Latest / Crossroad Conversations with the Lewis Brothers / Ep 96 "You Get the Behavior You Pay For"

Transcript

Ep 96 "You Get the Behavior You Pay For" · Crossroad Conversations with the Lewis Brothers

0:02
SPEAKER_00: Hey everyone, welcome to Crosshair Conversations with the Lewis Brothers, where we aim to share real stories about running a successful family business, working through adversity, and pouring back into the community that keeps our door open.
0:15
SPEAKER_00: We're your host, Matt Shelby, and Taylor, and we bring you relevant local business advice and automotive insights that are sure to change the way you look at running a business.
0:24
SPEAKER_00: And maybe even throw in a plug for you to do business with us.
0:27
SPEAKER_02: Welcome back to the podcast, Crossroad Conversations with the Lewis Brothers.
0:31
SPEAKER_02: We're your hosts, Matt Shelby and Taylor, bringing you what you want to hear, what you want to uncover, or what's relevant, what our team thinks we should go over.
0:39
SPEAKER_02: Episode 96.
0:41
SPEAKER_02: 96 hours of data.
0:44
SPEAKER_02: Right?
0:45
SPEAKER_02: This one is a fun one.
0:48
SPEAKER_02: You get the behavior you pay for.
0:50
SPEAKER_02: Oh.
0:51
SPEAKER_02: Right?
0:52
SPEAKER_02: And how pay fully drives what's going on.
0:55
SPEAKER_02: You don't have the team that you hired, you have the team that you pay for.
1:00
SPEAKER_02: And there's a lot of ways to interpret that, right?
1:03
SPEAKER_02: Somebody in your building is doing exactly what you ask, and it's costing you thousands.
1:08
SPEAKER_02: Every business has a pay plan, and even the ones swear that they don't actually do.
1:13
SPEAKER_02: They do.
1:14
SPEAKER_02: And you can change the speech any day you want.
1:17
SPEAKER_02: Changing the check is the hard part.
1:21
SPEAKER_02: What you're saying, but what you get paid.
1:22
SPEAKER_02: So that's what we'll talk about this week.
1:24
SPEAKER_01: Absolutely.
1:25
SPEAKER_01: Recap in last week, episode 95.
1:27
SPEAKER_01: You fired the wrong guy.
1:29
SPEAKER_01: Make sure about asking one more question before you proceed forward and um any decision or anything else.
1:37
SPEAKER_01: Really dive into that.
1:38
SPEAKER_01: That was a fun one to be able to go.
1:39
SPEAKER_01: So many people dive into rationally, just making irrational decisions where they're not slowing down.
1:47
SPEAKER_01: So dive into that in all the previous 95 episodes we had.
1:50
SPEAKER_01: That's right, for sure.
1:52
SPEAKER_00: Yep.
1:52
SPEAKER_00: Check all that out at Lewis Superstore.com or Crossroad Conversations.com.
1:56
SPEAKER_00: You know, we got to talk about what's in the garage.
1:59
SPEAKER_00: What's in the garage?
2:00
SPEAKER_00: I want to talk half-ton trucks because they're a fan favorite.
2:03
SPEAKER_00: They're obviously the F-150s are number one seller, you know, number two seller.
2:07
SPEAKER_00: You get to the Ram 1500.
2:09
SPEAKER_00: And those two long, they are the Swiss Army knife today.
2:13
SPEAKER_00: They can tow, they can haul, they've got the luxury, they drive amazing.
2:18
SPEAKER_00: You can put your whole family in there.
2:20
SPEAKER_00: And kind of crazy to say they get better fuel mileage too.
2:23
SPEAKER_00: Here's what I remind people about fuel mileage on half-ton trucks is think about this.
2:29
SPEAKER_00: We have moved just in like the past 10, 15 years, we've moved up about three to four miles per gallon in a half-ton truck, and we've almost doubled the horsepower.
2:37
SPEAKER_00: Because we're comparing fuel mileage to the old 250, 275, maybe 300 horsepower, and now we've got 400, 450, 500.
2:46
SPEAKER_02: And we've probably doubled in maybe a couple cases, rippled the towing capabilities.
2:51
SPEAKER_02: Yes.
2:51
SPEAKER_02: That's the ridiculous part about a half-ton truck.
2:54
SPEAKER_02: You know, some of my people that uh say they want a truck, but they want luxury, but they want off-road.
3:01
SPEAKER_02: It's like Raptors, your thing.
3:02
SPEAKER_02: It's gonna be the best riding, the best driving, the most capable, the most comfort.
3:07
SPEAKER_02: Our half-ton trucks are gonna tow up to 14,000 pounds.
3:11
SPEAKER_02: Yep.
3:11
SPEAKER_02: Have zero to sixty numbers sub-six seconds, right?
3:16
SPEAKER_02: Some of them have crazy money off.
3:18
SPEAKER_02: Luxury of uh seating up to six people.
3:22
SPEAKER_02: Yep.
3:22
SPEAKER_02: Like it is the Swiss Army knife that you can do all range, range up over six hundred miles per tank.
3:29
SPEAKER_02: Absolutely.
3:30
SPEAKER_02: Like, I don't know what else you're looking for.
3:31
SPEAKER_00: Well, I'll tell you what you're looking for.
3:32
SPEAKER_00: You're looking for savings.
3:34
SPEAKER_00: And when you talk about savings, because we've got the inventory, when we talk about these vehicles, we've got over a hundred in stock.
3:39
SPEAKER_00: Taylor start off with the F-150.
3:41
SPEAKER_00: How much do you have off up on the F-150?
3:43
SPEAKER_01: Up to$15,000 off, and it's not off a high dollar one that started at$90,000 or anything else.
3:51
SPEAKER_01: It's on the best-selling, best segment, my favorite, of an XLT that's got everything you need and puts it at a sub-50,000 price point,$49,995.
4:03
SPEAKER_02: Heated seats, power seats, the largest digital display, blue cruise, towing capability.
4:11
SPEAKER_01: Oh, this one's over$11,000 because it does have the 3-5 EcoBoost in it.
4:15
SPEAKER_02: So it's going to pro power on board.
4:17
SPEAKER_02: You're not going to be missing anything.
4:19
SPEAKER_02: Not at all.
4:19
SPEAKER_00: And if you're looking over on the RAM side or you want to go up a trim level, we've got on special this month, Ram 1500 Laramie, and it's got that hurricane motor with 420 horsepower that points in a row in line.
4:32
SPEAKER_00: It's up to$17,000 off leather.
4:36
SPEAKER_00: It's got the black appearance package, so the black wheels, the painted front and rear bumpers, heat and cooled seats, the big screen, all that.
4:44
SPEAKER_00: But I'm going to throw you guys a curveball because we're starting to get into when people are thinking about construction season, end of the year, and they want dualies.
4:53
SPEAKER_00: And dually have been something that have been hard to get.
4:56
SPEAKER_00: We fought and fought and fought to make sure we have the inventory for you guys.
5:00
SPEAKER_00: On the RAM side, Ram 3,500 dualies, anywhere from a tradesman all the way up to a limited to mega cabs.
5:08
SPEAKER_00: We have 41 in stock.
5:10
SPEAKER_00: No way.
5:11
SPEAKER_00: 41 dualies to choose from.
5:14
SPEAKER_00: Okay.
5:14
SPEAKER_00: That's ridiculous.
5:15
SPEAKER_00: That's a bunch.
5:16
SPEAKER_00: And they're up to$12,000 off, and they tow up to 38,000 pounds.
5:21
SPEAKER_01: And that's so hard because on the Ford side, I cannot get any dualies.
5:25
SPEAKER_01: And we had been able to over on the CDGR side.
5:27
SPEAKER_01: Like Matt said, we pulled a power play to be able to leverage some options to be able to have those available.
5:34
SPEAKER_02: Hey, I do want to throw that out.
5:36
SPEAKER_02: We have the Rams on the ground available, 41 to pick from.
5:38
SPEAKER_02: We have a few uh cabin chassis, a good amount of F-250s, trims all across.
5:43
SPEAKER_02: If you need a super duty, RAM won't suffice, and I challenge you to come drive on, right?
5:48
SPEAKER_02: Uh it's your time if you're thinking year in right now to come in and order.
5:53
SPEAKER_02: Right?
5:53
SPEAKER_02: We can get it most likely or foreign.
5:56
SPEAKER_02: Four end of year.
5:57
SPEAKER_02: We can get that dually you're looking for, or that commercial truck for Section 179 for a write-off, but we need to get that in now.
6:04
SPEAKER_00: I agree.
6:04
SPEAKER_00: I agree.
6:04
SPEAKER_00: Yeah, start playing it for the end of the year right now.
6:07
SPEAKER_00: So if you're looking for a truck, we've got your truck, but you really came here for the podcast episode.
6:11
SPEAKER_00: And today I love talking about this one because it, you know, you get the attitude that you pay for, and it gets to the design.
6:18
SPEAKER_00: Whatever you reward is your real strategy.
6:22
SPEAKER_00: And I'm gonna do there's a saying here, and to get you thinking about the saying, I'm gonna go to real estate real quick.
6:28
SPEAKER_00: If you ever heard real estate, what do people talk about?
6:31
SPEAKER_00: Location, location, location.
6:34
SPEAKER_00: If you ever talk about an employee and what you want output out of them, pay plan, pay plan, pay plan.
6:41
SPEAKER_00: So what does your pay plan look like?
6:43
SPEAKER_00: And I'll show you what your employees are gonna produce.
6:46
SPEAKER_00: If it's focused around a culture or around CSI, then you're probably gonna have really good culture, you're probably gonna have really good CSI numbers.
6:55
SPEAKER_00: If it's on upsell, or if it's on inspections, or if it's on solds, you're probably gonna have a really good emphasis in those areas.
7:03
SPEAKER_00: Even if people that are say, like, well, they're on hourly or they're on salary, put some type of quarterly bonus out there, they we we are built.
7:12
SPEAKER_00: As human beings, we are built to chase goals and we want rewards from them.
7:18
SPEAKER_00: We started as really young kids at participation awards and stuff, whether it was T-ball or the debate team or the spelling bee or any of that.
7:27
SPEAKER_00: We've built it into our DNA to have a goal and to get rewarded for it.
7:34
SPEAKER_02: Most certainly, like it is anytime that we talk about anything between us or between managers, or we go to a 20 group there, like we're we're trying to say, hey, we did well here, or we have an issue here, and they say, okay, let's break it down.
7:47
SPEAKER_02: What's what's the comp plan like?
7:50
SPEAKER_02: Here, and let me tell you the Achilles Hill.
7:53
SPEAKER_02: Okay.
7:53
SPEAKER_02: When when you get too involved, there's not a downside.
7:56
SPEAKER_02: There is a downside, but there the upside's bigger if you're getting too involved.
8:00
SPEAKER_02: What happens if you you have a working relationship with this person, you've worked with them for a long time, and then if you're not getting the results that you need, that becomes tougher to change that pay plan because you overly care about that person.
8:16
SPEAKER_02: And in the end, you have to just get over it because it's business and say, if I do change it and say, here, I need to elevate, they're still going to continue to be rewarded.
8:26
SPEAKER_02: The goal is not to take money from them.
8:28
SPEAKER_02: You have to remember that.
8:30
SPEAKER_02: And the anytime a pay plan changes, even if you're increasing their pay, it's like, you know, it's like going to the doctor.
8:36
SPEAKER_02: Hold on, what's up?
8:37
SPEAKER_02: What's wrong?
8:38
SPEAKER_02: It's like, no, this is a really good thing.
8:40
SPEAKER_02: We have opportunity, but it's uh it's tough.
8:43
SPEAKER_00: It's very tough.
8:44
SPEAKER_00: And I'll tell you, in our industry, you might be listening out there going, well, why do you ever change it?
8:49
SPEAKER_00: Well, let me tell you, in our industry, a lot of our money that we can claim or we can earn from manufacturers are based upon whatever their current programs are.
8:58
SPEAKER_00: And that changes.
9:00
SPEAKER_00: That changes.
9:00
SPEAKER_00: So we have now written in our pay plans, subject to change based upon manufacturers' goals and incentives.
9:08
SPEAKER_00: And we're as transparent as we can be, but like Shelby said, it's still, man, it's a tough conversation because you're messing with somebody's pay.
9:15
SPEAKER_00: But in order to pay them, we have to get paid.
9:18
SPEAKER_00: So it's very transparent as hey, as the manufacturer comes out with new programs, we need to sit down and talk about that.
9:24
SPEAKER_00: And the goals may shift from focus area A to focus area B so we can work together, we can earn the money, then to pay you the money.
9:33
SPEAKER_00: We're in this together as a team.
9:35
SPEAKER_00: And we've got it, we've got to change focus.
9:36
SPEAKER_02: So the manufacturer changes our money constantly.
9:39
SPEAKER_02: They don't even talk to us about it.
9:41
SPEAKER_02: That's right.
9:41
SPEAKER_02: It just happens.
9:42
SPEAKER_02: They're like, hey, this.
9:43
SPEAKER_02: And it's like, okay, we need to be a little more cold-hearted like they are to survive.
9:50
SPEAKER_02: Yes.
9:50
SPEAKER_02: But then answered a little human of we care, and here's how, right?
9:54
SPEAKER_02: That's the tricky part of how do you do both.
9:56
SPEAKER_02: But if you don't, if you don't, you're gonna be sitting there with nothing left in your bucket.
10:00
SPEAKER_01: You're gonna be chopping wood, and that's the only thing you ever learned to do, and you're gonna be real good at that.
10:04
SPEAKER_01: But they're they're processing it now.
10:07
SPEAKER_01: So you have to make sure you're adapting and changing.
10:09
SPEAKER_01: So if not, even though you're really good at that one thing, you never moved on to the next step and you were left in the dust.
10:15
SPEAKER_00: That's right.
10:16
SPEAKER_00: So always always be looking at that.
10:18
SPEAKER_00: Be transparent about it, but be looking at it.
10:21
SPEAKER_00: If you are ever a little unsure about one to come out, do this.
10:26
SPEAKER_00: Let me let me give you a tip.
10:27
SPEAKER_00: Put something on just a supplemental bonus, like a quarterly bonus, or a yearly, or a bi-yearly bonus, or even a one-month bonus.
10:36
SPEAKER_00: Don't put it in their pay plan.
10:38
SPEAKER_00: Come out with it and see if that's actually gonna move the mark before you redesign their entire pay plan.
10:44
SPEAKER_00: All right, so that's tip one.
10:46
SPEAKER_00: Tip two, let me tell you how we soften the blow a little bit if we're doing a major change.
10:51
SPEAKER_00: And we've ran the numbers and we know at the end of the day it's really gonna equal the same amount, but it's it but it's a different avenue to get there.
10:58
SPEAKER_00: Like let's let's say the manufacturer has changed it from how many units you're selling to your connected services and how you're getting people connected with their phones and signed up for apps and enrollment and so on and so forth.
11:11
SPEAKER_00: And it's like, okay, we can see that the math maths, but we haven't been down this road yet.
11:15
SPEAKER_00: What do you do to get your employees' mind at ease, yet go after it?
11:19
SPEAKER_00: A lot of times we will give them a 60 or a 90-day best ball.
11:24
SPEAKER_00: And for 90 days, then we will calculate both pay plans as they're getting started up there, or guarantee what they did last year for the next 90 days as we get rolling.
11:35
SPEAKER_02: And so, like, for example, uh of a getting started of a sales volume thing or a sales number you're chasing, but also in a technician.
11:45
SPEAKER_02: You know, so you think about somebody who works in the field.
11:48
SPEAKER_02: We will do an hourly rate or a flat rate, whichever is the better of the two.
11:52
SPEAKER_02: We'll pay them, but it gives them a little bit of safety blanket to say, hey, we're gonna change this and this is gonna help you.
11:58
SPEAKER_02: But let me give you words of caution because we just had this in a meeting the other day.
12:01
SPEAKER_02: I was like, hey, what's the egress off of this?
12:04
SPEAKER_02: Yes.
12:04
SPEAKER_02: What's the expiration date?
12:06
SPEAKER_02: Like, well, we don't have one.
12:07
SPEAKER_02: It's just always you pick this or you pick that.
12:09
SPEAKER_02: I'm like, that is an awful pay plan.
12:11
SPEAKER_00: You gotta have a start and an end date.
12:13
SPEAKER_02: You do, and we've learned that when Matt's talking about that supplemental piece, because before we would just change the pay plan and we would just either victoriously celebrate, hey, this worked well for everyone, or we would suffer.
12:26
SPEAKER_02: Or be just stuck.
12:27
SPEAKER_02: And we'd stuck, and then you'd have to hey another pay plan.
12:30
SPEAKER_02: And that's one of our Achilles Hill.
12:32
SPEAKER_02: We don't change pay plans enough.
12:34
SPEAKER_02: And we shouldn't have to, but you have to to chase the market change.
12:38
SPEAKER_00: That is very true.
12:40
SPEAKER_00: And so so a couple things there of just advice for you guys on either or as long as you have a start date or end date, or just put it out there as a quarterly, it's almost like a tester.
12:49
SPEAKER_00: Yeah, do you have the liability if they hit on both?
12:51
SPEAKER_00: You do, but that's less liability than having something written in stone that you back yourself in a corner to for multiple years.
12:59
SPEAKER_00: So so look at both of those.
13:00
SPEAKER_00: So let's keep diving into this here.
13:02
SPEAKER_00: You know, every plan teaches something.
13:05
SPEAKER_00: Think about that.
13:06
SPEAKER_00: Every pay plan teaches something.
13:09
SPEAKER_00: You know, what's yours teaching right now?
13:12
SPEAKER_00: And is it specific to that department?
13:15
SPEAKER_00: I I'll talk to business owners out there and they'll say, I'm really trying to move the mark on X, Y, and Z.
13:21
SPEAKER_00: I'm really trying to do a better job setting appointments or my upsells or my inspections.
13:28
SPEAKER_00: And like Shelby said, the first thing was say is show me the pay plan.
13:31
SPEAKER_00: And you're like, well, it's not all about pay, Matt.
13:34
SPEAKER_00: They're here to make a living.
13:36
SPEAKER_00: They're going to chase what the pay is.
13:38
SPEAKER_00: I agree with the statement it's not all about pay, but the pay has to be relevant for what you want to produce and the goal you're going towards.
13:46
SPEAKER_02: It starts their conversational path, you know, of like, hey, we're going to go with this bank, right?
13:51
SPEAKER_02: Or hey, we're going to go with this product, or I want to upsell you this, or hey, the customer needs this and this one, I'm going to do this inspection and I'll get to that one later because the pay is telling them the route to go down.
14:05
SPEAKER_00: I I want to give now let's go a little advanced here.
14:08
SPEAKER_00: Most people don't do this, but I'm going to teach you how to do it.
14:11
SPEAKER_00: And if you'll if you'll listen, if you'll put this in place, you'll be worlds ahead of everybody else.
14:16
SPEAKER_00: Don't always focus on the outcome.
14:20
SPEAKER_00: So so many pay plans are written on if you sell this much, if you do this much, here's how much bonus I'll give you.
14:27
SPEAKER_00: And we're going to go into football season, so let's talk football.
14:29
SPEAKER_00: It would be like the bonus just being on winning the game.
14:32
SPEAKER_00: Now that might the head coach, that might be a good bonus for them, but for some of the other players that don't have control on the entire game, they may need different bonuses.
14:42
SPEAKER_00: And I've heard a lot of sportscasters talk recently about turnovers and the cost of turnovers.
14:47
SPEAKER_00: So the incentive may be on if we have zero turnovers, or if we reduce last year we had an average of, I'm making this up, three turnovers a game.
14:56
SPEAKER_00: If we can reduce that to just one, here's what it calculates.
15:00
SPEAKER_00: Incentivize on the activities that get to the results.
15:04
SPEAKER_00: So one in our example would be, you know, our mechanics that are doing inspections on vehicles, they don't have bonuses on if the service department hits their overall gross goal.
15:17
SPEAKER_00: They have bonuses on if the percentage of multi-point inspections are high enough.
15:22
SPEAKER_00: That's the activity we need to be able to sell the work that's out there on a customer's car to get to the end result of more gross profit in our service department.
15:32
SPEAKER_01: I think it's really important too to note there you can get granular on specific things for that's why there's different pay plans because different areas need to focus on, they might need to micro focus and heavily focus on one area so it can really dumb down of I need to hit this metric.
15:52
SPEAKER_01: This metric needs to be plus this percentage, and then I need to have this first in the mechanics world fixed the first time, really being able to go and layer it underneath, it's okay if it doesn't cover everything because you're hyper-focusing on what they need to be driven towards.
16:08
SPEAKER_00: Yeah, you just buy you just reverse engineer it.
16:10
SPEAKER_00: You go, hey, here's the end goal.
16:12
SPEAKER_00: Now, what are the daily activities?
16:14
SPEAKER_00: What do we have to do really good at to equal that end goal?
16:17
SPEAKER_00: You know, is it inspections?
16:19
SPEAKER_00: And in the football ward, is it making sure our completions or our turnovers are reduced?
16:24
SPEAKER_00: Or if you're trying to incentivize the field goal kicker, you're not connecting it to a percentage of completions about a quarterback.
16:31
SPEAKER_00: Like, think about those activities.
16:33
SPEAKER_02: Yeah.
16:34
SPEAKER_02: And if you're like, man, I I don't know that I could ever do that.
16:37
SPEAKER_02: Well, think on the flip side, in the NFL, if someone does something that's against the rules, they're penalized with a finer feat.
16:44
SPEAKER_02: So why don't you just flip it and say opportunity when you do this, this, and this, I'm not going to cost you money, I'm going to give you money.
16:50
SPEAKER_00: I I'm going to take what you said right there, and I'm going to challenge everybody listening because I think the initial knee-jerk reaction is exactly, Shelby, what you said, is they're like, man, I don't know.
16:59
SPEAKER_00: I'm just trying to survive.
17:01
SPEAKER_00: I can't do that.
17:02
SPEAKER_00: I want you to think about what got you to the position you are.
17:06
SPEAKER_00: And most entrepreneurs out there have worked their way through the business and grown the business.
17:11
SPEAKER_00: What were you the best at?
17:12
SPEAKER_00: What were you really good at that you were just beating your head against the wall that you can't get your employees to do?
17:19
SPEAKER_00: What was it?
17:20
SPEAKER_00: Was it that you made sure every time you showed up to a customer's house, if you're in the service business, that you that that you were clean, that your vehicle was ready, is that you communicated properly?
17:30
SPEAKER_00: Is it that you always did a follow-up?
17:32
SPEAKER_00: Whatever those couple things are, that's your key.
17:35
SPEAKER_00: That's your gold right there.
17:36
SPEAKER_00: Integrate that into a bonus plan.
17:39
SPEAKER_00: Yes, absolutely.
17:39
SPEAKER_00: A bonus plan.
17:40
SPEAKER_00: Absolutely.
17:41
SPEAKER_00: So I think, you know, the plan nobody can explain is the one sentence is a plan nobody is working.
17:50
SPEAKER_02: Right?
17:50
SPEAKER_02: So think about that.
17:51
SPEAKER_02: Uh uh here's a plan and no one's working it because there's no incentive to it.
17:56
SPEAKER_02: Uh-huh.
17:57
SPEAKER_02: Right?
17:57
SPEAKER_02: So it's like, all right, guys, here's a plan, here's what we're gonna do, we're gonna complete this amount of activities or we're gonna do this and this.
18:02
SPEAKER_02: But if you don't tie the money to it, no one's working it.
18:04
SPEAKER_00: I think on the other side too, if the plan they don't understand and they can't explain it, if it's too complicated, if somebody at MIT wrote it for you, they're just gonna go, I don't know, I just go to work and the money's in my account.
18:19
SPEAKER_00: Like, like they they've gotta be able to explain it.
18:22
SPEAKER_01: I think that gets missed so easily because the okay, let's take every entrepreneur that's listened to this, and I know we go through this as well.
18:29
SPEAKER_01: You'll sit, you'll be in your flow state, getting after it, listening to your music, and come up with this grand idea.
18:34
SPEAKER_01: It makes perfect sense in your head.
18:37
SPEAKER_01: I put all these things together, and then you go and tell your team, and if you don't dumb it down, there's been multiple times I've gone and told my managers, I mean, I am Jack.
18:46
SPEAKER_01: I'm like, this is the next thing, and I forget to put that next step in there of, hey, this is where it's going to make the difference.
18:53
SPEAKER_01: This is how it what's in it for me for the manager that I'm going over.
18:58
SPEAKER_01: And I miss that.
19:00
SPEAKER_01: And they're like, okay, great, boss, we'll get after it.
19:03
SPEAKER_01: They don't do anything.
19:04
SPEAKER_01: They're just saying that to answer.
19:06
SPEAKER_01: So make sure you're putting the we call it with them, but what what's in it for me for the employee that you're going over?
19:14
SPEAKER_01: Absolutely.
19:14
SPEAKER_02: All right, two truths and a lie.
19:16
SPEAKER_02: Gotcha.
19:16
SPEAKER_02: Okay.
19:17
SPEAKER_02: Give you three statements or claims uh about how the American people pay or how the American people get paid.
19:24
SPEAKER_02: Two of them are uh real and one's a lie.
19:26
SPEAKER_02: Okay.
19:27
SPEAKER_02: A, fewer than one out of ten people, U.S.
19:30
SPEAKER_02: private sector workers, are on true incentive pay.
19:34
SPEAKER_02: Okay.
19:35
SPEAKER_02: Okay.
19:36
SPEAKER_02: B, sixty-eight percent employees who are paid fairly still believe they're paid below market.
19:41
SPEAKER_02: Okay.
19:41
SPEAKER_03: Okay.
19:42
SPEAKER_02: And C, only about one in five companies give managers any formal training on how to talk about pay.
19:50
SPEAKER_00: I mean, nope.
19:51
SPEAKER_00: I mean, I got my answer.
19:52
SPEAKER_02: All right, so uh tell me what you think is a lie.
19:58
SPEAKER_00: Um, you got your okay.
20:00
SPEAKER_00: Mine's A.
20:01
SPEAKER_02: You think A is a lie?
20:03
SPEAKER_02: Yeah, I'd go with A as well.
20:05
SPEAKER_02: Okay.
20:05
SPEAKER_02: Well, I'm glad I deleted this so we can go over that.
20:08
SPEAKER_02: So your thought is that fewer than one out of ten U.S.
20:10
SPEAKER_02: private sector companies work on true incentive-based PayPal.
20:13
SPEAKER_02: The answer actually is C.
20:16
SPEAKER_02: Really?
20:17
SPEAKER_02: Huh.
20:18
SPEAKER_02: Of being a lie.
20:19
SPEAKER_02: Only about one in five companies give managers any formal training on how to talk about pay.
20:24
SPEAKER_00: So is that saying that more than one in five companies give managers training on how to talk about pay?
20:30
SPEAKER_02: Uh I guess so.
20:32
SPEAKER_02: Huh?
20:33
SPEAKER_02: Right.
20:33
SPEAKER_02: I'm depressed.
20:34
SPEAKER_02: Right?
20:35
SPEAKER_02: Uh because true is A and B.
20:37
SPEAKER_02: Okay.
20:38
SPEAKER_02: Uh BLS analysts found under 7% of U.S.
20:42
SPEAKER_02: private sector companies are incentive pay jobs.
20:46
SPEAKER_02: Okay.
20:46
SPEAKER_02: Right?
20:47
SPEAKER_02: And 46% of those were sales rolls.
20:50
SPEAKER_02: Uh and then B, pay scale, 2025 Fair Pay Impact Report, the percentage gap has widened since 2021.
20:57
SPEAKER_02: So it just keeps rolling there.
21:00
SPEAKER_02: Okay.
21:00
SPEAKER_01: Fun fact plan.
21:01
SPEAKER_01: So rolling into this next segment, the unintended consequence.
21:05
SPEAKER_01: The number got hit and business got hurt.
21:08
SPEAKER_01: So we roll through this all the time, but volume versus gross, speed versus comeback, closed tickets versus fixed cars, it's it's the wanting the more, but not necessarily putting the process in so your gross or uh a customer feedback or anything else suffers from that.
21:28
SPEAKER_01: Walk us through that whenever we go through with managers.
21:32
SPEAKER_01: Whoa.
21:33
SPEAKER_01: I know.
21:33
SPEAKER_00: It's almost an entire podcast.
21:37
SPEAKER_00: I think you have to do some time as the as the leader and identify what is your business model.
21:45
SPEAKER_00: That that's what's most important here.
21:47
SPEAKER_00: Um our business is a little bit different, but you have to determine am I in a volume business where I can lower the margin and I want high levels of volume, which take different processes.
22:00
SPEAKER_00: It takes different people.
22:01
SPEAKER_00: It's very rewarding, but it also is very easily if something stumbles that the wheels can start coming off because you have a lot of exposure.
22:11
SPEAKER_00: However, on the other end, if you're just gross and you're just niche, it's great.
22:16
SPEAKER_00: You can stay small.
22:18
SPEAKER_00: Um, but then you have to look at market erosion dependent upon what you're in.
22:23
SPEAKER_00: You know, some businesses are not in an industry where you have large big box stores or you have big companies um, you know, that are coming in and buying, and they're obviously after volume.
22:37
SPEAKER_00: So you have to think about which one those are.
22:42
SPEAKER_00: It's not a losing gross volume.
22:45
SPEAKER_00: It's a lower gross volume, especially on the sales side, because to feed the entire rest of our machine, whether it's service or parts or used cars or body shop or anything else, we have to have the volume input.
23:01
SPEAKER_00: But you also with volume input, you can run away and lose too much gross where it doesn't compute.
23:08
SPEAKER_02: Yes.
23:08
SPEAKER_02: It's one of those things that your team without very clear direction will say, What are we doing?
23:13
SPEAKER_02: Yes.
23:13
SPEAKER_02: You know, do you want us to sell the units or do you want us to not make the money?
23:18
SPEAKER_02: And so then the answer is generally both.
23:20
SPEAKER_02: Right.
23:20
SPEAKER_02: Uh and it's case by case, and it's one of those things.
23:23
SPEAKER_02: Alex Hormozy says this when he asks uh businesses certain things like, hey, what's your game plan?
23:28
SPEAKER_02: What's your game plan?
23:28
SPEAKER_02: He said, You can have very large scale and appeal to the entire world at a very low margin, right?
23:36
SPEAKER_02: Or you can have a very high margin and appeal to a very small crowd.
23:41
SPEAKER_02: Right?
23:42
SPEAKER_02: And so then how do you find that where you are?
23:45
SPEAKER_02: And ours is that happy medium, right, to say, okay, our customer acquisition and our units in operation means higher volume.
23:54
SPEAKER_02: Yes.
23:55
SPEAKER_02: And that means 80 years of sustainability because the volatility is less because you have more people in there that you can count on to come back to us.
24:06
SPEAKER_02: And so that's where our culture comes in.
24:08
SPEAKER_02: That's where the experience that we offer gets to be different than anyone else's.
24:13
SPEAKER_02: So then when price becomes a war, it's like, okay, we can arrive at that price, maybe lose money when we sell the new car.
24:19
SPEAKER_02: But then to say, here's where they'll come back to us, and so then we can say when you have an issue, you can come back to us, and then there's a hang up here, you can come back to us.
24:28
SPEAKER_02: So that becomes that long-term sustainability.
24:31
SPEAKER_00: You have to look you can't look at one without the other.
24:34
SPEAKER_00: So if you want to be highly aggressive with volume, you're banking on all the rest of it.
24:40
SPEAKER_00: So you can't have a high amount of volume.
24:43
SPEAKER_00: I I don't I'll sell somebody a car in North Carolina or in California, but that's whatever.
24:49
SPEAKER_00: Not our business.
24:50
SPEAKER_00: It's not our business.
24:51
SPEAKER_00: Because if I sell them a car at losing$500 and they never come to service, they never come to parks, they never tell anybody.
24:57
SPEAKER_00: That does that doesn't matter.
24:58
SPEAKER_02: That was a bad investment, bad business sense.
25:00
SPEAKER_02: So you have to look at that.
25:02
SPEAKER_00: So if it's volume, and and our managers listen to this, I hope they are today.
25:06
SPEAKER_00: If it if it's volume, we ask them three simple questions.
25:10
SPEAKER_00: Hey, get highly aggressive on that deal, but here are the three questions I need to know.
25:15
SPEAKER_00: Do they have a trade-in?
25:17
SPEAKER_00: Because that trade-in is going to go through our entire system.
25:20
SPEAKER_00: Part, service, sell a used vehicle, generate another used vehicle, so on and so forth.
25:25
SPEAKER_00: Okay.
25:26
SPEAKER_00: Are they financing with us?
25:27
SPEAKER_00: If they're financing with us, we have it.
25:30
SPEAKER_00: There's no hidden secret here.
25:31
SPEAKER_00: We have relationships with all the banks.
25:33
SPEAKER_00: Now we give our buy rate out, so we're not marking the rate up, but they do pay us a flat amount for processing that.
25:39
SPEAKER_00: So that's additional income.
25:40
SPEAKER_00: And then are they a local customer?
25:42
SPEAKER_00: Why is that important?
25:43
SPEAKER_00: Well, if they're a local customer, they're going to come service with us, buy parts from us, and then be an influence on other buyers out there in the market.
25:50
SPEAKER_00: And then needs to check those boxes out.
25:52
SPEAKER_02: That also makes you feel better when a deal is just like awful, right?
25:57
SPEAKER_02: And you're like, oh, this doesn't make sense.
25:59
SPEAKER_02: Like, why should I do this?
26:00
SPEAKER_02: If you're like, hey, local person, you have the ability to then have that outreach.
26:05
SPEAKER_02: Because then their word of mouth of you giving a good experience and a fair deal hopefully continues to spread.
26:12
SPEAKER_02: And then the next person, next and the North Carolina, if you sell that person, they don't finance, don't have a trade, you ship it to them so you never get to experience your culture.
26:20
SPEAKER_03: Yeah.
26:21
SPEAKER_02: You could have the most raving process ever, but the chances of their friends coming to buy you from you is little to none.
26:27
SPEAKER_00: It really is.
26:28
SPEAKER_00: Now I'm going to play the other side, and and I'll go through this real quick.
26:31
SPEAKER_00: We went through this exact exercise before we moved campuses.
26:37
SPEAKER_00: And it came down to what do we want to do?
26:40
SPEAKER_00: Do we want to stay about the size we are?
26:42
SPEAKER_00: We've got it narrowed down, we'll put some new paint on it, so on and so forth, or do we want to move forward with a big risk and upper volume?
26:50
SPEAKER_00: Well, before you answer that question, you also have to look at the outside of the industry.
26:55
SPEAKER_00: And when we look at Northwest Arkansas and we looked at all the automotive stores selling retail, okay, not talking about repair, but selling retail, what's happening?
27:03
SPEAKER_00: The majority of privately owned automotive dealerships are being bought up by large groups.
27:10
SPEAKER_00: And those large groups are all based upon volume.
27:14
SPEAKER_00: They have the capital to do that too, to be able to try to erode market share from others.
27:20
SPEAKER_00: So we said, if we stay in our current model, we're not going to stay the same.
27:25
SPEAKER_00: There's going to be some erosion that happens to our market share because these large companies are going to come in.
27:31
SPEAKER_00: So you got to decide which area you're going to play in, and then is that applicable in your market in your industry?
27:38
SPEAKER_02: It's funny because we see that, let's say outside of our industry, local businesses that we do business with.
27:44
SPEAKER_02: Uh-huh.
27:44
SPEAKER_02: And you look at what their vehicle fleet looks like.
27:47
SPEAKER_02: Yes.
27:48
SPEAKER_02: And we've experienced this on all far scales.
27:51
SPEAKER_02: And they have to make that same decision.
27:53
SPEAKER_02: So if you do upgrade and you say, hey, I've got 20 vehicles in my fleet, five vehicles in my fleet, 100 in my fleet, do I want to buy new vehicles that all look the same, they're all symmetric, they're all brand new, they all have warranty.
28:07
SPEAKER_02: That means more capital invested or more debt acquired, but I've got this, this, and this.
28:13
SPEAKER_02: And some of them have said, no, I want to budget friendly this thing, and I want to get four-year-old vehicles with 100,000 miles because I can save 50% of the initial investment.
28:24
SPEAKER_02: That keeps me out of debt less, right?
28:27
SPEAKER_02: Uh, but then sometimes they don't completely weigh those options because now they're the used car factory, which there isn't such a thing, means now that you've got a RAM that's red, you've got a Tacoma that's gray, you've got an F-150 that's black, you've got a silver Sierra, right?
28:45
SPEAKER_02: And your graphics aren't looking the same, you can't generally service them with warranty style stuff at the same place.
28:52
SPEAKER_02: When your vehicle breaks, guess when people work on vehicles during your working hours, so that means you can't be in front of customers.
29:00
SPEAKER_02: So when you try to save a dollar, had we stayed across town trying to save some dollars, you become less and less relevant.
29:07
SPEAKER_02: So in that assumption, you need to look at that, like it's gonna take some money to make some money.
29:11
SPEAKER_00: That's right.
29:12
SPEAKER_00: That's right.
29:13
SPEAKER_00: Now those those are all good things that you just gotta slow down and and you're probably going, how do I do that right now?
29:17
SPEAKER_00: I'm too busy in my business.
29:19
SPEAKER_00: You're gonna have to figure out a weekend or maybe even during the week that you take a day or even two days, or maybe even it's a couple half days, and just go somewhere by yourself.
29:30
SPEAKER_00: You know, I don't care if you go camping out in Devil's Den, it might be a little hot for that right now, but something like that where you can remove distractions and you think, well, I can't afford to do that.
29:39
SPEAKER_00: Well, you can't afford not to do it.
29:41
SPEAKER_02: Yeah, and so to break that down a little bit, that's not just, hey, let's go on the beach and hang out.
29:46
SPEAKER_02: It's where you are away from the business to then see the business through a different lens.
29:51
SPEAKER_02: Right?
29:52
SPEAKER_02: You're not calling a bunch of buddies saying, hey, let's go to Vegas real quick.
29:55
SPEAKER_02: Yeah.
29:56
SPEAKER_02: You might find a like-minded individual and say, Hey, can I help break this down?
30:00
SPEAKER_02: You help me break mine down, I'll help you break yours down from a customer's view or something.
30:04
SPEAKER_02: Or you might just on your own.
30:06
SPEAKER_02: So it's you're not saying, hey, you just need some days, some alone time.
30:08
SPEAKER_02: No, you need some specific out-of-the-office time to look at your business.
30:13
SPEAKER_00: Oh, that's good.
30:14
SPEAKER_00: That's good for sure.
30:14
SPEAKER_01: To be able to dive in there.
30:16
SPEAKER_01: Okay, let's dive into this rapid fire questions.
30:18
SPEAKER_01: I got some for each going through there.
30:21
SPEAKER_01: Um, rolling.
30:23
SPEAKER_01: So what's one thing you pay for today that you didn't pay for five years ago?
30:28
SPEAKER_02: Everything.
30:30
SPEAKER_02: Uh we we pay uh we pay for a lot more talent than we did five years ago.
30:37
SPEAKER_02: To to buy talent.
30:39
SPEAKER_02: To buy proper talent, people that know stuff that we don't know that are from outside of our industry.
30:46
SPEAKER_02: Right?
30:46
SPEAKER_02: Whether that be in marketing, whether that be in media, whether that be in HR, whether it be in IT, whether that be in our office management, all of those are areas that we pay for now that we didn't five years ago.
30:59
SPEAKER_01: That's good.
31:00
SPEAKER_01: That's good.
31:01
SPEAKER_00: Uh name a number you stopped chasing.
31:03
SPEAKER_00: Uh I'll take this one.
31:04
SPEAKER_00: In finance specifically, we stopped chasing how much we were making on reserve dollars, which was the markup on the rate when we shifted our business to a flat where we did a buy-sell for the same rate we got from the bank.
31:20
SPEAKER_00: We stopped chasing how much we were making in reserve.
31:24
SPEAKER_00: Yeah.
31:25
SPEAKER_01: Best money you ever spent on a person?
31:28
SPEAKER_02: So I would tell you proper talent, but I already said that.
31:31
SPEAKER_02: I would say training.
31:32
SPEAKER_02: The best money you could ever spend on someone, whether it's a technician or a revenue generating person or not a revenue generating person, is to properly train, whether that be something you train on, or you send them to outside training and fully vetting that to make sure that the expectations are clear, their understanding is clear, and they are very relevant.
31:52
SPEAKER_03: Yeah.
31:52
SPEAKER_03: Yeah.
31:53
SPEAKER_01: Would you rather overpay a great employee or fairly pay two average ones?
31:59
SPEAKER_00: Okay, I'm going to answer this um in a couple different ways.
32:03
SPEAKER_00: Um the obvious answer is you overpay for a great one.
32:08
SPEAKER_00: But it depends upon the position.
32:10
SPEAKER_00: I would overpay for a great leader in a department head to elevate the average below them.
32:18
SPEAKER_00: So I I'm very specific on what I do there.
32:21
SPEAKER_00: I want to overpay for the leader in a department to develop it.
32:25
SPEAKER_01: It's hard to do it like on a sales level of a guy, because he's going to generally generate more with more production.
32:32
SPEAKER_01: Trevor Burrus, Jr.
32:33
SPEAKER_02: And here's the good news about probably 65% of our pay plans is they're generated based on their activity.
32:41
SPEAKER_02: Yes.
32:41
SPEAKER_02: So the good ones, they get paid more anyways.
32:44
SPEAKER_02: The scale generally isn't different, but they get paid more because they're quality of a work.
32:50
SPEAKER_02: Think about that across the entire board.
32:51
SPEAKER_02: So they do get paid more and it is worthwhile.
32:53
SPEAKER_01: It is.
32:54
SPEAKER_01: It is.
32:54
SPEAKER_01: Last one here.
32:55
SPEAKER_01: One word.
32:56
SPEAKER_01: What is your pay plan reward most?
32:58
SPEAKER_01: I got one word I'll say, and we'll see what you'll say.
33:00
SPEAKER_01: Yeah.
33:01
SPEAKER_00: Results.
33:02
SPEAKER_00: Yeah.
33:04
SPEAKER_02: That's a pretty good thing.
33:06
SPEAKER_02: I know that's generic.
33:07
SPEAKER_00: But our technicians are paid on hours.
33:09
SPEAKER_00: Yeah.
33:09
SPEAKER_00: Our salespeople are paid on souls.
33:11
SPEAKER_00: Our managers is paid on either the gross or the souls.
33:16
SPEAKER_00: You know, our parts department's paid on how much they produce.
33:19
SPEAKER_00: So it it's results.
33:21
SPEAKER_00: That's really good.
33:22
SPEAKER_02: I think that's really good.
33:23
SPEAKER_02: All right, wrapping this thing up, episode 96, you get the behavior you pay for.
33:29
SPEAKER_02: Right?
33:29
SPEAKER_02: We talked about that, broke it down the things that we see, the things the industry talks about.
33:33
SPEAKER_02: As always, check us out, Louis Superstore.com, a crossroad conversations podcast.com for this episode and 95 other episodes, and we'll see you soon.
33:42
SPEAKER_00: Hey, thanks for joining us today, and we hope you enjoyed this episode.
33:45
SPEAKER_00: Make sure to give it a like, share it with your friends and family, visit our website, and send us some questions.
33:50
SPEAKER_00: We want to know what you'd like to hear, who you'd like to hear from, and what you want to see, or maybe even some questions for us to answer about either the automotive industry or just business in general.