How to Change Your Team's Pay Without Everyone Quitting | 341

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Transcript

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Welcome back to the Business of Beers Podcast, your daily dose of strategies, tools, and tips to help you build an eight-figure business. Today's episode is a clip from one of my YouTube lives. If you'd like to hear the whole thing, there's a link below in the description. Cheers. So we go through this whole exercise. We come up with a better plan to pay our guys. Something that falls under the sales uh framework that I uh talked about a little ago. And so we say, hey, this is great. We spend a bunch of time uh on a spread change. So let's say you do all that. You you get a bunch of feedback, you're like, it looks perfect, it's great, but now we've got the like the hardest part, which is the rollout, because there's this fear that um this fear of change, right? And the fear that like I, you know, I want to roll out this new thing that Brian talked about on this this live. It sounds great, you can make a lot of money, but like guys are used to it a different way, right? They're used to maybe a flat rate, and now we're talking about going to percentages, or they're used to like whatever, just getting paid hourly, and now you want to you you want to put in some performance-based system in there. And it's fearful, right? They're afraid that they're gonna make a lot less money, right? You're afraid that they're gonna quit because of their fear and that you're gonna have to start all over again, right? And that you have this like really good team and you have these great people, and you know they all try real hard and like they want to do well, but possibly for you, you're just not hitting your goals. Like, I mean, we I talk to owners all the time who are doing big revenue numbers, like good revenue numbers, but their their net margins are are not where they need to be. And often it is payroll that is eating up a huge chunk of that of their profitability. Uh, or it's it's a combination of a few different things. Or it's like we have payroll percentages right, but we just have the wrong people. The people aren't driving revenue, people aren't like aligned with company values. And and in these businesses, like it's I mean, it's it you hate to say it, but like sometimes the quickest way to double your business is to get new people. And so, all that being said, we got to get the right people, we gotta pay them right, we got to have a strong business model. Uh, chances are you have plenty of people you don't want to lose, but you but you need to implement new things because the business has to go in a in a much um you know stronger trajectory than than what it's going in today. And so, how do we overcome this fear of change? And so the the first thing you do is make sure you've done a really good job thinking through all the what-ifs. I think that is like I think spending time just to like go through all the scenarios. I would run a it in your spreadsheets, you should go through and run a bunch of scenarios. You want to look at um three pe three groups of people. So, what I want to see is when I run my new pay plans on uh my best people, I want to see that my best people are are making more money. Right? So the best people should make more money in your plan. If not, it's not a good plan. If your best people are now making less money, chances are like that's not what you want to do. Um, you want to see that your middle people are gonna make about the same money that they are today. And ultimately, you you want to see that your worst performing people are making less money. Because the whole point of a of a new plan that you're gonna roll out, the point of it is you wanna incentivize the people who are doing top performers, and you want to like ultimately move on from the people that aren't. Like, if someone's not producing, they're probably never gonna produce for you. And so, if anything, we we could possibly open up a seat down here that we can then fill in that seat with somebody who is gonna be a better performer and is gonna be better aligned with the company and all that. So you want to run those scenarios. So, what you're gonna do is in Excel, just like build a simple spreadsheet. I personally, when I've done this, have gone employee by employee. So I get my best, I get my top five, top ten, depending, you know, it depends on how many people work for you, and just like run the last eight weeks. All right. And then go week by week. For example, what do they get on the old pay plan? How much money do they make on the new pay plan? Old new, old, new, old, new, right? And at the end of it, you should have some sort of number there. And it's possible that they're making the same, if not better. You're probably in pretty good shape. If they're making less money, you're probably gonna have to tweak some things. All right. Same for all the other guys. So now we're armed with some data, and we can go to our best people, and then we can have a conversation around data that's saying, hey, we're rolling out this new plan, and for you, it's it's really gonna benefit you because of X, Y, and Z. And you can show them the numbers and you can show the scenario of if they if they change nothing, they're gonna make a little bit more money. However, if they can increase their production by whatever, 10 or 20%, like we can do even more of what we're doing, then all of a sudden they now have the opportunity to make a lot more money, right? Because one of the ac attributes here of it of a great pay plan is something that's lucrative, right? And you want to have a play plan that for your best people is extremely lucrative. And if it's not, like go back to the drawing board uh and if of of making a plan that rewards your best guys really well. And then for your worst people who are honestly probably just gonna get fired, like you're gonna you can have a lot more frank conversation with them to say, hey, listen, man, like we're we're changing a few things. We are rolling out in a new plan that had that will give you the opportunity to make a lot more money. But to do that, you're gonna have to we're gonna have to pick up your production, right? And I'm gonna help you with it, I'm gonna show you exactly what you need to do. But at the end of the day, like we can't keep going how we're going here. And so that would be one, those are gonna be the tougher conversations. And if you think that you're gonna lose somebody ahead of time because of it, um, you know, I would just be proactive. I would I would get ads posted on Indeed. If you've got already people on the hopper on the resumes, you know, you can you can start having those calls. And then ultimately, like it, it may require some short-term pain. Like you may lose some people, but it has to be worth it in the end, right? You have to have a plan that you say, hey, in the end, I know that like this thing, like the way that I'm going today is not gonna get me to the next level. It doesn't, it's not aligned, it doesn't, it's not lucrative, it doesn't really like it. Maybe it's just too complicated, nobody understands it. And so I need to roll out something new. My best guys are gonna make some more money, my worst guys are gonna move on, it's gonna free up spots, and ultimately I'm gonna grow the business. And yeah, in the short term, we may lose some people. And knowing that, I'm gonna be proactive, I'm gonna post ads, and then also like all my new people that come in um are gonna be on the plan from day one. Right? And so you you kind of go through this, you know, possibly a little bit of a transition period, and and then you're good to go. The other thing you can do, right, um, is also you know, you you have some sort of like guarantee for a period of time, right? Some sort of like um guarantee during like a transition period. I would I wouldn't do this. I mean, you could do it with everyone if you really wanted. I'd personally pick like the top 50%, but but essentially saying, hey, this is what we're gonna do for the next four weeks, is we're gonna run both plans side by side. And so you're gonna be able to like see how the numbers work. If you know you're gonna be able to like, you know, if if you're making more money on the new plan, great, you that's what you're gonna get paid. And then, but if you're still making more on the old plan, you still get paid that. But then at the end of the the four weeks, whatever it is, then we're like old plan's gone away, we're all in the new plan. So you you get them time to like you know get accustomed to it. I mean, obviously you have the risk of like them leaving during that time and like milking it for four weeks and then leaving, but like you know, if you see that, if you see that, like you're gonna be posting ads, you're gonna get ahead of it, uh, you're gonna have a you're gonna have a replacement. Or maybe you're tweaking the plan a little bit. Maybe there's some things that you miss that now that you see it in real life are are having an impact. So um anyway, that would be my approach. That has been my approach multiple times that you know, over the years that we've rolled out new things is we address it, we run scenarios, we're proactive. Um, and at the end of the day, like I I truly have everybody's best interest like at heart. Like that's how I think about it at least, is that I want my best guys to make more money. And this plan does that, right? And that, and that the more company, the more we make, the, the, the more opportunities we can give to people, the the better we can be with PTO and 401ks and health insurance and all these different things. And then we can add more stores and we can employ more people and like the the the the flywheel like continues.