Chuck Blakeman - Why Employees are ALWAYS a Bad Idea (F1917)

Welcome to the Exit Coach Radio show, the show for baby boomer business owners who are looking for cutting edge information as they plan their 3 to 10 year business succession and exit. Every week we interview top professional advisors for their best tips, strategies, and precautions so you can be well planned. And don't miss our one minute exit coach tip of the day on Exit coach. And now here's your host, the exit coach Bill Black. Welcome back everyone. Our next guest is Chuck Blakeman. He's with the Crank Set Group, and he is the chief transformation officer from Greenwood Village, Colorado, and Chuck Blakeman is a bestselling business author and world renowned business adviser who has built 8 businesses in 7 industries on 4 continents. So you might want to get a pencil for this one. He inspires leaders and provides simple tools to transform their business. Chuck's here to talk about his new book Why Employees Are Always a Bad Idea. You heard me right. Why employees are always a bad idea. It was named one of the top 10 business books of the year, so I'm really looking forward to this. Chuck, welcome to the show. Thanks, Bill. It's great to be with you. Wonderful to have you and thanks for joining us from Colorado. Chuck, before we get into all of uh about the book, uh, tell us a little bit about you and your background. It sounds fascinating. Well I'm a serial entrepreneur. Uh, when people tell me something can't be done, I, I get interested in it. So I've been in all kinds of industries, everything from landscape architecture to leadership development, uh, uh, direct mail, printing call centers, fulfillment logistics, and, uh, we even had a Run a website development. We designed, developed a website, designed, developed and hosted web sites and and databases for companies like Microsoft and Eli Lilly and other big companies because they couldn't figure it out. So I've been all over the board, classic serial entrepreneur who doesn't have the attention span to keep doing the same thing for 30 years. Well, it makes life interesting, doesn't it? I mean, you're from project to project like you said, I've had a sign on my desk that says the person who says it cannot be done should not interrupt the person doing it. So that sounds like you have that same sign on your desk. The driving force behind me has always been this question Why do what others can and will do when there's so much to be done that others can't or won't do? Same thing. I love it. So, so let's talk about, you know, you, you talk about something, a concept called the participant, yeah, easy for me to say, the participation age company. What is a participation age company? It's a company that rejects the industrial age management system that we still have in place. And what I mean by that, just picture Dilbert. Gilbert is funny. The reason Dilbert is funny is because everything we do in management is broken. And and all of that stuff was learned in the factory system from about 1850 to 1970. All of our management practices came out of the industrial age. We think we left the industrial age in the 1970s when in fact only the back office left the industrial age. The front office is still stuck in it with a bunch of Old guys with ties making decisions for everybody else and in a in a participation age company, everybody brings their brain to work. They bring the whole creative messy person to work. Everybody makes decisions and decisions are made at the level at which they will have to be lived with. So how does that look? I'll give you the most radical. A description of the most the most advanced participation age companies. Imagine a company with no titles, no departments, no corporate ladder, not even any office hours, even in manufacturing companies, no office hours, unlimited vacation. Take off when you feel like you need it. I, I, I imagine a company that's like no HR department, not even any written policies where there's profit sharing for everybody and decisions are made by the people who have to carry them out. That is the, uh, the penultimate, uh, participation age company and, and, uh, when, when people hear me say those things, the first thing that pops into their head is chaos. I can tell you there's been companies who have been doing this. WL Gore and a few others have been doing this for 60+ years. And there's some of the best companies on Earth. You're right. The first thing that comes to mind is can it work because there, there's an, there's an employee mentality that that says as soon as the clock hits 5 o'clock, let's say, my work, my work is done, my work is done. And then there's the entrepreneurial and often manager mentality that says it's never done. It's just I'm just leaving the office now. If I was in the in the office in the first place, and we're seeing a big shift, especially in family companies where you have dad who says if you're not in the office, then you're not working, and the son who says, I'm at my kid's baseball game because I'm not going to be like you and miss them all. I'm going to go to these and I'll be on the computer at 10 o'clock at night, finishing up when I, when I, you know, I'm always on the clock. So what you're talking about is I love the idea, but I think like a lot of people I'm thinking how do you motivate those people who think like employees to think like the owners and the entrepreneurs. It's a great question, Bill. The first, the first thing we have to believe is that everybody actually wants to do this. And where's the proof of that? It's real simple. Before 1850, right around 90% of all adults owned their own business, farms, mercantiles, silversmiths. and today it's about 15%. It's, it's almost completely reversed. We are not naturally employees. We are all with a very few exceptions naturally business owners. We want to be in control of our lives. We want to be adults and make decisions for ourselves, and employees are people who are who bring only the part to work, the extension of the machine, they leave why at home, they leave all the other questions at home. And so we have to believe that first and foremost people actually want to be this, and the proof is that for tens of thousands of years we were all business owners, and when they, when they put the factory system together you could not find an adult who wanted to work there. For the 1st 50 years, the average The age of the factory worker was around 10 years old, and the 98% of them were under 16 years. They found poor children and orphans, and they staffed the factories with that because that's all they could find. Nobody else would show up. So we're not naturally employees. We are naturally people who want to take, take control of our lives. The second piece of this we have to understand is that the reason we don't see that is because it's a self-fulfilling prophecy. This guy Frederick Taylor defined the employee in 1903 with these two definitions. The average employee is so stupid they more resemble resemble the ox than any other type. That's number one. Employees are stupid. The second thing he said was employees are lazy. He called it soldiering. The average employee will work only so hard as to not get fired. If you believe that. People, then the only solution you have is to to find the very few smart and motivated ones to lord it over the stupid and lazy ones and thus management was born and we have an entire industrial factory system model that still hangs over our heads that is a self-fulfilling prophecy. I believe people are stupid and lazy. I'm going to put together a Structure that is what we call lowest common denominator management. What's the stupidest and laziest thing somebody could do? I'm going to put together a system that keeps them from doing that. And when people come into that system, they look around and they say, what game do I need to play here in order to survive? And they become instantly stupid and lazy. People will raise themselves to our lowest expectation of them. Chuck, hold on a second. I'm online buying your book. I, I'm fast. I'm fascinated, uh, with the conversation that we're having right now. I never thought of it that way, that, that for for all of those many years we were brought up as, as business owners and entrepreneurs, um. That's fascinating, really a great, great, isn't it? Isn't that fascinating? Yeah, and that's normal. But you know, when you and I were born, we were born into the industrial age nonsense, and we just assumed the world has already looked like, always looked this way, when in fact the last 150 years is a pimple on the face of business. We got to, you know, we got to get some clearil for this, right? Good point. Yeah, that's that's really fascinating. So, and you know, I'm hearing from a lot of people that started businesses. They're reaching the age when they've been able to divest themselves, and they're saying, finally I am free of all of the employee mentality that I've had to manage, which is really what brought me down. And now I'm free to go out and find employees. Is all over the world through some of these virtual sites that are popping up with talent that's coming together. So is this a new age we're moving into this this participation age company? Yeah, it's a combination of two things. You just hit on one of them. The government is so worried that employment isn't back up. It's because a lot of people are figuring out I don't want to be employed. I can work for 6 different people and I'll be a web designer for 6 people or I'll be a virtual administrator for 9 people. I'm not going to work for you. I'm going to work for myself and the companies are finding that more convenient and better as well. I don't need somebody 40 hours a week. I need them for 20. So that's part of what's going on here in the participation age. The other thing that's going on is that as we get away from the industrial age, employees are becoming stakeholders. It's not that we can't work for other people. But if we do, everybody there should be treated like an owner, think like an owner, and have the results, the profit sharing, and the other things that come with ownership. So I can give you an example of companies that have 10,000 stakeholders and not a single manager in the whole place. How do they do that? Well, everybody's an adult. They work, they develop, they bring themselves into self-managed little teams, and they decide together what their salary is going to be, what their productivity is going to be, who leads the team for the next 6 months. Every 6 months they they even decide who's going to get to stay on the team. All the functions of management are done by a team of people, so you have 8 or 10 brains making the decision instead of one genius who's out of touch with what's actually happening on the ground. And that's the other thing that's happening in this is that people are moving from employee to stakeholder, and the simple difference is this that employees are told what to do. Everyone else solves and decides for them, and stakeholders, they're, they're adults, and they make the decisions they have to carry out. And when you do that, when you give people their brains back, companies explode and I can give you some great examples as we go along today. Well, it's fascinating. I mean, uh, you're, you're hitting a lot of topics and technology is creating a lot of these opportunities by bringing together worldwide. A talent, right? I mean that there's a lot of things you can think about that technologies, you know, you used to have the assistant or secretary who would type memos and, and, you know, this draft, do another draft and all longhand set appointments, all these types of things, and now all these things, a lot of them are handled by technology and the talent that's out there that's saying I don't want to work for one employer are finding these websites where they can have a worldwide. Uh, portfolio type of uh uh uh uh uh work I guess where they like you said, they, they don't rely on one employer. Now the problem there is that do they have benefits and security uh long term from that but I guess. And that's a mirage, you know, you talk to Airlines. The 30,000 people that lost their, you know, they worked there for 35 years and came up empty. The fact is this that both people who work for themselves and people who work for each other have risks and rewards. The difference is that with a with an employee, your risk is long term. You are banking on the idea that you'll invest 3 or 4 years in this and the stock market won't crash or the, or that they won't run off with your bank, you know, and get into bankruptcy. And so you're, you're and you're putting yourself in the hands of other people. You have no security. You can be the best contributor in a business, and when a recession hits, if you're the last higher in, you're the first one out. You have no control over your future. There's a huge risk of being an employee that way. If you own the business and a recession hits, you can work harder and save your business, and the risk is on the front end. I might lose some money. I might lose some of my 401k, but boy, if I, when I make this thing work, uh, I've got security for the next 40 or 50 years. So in the long run, owning your own business is actually a much more secure proposition. It just doesn't look that way because the employee insecurity isn't a parent right away. As soon as you go to work, you get a paycheck. That seems very secure, but then you, you're you're subject to being fired 3 days later. So if employees are a bad idea, what should we have instead? Great question, stakeholders. And, and again, the stakeholders are, are, uh, employees are children, because see, if people are stupid and lazy and, and the factory system was stacked with children, where you start is where you end up. This is a system designed by geniuses to be run by idiots. Guess which one you are, come to work, bring the brilliant skill that you have. To, to work, but do not ask questions like why or how or any of that stuff. I just want you to be an extension machine. That's what an employee is. They're obedient. They do what they're told, shut up, sit down, don't make, make waves and go out quietly. And a stakeholder is someone who will say, why are we doing that? How can we do it better? And I, I am an adult. I can make the decisions that I have to carry out. I don't need somebody else that isn't smarter or more, more motivated. I can do this myself. I can carry out those decisions, and that's what a stakeholder is someone who is an adult and carry out and can make and carry out the decisions themselves and how it plays out in companies again, that sounds like chaos. Where are the managers in this? There aren't any. And how does this work? I'll give you an example of Semco. Uh, Semco was a pump manufacturer, started in 1951, and for 30 years it was a classic industrial age top down hierarchy and in 1981 it had $4 million in revenue. Uh, Ricardo Semler took it over in 1981 and 25 years later they, they were a $1 billion company with $6 billion in assets. The first thing he did was fire all the managers. He just, he got rid of them and he gave, he gave everybody a brain and said, hey, if you can think of something we ought to be doing that we're not doing in pumps or whatever, now they're in, in every sector imaginable. They own a bank, they own restaurants, they own real estate, they're in internet services. They're in all these kinds of things that Ricardo Semler could have never imagined, but because it gave every stakeholder back their brain. They turned that into a magnificent company and one of the one of the best examples of our participation age company. Their profits were in the last 10 years their their their revenue is up 500%. The profits were up 600%, and the average. Employee turnover is less than 1% a year. 3000 people, 25 or so leave every year. You talk about the baked in profit when you don't have turnover like that. It's, it's amazing. So that's what stakeholders are. There are people who will take this and run with it and say, I own this company. Now, what about, you know, you talk about stakeholders, but a lot of people say, Well, I'll take the upside. I just don't want the downside. Don't call me when things are going bad. So, so how do you handle something like that in a stakeholder type of a situation? That's a great question. Employees are taught for the last 150 years we're taught that we shouldn't take risks. The three in the three S's of the industrial age are safety, security, and stability. Safety. Live in the suburbs, don't live for the icky people downtown. Security, have a big water cash in the bank, and stability every day should look the same. That's Nirvana. That's Ozzie and Harriet and my 3 sons and leaves the Beaver and everything else you saw in the 1950s. That's what we were taught we should go after. But I can tell you that's an unremarkable life. People who live safe, secure, and stable lives live unremarkable lives. But that's what we were taught, and that's the employee mindset. I want to know. I want to guarantee that every day will look the same. The stakeholder, which is 90% of the people out there pre-1850. They're looking for adventure. They're looking for making meaning at work, not just money, and so they're willing to go with a risk reward environment. In today's world, the only people we have to do risk reward are sales people. You got a quota and if you hit your quarter, you get paid, and if you don't, you don't get paid. But a stakeholder will, will look at it that way. And so we're looking for those people who are making the transition, and we have to help them. This is not a fair thing. We've got 150 years' worth of nonsense behind us. We actually have to help people make that transition. I'll give you one real quick example. A mortgage broker here in Denver caught on to this. He had a loan officer. He'd been paying her $55,000 a year for 15 years, and he said, I'm going to turn you into a stakeholder. You're now going to make $25,000 a year instead of $5500 and I'm going to pay you the rest of it on performance results-based work, that's a participation age mindset. And, and he said if you take that deal today based on what you've just been doing for the last 5 years, you'll go from $55,000 to $60,000 as a run rate next month. She turned him down. And he showed her, he was, he showed her for 6 months, and she finally took the deal and 2 years later she's making $110,000 a year in a results-based role because she was willing to take the risk. So we're very adamant about this. We will help people get there, but if they don't want to get there, then they're part of the 10 to 15% who don't want to play and we'll move along. We can't, we can't have them in our business. Yeah, absolutely. There's got to be a transition. Absolutely right, Chuck. I want to have you back like tomorrow. We're not doing a show tomorrow, but I am so fascinated. But we are out of time right now, and I want to again tell people about your book Why Employees Are Always abadea.com. You can find it right there or on Amazon and don't, you know, if you've been listening to this for the last 20 minutes. Don't you just want to go read this book like right now? I do. I sure do, and I've really enjoyed having you on the show. Besides finding your book, there, are there other ways you would like people to get in touch with you, Chuck? Yes, if, if they want me as a keynote speaker or to do workshops or to work with their company, Chuck Blakemanspeaker.com. Chuck, hey, this has been fantastic, and I'm really glad we hooked up and we're able to get an interview going with you and uh I, I hope we can uh reschedule for another time because there's so much I want to talk to you about and learn about. But first I'm gonna go out like our listeners should and go right. Why employees are always a bad idea.com. It's a long URL, but when you get there, you're going to be fascinated by this, by the material there. So Chuck, thanks very much for joining us, and I sure hope we can connect again in the near future. Thanks, Bill. It's been fun. I've been talking with Chuck Blakeman of the Crank Set Group. You're listening to Exit Coachradio.com, the information station for age 50 plus business owners, where we're interviewing over 250 top advisors for their best tips, ideas, and precautions so you can be well planned. We upload new one minute tips every day. Exitcoachradio.com. Come listen for a minute. Thank you for listening to Exit Coach Radio.