Managing People Is Hard: When Does Demanding Become Toxic?
Introduction:
It’s easy to condemn the horror stories coming out of Noma, the celebrated restaurant in Copenhagen. But this week, Jay Goltz, Jennifer Kerhin, and Ted Wolf confront a harder question: How far are the rest of us—business owners in every industry—from crossing the line? Because it’s not just restaurants. Most owners don’t set out to be abusive. They set out to build something great. And somewhere along the way, high standards can start to blur into something else. ‘I was out of control when I was in my 20s,’ Jay admits.
So, what changed? And where did the owners land? How much command and control is actually necessary? When does pushing someone cross the line—and when does not pushing them enough become its own failure? Have you ever held onto the wrong employee too long? Or pushed the right one too hard? Jay doesn’t sugarcoat his opinion about yellers: “You’re going to tell me you’re passionate. I’m going to tell you, ‘You’re an asshole.’”
The group digs into the trade-offs every owner faces: hiring versus managing, systems versus stars, culture versus performance. What do you do with the high performer who damages the team? Can you really coach anyone to excellence—or are there limits? And then there’s the quiet warning sign many owners ignore: Something goes wrong, and someone says, “Oh, well, everybody knows how Bob is.” That, says Jay, is when you know you’ve got a problem. This is a conversation about judgment calls—messy, human, unavoidable. Because as Jennifer puts it, “It’s really hard to manage people.”
— Loren Feldman
Guests:
Jay Goltz is CEO of The Goltz Group.
Jennifer Kerhin is CEO of SB Expos and Events.
Ted Wolf is CEO of Guidewise.
Producer:
Jess Thoubboron is founder of Blank Word.
Full Episode Transcript:
Loren Feldman:
Welcome Jennifer, Jay, and Ted. It’s great to have you all here. You’ve probably heard the stories recently about Noma, the fine dining restaurant in Norway that’s considered to have been one of the best and most influential restaurants in the world, but where the chef owner recently resigned over accusations that he’s been remarkably abusive, physically and psychologically. I’m hoping we can use this as a jumping off point to discuss what it takes to align small business employees, and have them perform at a high level. Noma is, after all, a well-known, high-performing small business.
Before we start though, let me just give you a couple of highlights from the story that The New York Times broke that led to the resignation. In The Times report, “cooks who worked at Noma from 2009 to 2017 shared stories of how Mr. Redzepi walked down the line punching his entire kitchen staff in punishment for one person’s mistake and how he crouched under counters to stab them with a barbecue fork out of sight of diners walking past to admire the open kitchen.
The Times article included other accounts of Mr. Redzepi hitting cooks, humiliating them, threatening them with deportation. One of them said Mr. Redzepi slammed him against the wall, punching him in the stomach for leaving a mark on a flower petal as he placed it with tweezer tips, a mark that would make his presence, his work, even faintly visible to the diner.”
And you know, we should emphasize, because of its renown, this restaurant had incredible influence. A tremendous number of chefs went there as interns—unpaid interns—in most cases, I believe, and then went off and started their own restaurants, in many cases, following what they learned there. So again, I don’t think any of us are experts in fine dining, but I’m curious, when you hear stories like this about Noma, with that kind of brilliance paired with that kind of horrific mistreatment, what’s your gut reaction? Does any part of you understand how this could happen?
Jay Goltz:
I find it revolting. And I do understand that running a restaurant is different than what I do, but to go ahead and be stabbed… And then I have to think, and all the people who put up with it for years and years and years, and nobody went to the department of—what? It’s just, I don’t know, victim blaming, but, like, what were they thinking? It was okay?
Loren Feldman:
They were thinking they didn’t want to risk their career.
Jay Goltz:
I know. Okay, the whole thing is just—I’m really disgusted by TV ads you see. You know, everything’s politically incorrect these days, except making the boss out to be a maniac. That’s okay: the screaming boss with his glasses bouncing up and down on his nose. That’s like a running joke out there, and it’s not a joke. And as a business owner, I think we need to stop.
And when I do business speeches, I ask people, “Do you yell at your staff ever?” And then I think, “Oh, you’re going to tell me you’re passionate.” And I’m going to tell you, “No, you’re an asshole.” It’s not good. It’s bad. When I was a kid, I did it. I was out of control when I was in my 20s. Yelling at people is bad business, period. Bad business.
Ted Wolf:
I agree with Jay. I think it’s revolting, and I think it’s disgusting. And it gives a bad name to every entrepreneur, business owner. We all learn from our mistakes, but the owner sets the tone, sets the pace. He’s the lead dog. So they create the culture, and it’s a reflection of their personality. I know today, some business owners who basically manage to emotional violence. I mean screaming and yelling like that. I want no part of it. I don’t want to associate with it. I think it’s totally wrong.
But on the other hand, I have to ask the people who are willing to take it and they stay there: They need to look inside themselves. Because maybe they don’t have choices in the restaurant industry. I know it’s very common that there’s an awful lot of, I’ll say, poorly educated or low educated individuals, and they may not have an awful lot of choices, and I feel extremely sorry for them. But at some point it’s carried, and that gives all of us a bad name.
Loren Feldman:
Although that wasn’t the case, I’m assuming, at Noma. You know, those were prized jobs and very talented people had to compete to get them. I think they stayed quiet for different reasons.
Ted Wolf:
Well, I will tell you that I know an individual who worked for a very, very well-known fine dining restaurant in New York City, down near Wall Street. To rent that restaurant out for a night cost tens of thousands of dollars. And they treated their staff exactly the same way it was described here.
Loren Feldman:
Do you think there’s something different about restaurants and that deadline pressure? I mean, obviously there’s deadline pressure in a lot of businesses. But is that something that helps explain this?
Jay Goltz:
You know what? Maybe. I don’t run a restaurant. If you got 20 of these guys or women together and they said, “Listen, you have to do it this way. It’s the way it works.” I don’t know. I’ve never run a restaurant like that. I find that surprising. I certainly think, though, in normal business, this is the problem—which I didn’t understand when I was 26.
When you scream at somebody, you have no idea what you’re doing to their head. They might have had an abusive, alcoholic father or mother. They could have been beaten as a kid, and every single person watching it is cringing. The amount of psychological damage you are doing to human beings, it’s just wrong. And if they’re upsetting you so bad that you feel the need to scream at them all the time, you should get them into your office quietly and say, “You know what, I think this is the wrong place for you. It’s a bad fit.” And fire them. Screaming at them is not the answer. But restaurants, apparently, I don’t know. It’s different.
Jennifer Kerhin:
I don’t think it’s just restaurants, though. I think there’s a lot of creative or really smart people who, for one reason or other, think of themselves as geniuses. And people support that validation of themselves as geniuses, and they get this ego that then turns them into a monster.
And I don’t think it’s just restaurants. I think it’s anyone who has sort of morphed into this egomaniac in whatever place they’re in. I mean, I’m sure there’s plenty of sports people who think they’re amazing at sports and start doing crazy things on the field to their teammates or coaches, or plenty of artists or actors. It’s something about when you start to be really good at a craft, and you get external validation, and your ego takes over. And there’s no safeguards against it in some places.
Loren Feldman:
I’m pretty confident that none of you have ever stabbed anybody with a barbecue fork, but—
Jennifer Kerhin:
Goodness, no.
Jay Goltz:
Not that I recall.
Loren Feldman:
Have you ever had, any of you, a moment as an owner where the pressure to get something done, get something right, pushed you to behave in a way that you later were not proud of?
Ted Wolf:
I had situations early in my management career, owning a business, where I got extremely frustrated, but I never took it out on people like that—never. I basically just left the room, calmed down, walked back in. And I guess my father had an awful lot to do with it, because he would say to me when I was a teenager, “Ted, cool heads prevail.” I learned that that has some truth to it, and I’m glad he said it, because to this day, it’s still one of my mantras.
Jay Goltz:
I’m sure I yelled when I was in my 20s. It was just a pressure cooker from morning till night, getting stuff out the door—and I’m sure I yelled, but I never got crazy. I never hit anybody. But I certainly, you know, people say to me all the time, “Jay, what do you do to motivate people?” And I say, “Well, how many different ways are there to motivate people? Three, four, or five? Raise, bonus, vacation, whatever. There’s about 100 ways to demotivate people. I don’t demotivate people. I think if you hire the right people, they’re naturally motivated.
But all you have to do is—for instance, we frame pictures. Once in a great while, someone damages a print. It happens. And I go out of my way to go to the person that did it, because I know they’re sick to their stomach. It’s extremely upsetting. And I go, “Lookit, you’re very careful at work. This doesn’t happen a lot. Do not take this home with you. Don’t worry about it.” And I feel very good about the fact that I do that, because I am sure it’s weighing on them, and it’s not right. They didn’t kill somebody. So I go out of my way to make sure. All you have to do is have a disgusted look and walk away, and it could freak someone out. It’s very subtle.
Loren Feldman:
Have you ever done that with someone and then had them do it again?
Jay Goltz:
Not that I can think of. Are there people who were careless and we ended up having to fire them? Sure. But I don’t think those are the ones who I would have gone up and said something to. I would only say it if I knew that they had been there for a while, and they were careful.
But management is tricky. I’ve never had a job. I never had a mentor. It took me 20 years to figure it out, and I look at things extremely differently now than I did 40 years ago. I don’t get flapped like I used to. And I also recognize the power of the boss. And when I was a kid, I didn’t get it. I just didn’t get it.
I remember walking into a room. I had a bunch of factory workers who I just hired. There were like 10 of them, and I had brought donuts and stuff. And they were all sitting there in their coats, frozen. I’m like 29 years old, and they were afraid of me, and I didn’t get it: the power of the boss. And I think when you’re the boss, don’t abuse it.
I mean, there’s a certain thing to you’re the big boss, and some of them need that paycheck at the end of the week. And, you know, it’s not right. And I will say now, I’m extremely proud of the fact my turnover is next to nothing. I’ve got 114 employees. Nobody’s screaming at anybody here. It took me a long time, but I feel like I finally figured it out.
Loren Feldman:
Jennifer, you have a complicated business with, I assume, pretty serious deadline pressures. What does high performance look like in your mind with your staff?
Jennifer Kerhin:
You know, I was thinking about what Jay said about motivation, and I think that’s one of the hardest things as an owner and someone who’s managing staff. Because everybody’s motivation is really different. For example, if we have a convention and the deadlines and things have to be fixed, or something changed, and you’re making really fast turnarounds, well, if you are really motivated by process and systems to do it, you’re going to spend a lot of time to find the easiest, fastest way to do it. But if you are just motivated to have a good, steady job, there’s nothing wrong with that. And you want to come in, you’re just going to work longer, harder hours and then get stressed and burnt out and get upset yourself.
Because there are different classes of employees. There are ambitious rock stars. There are people who come in and do a great job every day, day in and day out, but they’re happy where they are. And then there’s ones that maybe just aren’t the right fit for you. I mean, we’re all human, too. The motivation that helps that employee get stuff done for your company and fits into your personal leadership style, those are hard things to balance. I think I didn’t really answer your question, Loren, but it’s hard. It’s really hard to manage people.
Jay Goltz:
My answer is, it’s pretty simple. It’s about two things: hiring and firing. It’s about figuring out the kind of person who works well and doing a thorough interview and checking references. And then, our job is to make them as good as they can be, and our job is to figure out when we hit the ceiling with it. And our job is to figure out it’s just not going to work.
And in my experience—let me throw this past the two of you—I’ve been able to take people up two notches. I can take a six and turn them into an eight. I can take an eight and maybe get them to a 10, but I can’t take a five and make them into a nine. There’s a natural ability part there, and I’ve never pulled that off. Have you found that to be true? You can make people 20 percent better, but you’re not going to take someone who’s bad and make them great?
Jennifer Kerhin:
Agreed. But Jay, when you’re a new founder or owner, you may not understand the right type of person who will work in your organization.
Jay Goltz:
No question.
Jennifer Kerhin:
That’s the hardest part. You start a company, and you’re like, “Okay, who would be good in this organization?” You don’t really know that. Because all you know is yourself.
Ted Wolf:
I’m not sure that’s the way a lot of restaurants or highly competitive people actually think, though. I don’t think they look at, “Here’s the culture I’m going to get.” Take a look at some people that are very successful. They just think that, you know, they’re God’s gifts to everybody else and they are right, and everybody has to conform to them. And there are those people out there. It’s not just restaurants, but it’s everywhere, I think.
Jennifer Kerhin:
I think they think talent oversees teamwork.
Ted Wolf:
Exactly.
Jennifer Kerhin:
And to Jay’s point, okay, you can have a couple rock stars at the nine level or the 10 level. But are they team players? Jay, I’ll ask you: Would you rather have a team of sevens or a team of tens who aren’t team players?
Jay Goltz:
Well, that’s a trick question. I’d rather have neither. No, this is what I’d rather have: I’d rather have eights and nines. And in my world, I figured out that the people who are going to kill your business are not the fives, because you probably fire the fives. The people who are going to kill your business are the sixes and the sevens, who are just mediocre, who are just barely holding on and not giving great service to the customer and not giving good product or whatever else. And I’ve just learned my job is I only want to have eights, nines, and 10s working there.
And I have a definition for corporate culture. This is mine. Very simple: One, how far will you go for a customer? We do whatever we have to. I’ll stick someone in the van to drive to Minneapolis to go deliver a chair if we screwed up, or we need to get it there. So we do whatever we have to. Two, how much do you expect from employees? I don’t expect people to work 60 hours a week. I expect them to come in early if they need to, or stay late once in a while, but I’m not looking to get people working 55-60 hours a week. And lastly, what do I expect for people to treat each other? I expect them to be respectful to each other.
Here’s the kiss of death, and I certainly have had it in my company. Someone will do something, and then someone will go, “Oh, well, everybody knows how Bob is.” That’s a bad excuse. That’s when you know you’ve got a problem.
I had a cashier. It wasn’t a major job here, but she was just condescending to other employees. And I had a kid. She was in college. She was in the back crying. I go, “What’s wrong?” And she told me about so and so talked to her. She makes her feel bad about herself. I had to sit down with her for the third time and said, “This can’t continue. Do you have an answer to this?” She said nothing, and I ended up having to fire her. And you know what? It was a good move. You can’t have people around who are disrespectful. I shouldn’t say that. You can do whatever you want. In my world, I don’t want people working for me if they’re going to be disrespectful to each other, period. And it took me a long time to get there, but it works.
Loren Feldman:
Jennifer, I liked the question that you were getting at there. I think there’s another way to phrase it, but you’re kind of asking: What do you do with someone who is a really high performer, but a bit of a jerk and doesn’t fit in with the rest of the culture? I’m wondering what your answer to that question is? Have you had that situation?
Jennifer Kerhin:
Maybe I wouldn’t say “jerk,” but maybe not a team player, right? Like that person who’s really good at something but maybe not a team player, to me, you find the place where they can succeed on their own.
Jay Goltz:
That’s usually outside sales.
Jennifer Kerhin:
Yeah, Jay, good point. Yes.
Jay Goltz:
That’s exactly what I found. I’ve never found an outside salesperson who people didn’t complain about.
Jennifer Kerhin:
Yeah, because they’re motivated in very different ways than your internal customer service person. So when you find a really good person at something, to me, you want to put them in a place where you don’t need them to be in a team. You need team players in certain areas of your business, but like Jay said, in sales, you don’t want a team player. You want somebody who freaking sells.
Loren Feldman:
Ted, I’m curious. Have you had the situation with a kind of brilliant jerk who you had to figure out what to do with?
Ted Wolf:
Oh, yeah. I mean, I was just going to ask the question: Did anybody have superstars working for them? Tens, nines and tens, we’ll say. On a grading scale, I’ve had that. And it’s like their attitude is: “Everybody is working for me. I’m not supporting or relying on anybody else.”
And I had one. In fact, what they did is they stole some of our accounts and took people with them. So my feeling is, if I get a superstar, I don’t want a superstar in a supporting cast. I want to build people. I want to build a really strong system that I plug—I’m going to say, in my words—average to just above average people in. And the system makes them better. And the culture makes them better.
Loren Feldman:
So what do you do with the superstar if you wind up with one?
Ted Wolf:
Get rid of them.
Loren Feldman:
Really?
Ted Wolf:
Yeah, I let them go.
Jay Goltz:
You know, one of my biggest transition problems was, I’ve always been a retailer, and then I started doing outside sales with artwork and such. So I had to hire outside sales people, and I learned: Having an inside person and an outside, they’re two different animals.
Like, here’s my analogy: inside people are a different species. They’re like your best friend, your dog. Best friend, there every day, consistent, takes care of everything. The outside sales people are like cats. Sometimes they’re nice, sometimes they’re not. But cats take care of themselves. Cats will go out and feed themselves. The dog will starve to death. And that’s the difference. The problem was, I’d hire outside sales people like I hired inside, and you know what? They were really nice. They just didn’t bring any sales in.
Ted Wolf:
Well, I think it’s the difference between hunters and farmers, when you’re talking about people. A hunter has to be brutal. They have to go out, and they get so much rejection that they deal with, whereas an inside sales person who is around people who they get along with, they’re probably the farmer. Everybody likes them. They like everybody else. But you can’t build a business around just farmers or just hunters.
Jennifer Kerhin:
And think about product development. What if you have this genius scientist or R&D person? They’re a genius, they’re in the lab, or they’re coding or doing something amazing like that. That talent, if it’s by itself, can be incredible for your company. It’s when you’re trying to take that new—
Loren Feldman:
I think Ted already fired them.
Jennifer Kerhin:
All right. [Laughter]
Jay Goltz:
That’s a problem. No, I think you’ve got a good point. Like, in that case, maybe you’ve got to put up with them. You know, they’re a scientist, and they’re a genius.
Ted Wolf:
Well, look at Steve Jobs, the way he used to talk to people and scream at people and everything. And he said, “I did that to bring the best out in them.”
Jay Goltz:
Oh, no, I read the book about him. Oh my God. Someone would bring up an idea. He would say, “That’s stupid,” and then the next day he would present it as his own.
Ted Wolf:
Yeah, exactly.
Jay Goltz:
I mean, what do you say to that?
Ted Wolf:
You take a look at some business leaders, or just leaders in general in any field, and you know, their ego gets the best of them. But there’s something about the people who work for them. I mean, they hire people who won’t challenge them, who are weak, who they can dominate. There’s an awful lot going on on both ends of that whole thing within their mind.
I think that’s why companies start skunk works and things like that. You’ve got to get people away. You’ve got to move them out. You’ve got to get them out by themselves. Some people don’t deserve to work around other people. But I guess what I’ve learned in business—and I’ve been in business for almost 50 years, my own business—I’ve learned what goes around comes around. So a common way of saying anything: Beat karma. I don’t want the bad karma. I don’t want that crap coming back on me.
Jay Goltz:
And you know what? We’re almost the same age, probably. I’ve been in business for 48 years. I have to tell you, I would have never said this 20 years ago, because I didn’t get it: I get great satisfaction out of knowing I’ve made a profound impact on a lot of people who have worked for me. Some of them still work for me. And I have no apologies. I can honestly look anybody in the eye and say: I have never screwed any employees over, and I get great satisfaction out of the fact that I have nice people. I treat them nice. They treat me nice.
Loren Feldman:
What changed, Jay? You talked before about how you used to lose your cool and you would yell and scream. What got you out of that?
Jay Goltz:
Well, I got older. Well, the biggest problem was, back in the beginning, I had no clue how to hire people. “Oh, you have a pulse? Sure. You start tomorrow.” And so I’ve got better people now, and I had people here who—
Loren Feldman:
But you wouldn’t yell at them if they weren’t better people today, the way you would have, perhaps, 30 years ago. Something must have clicked for you.
Jay Goltz:
Well, I actually, believe it or not, I read a book, Coaching for Improved Work Performance, by Ferdinand Fournies. I don’t know if he’s still around. This was years and years ago, and he said one line in there that stuck with me. He said, “Do you use a Y-S-T approach?” Yelling, screaming, threatening. It’s destructive behavior. And it sunk in.
And part of it is, when you’re young—I don’t know, I’ll just talk about me. I thought everyone was just like me when I was younger. I didn’t understand they’re not. It wouldn’t occur to me at 28, 30 years old that screaming at somebody is going to freak them out, and they’re going to think about their abusive father. I just was too immature to be running a business that size.
And I’m afraid to say, but I want to say: If you’ve been in business three, four, or five years, and you’re still torturing yourself, you haven’t been in business that long. Stop torturing yourself. You’ll figure it out. It took me many, many years to figure this out.
Now, if I had a mentor or a boss, I’m sure they could have groomed me quickly and could have said, “Jay, stop screaming.” And I would have listened to them, probably, but I didn’t have that. I was out there on my own, which is partially why I do this podcast. I feel bad for people who didn’t have good training, good management, good mentorship, because no one tells you how to run a business. They certainly don’t teach it in college, I don’t think.
Ted Wolf:
Well, I didn’t learn it in college. I had to learn it on the job myself. But I found, similar to what Jay said, that if I could take a person and make them better and actually groom them in a good way, and that means I was fair but firm, my lesson was, when we lost a lot of that business, I had to sit back. It was quiet. People weren’t yelling or anything at all, but I had to come to terms with: I probably am making an awful lot of mistakes in how I’m managing people. That made me start to talk to our employees in a different way. I asked a lot more questions to find out what their needs were, because I came to the conclusion that I’ve got to get them successful if I want to be successful.
Jay Goltz:
I had a kid work for me. He was 17 years old when I hired him. He’s now 62. He’s been here for 45 years, and his brother died unexpectedly a month or two ago, and he decided he’s moving to Florida now. He’s going to semi-retire, and I have to tell you, I will cry my eyes out. I’m getting just choked up thinking about it.
I said, “You’re definitely leaving in June?” “Yeah.” And he said, “I’m really scared.” I go, “There’s nothing to be scared of.” And he went into this like he’s leaving me, and he’s like my little brother, and he went on and on about how I saved his life, and I feel the same way about him. And I can’t put a price on that.
It’s unfortunate that there are people who have employees that have been in business a long time and just don’t care about them and don’t get any satisfaction or enjoyment out of it. I get tremendous payback from knowing that he was there for me. I was there for him. And business can be a beautiful thing. That’s my point. Business can be a beautiful thing. The relationship with the boss and the employees can be a beautiful thing. And I’m sorry that when you see things on TV or in the movies or whatever, the typical yelling boss thing is like standard, and it pisses me off, because I just don’t think it’s right.
Loren Feldman:
Although we know it’s based on something.
Jay Goltz:
Yeah, for sure, for sure.
Loren Feldman:
Let me ask you this: I’ve had a number of interesting conversations with people who’ve been in the service and then started businesses and managed people, and they’ve talked about a very different dynamic—despite coming from the service where it’s command and control.
There’s a different element there, in that you’re given a workforce, and you have to work with that workforce. There’s no hiring and firing of people. You live with the people you’re given. And I’m curious how you guys think about this. How much of it is hiring the right people versus managing the people you have?
Jay Goltz:
In my world, it’s 75 percent hiring the right people.
Jennifer Kerhin:
I agree, maybe even higher. Maybe even 95. I think before, I used to think you could manage a five to an eight—to use your numbers, Jay. I don’t think that anymore. And I also don’t think—somebody’s five in one company could be an eight or nine in another company, right? Sometimes it’s just fit, skill, or culture.
Jay Goltz:
You’re dealing with customers. Maybe they shouldn’t be dealing with customers. They should be auditing insurance claims. I mean, there’s lots of things that just are the wrong job for them.
Jennifer Kerhin:
Right. And I think now I’ve just thought over the years, you hire the right person, it’s a game-changer. You could spend hours and hours and hours trying to figure out the right way to manage somebody. I don’t think so. I think it’s all hiring.
Jay Goltz:
So here’s the problem: The entrepreneur is frequently the worst person to be doing the hiring. Why? Three reasons. One, they like people. That’s why you’re in business. We like people, and we like to think the best of everybody. So you interview them, and you’re not skeptical enough. Two, you talk about the company too much, about your customer service and about your story. And three, you’re in a big hurry. That’s a recipe for disaster.
My company was changed when I hired a woman. I interviewed her. She ran a lighting show. She had four employees. I said, “How many people did you have to hire to get to the four employees who you’ve got that are good?” She goes four, and I laughed. And I said, “Either you have much lower standards than I have, or you’re a hiring genius.”
I hired her. She was a hiring genius. She changed my business. This is 30 years ago. I still have most of the people she hired for me 25, 30 years ago. They’re still here. I would interview with her, and she’d go, “What do you think?” “Oh, he seems good.” “Are you out of your”—and she would lay me out. And she was right. She was right. So having the right person doing the interviewing is critical, and maybe the boss is not the one to be doing it.
Ted Wolf:
Well, I think a lot of it comes down to accountability and feedback. How do you give people feedback? And if you have to berate people to give feedback, so it finally sinks in, you’re either desperate or they are. And you’re not going to build a big, big business around that.
Now, this situation with this Noma, obviously they had remote locations, restaurants, and all kinds of things, and the guy was riding very, very high. But I think it comes down to the culture, and the way it’s a reflection of you. And that comes back to a lot of accountability, and how you give feedback to people.
Loren Feldman:
Where do you draw the line between having high standards and toxic pressure? What’s the sweet spot there, Ted?
Ted Wolf:
Oh, I think everybody knows, if they’re going to berate somebody, there’s something wrong. So you treat somebody with respect. Everybody deserves some type of respect. Everybody does, in my opinion. So I treat them with respect. And if it gets returned, I know, “Okay, I’m probably on the right track.” But you can tell in 30 days if somebody’s going to make it or not make it. You just got to be honest. You’ve got to have those hard conversations with them, but you’ve got to be honest. You’ve got to have integrity.
Jay Goltz:
My big line is, I say to them, “Bob, this is the third time I’m telling you this. I’m getting concerned you’re the wrong person for this job. Because I have to tell you, if you can’t get—if I have to tell you again, it’s gonna be your last day. Unfortunately, I have to tell you, you can’t do this again.”
And I just want to clarify something: I have yelled. I have never berated anyone. I’ve never called anybody names. I’ve never said, “You stupid”— I would never, ever do that. But I would scream about whatever. I would never berate them, but I definitely did scream.
Jennifer Kerhin:
I think one thing that owners should remember: When you’re starting off as a company and you get somebody you really like, it’s a great fit, you think they’re a rock star, sometimes you design jobs around them. And I’ve learned that lesson you shouldn’t. You should design what your company needs. Write down the responsibilities for that. If the person fits 70 percent of them, great. You can do the other part, but create job descriptions or roles or responsibilities, regardless of the personalities of the people you have now.
I made a lot of those mistakes in the beginning, because you get somebody, you’re like, “This is a great fit. This person, they can do X, Y and Z.” And you’re like, “Wait a minute. No.” They were great in their current fit. But as you grow, you need to be more honest about the roles and responsibilities you need, regardless of the personalities and characters that you have on staff.
Jay Goltz:
You brought up an incredibly important part. If you grow your business—the people who played basketball with Michael Jordan in high school probably didn’t get to college with him. And the people he played in college with probably didn’t get to the NBA. If you’re that talented or good at what you do that your company keeps growing, there’s no question that most of the people are not going to be able to keep up and be at the top.
And that certainly has happened. You outgrow people, and sometimes it’s okay, and they stay in their position. And sometimes they leave, either because you had to fire them or they quit. But that is a problem. The old thing of, “Oh, that guy worked for me on a loading dock, and now he’s my vice president”? Yeah, that can happen, but not all the time.
Jennifer Kerhin:
Right, exactly.
Ted Wolf:
One of the things that we found is an important metric as we were growing, and that was a metric that said: How many people did you manage that turned into managers themselves? Because that enables us to grow. That became our most important metric on anybody, because they looked at each other and said, “I’ve got to get you better. I’ve got to make you better, because that’s how I also become more valuable to the company.”
Jennifer Kerhin:
That’s a great one, Ted. How are you getting somebody to replace part of your work? If you can have somebody replace 25 percent of the work, that’s how you become more valuable to the company. Yeah.
Loren Feldman:
Ted, did you do anything to encourage that? Did you offer training or anything, or did you just let it happen organically?
Ted Wolf:
Oh, no, it wasn’t organic. I mean, after we went through that situation where we lost business that weekend, we did away with all titles. Everybody had the title of partner. Now, it wasn’t an equity partner, but they partook, and they were a partner in getting profit-sharing every year—every quarter, actually. We put millions of dollars into profit-sharing, and it was a lot of talking and nurturing and building.
So it was a constantly—I mean, we didn’t do therapy. Was it therapeutic in talking with people and finding out how we can help them succeed? And once they knew that, if you hire a decent person, they’re going to treat you back that way. I mean our turnover in our business—and we had, at the high point, probably close to 800 people—our turnover was probably too low, but we were manufacturing a good succession plan. We had the metrics. We went public with it. We gave a lot of credit to a lot of people. We made them the heroes, not us, and it worked. It just really all clicked, and it worked.
Loren Feldman:
What’s the problem with having turnover that’s too low?
Ted Wolf:
You don’t have a lot of fresh ideas. You don’t get a lot of innovation, sometimes.
Jay Goltz:
And there’s probably some people who probably are not—they’re probably sevens.
Jennifer Kerhin:
What do you think that percentage is, Ted? What’s the right percentage of turnover?
Ted Wolf:
I don’t know if I could give it a number, to be honest with you. But I look at it, and I can walk into a business today—and I think anybody who’s in business long enough, you can walk in and you get a feel for the culture. You get a feel for how people are interacting with each other. And you know, I mean, it’s a sports team in business today, whether we want it or not. We can all say it’s a family, but it’s not. It’s a sports team. We’ve got to be competitive, particularly with AI coming in and everything.
Loren Feldman:
Okay, you all treat your employees really well. But I’m betting each one of you has had times where you realized you let poor performance go on too long before you actually actioned—
Jay Goltz:
Oh, absolutely. Many times.
Loren Feldman:
How do you get past that?
Jay Goltz:
I have a simple test now. I say to myself, “If they walked in tomorrow and quit, would I be relieved?” And it takes all the emotion out of it. And if I’d be relieved, I know they shouldn’t be here. And I ask the manager, if they’re talking about somebody, I go, “If they quit tomorrow, would you be relieved?” And they’ll think about it. “No, no.” Okay. That’s my test.
Loren Feldman:
Jennifer, have you had that situation where you know you’ve let somebody go too long?
Jennifer Kerhin:
Yeah, I don’t think anymore, but I definitely think in the beginning. They always say to you—but it’s impossible to do this—take a long time to hire and then fire fast, right? But after you’ve trained somebody, and you’ve put effort, and you finally can get away from it, when maybe you’re four people in. And then you’re like: Ookay. You start making excuses, because that means that work is going to dump on you, right? And so you’re overwhelmed already. You’re working nights. You’re working weekends. You’re thinking, “Oh god, okay, maybe they’re good enough. They’re maybe not an A player, but they’re a person in the seat.”
Loren Feldman:
You don’t want to do the confrontation, and you talk yourself into: maybe, maybe, maybe.
Jennifer Kerhin:
Yes. And you just don’t want to do the work yourself. You’re like, “Well, at least they’re doing something.” And then eventually, as you get stronger, and then you’re like, “Look, this can’t this can’t continue.” It’s also a morale killer for the other people who work there, right? When they see poor performance being let go, just ignored, they get upset about it.
Jay Goltz:
And how many times have you fired someone, and then the next day, three people go, “Oh, you know what they did last week?” And you say to yourself, “Why didn’t you tell me that?” It’s not their job.
Jennifer Kerhin:
Absolutely, Jay.
Jay Goltz:
It’s not their job to tell us that. I don’t get mad about it. Just, okay. It’s kind of expected. No one wants to go and tell the boss that so and so is not doing their job.
Ted Wolf:
If you have a business long enough, you’re going to run into those situations. And today, I walk into a company, I tell people this: I’m amazed how many times I walk in and nobody has a quarterly goal. I just come in and do my job every day. This is what I do. You don’t frame it around a goal. You’re not trying to do better, or you’re not learning. You’re not innovating. You can frame a goal around everything.
So give people 90-day goals. Have a metric you’re going to track. Encourage them. You won’t have poor performers too long, because the peer pressure will force them out. Nobody will want them on their team. Nobody will want to be working with them. I found that works extremely well, and today, I’m still amazed how many times I walk in and they say, “Well, I don’t know. I don’t have a goal. I just show up every day and do my job. “
Jay Goltz:
Listen, I have to tell you: That’s me. That’s my company. I hear what you’re saying and you’re probably right. I can’t tell you that if you asked a bunch of my employees, “What’s your goal?” I don’t know if it’s a difference in our businesses, or maybe you’re right. Maybe I’m not—
Ted Wolf:
Try it.
Jay Goltz:
No, I know. Maybe I’m not pushing. Maybe I’m not leading enough or pushing enough.
Loren Feldman:
Well, how do you do it, Ted? Are you talking about an individual goal or a group goal? Where does the peer pressure that you’re using to kind of police this come from?
Ted Wolf:
I love team goals myself. Put a team together, make a team. It could be inter-departmental teams. It could be one team, and it could be: Achieve any goal. I mean, you can make up a metric. How many times did we get customers calling in where they thanked us? Build it into some type of a one step further. You’ve got to do a little bit more, and then track and give weekly updates. Make heroes.
Loren Feldman:
And it’s all public. Everybody knows who’s—
Ted Wolf:
Absolutely, absolutely. And you form any type of a goal. People love to compete. They may not admit it, but people love to be able to say, “Can we come together and make it work?” But you have to nurture the environment. You got to give them positive reinforcement, and you’ve got to be fair but firm, and give them honest feedback. And the big thing is, from a goal, it’s not just winning the goal. It’s: What did you learn about yourself and what did you learn about achieving a goal working with other people? That’s the root of it, and that’s where you want to go with it.
Jay Goltz:
I’m having a hard time applying that to a retail business where, like in my framing business, they’ve got art backgrounds. They’re very good at it. They’re good at taking care of customers. They show up every day. They do a lovely job. Many of them have been with me for 10, 15, 20 years. I’m trying to figure out what I could do for a goal.
Ted Wolf:
Do you operate the process exactly the same? Or have you ever innovated and tried doing the exact same job in a different way? There’s all kinds of things you can come in and say, “Hey, you know what? I can get them thinking.” It’s personal development that I want to drive.
Jay Goltz:
All right, I think I need some personal development from you after the podcast [episode]. [Laughter]
Ted Wolf:
We’ll talk.
Jennifer Kerhin:
I think, ultimately, management of people is a skill in itself. To go back to the athletic sort of analogy, there’s incredible athletes who are terrible coaches. And there’s coaches who are probably mediocre athletes who know how to motivate and manage and be strategic. And I think every major company—even we under-resource management training. We started a book club. So we do a book club internally for managers. The more management training I can do, the better, because it is not always an innate skill, and you can’t just expect your good performers to manage somebody.
Jay Goltz:
Ted, you said everybody loves to compete. I don’t know if that’s true. Maybe in the people you’re hiring in your kind of business. I just don’t know that that’s true, that somebody with an art degree, art background, likes making art, who likes taking care—I just don’t know that everybody likes to compete.
Ted Wolf:
I think everybody loves to be able to invent. People like to accept a challenge.
Jay Goltz:
Okay, maybe.
Jay Goltz:
They have art backgrounds, it’s like, “Sure, how can we explain what we’re doing a little differently?” I mean, everybody can do that. Everybody wants to do that. It makes them feel like they’re growing. They’re important. They belong to something special.
Jay Goltz:
That part, I buy. Yeah.
Ted Wolf:
One other thing that we did was very effective: We broke everybody into teams, and we had the team, maybe 10 people on a team, elect that team leader. They held the position for six months. They got extra money for it.
After six months, that team elected the next team leader. And you know what that did? It cut down on the politics, because they said, “Wait, you’re gonna be managing me in the next six months maybe? I’d better treat everybody here decently.” I can’t tell you how many inner office problems and little nitpicking and rumor mill just stopped right away for that.
Loren Feldman:
Jay, I heard you sighing.
Jay Goltz:
I’m just, I am, yeah, wow. Now, there’s five people in my biggest frames place. I can’t get anybody who will even take any management response. They don’t want it. They just don’t want it. It’s a whole other day out there. And I am confident that if I said to them that whole thing with you’re going to be in charge, they don’t want to be in charge.
Ted Wolf:
So you create an inter-departmental team and find somebody who wants to be in charge. Find three, four people, five people who want to be in charge, and create teams. Five, I don’t know, 5, 10 people. You got quite a few employees, Jay. It’s also how you nurture them and get them used to and do management and leadership training on the job.
Loren Feldman:
You know, to some extent, the issue that you’re talking about there is employees who are looking for a career and advancement and want to grow in their position versus employees who want to do their job and go home and think about something else.
Jay Goltz:
It’s still a career. You were half right. You’re right. It’s a career, but they don’t need advancement. Yes, it’s still a career. They like what they do. They’re good at it. They stay around for 20, 30, years.
Loren Feldman:
I think I was three-quarters right, Jay.
Jay Goltz:
Okay, that’s fine, but the two things are not mutually exclusive. It could be a career, and they might not want any advancement. I literally have people who have been doing the same thing for 25 years, are good at it, like it, and they’re retiring.
Ted Wolf:
That’s fine. Everybody deserves the dignity to make their own decisions. But I think that, I mean, we had a lot of employees, and not every one of them wanted a career, but we were able to find those people who were developing other people. And then we groomed them, and we built these teams. And it wasn’t always teams of a department doing a particular function.
We thought above it. We wanted to innovate. We wanted to bring new ideas into a certain area of the business that was getting stale or something. We created teams to be able to do this. It may not have been their full-time job, but it was a team. You’d be amazed how many times people who just wanted a career would step up and say, “Well, let me take it. I’ll take it the next six months. It’s only six months. Yeah, let me try it.” And it developed them. It made them work, and it created meaning for them.
Jay Goltz:
Now that I fully agree with. And my people do feel they do meaningful work. They take people’s prized possessions and they work with them to find them the perfect framing, and the customers are thrilled, and they do find it meaningful. And they do want—I’m going to use the word career simply to mean they hang around—but they do not aspire. Because trust me, I’ve tried to get someone to take over some management. They just don’t want it.
Jennifer Kerhin:
I think we have plenty of people, Jay, who want to have purpose and have a career but don’t want to be a leader. They want to come in, and do a great job.
Jay Goltz:
That’s what I’ve got.
Jennifer Kerhin:
Yeah, but I think that’s across all industries. Leadership is hard, and some people would rather just do a great job and feel great at what they’re doing and then go home and not lead. And that’s the hard part: finding how to motivate the ones who you think have the potential to want to do it but then also not demotivating the ones who aren’t interested in it.
Loren Feldman:
One last question: Anybody want to open a restaurant?
Jennifer Kerhin:
Goodness, no. I just read a great study about how restaurants used to depend on the ratio between alcohol and food. With less people drinking, the margins have disappeared. So, goodness, no. I’m not getting into the restaurant business.
Ted Wolf:
I have to admit that I was a part-owner in founding a fine dining restaurant years ago. I thought it was going to be an awful lot of fun. And you know how you create a million dollar restaurant? Start with a $5 million restaurant. [Laughter]
Jennifer Kerhin:
Would you do it today, Ted?
Ted Wolf:
Absolutely not. I’ve got to tell you a quick story. Neighbor goes into the restaurant one Saturday night. He calls me up Sunday morning. He said, “I’ve got to tell you: I went to the restaurant. It was absolutely fabulous. The food was great, the wine was great, everything.” And he said, “I bought a really good bottle of wine,” and this is years ago. It was a $350 bottle of wine. And he said, “My check comes, in, the bottle of wine wasn’t on the check.” So he said, “I said to the waiter, like, ‘Hey, I’m sorry you didn’t include the bottle of wine.’ He goes, ‘Oh my God, look at this.’ He said, ‘Let me go talk to the manager. I’ll be right back.’ He comes walking back in. He says, ‘Well, it’s our company policy that if we don’t have your check accurate, what is not on the check you get for free. So the bottle of wine is on us.’”
Jennifer Kerhin:
Whoa.
Loren Feldman:
Was that the policy?
Ted Wolf:
No, absolutely not. [Laughter] That happens all the time, I found. All the time, and my friend told me, and I thought to myself, “That’s the one that I heard about. I wonder how many we didn’t hear about.” So I went into my other partners, and I said, in not this language: “What the heck is going on here?” And it was like, “Well, that happens. It’s people, it’s acceptable.” And I thought, “Okay, I don’t think this business is for me.”
Loren Feldman:
Did you scream and yell?
Ted Wolf:
No, I didn’t, but I did leave one or 2 f-words on the table. [Laughter]
Jennifer Kerhin:
I mean, I don’t know how this industry, restaurants, do well with the change of alcohol consumption.
Ted Wolf:
Yeah.
Jay Goltz:
Oh, it’s not just that. In Chicago, they’re making the minimum wage. They’re trying to get the minimum wage to not be less for servers, which is going to kill restaurants. It’s ridiculous. And the weight and the serving staff doesn’t want it to go that way, because all it’s going to do is people are going to give less tips. It’s messed up. These politicians have never run a restaurant. They’ve never run a business. It’s horrible what they’re doing to them.
Loren Feldman:
All right, my thanks to Jennifer Kerhin, Jay Goltz, and Ted Wolf—and also to our brand new sponsor. This episode was brought to you by Grasshopper Bank.
