potential to be variable so that would be like whatever 600 bucks a
month ish right of their compensation is kind of in the air hung in the
balance and so here's the cool thing what he does is that he says this
is the variable comp and you get to set the goal every month

5 00:04:00.000 --\> 00:05:00.000 so it's a 30-day rolling goal and every
month they get to set the goal of what they're going to do they have to
you know show it publicly so you get some social pressure in there right
you also get autonomy because they're the ones who are picking it and so
here's what's cool if everybody on the team has to say what their
personal goal is right and they get to set it and if they hit their
personal goal as long as it's aligned with the company goal overall like
it's going to contribute to that goal then they can make it right they
have to obviously prove that it in some way furthers the overall uh
division or department's goal but as long as it's aligned in that the
extent to it and the amount that they have to hit has got to be
quantifiable right if they set that goal they can set it as bigger as
little as they want what happens is that the social pressure of wanting
to set good goals automatically self corrects you might think well what
if they just say they get you know a half a percent you know improvement
or something like that and then they hit it cool but the thing is is
that people on the team

6 00:05:00.000 --\> 00:06:00.000 are going to be like dude come on
that's the goal and then all of a sudden they raise it but they raised
it no one else and so they have complete autonomy and ownership over
that goal now for you as an owner what you can do obviously is let's say
that your targeted earnings for the person's fifty thousand a year
that's fine you just take fifteen percent and make it variable so like
they have the potential to earn the whole thing or they have to earn
somewhat less like don't worry about the variable column the the piece
is that we have intermittent reinforcement which is another way of
saying variable reward for an employee they have complete autonomy and
they have social pressure and they have some level of competition and
this is really useful in roles that don't necessarily a directly you
know tied to the bottom line like sales does and are more difficult to
quantify right and so this gives those roles the opportunity to feel
like they're contributing to the overall growth of the company and have
something in the balance that matters so i wanted to share this with you

7 00:06:00.000 --\> 00:07:00.000 because i thought it was really really
cool we're going to be implementing stuff like this in some of our
portfolio companies but i thought it was just incredibly sexy and um i
didn't want to i didn't want to keep it from you because i think it's
really really cool because there's just so much psychology behind doing
things this way um and it just allows everyone to participate and grow
as employees within the company and as a as a tangential tertiary
benefit of this your churn will go down because people will feel like
they're making progress pretty cool right if they'll feel like they're
making progress and that they are growing and that they are challenging
themselves and that at the end of the day is what you want every
workplace uh to fulfill for your employees now whether they feel
fulfilled you have no control over but if you can create an environment
that increases the likelihood that they feel that way given a normal
human construct um i think that you're going to build a better business
so lots of love keep being awesome mozy nation love you all

8 00:07:00.000 --\> 00:08:00.000 and i'll see you guys next video bye
