I Want Clean Hands

[Music] hello everyone welcome to the 21 hats podcast I'm your host Lauren feldin this week Paul DS Jay goz and Dana White give quick PPP updates and then dive into a discussion of what a $15 federal minimum wage would mean for smaller businesses will it lift people out of poverty will it put businesses out of business will it hurt entry-level employees I'm listening to you Jay Dana tells us at one point and I'm thinking about the coffee shop owners that I know who will have to close to which J response they say they have to close but did they try raising their prices 5% first we also tackle a listener submitted question about the best ways to avoid unemployment claims which can entail forceful management there's no way around it Paul tells us you got to be hard at some moments as a boss you just have to be even in Good Times owning and running a business can be a lonely Pursuit our hope is that these weekly conversations will if nothing else let owners know they are not alone in facing these challenges same thing with our daily newsletter the 21 hats Morning Report which you can subscribe to at 21h hats.com where you can also find transcripts of our podcast episodes this week's lineup features Paul DS who is founder and CEO of Paul DS cabinet makers which is based outside of Philadelphia and makes custom conference tables Jay goz whose companies in Chicago include a picture frame business artist frame service and a home furnishing store Jason home and Dana White who is CEO of Pary Boyd a chain of hair salons based in Detroit the episode is titled I want clean [Music] hands before we get started one of the recurring themes of this podcast is that marketing is hard for smaller businesses one reason it's hard is that we are all besieged by self-appointed digital marketing gurus who overwhelm us with outlandish promises on the other hand there's Steve craw co-founder of B found online a loyal listener to the 21 hats podcast Steve understands the business owners who listen to this podcast because he is one he knows his stuff but he's also a real person who you can have a real conversation with and if you tell him I sent you you can get a free consultation with Steve himself just shoot him an email at Steve befound online.com to schedule your talk that's Steve at befound online.com now on to the [Music] show Welcome Dana Paul and Jay uh hope you guys are doing well let's start I'd like to do a quick uh PPP update um how about you Paul last time you were here you told us that you were getting your application in and you were very much hoping for a quick turnaround how'd that go it went as advertised very quick turnaround I had to have one conversation with a guy from the bank and he said you're good and the money appeared the next day wow very simple nice and you you were hoping to get it quickly because you your phone wasn't ringing has that changed at all has sales picked up at all uh we did scrape it out in the last week of January and hit our Target for January 358,000 and uh we just made a nice sale today so so far uh the sales are coming in the phone calls are still way behind where they were in 2019 but I don't know what to do about that it's possible that um the people who aren't calling are the ones who never would have bought anyway so it's a 25% drop in the number of calls but maybe we don't care about some of that we'll see Dana how about you I think last week you told us that you had uh sent your application off to the bank any progress none what's going on no progress I don't know um I go on twice a day to their little portal check applications status and it still says under review um I'm with PNC so is that the bank that helped you the on the first round no the PNC was a little slow to shoot and everybody was nervous you know with the first round like oh I want to get it in because they may run out of money and so I went ahead Goldman Sachs provided an opportunity for Goldman Sachs alumni of the 10 KB program to get uh to go through them to apply so I did and I re received it um now that everything seems a little bit more ordered I went ahead and did my application through my bank um last Tuesday I did it and so nothing as of today are you at all concerned about money running out this time uh yes and no I'm not asking for a lot I think if and they put restrictions on who can apply um so I'm I'm getting nervous now because I like my you know application get submitted to the SBA but I'm not as nervous as I was the first time I know more now and I think um the businesses and banks are working smarter this time so we'll see you never know uh for what it's worth my bank is PNC too and uh but I had gotten the first round of PPP through them and they gave me the impression that that helped get the second one through quicker now the person who called me was a senior vice president pres in charge of agricultural operations in Tennessee and I I don't know why I said why are you calling me and he's just like well it's just all hands on deck we're we're calling we we get given a name a list of names and we call them and so I wouldn't necessarily despair if they haven't contacted you I think that uh similar to the spring that this is actually kind of tricky for banks to to just process a huge number of applications at one time time okay my friend another friend of mine who went the same route as I did his PNC approval came back very quickly he filed I think this Tuesday and is going to closing tomorrow Jay last time we talked you said that you didn't think you were going to apply this time because you didn't think you needed it uh is that still where you are no that not where I'm at it turns out that I am qualified I do need it and the bank to their credit has been very an top of it and he's the one that called us and said your numbers all qualify you should do it and I did it and it worked you've talked to us many times about your efforts to get a new loan that would give you a mortgage on a building that that has no mortgage on it and every time you've told us about it you've ex you've concluded with some optimism that you think maybe this week it's going to come through yeah are you feeling less confident about that it sounds like you are no I've got one Bank left who who who wants to do the deal so I assume this is part of the reason you decided to go ahead and apply for the PPP absolutely well let me ask you about that because I suspect there are a lot of businesses in the same situation uh that you are meaning you you had a a rough time in the spring when the pandemic hit when you had a shut down but but business came back and when we spoke about this last time you said you you know you might not need it because business had come back and um you you know you weren't sure this was intended for for you how are you feeling about that now a it was intended for me cuz my numbers were off just like I mean I fit right into the thing you definitely qualify and B here's the part that I wasn't thinking about I've had a credit line for the last 30 years I no longer have a credit line at the bank why is that because I'm a retail Pariah that's why because oh you're a retailer they can't get away from me a fast enough they took away your credit line yeah yeah I what I don't know if you could call it took away or didn't renew it had you been using the credit line yes absolutely I use it every single year I lose a good amount of money January February March April business is slower and then I make it up it's I'm I'm in a retail cycle and I use the credit line as it's supposed to be I borrow from it and then I pay it back at the end of the year in the same way for 30 years now all of a sudden well part of it is my bank got bought by the bigger bank it's a different deal the bank I used to be with made their living lending money to small business that was their Niche now the bigger Bank bought them out they've got other niches they've got re they've got banks on every corner they've got they've got big corporate business I want to ask you uh about some other aspect of the PPP which is this in the legislation that renewed it and gave us round two there was also a change to the employee retention tax credit and William went off about this last week uh on the show uh talking about how it's very complicated requires a lot of math and hours of analysis but in the end he found it was going to have in his words a pretty incredible impact for him have any of you looked at the employee retention tax credit and does uh do you qualify and do you does it look incredible to you I did um I took a brief glance at it and it looked like we qualified because we were shut down by state action on March 18th of last year and didn't open up until uh April 28th but during that time the employees that I had who could work from home continued to work from home and I continued to pay them so that is as far as I could tell was payroll that qualified under this under the terms of this and I didn't work out the math of how much it was exactly let's just say it's 10,000 bucks for sake of argument um the difficulty was in trying to figure out how to actually get it I read through the treasury Department web page about it and they referred to a particular form that you could fill out but there was no mechanism by which you submitted the form it wasn't clear who you sent it to or how you did it and uh it just started to look like oh my God here we go down some other rabbit hole and that particular morning I didn't feel like entering that so I set it aside and that's where I'm at at the moment um $10,000 is nothing to sneeze at and maybe it's $20,000 maybe it's $5,000 but it's nothing to sneeze at but it's not a game Cher for me right now so after the encouragement received in the morning report and from William I'm going to go back and take another look at it but it did appear to be extremely complicated to actually get it somehow interesting Jay or Dana the either riew look at it I didn't even know about it until the warning report came up with it I sent now I have a full-time CFO you know MBA CFO been here for 20 some years he didn't know about it he looked into it he's on a webinar as we speak finding out more about it but he said there's controversy as to exactly how it works and it's the same story again the rules are unclear he's trying to navigate it but I feel bad for someone who doesn't he literally that's all he does that you know he's a full-time C my CFO he's working on it and he thinks that we qualify and he thinks it'll be worth the trouble but he's on a webinar right now to try try being the operative word to try to figure out exactly how it works Dana have you even given any thought I have and I'm meeting with um my bookkeeper accountant um just to see if it's even worth it or if I qualify I think our biggest thing for Perle boy is forgiveness you know we're trying to looking more into forgiveness and then whatever tax credits come after that I want to ask you guys about another uh topic that's in the news right now there's a lot of talk once again uh about the The NeverEnding debate about the $15 minimum wage um every story you read suggests it's e either going to lift millions of people out of poverty or destroy thousands of businesses or or maybe both um are any of you concerned about this not me uh we well not for my primary business because the lowest wage we're paying right now is $1850 Plus benefits and it just you know it doesn't make any difference however I'm on the board of a nonprofit which operates in the food service space and it would have more of a of an effect there and just to you know do some quick math what's the difference between a $10 an hour person and a $15 an hour person uh if I get it right in my head it's about 10,000 bucks a year so however many employees you have times plus 10,000 I think that is a powerful incentive to look for ways to increase the productivity as opposed to just continue the same model um the you know your your your question will it raise people out of poverty yes it will the ones who are worth it and will it drive automation absolutely because if you have there is a difference between the least productive employees and better employees and uh a lot of times a cheaper employee is just more trouble than they're worth so I could see it certainly drop driving the evisceration of that entry level job and uh sort of raising the bar of what is the basic requirement to enter the workforce let me put some math to that because you just gave a good example of where I think there's a misconception let's talk about the one you just talked about food service so what do they sell are they selling hamburgers Bakery okay a bakery okay fair enough now let's what do you think their percentage on on sales how much do they pay in labor I'm going to guess 30% 30% we let's say yeah 30 it's somewhere between 30 and 50 depending on let's say 40 fair enough 40 let's say 40 now if you raise it from 10 to 15 that's a that's a 50% increase but everybody's not going to get the 50% increase because so many employees aren't making the 10 it's going to compress the difference between the experience person and the new one but it's not going to everybody's not going to be going up 50% so can we agree Maybe maybe the labor costs are going to go up 25% I wouldn't think about it that way Jay I mean I think that the actual dollar amounts are a little more revealing and this is math let me just finish then so my you can write math to do one thing you can write to do another thing I mean in our case we've got budgets of around quarter million for this Enterprise so if I've got four employees and I'm adding an extra 10,000 bucks that is a pretty significant bump in our in our as I said this isn't an opinion this is math so my question is here's the math if their sales are $800,000 a year it would require raising prices by 5% in order to cover that and the argument is if everybody has to do it then perhaps everyone instead of paying $10 for that cake they're going to pay $1050 now so I don't know that that's going to drive people out of business so I think think it's a false argument I think the argument is if this goes through I'm going to have to raise my prices and if I raise my prices people won't pay that price and I don't think you know that until you try it and if everybody needs to raise the cake from $10 to $10.50 I'm not sure it's going to ruin the business and I think the statistics of of everywhere that's done it has proven out that in fact most people don't go broke over it unless they don't pass it along wow that yeah math disagree with that analysis it's math to scale though like I'm listening to youj and I'm thinking about the coffee shop owners that I know who have to close wait wait they say they have to close but did they try raising their prices 5% for they don't have the volume but they even they they've done the price the raising price scale model how much do we need to raise our prices just to make ends meet how much do we have to raise our prices to you know come just below that and not pay ourselves or bring more family on and I think yeah if you have an $800,000 a year business sure what they're finding is it's going to happen if we're going to have one maybe two employees and this has to become a family run business where the younger part of the family isn't getting a salary because they're taking they're living at home with Mom and Dad right except except that's so logical it's the same doesn't matter what the size of the business is it still comes down to if it's a smaller business there's less you're paying out it's still simple math so if they're charging $3 for the cup of coffee and they raised it to 350 that should more than cover the extra expense but that not if they're only selling three or four cups a day if they're only selling three or four cups a day they don't have any employees so it's a it's a bad argument it's it's math all right J you've you've proven that it's going to be no problem for everybody in the economy and I hope you're right but no I haven't proven proven that people that say they will go out of business because of it unless they've gone ahead and raised their prices and then have gone out of business it's all a theory if they're that small it's not going to add up that much to the business and the Miracle of adding 10 or 20 or 30 cents to the product would cover the costs of the increase I I disagree completely I don't think the raise of the raising of prices will will solve for small businesses who don't have the volume who don't have the family they have to grow their business so they can bring on a manager the long term of this will hurt my business it may not hurt my business in the first year but a lot of them don't want to be Mega coffee shops they want to be small local coffee shops but they don't want to have to work 96 to 100 hours you're conflating all these things into a simple minimum wage raise that has no they have a business problem then if they can't figure out how to hire a manager this has nothing to do with the minimum wage to hire a manager though they can't afford to hire a manager because they're not making enough money because they don't have a successful businesses has nothing to do with minimum wage everything gets thrown at the minimum wage like but you're defining it is you're defining successful differently than they are they want to stay small no I'm saying math if you have to raise a minimum wage employee up it's a simple math I think they did a thing with Target in Walmart and found out if they raised their prices 1% they could pay everybody more money it depends on what your margins is what your labor I got it but no it's still math my point is this isn't an opinion and it's math if you raise the minimum wage it all turns into a mathematical amount of money that's a percentage of your gross sales and in many cases a minimal increase in your pricing meaning three four 5% will make up for the minimum wage raise and the rest of this is a whole other issue I want to give Paul a chance to respond to what Jay said but but first Dana are you concerned about the impact of this on your business not anymore I was why not what changed because my operations manager and I worked it out while you know Biden was on television and you know she text me and said you know we're going to have to work this out um and I said okay and so we did how did you work it out what did you do we're eliminating we no longer are hiring shampoo assistants unless it's on the busier days and all of our stylists will and all of our stylists will do both but they get a higher commission so I'm fortunate that in my industry I can pay hourly and do commission and would pay them the higher of the two it just so happens that I when I pay them the higher of the two it's it's a commission right so when you know they don't meet commission if they don't have hit a certain number of heads then they get the hourly but the hourly works out to be less than the commission because if they see three or four heads an hour at $112 a head well that's how much they're making per hour but again it's the volume the math works because we have the volume the second we go down to you know our slow season and we're not marketing or we go back to the numbers that we used to have before we grew yeah people paying you know one or two or three people in a shift $15 an hour to sit because we don't have the volume and then I raise my prices okay I raiseed my prices and then we still don't have the volume then I have to start letting people go well then a problem if you're paying people sitting around doing nothing in that in the business model it gets no I'm just saying in any business nothing I don't I mean by nothing I mean hair I got it but I'm just saying and Paul's totally right this is gonna make it hard for a younger person or for someone with no se there's no question I'm not arguing that at all he's correct if you're going to pay $15 an hour you might as well get a grownup and not hire some kid that you're going to have to put more time into you're 100% right on that and I would also say there's a huge problem with this in that telling J in Chicago to pay $15 an hour which I have to anyway because it's Chicago in telling some guy in buuy Mississippi to pay that's not right I mean the cost of living is dramatically different it's also not right that I pay health insurance I pay vacations me paying $15 is very different than someone paying $15 who only hires part-time people and doesn't give any benefits no health insurance no vacation time blah blah so it's not right no trust me I that's what I'm saying part of the problem there is that if you leave it to Mississippi it'll never get raised but but Paul did you have you finished your critique of Jay's critique no I mean Jay sort of slipped in slipped it in as if it was an asterisk in a footnote but those are pretty critical points he just raised and I mean Dana just said it herself she's going to cut out some of the lower skilled positions in her in her company uh because basically that job isn't worth $15 an hour so Paul is the concern that you're raising the loss of jobs or the threat to the business let's just let me here's my concern uh and I will say that that I am actually in favor of minimum wages in the absence of something like Universal basic income okay if you don't have minimum wage it's a race to the bottom and the people who suffer in those in those kinds of games are the ones who are least equipped to get themselves out of those situations that it sets up exploitation so setting up $15 minimum wage so that someone can can make a decent living from working 40 hours a week I've got nothing against that I'm all for it but there will be knock on effects and the fact that it's been tried in a bunch of high cost urban areas and there wasn't a huge difference because as Jay correctly pointed out you could do a relatively modest price range uh price raise and absorb the extra costs okay roll it out to every town and city in America and you're going to see a lot of operations that formerly were viable slip over the edge I think Dana is right that that it's it is a cost you're going to see the Dynamics within companies something which is utterly invisible to economists play out so you give the worst worker a raise to 15 bucks an hour and your former you know midlevel and good workers were making 16 an hour now what do you do so the the price of of Labor will go up across the board does that apply to you Paul you said before you you talked about your own business you're not paying anybody uh at the minimum wage but will there be pressure on the wages for uh your employees um within Paul Down's cabinet makers I don't think it'll have any effect at all because we're already a high skilled High pay uh operation and it's just that's not the world we live in with the bakery I run it's going to raise a couple of people and let's say it's going to have it's going to cost us 40 Grand but it's the new hires that are going to be more difficult because when you hire someone new you have to start paying them from the minute they show up and you also have to train them and you have to manage them and those things are expensive particularly a $10 an hour employee requires Ires more management than an $18 an hour employee and so that uh there's going to be a lot of businesses which don't have systems set up to manage employees at that cost level and so you're you're increasing the cost of the labor and of the management and what you describe I'm living I am that company I do have people that that are making that are making $17 an hour and I am going to have to make some adjustments what this is doing is it's bringing down the difference between the new employee and the one that's been doing it for 10 years there might have been a $5 spread per hour now it's going to be three or two and it has affected that and I'm by no means suggesting this is a perfect model they should make $15 every not at all I think it's clumsily done and and needs to be done more surgically and I think it should probably be left to the States because I don't think you can even if the states don't do anything yeah we have that now States like businesses then how about this how about taking the state that their minimum wage is seven what about making them do 10 then I mean what's with the they're going to go from 7 to 15 over it's not 7 to5 the legislation hasn't been written as far as I know but I think what they're talking about is phasing this in over four years okay whatever they do treating Illinois the same as they treat whatever the lowest income state in the country is is not right it's just not right I mean there needs to be some there needs to be some wiggle room there and then not allowing do you realize why all these big stores now have part-time people they figured out how to get out of paying health insurance which is why many Studies have been made how many people that work at Walmart are are getting get government subsidies it's it's they figured out how to get around it I don't think we're going to settle this today let's move on to something else wait just to be clear my guess is if we all sit down and lay this all out we'd all be on the same page the only point I'm trying to make is before someone screams oh my God if minimum wage goes up I'm going to go out of business I'd like to hear their math look at Dana figured out how to make it work I believe there's many other companies that could figure out how to make it work many let's go to a uh question that was submitted by a listener it comes from uh a woman who's submitted a previous question that we've dealt with Liz picarazzi of City bin who sent me a whole bunch of really good questions she wants to know uh how you guys handle bogus lawsuits and unemployment claims those are two completely separate things those are two different topics two different topics pick one Lauren just pick one of them unemployment claims want to hear my four keys to getting un my unemployment rate 20 years ago got up to the maximum maybe 30 years got up to 7.2% of the first x amount of income I think we have to Define what that is when people hear unemployment rate they think you're talking about the national unemployment rate all right here in today in Illinois you pay a percentage somewhere between I don't have it in front of me 1% to or half a percent up to 7.2% of the first whatever it is $14,000 of income I'm close that's Illinois only which means that if you get up to 7.2% you're going to pay $1,000 a year per employee for unemployment whereas if you're at the bottom you're going to pay next to nothing it's going to be hundreds of dollars okay so I got my rate from 7.2 down to .6 or something over the years how did I do that you ask good question first of all we don't even need to be here Jay well you want you want the answer or not Lauren I'll stop if you want keep going number one I'm much more careful who I hire we're much more careful doing the interview process the reference checking the whole thing number two at 30 days you own the you you own their unemployment generally speaking if you if someone gets gets uh un hired within 30 days you're not responsible for their unemployment they could have worked at us steel for 40 years you hire them they're there for 40 days you own their entire unemployment it's unbelievable so number two is in 28 days we sit down and think is this person working out or not and answers like well they're really trying harder well we've had worse or we don't take chances with it now and almost always you can usually tell by 28 days if this was a good hire if not you tell them this is it's a probationary period we on hire doesn't happen very often but that certainly helped number three um if someone we manage properly if we make people productive and work hard and and if they're not working and if there's a problem we sit down and we have candid conversations we've told you three times about this we we're concerned you're not the right person for this job I don't know if you knew what you were getting into and then sometimes they figure it out on their own and they leave on their own which is better for them and better for us they look for another job they leave lastly um we document if we have good policies coming in on time it's all laid out we treat everyone the same and if we have to contest it we usually win because of this methodology I very seldom have an unemployment claim now because the first three things take care of it and when we do have an unemployment claim we usually win because it's a slam dunk we warned them we told them they violated the policy and as a result I'm telling you fact my unemployment rate is down to the minimum it's I've I've had one I've had one claim in three years that got through one how much money does that save you a year I gave you the math um I have 125 employees if it was at its Max it would cost me about $1,000 a year each that would be $125,000 in unemployment insurance I'd be paying if I was still at the max and you think you're somewhere in the neighborhood of oh it it can't be more than um um $10,000 interesting this is kind of the irony to it if someone's got a super low unemployment rate like the minimum it means one of two things either they've gotten to be good managers they're careful who they hire and blah blah blah or they never fire anybody because they're terrible managers pick one if they're terrible managers they're probably going to be out of business eventually so um the unemployment rate is a grade of how is your management because if you have high unemployment rate you're doing something wrong and no one knows better than I did because I was doing everything wrong I was a revolving door Dana what's your experience been with bogus unemployment claims well they're not they're unemployment claims well some of them are bogus right some of them are angry some of them are emotional um and some of them are you know I don't know what to do so this is what I'm going to do so we just document we document thoroughly sometimes with video sometimes with audio Always written out um documentation um and that's how we've been able to keep our unemployment low is and then we train we've hired better meaning the attitude you know everybody coming through the door has a cosmetology license but they may not have the attitude to work at paraloid so we know that the people who come into per boid who want to make per boid what they think it should be versus what it is we know very quickly that these aren't the people who are going to to work out and then like Jay we let them go within a certain amount of time not a lot of the we don't get a lot of that I find that that my rates go up after I lay people off and there have been times when I laid people off off because I just needed to and then the claims come in I think that the critical thing to understand right out the gate is that the states have different rules and you really need to understand what are the rules for your state so I know Liz is in in New York I have a hard time imagining that New York has an employer friendly system but knowing things like well what are the days of the grace period that you can get rid of uh what are the Criterion for deciding for or against you I've only had one contested claim and uh it turned out that in the process of that I had a lot of conversations with the adjudicator and you can't fire someone because they can't do the job in Pennsylvania and expect to avoid the unemployment claim that's I think that's everywhere just so everyone knows yes do all the do all the warning do all the documentation that's all good but really understand what what the state sees unemployment as for and then the other thing is that I think that there's as much impact from the general uh economy as anything you do yourself so that the unemployment claim is going to be big if the person lingers on unemployment so if you get rid of somebody in a time when unemployment is high you're going to end up paying out a lot of claims I just went back and looked at all my rate Ates from 2009 to this year and they were high in 2010 11 12 because I had to lay off 22 people and I ended up paying out those amounts over the next few years and uh and then now it's down to 1.8% and it's more to do with not having laid anybody off and then and then when I got rid of a couple of low performers in the last few years they immediately went out and got other jobs so they just weren't making claims so there there's there's a bigger context than just what you do I mean yes absolutely do what you can to understand the system and avoid it but a big part of your ongoing cost is going to be determined by things that are out of your control which to your point those weren't bogus claims that's what unemployment is for you had to lay people off that's what unemployment's for it worked and right but you end up paying for it yes but I'm saying but but you know uh that's what unemployment's for and I wonder if this is what Liz was referring to aren't there times when you just want to fight whether the former employees should collect unemployment or not is that the bogus no either it's legitimate no no I I disagree and and I think that there are definitely times I had an employee that I fired because he wasn't showing up for work and I did all the stuff documenting it writing it down and uh we had the final meeting where his transgressions were to be reviewed and I filmed it and what happened was I sat down down handed him a document here's your problem here's the policy violation started reading it to him and he threw it in my face and jumped up you know basically screw you I'm out of here but he was smart he said you can fire me if you want but I'm not listening to this garbage and then he just left and so then I did go and fire him and then of course he claimed unemployment and I sent this movie in to the adjudicator and I said check this out you know like how in the world is this not a quit and he said well it's not a quit he he asked you he didn't say he was quitting he said fire me and you did so it it's a fire but and the guy took pity on me he told me exactly how to play it so that so that the claim would be denied and it was and it basically was the guy had demonstrated that he couldn't be managed and that instead of me saying that he had quit uh I should just say he couldn't be managed you know that is a critical piece of this question of competence or whether he could do his job or not and it wasn't a question of who who quit or who got fired it was he had demonstrated very clearly that he could not be managed and that was a legitimate reason for me to get rid of him you hit on the key piece which is there's there's maybe half a dozen reasons why someone's not eligible for unemployment one of them is they didn't follow agreed upon rules one is is you know attendance there's there's reasons so you have to pick the reason J before you say that in a blanket way we should be we should emphasize that these rules differ from state to yes my point you Illinois and what I say about Pennsylvania may be real different in in Alabama or New York for that there are I'm 100% with you on this you need to know the rules and if you follow the rules and someone you have to fire someone for those rules you will win unemployment but at least in Illinois if someone you can't say oh they weren't doing a good job that's that's that's not a that's not a reason to that's not a reason they don't get unemployment I want to follow up on one aspect of what Paul just said do we all think it's a good idea to videotape a session where you are letting an employee go I think it's a bad idea because there shouldn't be enough discourse to videotape termination should be quick and you should always have somebody there with you um and some of the times we've even had a quick sign off a quick two or three sent par gra saying you know yes I'm being terminated on this day and done but videotaping it I haven't found it necessary and B I find it to be just too adversarial personally this is just my own personal thing I don't like the idea of returning this into a court case right off here we're going to video I I'm not comfortable with it and I have I have found that by documenting it it's worked fine Paul what do you think have you continued to do that uh I haven't but I find the threat of it to be extremely useful so I have I did that one and it actually was really helpful to me in the situation where I was trying to get the adjudicator to see what happened I mean the one thing about video is there's no argument about what happened but since then what I have done is prepare documentation and have a witness and what I tell the person I'm about to fire discipline when they come in is hey I'm going to do you a favor I'm not going to turn on a camera here and and what it does is it is it lets them know it could be even worse they're about to have probably the worst moment or one of the worst moments of their adult lives and I'm going to tell them that there is a further level of humiliation that I could subject them to and I'm not going to do it and that has worked out well for me since then in that I've discharged six or eight people uh for cause and I haven't had any unemployment claims from that um because I try to always leave them with a sense that it's not working out but I don't bear you any ill will so by telling them hey I'm gonna do you a favor by not recording you right now I see like I see the bully and I see the the bully and the and the buddy right like let me help you help I mean there's there's no way around it you got to be you got to be hard at some moments as a boss you just have to be and you have have to do hard things and they are humiliating and they are dreadful for the person you're you're doing them to and that's just part of the job but there's ways to do it to make it worse or ways to do it to make it better and I'm not a I'm not a hard person but I will do a hard thing if I feel like that employees continued employment is threatening the health of the rest of the team that's what makes me act and uh but I try to always pull back a little bit as the punch lands and try to make it as good as it could be well let me give you my version of that clearly you have to fire some people and clearly they're usually not going to be happy about it and I my Approach has been I want to have Clean Hands which means they've been talked to about it before they were given an opportunity to fix whatever the problem was they've given an opportunity to go look for another job because you said listen I'm getting I'm starting to get concerned you're the wrong person with this job they've had all that opportunity when comes the time that they have to get fired I want Clean Hands and if they go which just happened I can't believe you're doing this and say I can't believe you're surprised we just had a conversation two weeks ago and I told you exactly where we're at and listen Bob if their name is Bob Bob you don't have to agree with me I maybe you're right all I know is this isn't working out for us here today's your last day I wish you well I think that one of the critical things is not the meeting that that involves the firing but the one before that and I bring out the full documentation and the full you know it's it's all the same things you would do to fire someone with an escape valve at the end so there is the written part there is the witness there is the policy violation there's the person has to sign an agreement that they've been in the meeting they understood what happened but I always say you know I've laid out what I want to change in this document we're we're both reviewing I want you to stop doing X and I want you to start doing y and if you do that we'll forget about this it'll be in your record but I'm not going to hold it against you you know it's like a real it's a real warning you have just described having Clean Hands no You' you just described exact what I'm talking Direction and bad on continue down the road and then you fire them but they're not surprised I just want to make clear you guys are all performing at a very high level I am never letting any of you go except for uh for right now cuz we're at a time uh my thanks to Paul DS Jay goz and Dana White wait wait don't leave yet if you have a question or a comment that you'd like the 21 hats owners to address send it to me by replying to your Morning Report or by email at Lauren 21h hats.com that's L ren21 hats.com do it now before you forget and don't be afraid to tell Jay what you really think you can take it and if you got something out of this conversation help us reach more business owners tell a friend subscribe and review us wherever you get your podcasts follow us on Twitter subscribe to the morning report at 21h hats.com this episode was produced by Jess thubron founder of blank word Productions okay now you can leave thanks for listening everyone [Music]