Episode 44: How Do I Manage My Managers?

Episode 44: How Do I Manage My Managers?

Guests:

Laura Zander is co-founder and CEO of Jimmy Beans Wool.

Dana White is founder and CEO of Paralee Boyd hair salons.

Jay Goltz is founder and CEO of Artists Frame Service and Jayson Home.

Producer:

Jess Thoubboron is founder of Blank Word Productions.

Episode Highlights:

Laura Zander: “So now I’ve got anxiety about my anxiety, and it’s this crazy, vicious cycle. And what is so confusing is that intellectually, consciously, there’s nothing wrong.”

Jay Goltz: “Anytime you ever hear anyone complaining about their employees, it’s a bad manager.”

Jay Goltz: “The most important part of management is hiring the right person in the first place.”

Full Episode Transcript:

Loren Feldman:
Welcome, Jay, Dana, and Laura to our first podcast taping of 2021, a year that’s already off to a rousing start. Let’s start by catching up a little bit since we did take a few weeks off. Dana, anything new with you?

Dana White:
Yes!

Loren Feldman:
Tell us!

Dana White:
After four and a half amazing years with my boyfriend, on December 24th at 11:50 something at night, he got down on one knee and asked me if I would do the honor of being his wife. I proudly said yes, and I am officially engaged.

Laura Zander:
Congratulations! Welcome to the dark side.

Jay Goltz:
And we’ve all met him, and we all like him.

Dana White:
Yes, I’m so excited. I’ve never been one of those girls who dreamt of her wedding, and like a family member asked me like within hours of being engaged, “So what are your colors?” I have no idea. And then, “When are you getting married?” I’ll get back to you. We are going to have a small ceremony, probably like 30-35 people, and then we’re going to have a brunch for those people after. And then later on that night, we’ll have a huge big reception to which all three of you are completely and totally expected and invited.

Laura Zander:
Is it gonna all be on Zoom?

Dana White:
No, but it’ll be in like 2022.

Jay Goltz:
I’m not coming until you tell me the colors though. I want to make sure I dress right.

Loren Feldman:
I am curious. Are you concerned about marriage having any impact on your business?

Dana White:
My marriage?

Loren Feldman:
Yeah.

Dana White:
Absolutely not. I think maybe we’re—

Loren Feldman:
Jay’s laughing. Why are you laughing, Jay?

Jay Goltz:
I’m just laughing about all the people who are married, who have been in business for a long time, who are thinking about whether their spouse has any effect on their business whatsoever. It kind of makes me laugh.

Dana White:
But he and I have been together for a long time.

Jay Goltz:
Oh, yes. That was a personal laughing at myself—not laughing at you.

Dana White:
He met me, and on our first date, he saw my office and my calendar, and it was full. He knows that Paralee Boyd is extremely, extremely important. And I don’t think he’d want me to be less Paralee Boyd now that I’m married. That would be weird to me. I don’t even know… oof, that’s scary to me. I know there are women who become less ambitious once they get married. I was never doing any of this to get married, so I don’t see myself changing. I think my customers… oh, man, I think my numbers might go up.

Loren Feldman:
How so? Why do you say that?

Dana White:
My business operates in a Midwestern town. I remember opening and getting the questions, “Girl, who’s your husband?” Just everybody assumed I was married and that I had someone helping me do this, and the looks on their faces when I would say, “No.” “You have a boyfriend?” “No.” “Well, who told you to do this?” I mean, those are questions that I’ve gotten. Marriage checks one of the societal boxes of this community, and it’s important to some women here that you are married.

Loren Feldman:
Do you think that’ll make people more likely to come into your shop?

Dana White:
I don’t know if it’ll make people more likely to come into my shop as it will make me an owner who they can relate to: “She’s relatable.” Where I’m at, being the age that I am and not being married, that’s, “Whoa.” It’s not New York, where it doesn’t matter. In Detroit, it matters—especially if you’re Black.

And then you’ve gotta go to the right church. You’ve gotta have the right job. You had to go to the right high school and go to the right college, which is local. A lot of times, that’s Michigan State or U of M or out of state.

Laura Zander:
That is exhausting. That sounds absolutely exhausting.

Dana White:
It is extremely exhausting, but I just now will check one of the boxes. Sadly, it matters though.

Jay Goltz:
Or not sadly. Whatever.

Loren Feldman:
It is what it is?

Jay Goltz:
It is what it is. It’s okay.

Laura Zander:
It is what it is. It’s not like they’re doing it to check the box, right?

Dana White:
Yeah, and I could care [less].

Loren Feldman:
All right, let’s keep going. Laura, how are you doing? Were you able to take a break over the holidays?

Laura Zander:
Yeah, I did take some breaks over the holidays. I’ve actually been home in Reno for three weeks now, so this is the longest stretch that I’ve been home since I think June. I actually don’t have plans to go back to Texas for at least another week or two. I’ve been taking breaks, but I’ve really struggled. My anxiety has just been through the roof.

Loren Feldman:
Why is that?

Laura Zander:
I don’t know, and that’s what’s killing me and driving me nuts. As soon as I got back from Texas the week before Christmas, I’m having trouble breathing. I’m tired, I’m exhausted. Every time I come back, I’ve got really severe allergies, so I always have this period of a couple of days where I’m just like, “Oh my God. I’ve got the Rona. I’ve got it. I must have it, and then I’ve infected everybody.” The guilt. It’s not worrying about myself as much—and I mean that sincerely—as the guilt of, “What if Doug gets it? What if blah, blah, blah?”

Then I go into this spiral of, I’m having trouble breathing, and I’m tired and exhausted. So is it allergies? Is it just genuine exhaustion because I’ve been working my butt off and traveling non-stop? Or am I sick and do I have the Rona? And so then I worry that I’m sick, which makes me more exhausted, which makes me not be able to breathe, which heightens the anxiety. So now I’ve got anxiety about my anxiety, and it’s this crazy, vicious cycle. What sucks, and what is so confusing, is that intellectually, consciously, there’s nothing wrong. There’s nothing stressing me out.

Jay Goltz:
Can we hear from the doctor now? Because I know what you speak of. You’ve been on business adrenaline—like most of us—dealing with multiple issues all year long. All of a sudden, the merry-go-round has stopped for a minute, and your adrenaline’s gone down. And now all of a sudden, you’ve got time to think about stuff. When you’re getting shot at in the foxhole, you’re just thinking about shooting and survival. All of a sudden, the shooting stopped for a minute, and now you’re thinking about, “Oh, I wonder what’s going on at home?” You’ve got a little battle fatigue. It’s been a long year with all kinds of stuff going on, and it’s been a long simmer. We’re all readjusting now.

Laura Zander:
Yeah, exactly. Finally, the other day, I’m like, “Okay, I’m gonna write down when I can’t breathe and when I can breathe.”

Jay Goltz:
And then call me.

Laura Zander:
And then I recognize, I’m like, “Okay, I’m baking a cake. Wow, I can breathe,” because I’m just kind of in the moment. I’m focused on blah, blah, blah. I’m like, “Oh, I’m doing a puzzle. I can breathe.” So it’s not that I can’t breathe. You’re right. It’s those moments of silence.

I try really hard. I meditate every day. But that’s been harder. I’ve tried to do it for years, but I’m not doing a great job at it, and that’s not working. And so I recognize that it’s the—

Loren Feldman:
What do you mean you’re not doing a great job?

Jay Goltz:
Listen to her, Loren! Listen to her. This is what she’s telling you.

Loren Feldman:
Well, I’m asking: Is it just not helping? Or do you think you’re doing something wrong when you’re meditating?

Laura Zander:
I am not finding peace as easily and as frequently as I normally would. It’s more of a struggle right now for me to sit and to just sit with myself sitting. I can feel my heart racing. I can feel the breath catching. The whole point of meditating is to kind of relax into it and to just exist, and I can’t wind down. I need to wind down, and I am not sure how to wind down knowing that, “No, I don’t need to work 40 hours a week right this second. I don’t need to be in the office every second, but I still need to be engaged a little bit.”

Jay Goltz:
You sound like someone who needs to meditate, but you’re telling us you are meditating. To what I understand, it’s not working, so maybe you need to double down on that and figure out—

Laura Zander:
Or maybe it is. Maybe I’d be in much worse shape if I wasn’t.

Jay Goltz:
Wow.

Laura Zander:
One of the things that, now at 46 years old versus at 36 years old, I now am aware that I’m having anxiety, as opposed to just having it. I’m aware that nothing is wrong, but something is wrong, and so I’m trying to fix it. That’s part of where the meditation stuff comes in. It helps me practice being aware of it. Now the trick is, “Okay, I know something’s wrong.” I know, like you said, I’ve got the battle fatigue, the adrenaline just stopped. Now, what do I do? Do you know what I mean?

Jay Goltz:
You’re brought up a very interesting difference between you and me, which is real simple. I’m 18 years older than you, and I can tell you—

Laura Zander:
And you pee standing up.

Jay Goltz:
That too, which is always important. I would say, I realize now part of the reason why I might have been talking just like you 18 years ago, you’re still getting your sea legs to the whole business thing. I realize part of this is, you’re just growing into your job still. You’re doing the self-talk of, “There’s nothing really wrong.” I’ve gotten used to doing it to myself. I’ve had to go, “Okay, there’s nothing wrong here.” So my point is, it’s going to continue to get easier for you. It is.

Laura Zander:
And I recognize how much better it is—or how much easier, I should say, it is—than it was five years ago, or 10 years ago. One of my favorite quotes recently is, “The only way to get through it is to get through it.” I’m just cutting myself some slack. I recognize objectively that I’m having either panic attacks or anxiety attacks constantly. I’ve just got to get through it. I’ve got to try to identify the things that are making it a little better and do more of those and less of the other things.
The big one for me is, I recognize that my tolerance is really low right now. I’m annoyed pretty frequently, and so I really have to be very aware of not reacting impulsively when I’m talking to people, especially because with Slack and texting, it’s so easy to just fire off an impulsive message.

I really am having to consciously stop myself and be like, “Okay, am I responding emotionally because I’m just exhausted, and so I have no patience? Or is this the right way to do it?” Which then, that takes more work too. It’s much easier to just fire off and be like, “God, you’re an idiot! What are you thinking?” But instead, I’ve gotta be like, “Good question. Have you thought of maybe looking this up yourself? There’s this thing called Google that you could type your question into, and it will give you lots of answers.”

Jay Goltz:
Stripping out the sarcasm.

Laura Zander:
Yeah, I know, I know. You know what I mean.

Jay Goltz:
Yeah, I do. I’ve been in a similar situation where the company was growing faster than my brain. It took me 20, maybe 30 years to catch up to it. That’s part of your issue, which isn’t a bad thing. This is growing pains. You just bought another company. You’re growing. You’re doing stuff. Every time you get comfortable where you’re at, you’ve grown it a little bit more. So you will catch up.

Loren Feldman:
Laura, tell us about your business. I know you said everything’s okay, but what are you concerned about? I’m sure there are things you’re concerned about.

Laura Zander:
Oh, absolutely. Some of us have a tendency to look at all the negative stuff—I’ll call it a critical view, so we’re critical thinkers. There are so many things that need to be fixed with the business that we bought in Texas. There’s still so much work to do. But I asked everybody to list out all of the great things that we accomplished this past year. We just spent Tuesday going through the 30 different things that we’re all most proud of, and how far we’ve come is pretty remarkable. It’s really, really amazing. Okay, great. We’re going to put it up on the wall so that I don’t forget, and I still have perspective.

That said, moving on to being critical. Our staff is just not where we want it to be right now. We just did end-of-year bonuses—not huge, but something—and I asked the managers to go through all 35 people and rank them on a one-to-five [basis]. Five meaning irreplaceable, we’d be dead without them. Four is really awesome, but there’s still some room for growth. Three meaning really great, but we’ll be okay if they leave. Two: shape up or ship out. And then one: they need to leave today. Out of 35 people, we had 11 ranked under a three.

Jay Goltz:
Wow.

Laura Zander:
That really shook me up, because we let 11 people go back in March. Really shook me up, which I think is part of the anxiety stuff. It’s like, we just accomplished all this stuff. We have gone over and overboard being generous this year and trying to make everybody’s lives better and blah, blah, blah, trying to make the business better. And to know that there’s still a third of the people who aren’t fully invested…

Loren Feldman:
Laura, you’ve been spending a lot of time down there, and I assume you’ve gotten to know a lot of these people. Were you surprised at some of the people on the list who were threes or below?

Laura Zander:
No, not really. I just didn’t realize, I guess I thought some of the twos… the threes are fine. We’re always gonna have threes. We’re gonna have threes, fours, and fives. Or at least that’s my goal. Jay, you may have other—

Jay Goltz:
I say, out of a 10 scale, 7, 8, 9, 10’s—and not thrilled with the sevens. I’m not sure threes are so hot out of five. That’s a six out of 10. That’s not great. I hope you will aspire to getting it to a little higher than that.

Laura Zander:
That works. But to be fair, we’re just going to start with—

Jay Goltz:
No, for sure. You walked into a situation. I’m not arguing. I think as time goes by, you will upgrade those numbers. You did say something I’m just laughing at because it’s funny. You said, “What are all the things that you’re all most proud of?” So I’m trying to decide: Is it almost like A-L-L most? Or almost proud of? So is it that you’re almost proud of this? Or you’re all most proud of this?

Laura Zander:
That we’re all most proud of.

Jay Goltz:
Excellent. But it was funnier the other way though.

Loren Feldman:
I took it the other way. That is funny.

Jay Goltz:
See! Isn’t that funny?

Laura Zander:
No, no, no, no. So it was like 10 of us. It’s our weekly meeting, and each person came up with the three things that they were most proud of. So together, this is what we were all most proud of.

Jay Goltz:
Every single thing you’re saying is showing you’re really growing as a manager. I would only challenge one word you said—when you said they’re not “invested.” They’re not doing a good job. Whether they’re invested or not. I’ve had people who were invested who couldn’t do a good job. I’ve had people who weren’t invested who did do a good job. It’s really about: Are they doing the job they’re supposed to be doing?

Laura Zander:
Great point.

Jay Goltz:
But other than that, good for you. You’re growing into the manager role that you were destined to be in, and you’re doing everything right. I can totally identify with the anxiety of, “Oh my God, I’ve got 12 things to do!” And part of the reason I don’t have that anxiety anymore is because I’ve caught up to that stuff. And you just bought this company. You’re just working on it. So good for you. You’re making great progress. I love the idea that you sat down and went through all the good stuff you’ve done that you are all most proud of.

Laura Zander:
To me, it’s so important. I have to keep that in perspective. So where we’re at, Loren, is we are, over the next year, our goal is to grow moderately, but to work on efficiency.

Loren Feldman:
Is this just, you’re talking about Madelinetosh in Texas?

Laura Zander:
It is, just the Texas business. The Texas business is very controlled growth, while working on efficiency and working on the foundations. We’ve got to get our QC systems, and to really prep us for scaling, because I know that the business can be double or triple. The demand is out there. That part I’m not as worried about. The tendency of this business has been to just throw bodies at stuff when there’s an increase.

I would like us to work smarter, not harder. I think it’s going to take us six months or a year to change the mentality. I’d like fewer people to make more. I keep telling them, we could probably do 30 percent more business than we’re doing now with the same headcount. That means everybody, if we’re all pushing hard, we should all make a little bit more… or a lot more.

Jay Goltz:
I have to tell you a real life story. This isn’t some parable. This is a real life story. I was buying glue to mount pictures, and it comes in barrels. This guy selling it to me—this was 30 years ago—he was in his 50’s or 60’s, I don’t remember. And I said to him, “How long have you worked for the company?” And he says, “I used to own the company. I sold it to someone else.” I said, “Really? How did that go?” He goes, “Well, here’s what happened. I had 10 employees, and this guy took over, and he’s a real tough guy, running a business. And he said to me, ‘Tell me who your top five people are.’ So I told him, and he fired the other five people. And he gets the same production out with the five people that I was getting out with 10 people.” To your point of, yeah, it happens, and I never forgot that story because it was just so poignant.

Loren Feldman:
So, Laura, along those lines, were there any ones on the list?

Laura Zander:
No ones, no.

Jay Goltz:
There are never ones on the list. Because even the worst manager in the world fires the ones. The ones that kill businesses—out of a scale of 10—it’s the sixes, because the sixes aren’t quite bad enough to fire. And you rationalize it, and you say things like—I’ve said all these things—“Oh, we could do worse.” Or, “Oh, she’s trying really hard.” Or, “Oh, they’ve been here a long time.” The customers don’t care. They want your stuff when they want it and they don’t want to hear about, “Oh, sorry the airplane crashed. The pilot was really trying not to crash it.” “Oh, sorry. Your mother died in the hospital. I was really trying, but I did forget to give her the medication yesterday.” I mean, no one cares!

So this is the growing up of being a manager. And then whenever I do this speech, someone goes, “Oh, you have to get rid of those people. They’re a cancer.” No, they’re not cancer. Maybe they’re just in the wrong job. You don’t have to call them names. For whatever reason—they’re invested, they’re not invested—they’re not working. All that matters is: Are they doing their job or not? And that’s the maturity of a manager, when you finally get to that point, and you’re moving towards that point. You’re doing a good job.

Laura Zander:
Well, I’m very lucky to be able to jump into this and not have been there for 10 years and have the history and the emotional baggage and the emotional ties. It’s given me a totally different perspective to be able to walk in and look at a lot of this so objectively, which has forced me to be more objective in the business in Reno. It’s forced me to take a look back and be like, “Ugh.”

Jay Goltz:
Well, let me tell you the other part you’re missing. You realize you built a relationship with those people to where they gave you the honest truth. Do you know how valuable that is? Obviously, you’ve built a relationship with these key managers that when you asked them to rate these people, they weren’t covering for people and they told you the truth. It’s a beautiful thing that is totally a credit to you. If you were a jerk, they wouldn’t have told you that stuff. They would have lied.

Laura Zander:
I appreciate it. I’ve told them I was so grateful that they were honest with me about it.

Dana White:
Were you able to validate what they said to you with what you’ve seen since you’ve been there?

Laura Zander:
Yeah.

Dana White:
Okay, good.

Loren Feldman:
I was gonna do this last, but it kind of relates to the topic we’re on. We’ve got a reader question that I want to address, and I’m hoping to do this in most, if not all, of our podcast [episodes] going forward. I’ve asked people to send in questions for you guys, either about their own businesses or about your businesses, and I’ve been getting some good ones. Hopefully, I’ll get more. Any of you listening who would like to submit a question, you can send it to me by email: [email protected]hats.com. Or you can simply reply to your 21 Hats Morning Report.

Today’s question comes from Hap Cameron. He’s owner of Happy Cones, an ice cream shop in Denver: “I have a question I’d love your panel to answer. I’m more in Dana’s position. I started as an ice cream truck six years ago. I opened the shop a year ago, and I’m opening another shop in three months. My question is: How do I manage managers effectively? Bear in mind, I’m not a big tech company. I’m an ice cream shop. I’m still trying to figure out whether to pay managers hourly or salary. Any advice would be greatly appreciated.” Any thoughts for Hap?

Laura Zander:
Let me chime in before the experts do, because it’s something I still struggle with. I would read the book, The E-Myth Revisited. I think that that’s very helpful. That’s all I’ve got. Jay and Dana, you’re better managers than I am.

Dana White:
I don’t know if I’m a better manager. I know that, over my years of being open, I’ve figured it out. And then I’ve been in leadership in other positions. I’ve had the opportunity to manage people before, and my management style is: I give you a long rope and then I see what you do with it. I try to meet with my operations manager regularly to go over the operations. What are the 10 things that are important so I can grow the business—do my job—and then these are the things I delegate to her, all of which I’ve done before.

But I chose, with the help of this show, to pay my operations manager a salary. My day-to-day manager in the salon, she is an hourly employee, but I’m rethinking that. As I expand, I think, what I’m going to have these managers do determines how I will pay them. But I think part of determining how you’re going to manage your managers is based on what you’re going to give them to do. There are certain things that I cannot delegate. I can’t delegate my presence in an incubator. I have to be there, and so there are things that are in the salon that need to happen that I need eyes on. So I delegate that to her and then set up frequent report-outs so we can go over the 10 or 12 things that I need to hear back from her.

I’ve found that, since hiring, I’m not in the weeds with human resources anymore. I’m not into the, “Well, her boyfriend is upset with her.” I’m not in that. I don’t know. I don’t know what’s going on in the personal lives of my staff. And I like that, considering my industry and considering what I’ve learned, in my experience. I know I’ve gotten some backlash from business owners who’ve said, “Well, gosh, you should know. You’re a small company.” Okay, you run an engineering firm. Very different than the culture of a hair salon. I found that having a manager just allows me to work on the grasstops and the stock of Paralee Boyd. The managers dig into the grassroots and report out to me on the things they need in order to keep the business open and to grow it.

Loren Feldman:
Jay, any thoughts on compensating and managing managers?

Jay Goltz:
I’ll give it to you in four steps. Number one—and most people don’t talk about this—the most important part of management is hiring the right person in the first place. So first, I put a lot more energy, or put good energy, into figuring out what kind of person is going to do the best job doing this. Put a great ad together, interview thoroughly, check references, and most entrepreneurs are not real good at it, including me. Why? Because we like people, because we like to talk about our companies, and we’re in a hurry. That’s not a good thing in hiring. Slow down the hiring process and do your best to find someone who has had experience doing something with customers. Ask good questions during the interview, like, “Tell me about a customer experience you’ve had.”

Loren Feldman:
Jay, is that realistic advice for an ice cream shop?

Jay Goltz:
Yeah. Why not? Maybe they haven’t worked in an ice cream shop, no question. But did they have a job before? They’ve never had a job? Okay, maybe they just graduated high school, college, whatever. They’ve never had a job, okay. But most people have had a job before, so I would ask them, “Tell me about dealing with customers.” Because at the end of the day, people are not going to be pissed at you because your chocolate ice cream wasn’t quite as good as the chocolate… No, they’re gonna be pissed because your person wasn’t nice.

Go to Yelp. That’s all you have to do. Just look at Yelp and see the reviews. Usually it’s about, “They’ve got an attitude in there.” Or, “They weren’t nice to me.” Or, “I hate them.” It’s usually not about the product. It’s usually about the people. You want to hire a nice person who’s going to give a wonderful feeling to your ice cream shop.

So you’ve got to figure out what kind of questions do you ask to tease that out? And the one I would ask is: “Tell me about a difficult customer situation you had, and how did you handle it?” And you can tell by just their body language… Do they sigh? Do they say, “Oh, wow, I had one, boy, six months ago…” And then you find out what they learned from it. You find out whether they’ve got an attitude about it, like, “Well, people are jerks sometimes,” versus, “Listen, I understand my number one job is to make sure people are happy—even if they’re not nice to me. I suck it up. It’s not a problem. I don’t take it personally.” I want to see how they handle that, how they process that.

Hiring, number one. Number two: set standards. In an ice cream shop, I’ll give you my top four. Make sure this door opens on time. How many retail stores do you go to that they’re not open when they’re supposed to be open, and you stand out in front waiting? I have a simple solution to that. My employees know our standards are: We open five minutes early, and we don’t lock the door ‘til five minutes after closing. There’s none of that screaming through the door pointing at your wristwatch, “We’re closed.” If we close at six, no one locks the door till 6:05. Easy. Versus getting into the fight with the customer. Setting standards like that. Cleanliness has got to be critical. You shouldn’t walk into your ice cream shop and find dirty napkins lying on the floor. Customer service. If someone’s not happy, how do you handle it? “Oh, no problem. Let me get you something else.” You need to train people on that stuff because some people think they’re doing the company a favor if they fight with customers. They think that’s their job.

Laura Zander:
Is it fair to ask this manager to write up those standards?

Jay Goltz:
No, not at all. Well, ask on the interview to see if they can do it. That certainly would be fine.

Laura Zander:
Could you make that part of their job? Could you say, “Look, part of the reason I’m hiring you is because I want you to create these standards. I want us to agree on them.”

Jay Goltz:
No, absolutely not. You’re no longer the owner. Now it’s like your employee is deciding who your store is. No. I don’t mind asking them, “What do you think? Mary, what do you think the four most important things to being a manager in the store are?” and see if she can come up with it. This ain’t brain surgery. They should come up with it. Customer service, cleanliness, making sure that we’ve got the place staffed properly for the right time. They should be able to come up with this if you want them to be a manager. Okay, so we get through hiring—

Loren Feldman:
Let me interrupt you, Jay, for a second. I want to tell you about a situation that I’m familiar with that I think actually resonates with some of what you’re discussing. I’m curious what your reaction to it will be.

A couple years ago when I was still at Forbes, and Bo Burlingham and I were picking the annual Forbes Small Giants list, we put an ice cream chain on the list. It’s called Amy’s Ice Cream. It’s based in Austin, Texas, and they do a couple of things there that I’d never heard before. One of them is they have no applications for jobs. If somebody comes in and says they want to work there, they hand them a white paper bag—the kind of bag that they put ice cream containers in for customers—and say, “Here, do something with this.” The thinking on that is that they don’t really care what someone does, they care that someone takes the time to actually try to do something. And they feel that sorts out the people who are just looking for a job from the people who really want to work at Amy’s. That’s one thing they do that they claim has been really effective for them.

The other thing is, they hire a lot of college graduates or even college students to work and even to manage the stores. But they rotate everybody through every position in the store, so nobody is assigned one role. They get to do everything. The goal there is to give everybody a great work experience. They know they’re going to go on and do other things and talk to their friends and they want them to tell their friends that this was the best college graduate job or right-out-of-college job anybody could have. What do you think of that Jay?

Jay Goltz:
I love the second part. Good karma. Sure, you’ve got young people. Give them a nice experience. I think that’s great. People should leave your company and feel good that they learned something or had a good experience there. The bag thing, I don’t know… If it works for them, I can’t argue. I don’t know that it makes sense to me. But if it works for them, it works for them. I don’t know what to think of that. You’re supposed to do something with the bag?

Loren Feldman:
You’re supposed to draw something, fill something out.

Jay Goltz:
I thought where you were going with that was, “Here’s a paper bag and a pencil. I want you to write down the five things that you think are critical to running a great ice cream place.”

Loren Feldman:
You can do that.

Laura Zander:
I love the bag idea. I think that’s brilliant.

Jay Goltz:
Yeah, sure. The point is, what I figured out—and I’m not that smart, it took me 20 years—is great companies have great hiring processes, period. It’s not an accident. Great companies don’t accidentally end up with great employees. They figured it out because the reality is, out of 10 people coming in for a job, only one of them is going to be a great employee for you.

Laura Zander:
So how do you feel about hiring a recruiter? Doug is ready to look for another software engineer, and we have tried multiple times. We’ve hired four or five people who haven’t worked out, so we obviously aren’t doing a good job at hiring. Is it time for us to get a recruiter for a high-level skilled job?

Jay Goltz:
Maybe in your business, maybe you have to do that, because there’s such a demand. I’ve used a recruiter, but I’m not in a high tech business. I’ve used a recruiter three or four times for management positions, and every one of them ended up being extremely disappointing. That’s been my experience, but I’m not hiring in high tech. My first question to you would be: Show me the ad. I want to see. When you said you’ve tried, okay, but did you put a great ad together that gives them why they should work for you? If you feel like you’ve done a great ad, and you’ve done the best, okay. Maybe in that industry, you have to use a recruiter.

So if you get the hiring thing down, the rest gets much easier. One, go through a process and say to yourself, “I’m going to take a lot of time and do this right. Set standards. Again: cleanliness, on-time, customer service, make sure everyone understands. Three, you’re a manager. You might have to tell them a couple of times. You’ve got to monitor it and make sure things are happening correctly. And included with the coaching, management, positive reinforcement, all that good stuff, this is where the manager has to come out in you.

There will come a point where you need to have the skillset of knowing this ain’t working and then get rid of them. Because that’s where people make the mistake. They rationalize. Anytime you ever hear anyone complaining about their employees, it’s a bad manager. You shouldn’t be complaining about your employees. You should have wonderful employees. That’s your job: find them, keep them. My contention is: hire the right people, train them, coach them, manage them, put standards together. Everything falls in place.

As far as hourly versus salary, I would say unless they really want a salary, I think it’s always safer to start on hourly. That way, if they’re working extra, they’re getting paid. There’s no downside to that. I have had the opposite where you put them on salary, and then they get home and their whoever—girlfriend, boyfriend, husband, wife, mother—“What are you working extra time for? You’re not getting paid for that. You’re working for free.” Some people don’t get the salary thing. I wouldn’t be so quick to throw everybody on salary.

Loren Feldman:
Dana, you just told us you were rethinking that for your manager and thinking about moving towards salary. What are your thoughts?

Dana White:
I’m noticing how many hours she’s working. She’s doing more than your usual manager. She’s more than just an on-site manager.

Laura Zander:
Is she hourly now, or is she salary now?

Dana White:
She’s hourly now. I just kind of talked about making it easier to have your admin team on salary. We don’t have to watch hours, we don’t have to not include her in stuff.

Jay Goltz:
What kind of money are we talking about?

Dana White:
Like $17 an hour.

Laura Zander:
What we did is, when we’ve had that situation and it becomes an administrative burden to clock in and clock out, we took their hourly wage—and I don’t know if it’s the right thing to do, it’s just what we’ve done—especially for people who didn’t really understand the salary and whose wives and moms and whoever would complain about, “You’re working more and not getting paid for it.” We said, “Look, we’re gonna take your hourly rate. We’re gonna salary-atize it, so multiply it times 2,080. And then we’re gonna add 5 percent. Basically, what that’s doing is we are guaranteeing you two and a half hours of overtime every week. We’re just going to prepay you. We’re just going to assume that you’re going to work blah, blah, blah overtime. Plus, you get an extra week of vacation. Plus, you get extra holidays.” We made sure that in a salaried position, there are some extra benefits that you don’t get if you’re hourly. That was kind of how we explained it to people.

Dana White:
Why do you guys know that their families have an issue with them working salary?

Jay Goltz:
Because that’s what comes up: “Hey, where are we going Saturday?” “Oh, I can’t. I’ve got to go to work Saturday.” “Oh, are you getting paid?” “No.”

Dana White:
Do they come to you and say… That’s what I’m saying.

Jay Goltz:
Oh, they usually complain to somebody else. Everything always simmers up to the top. If they don’t get the salary thing, my argument is they don’t need to get it. Just pay them on the clock.

And I don’t disagree with what you’re saying, Laura, with the 5 percent. The problem is, the way you stated it, they’re getting paid for two and a half hours of overtime. Not really, because they get paid time and a half for overtime. I’d tweak that number a little bit because, trust me, they’re aware of the fact they get time and a half when they work overtime. But I don’t think that’s a bad philosophy. And certainly there are some people [where] it’s a great thing to put them on salary. They feel like they’re more part of the management team, and they don’t punch in and out. It’s a great thing.

Except this is like, did you ever go on the tilt-a-whirl, the carnival things, the car that spins around? There are people who get off the tilt-a-whirl, get back in line, and can’t wait to do it again. And there are people who want to throw up and say, “I’m never going on there again.” That’s how salary is. There are some people [where] it’s great. Love it. And there are people who hate it. You’ve got to figure out which is which. Because if you put someone on salary who’s really got an hourly mentality, it’s gonna cause you problems.

Loren Feldman:
All right, we’re almost out of time. I’ve got to ask one more question. I want to squeeze this in quickly, because it’s about me. This question relates directly to what I’m doing. As you know, I’m trying my best to turn 21 Hats into a real business. I’ve got a daily email newsletter and a weekly podcast that you’re participating in right now. But I don’t have any revenue, and I’m hoping to address that situation in the next month or so. Which leads me to this question: When you guys were getting started, when did you know you had a real business? Laura, do you remember?

Laura Zander:
Umm, it’s different when you have a physical store, and you open it up. For me, I guess it was the first time… Susan Conrad was my very first customer. She walked in, and she spent $88. I still remember the credit card that she used, and I was just like, “Holy shit.” And I was just like, “Are you sure? Are you sure? Is that okay?” That seems like a lot for a little baby sweater. Is it gonna be all right? So, yeah, that was, I guess, the first transaction.

Jay Goltz:
I thought you were gonna say you still don’t feel like you have a real business. I was waiting for you to say that.

Loren Feldman:
She knows she has a business. She’s got two!

Laura Zander:
I don’t feel like I have a grown-up business. I don’t feel like we’ve got our shit together.

Jay Goltz:
You’re on the way.

Laura Zander:
I’m always on the way. It’s a frickin’ journey.

Loren Feldman:
Dana, how about you?

Dana White:
When we had volume. I remember it was December 16th, 2012, and I looked around and all of the chairs were full, two of the sinks were full, and there was a lady waiting. And then at the end of that day, when I looked at our receipts, I don’t even remember how much we made that day. But the fact that I realized the vision… I got everybody in and out in under a certain time, and they were all walking in, and they were happy. I said, “Wow, I’ve got something here. It’s closing, and we’re leaving, and we’ve seen over 30 people today. Wow.” And then the next time is, shortly after that, when I pulled up to open the salon at 9 a.m, and it was 8:15 a.m., and there was a line outside already. I said, “Ohhh, here we go.”

Loren Feldman:
That’s great. Jay, do you remember?

Jay Goltz:
I don’t remember a specific moment. But in 1979, for those of you who weren’t alive…

Laura Zander:
Well, that’s ‘cause it was like half a century ago.

Jay Goltz:
Well, it was almost half a century ago. Yes, it was. When I pulled up in my horse and wagon.

Laura Zander:
Everything was in black and white.

Jay Goltz:
Yeah, and in 1979, I made 20-some thousand dollars a year, which was the same amount of money that all the guys that took the accounting jobs were making. I felt pretty good, like, “Wow, I’m framing pictures, and I made as much money as someone that took a job doing accounting.”

Laura Zander:
Awww. I was eating my Cheerios in my kindergarten class right then.

Jay Goltz:
But I will tell you, getting bigger, there is one moment I remember that really made me feel like, “Well, I’ve got a real, decent-size business.” I bought a forklift. I mean, that’s a big deal. I own a forklift. You go to companies with forklifts, they just were there when you showed up there. But like, I bought a forklift. That was a huge thing. You don’t have a forklift unless you have a decent-sized company.

Loren Feldman:
All right, so you’ve told me what I needed to hear. I’ve got to end this podcast [episode] so I can go buy a forklift.

Jay Goltz:
Yes, that’s what you need. For all the heavy lifting you do every day.

Loren Feldman:
My thanks to Jay Goltz, Dana White, and Laura Zander. As always guys, thanks so much for sharing.

 

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