It’s Bonus Season. Are You Feeling Generous?

[Music] hello everyone welcome to the 21 hats podcast I'm your host Lauren Feldman this week Paul DS Jay goz and Laura Xander talk about the bonuses they plan to pay this year and how their bonus plans and philosophies have evolved over time are the payments a reward for company performance are they a reward for personal performance are they supposed to motivate or are they just a thank you then the owners talk about managing employees a discussion inspired by last week's episode with Dana White about navigating the space between being a pushover and being a jerk plus are 360 reviews good management or are they kind of creepy even in Good Times owning and running a business can be a lonely Pursuit our hope is that these weekly conversations will let owners know they are not alone in facing challenges same thing with our daily newsletter the 21 hats Morning Report which highlights the most important news of the day for business owners and which you can subscribe to at 21h hats.com where you can also find transcripts of our podcast episodes and lots of other articles and interviews joining me this week on the podcast are regulars Paul DS who is CEO of Paul Down's cabinet makers which makes custom conference tables outside of Philadelphia Jay goz whose companies in Chicago include a picture frame business artist frame service and a home furnishing store Jason home and Laura Xander who is CEO of Jimmy Bean wool a digital yarn store based in Reno Nevada and meline TSH a yarn supplier based in Fort Worth Texas the episode is titled it's bonus season are you feeling [Music] generous welcome Paul Jay and Laura it's great to have you here as always I appreciate it here's where I want to start today it's bonus season we've had a couple of tough years and a very tough labor market and I'm curious are you guys feeling generous what are you thinking as we approach the end of the year anybody well I can jump in I've said for years that the match on the 401K plan really isn't and I hate this word but I have to use it here fair and that the people who have higher income spouses that work they can afford to put away more they get a nice little company match of they could get you know a couple thousand doll and the person at the bottom who makes $43,000 a year that's got two kids at home can't put any money away they get nothing so that's always troubled me and I've just figured out in my world at least I'm not telling anyone else to do this I give a yearly bonus for everybody in production like 30 bucks a year so if they've been there 10 years they get $300 they've been there two years they get you know $60 and I feel like I might I might bump that up some and that way at least the people who can't put money away are getting something and there's no perfect solution in my mind you Jay I think the the thing about the 401K is a really interesting point that people tend not to think think about but I'm curious do you think of that as a bonus I mean I I know it's money coming out of the company coffers uh but do you think of it as a bonus yeah sure you don't have to have a 401k plan you don't have to match it I I and I and here's the other thing that's happened now that I'm 65 and I'm looking at my own retirement I am concerned about my key people's retirements and I'm looking at how much they've got in the 401K plan and I am I am trying to structure it so everyone will be I want to know when they retire everybody's in a good place so I am paying more attention to it now and the company's bigger than it used to be and hopefully I have more cash flow now that I can afford to do that I was going to ask about this $30 per year work I think that's really interesting do you increase that every year like with inflation no but I do occasionally but you know it it doesn't sound like a lot but I gotta tell you I got plenty of people with me for 20 years so they're getting 600 bucks so it's not bad and I think everyone appreciates it and I'll tell you what I did when I was trying to do a profit sharing thing where I used to give out and then we hit the bad years of 08 09 and every year I'd have to have the meeting and say listen guys we're still not where we need to be I can't give it and it used to weigh on me and I finally realized that we're talking about I don't know 7even 8,000 bucks and I just decided I'm giving it to everybody one way or the unless things are really bad and I can't tell you the we it lifted off of me I feel completely liberated I and they really appreciate it and it's just it's just not that much money and all I can say is these people just need food money they need money to put food on the table and take care of themselves and they're not my partners and when things are really good they're not getting bonuses and when things are really horrendous they're not getting money taken away so I just feel good that the people that have hung around are getting something and it works for me by making that switch you removed any sense that the bonus is BAS on performance it before had been tied to that do you think you lost anything by doing that not at all because I we my manager's very good with sitting down with people with their raise review and telling them why they're making what they're making and if their performance goes up he pays them more and I feel good it keeps that system clean and then also it takes the whole issue on the raise reviews of well I've been here for a longer yeah well you're getting a bonus for that it it just takes that out of that whole mix so I feel very good that we're paying people appropriate and according to how productive they are and giving them a bonus for being around for years is obviously saves the company money if you want to change people and all I can say is my turnover is very low my average person is going to be 11 years my my turnover is less than 10% you know we're not talking about people making $80,000 a year we're talking about people making 40 50 $60,000 a year what do you do about the people who are making $80,000 a year Well many of those people people are on some kind of commission or they get some kind of percentage and then there's others that uh I do have a bonus thing that I'm setting up for that level so it's it it's very in my mind in in my way of thinking I this is not a one-size fits-all thing I've got different categories of people doing different kinds of things and I I'm trying to do something that works for all the different groups so some groups get their for 1K matching some people are getting commissions some people are getting bonuses Paul what are you thinking this year boy um we have cash to give out substantial bonuses but what I'm going to do with it is pay down long-term shareholder debt instead and that goes with my basic theory of bonuses which now is Rich and happy I got to feel rich and happy if I do then I give out goodies and if I don't I don't basically you mean pay you and your brother back some of the money that you've in put back into the business is that right with a little luck we can pay all of it back and it'll be about a half a million bucks and uh and yeah that's debt that frankly I never expected to be able to pay back because the business just I pay my people well and so a lot of the profit that would lead to an annual bonus is just going trickling out every payday in above Market wages and in things like health insurance and so um I used I've tried a more formulaic profit sharing SL bonus scheme uh 2014 2015 and gave it up after just like Jay a string of bad years when there just wasn't any and what I've come to realize is the the the formulas I came up with were just handcuffs on me they forced me to take out money that I probably shouldn't have and I was trying to motivate more productivity on the shop floor by giving people a very defined piece of whatever they produced but as Jay pointed out you never go back to employees and ask them to give money back when the times are tough they just don't have it so uh it's it's it's just not in my mind for a company of my size it's just not reasonable to try to make it a formula do you think it was motivating briefly what I tell people now is that is that the company needs to make money so that the company can take care of the employees and uh if it does then we have the ability to at least cover the the health insurance costs and some some of the things that we do operationally that are expensive in a way that's very invisible to the to the employees like Flex time is something that has a definite negative effect on our ability to manage certain aspects of production but everybody really values it so so we have it but the company is less profitable I'm pretty sure because of that although we probably are retaining employees that we wouldn't have otherwise so I mean I don't know that that's why at the end of the day it's just like do I feel rich and happy yes give them money do I feel troubled keep the money that's what it comes down to I think the employees respect the fact that that we don't lay people off and last resort that that no one's I think they're happy they get they get it they understand we have to stay in business and we have to be profitable and this whole I have to open up this can of worms this whole phrase you keep hearing people over profits that is a false Choice that's like saying you're in a cave Lauren you've got two choices I can give you air or I can give you water which one would you like and you could go oh I need the air great well you'll still be dead in two weeks because you don't have any water I mean you can't run a business without a profit so the people are going to go down the tubes with it anyway do I believe in people uh profit over safety no I think it's horrible what Facebook's doing with they know that that their stuff is causing problems they're still doing it profit over the environment terrible they shouldn't be polluting Rivers companies profit over ethics terrible but profit over people I don't know what that means I I just it's it's that's just a false Choice Paul let me ask you you've told us that you are tremendously remarkably transparent with your employees about uh the company finances right down to how much money you take out will they have any sense that this year you're choosing to pay yes yes every Monday I get up there and tell them basically how much cash we have and how much we expect to get in a bunch of different Financial metrics they know how much I make and they know that you are going to pay yourself back rather than pay bonuses this year yeah I've been telling them for months I've been okay you know like we we've for the last 20 years we normally had somewhere between 100 and 250,000 bucks in the bank and then January at the end of January this year we had 800,000 in the bank and I told them and I was like okay we've got cash so we can we can invest in equipment which we did we can invest in shop improvements we we've got I'll spend some of that money and but I'm I'm going to pay down this debt because a servicing the debt costs money and um you know it costs about 45,000 bucks a year because I pay I've never paid much principal back to anybody but I figured well at least I could pay them a decent interest rate so just wiping all that out and about about I don't know 2third of it is is is to me and the other ones are to my brother and my father just recently passed away so his thing I guess ends up in my lap but anyway it's it's a chunk of change but then it does lower our operating costs so so I mean I just tell them the the one thing that I've noticed at least with my crew is that they're remarkably flexible about going along with my plans I guess I've never really strayed near the this is intolerable boundary for any of them and uh because I've never gotten any push back whenever I tell anybody stuff like this but that's a different situ I mean I would not necessarily recommend that for other business owners everybody's got a different situation no and you the fact is you're a good boss you treat people with respect and it's a nice environment and they should be happy I had a guy that we laid off right when the pandemic hit he frankly just was was over promoted and wasn't getting the job done and he's a good guy and and I like him but we had to do what we had to do I got to tell you two years later we just brought him back he's happy we're happy he said the place he was working this is his word not mine he goes they were savages the owner would come out of the office screaming at the top of his lungs swearing and it was freaking him he's happy to be back and I'm happy to have him back the fact is if you treat people with respect and it's a like that's good did you bring him back at a lower salary a little bit 10% less but he's reporting to the other guy that we used to report to him and you know what he's happy and I went right over there the first day he came back to welcome him back and gave him a hug and said I'm glad you're back I didn't have a whole long discussion about it but how many people do you know they can get the toothpaste back in the tube so so timely we just had to demote somebody who had been over promoted um two days ago so we were kind of trying to figure out is this going to work out you know how's it going to go they took the demotion so we we'll see Laura what are you thinking in terms of bonuses for this year um I really appreciate like I really enjoyed listening to Paul and Jay and hearing what they do because it's very different from what we do um what we do is we look at what our profit is if and we've only had two years and 20 that we didn't have a profit um so we look at what our profit is and then we take a percentage of that and then we just divy it up how do you divy it up I I have an Excel spreadsheet that I've been using for I don't know 15 years and what I do is I have three columns so I add up all the hours that were worked for the year and then I have all the hours that each of the employees worked for the year and what that is as a percentage of hours worked and then I have a column that is how many years they've worked and then I have a column that is like one through five how valuable they are to the business if you will or like you know kind of culture fitwise like like how H how much hustle they've put in this year and then I have a formula that gives me a weighted percentage of what they should receive of the of the booty I guess um and then and then I take a look at that so I let the you know let Excel do the math there and then we kind of round it and wait it and I sit with you know the managers and say this is what the math says now you know what a human say so um and then you know we just kind of compare does that take you as much time as I'm imagining nah it takes me an a couple hours but I enjoy it okay so the question is do you think they compare they I think I'm telling you they compare how much they got absolutely I question I would question whether you wouldn't be better off leaving out that last part about how much hustle that should be in their paycheck every week and I I so I'm saying I loved it up till then I love the years I love the spread all objective no one can argue with it everyone knows the formula like when I give out my bonuses everyone knows exactly why he got I mean we go from top to I go from the lowest to the highest I go okay this guy's getting $800 and it's a fun thing and they hear the number and no one can argue about it who can argue with a guy that's been worked for me for 30 years and that's a great point on the um you know if they're not hustling they shouldn't be working for us uh and so I think that I did that 10 or 15 years ago because I didn't have I wasn't a good manager and I didn't have good managers and we weren't doing a good job job of making sure that the hustle you know the people that weren't hustling were out so now we're you know we're in a much better spot where we've got you know 95% of the people we want to be there you know we only have a couple of people one or two people that you know we'd be happy if they left that said um the reason that I've kind of kept it in there is because it feels like every year we have one or two people who Maybe started the year really well or created tons of problems for the first half of the year you know or the first quarter or whatever had these meltdowns and you know sucked up a lot of time and energy in there for money and so we've just you know and they just haven't been as easy to work with their wage is already their wage like what are you going to do stop giving them raises well but we are let's say we already did let's say we gave them a raise in January and then because they were doing really well and then they had a six-month meltdown so the question is does this em this clearly emotionally makes you feel better that you're getting back at them on some level but the question is is it really helping anything that's my question so they got $300 less or $200 less is that really getting you what you want which in my mind what you should want is then to step up to the plate and start doing a better job is that really getting you that or are you just feeling better great I got 200 bucks out of them that's a great Point that's a really really good one I have another question which is the the formula as you described it doesn't really take into account the initial compensation in other words if everybody worked the same hours and they were basically the same person they would all get the same amount so how variable is the amount that comes out the other end of the formula it's not it doesn't take into account their compensation it takes into account hours worked so that means it's it's clearly more it's clearly more significant to the person who giving someone who makes $38,000 a year a $500 bonus that's clearly bigger than them than someone who makes $70,000 you're giving him the same 500 and there's nothing wrong with that I don't think there's anything wrong with it that's always been my theory with the bonuses that we actually divided it so that everybody in the company got the same amount and I think that making it proportional to the hours work is a nice twist absolutely but my feeling was that the bonus pool only resulted from the efforts of all the people and I never liked the idea that the more highly compensated people got a bigger share of the pool because the guys who are pushing the broom are actually just as important to me to get the work out the door so so the question is is this a motivating thing or is it a thank you and in my mind I have a quick answer to that it's a thank you that's all it is it's it's just a thank you that's my feeling too I love the thank you and actually I'm I'm glad that you mentioned that because I think it was a year ago or two years ago we kind of changed our terminology and we said it's not a bonus this was this is more of a thank you it's and the percentage of the profits that we give out as a thank you does change has changed based on how stressful the year was um so in years where things have been incredibly stressful we've given out a bigger percentage because we feel like people have put more into you know their job and their life you know blah blah blah and have you ever explained the formula to the employees or is it just Mystery Box no I explained it and that and I say you know you are pro you guys are going to get different amounts and the amount is based on the number of hours that you worked so that kind of accounts for people who maybe just started nine months ago or people who only work part-time so that kind of equalizes that um and then it's based on you know blah blah blah so yeah I explain it all wait wait wait let's go over the blah blah blah so then you go and if you've pissed me off you're going to be getting less than if how do you handle that part of it then or do you not talk about that part of it is that the secret santa part of it where you just don't mention that you're taking a little adjustment at the end if they've pissed you off no that's a good question let me think about how we phrase that but it usually has something to do with um we have a court so when we do reviews we do two different kinds of reviews we do a performance review and then we do a core value review and so we say that at the end of the year it's really based on core values you know and what your core value score is um I don't say that specifically but we have six different kind of measures um six different core values that people get reviewed on so we just say and we're very transparent about what those core values are they're you know they're up in the warehouse or they were until we moved this week um so people know what they are and they know for the most part they should know um where they're lacking and where they're doing a great job because we do lots of peer reviews during the year and blah blah blah so that's the third part is it's based on core value I haven't heard you mention peer reviews before how how does that work um maybe guys call them the same thing but it's a 360 review so when somebody's uh when when a milestone comes so maybe it's they've been here for 90 days or they're at the 90day Mark in a new position in the job um or maybe it's their annual review will'll hand out anywhere from three to six kind of peer review packets and we give them to the people that either they work with that work for them or that they work for blah blah blah um and then have them fill those out and it's again these six values and we ask them you know how caring do you think this person is how much of a team player and give us examples and so we get lots of examples and then we sit down and we say okay here's you know here's the summary here's a synopsis of kind of of where you're at and how well you fit into our environment um so yeah that's something we've been doing for God I don't know maybe five six seven years I know some people are very uncomfortable with the idea of 360 reviews and the notion of ask asking employees to add me to that list extremely UNC I'm cringing when no you're I'm just cringing I just cannot imagine sitting down with someone and going well here's what your co-worker said about you they don't think you care I just oh my God I it's like you're up to the Pearly Gates and you're being judged for the kind of person you are I I just I'm uncomfortable with having co-workers be managing each other yeah but okay so let me give you an example so we've got I did a review with somebody recently and I gathered all the feedback and this person is a great employee um from a productivity standpoint from a hard skill level um but it has really had a hard time kind of fitting in you know with everybody else kind of rubs people the wrong way blah blah blah and so having these peer reviews it gave me an opportunity and you know it just depends on the delivery I mean I'm not going to just read it and say so and so says you suck so and so says that you know you have resting face you know instead we talk about there's people say you rub them the wrong way I don't even know what that what does that mean they rub that's the point of getting the peer reviews is that we can dig into getting specific examples so here was an example when you responded this way and that rubbed you know and the perception of what you said was that you were angry or whatever that you may not have been angry but that was the perception and in our environment which I realize is very unique and it's different you know we're in a very creative industry so we have a lot of very sensitive people um you know it's just a tool to explain and to kind of go through some examples of you know an area that you may not realize is kind of irritating other people and you can do it in a really kind um and productive way and then that gives these people I I we've had great results with it it's worked really really really really well um because again we give people specific examples and we're not like calling them out well wait if you're if you're giving a specific example they know who ratted on them right not necessarily no I would argue that what you're talking about is there's a word for it it's called management so I might do the same thing you're doing except it might it's not called a 360 review I that's the question here I'll give you my quick thing you you about your your your your values here's our four it's real simple it spells m easy to remember M mutual respect screaming at people's not mutual respect being rude to people's not mutual respect I stands for integrity nobody's stealing that I know of back in the olden days 30 years ago I would go to use this the saw that's got a cord on it and the cord was cut in half by accident someone cut the cord and they ran and didn't tell anybody that stuff doesn't happen anymore if someone does something wrong they go Hey listen I accidentally cut the cord so we don't have a problem with that anymore C is customer driven if they got to come in early or stay late they know that's what we're all about we have to do it so people are there and the last one is e which is enthusiastic I'm in an artc business I need people that are into what we do whether it's selling furniture or framing pictures if it's just putting bottle caps on bottles they're probably not going to be happy here CU so it works for us so but Jay I'm sure you have tension between employees from time to time yes we deal with it yes well how do you deal with it is it that different if you go to the employees and say to them what's going on are you having problems with so and so um I'm that's why I'm saying I'm not sure what I do is that much different than than what Laura does uh usually someone complains to the manager and then the manager will sit down with him go listen let's talk about what happened yesterday and they flesh it out I don't know that what she does is that much different than me there's just something about 360 degree thing where you're asking everyone around them that that makes me cringe a little bit well the other thing is the interval how often you do a 360 like once a year it's a big event right um I'm sort of in Jay's camp and I try to give people feedback first of all I have oneon-one meetings with every employee three to four times a year and yeah and let me just throw out that we're you know maybe it's the terminology because maybe it's not really a 360 review it's more just the formal process of getting some feedback because on a regular basis um but we're doing we're getting this feedback every day you so when when we sit down and we do a review nothing should be a surprise well here's the one different we don't have a schedule if something happens we deal with it an hour later so 100% okay so I'm just suggesting I don't really my guess is you and I are doing almost the same thing I I don't call it a 360 review because I got to tell you that's a big big business term that is screwed up from what I've ever read and doesn't have a great rep it's like so we do we want to deal with it in the minute like I said when we do a review for somebody it nothing should ever be a surprise because we should have already talked about it but what we like is having that you know having that very specific time to sit down with somebody and really evaluate how did the last year go what do you want to accomplish next year what do you think your strengths are what do you think your weaknesses are here's where you've improved here's where your peers say that you know you've improved or here are the things that you know people wish you had done a little bit differently or whatever and my argument is that's called management yeah yeah now do you get a 360 do you get a 360 Laura do they tell you what they think of you that's what I was ask I've gotten some calls about you that I want to talk to you about that you're rubbing some people the wrong way but I don't know if this is the appropriate form to have it in so we'll talk later you serious no but did you notice how dead silent she got yeah that's my point this is the problem with 36 like I don't want a three you know what I honestly no I got to tell you I feel very good that I have half a dozen people to work with me that will come into my office and say Jay I think you're looking like a jerk with this or you're being a jerk or Jay you got to rethink they'll tell me and it's a beautiful thing and I appreciate it and I always appreciate it that's my 360 review every day every moment and I get it at home too all right on that now let's take a quick break to hear from our sponsor and then uh I want to ask you guys a couple questions about the interview I did uh last week with Dana uh so we'll be right back I'm here with Rob Levan co-founder of work better now which provides businesses with highly talented virtual assistance Rob I've noticed that owners tend to have certain questions about virtual assistance for example what exactly can they do yeah Lauren we get this question all the time uh because people really know deep down that they need an assistant but they're not exactly sure how it works and what they can do for them I would say that our clients use our assistance in one of two ways they will either use them much like I've been using my assistant for the past 8 years as an executive assistant handling my calendar which takes up so much time email management database file management personal tasks creating documents for me and then a lot of our clients basically operationalize our assistance so we have assistance with titles like project manager marketing associate operations manager and customer service representative I think some owners worry they'll spend more time managing their assistant than it would have taken them just to do the test themselves how do you respond to that right right right this is a deadly trap not only with assistant but really with any employees which is oh I can do it faster myself and the reality is you might be able to do it faster yourself of course it's impossible to grow your business if you're doing everything yourself I was very much uh of a similar mindset and what I did with my assistant is I basically told him what needs to be done and had them document it I hate documenting tasks but I know that processes are so important now we have a manual full of my uh tasks I only had to tell him once that he can follow time and time again and if he's out somebody else can follow and also think about it this way if you're a business owner making something like let's say $200,000 a year which is about $100 an hour you're basically paying somebody to do administrative work at $100 an hour if you're doing these tasks yourself that makes a lot of sense what does it cost the cost is $1900 a month and as you know Lauren we are offering 21 hats readers and listeners $150 off per month for 3 months just by by mentioning the word Lauren there are no contracts also very important for people to know can you promise a return on that investment if you're not getting a return something's not going right all of our clients are not only getting a return with the first assistant they've hired but many of our clients are now on their second third and fourth assistant where can we learn more work better now.com and again when you sign up for a 15minute consult just mention the word Lauren we'll make sure to give that $150 off for each of the first three months thanks Rob and we're back so as as you guys know um last week I I caught Dana at an interesting time she was just back from this great trip to Germany but uh while things went really well there when she came back she was hit with a couple of resignation letters that kind of shook her uh and we we talked that through and one of the things that came out of it was she was kind of questioning herself as in her role as CEO and trying to navigate that Territory between being a pushover and being what she called being a Laura can you relate to that at all and do you think it is something that women struggle with more than men um well I'm not a man so I don't know if I would struggle with it less if I was a dude um I mean I have told you before like I feel like Jay and Paul have are infinitely more confident and kind of cocky than I've ever been but I totally related and I actually after I listened to the episode sent Dana a note and I'm just I remember kind of getting caught up in this I need to be tougher I need to be tougher um and all of a sudden but being like that is not who I am you know and what I realized was I don't need to be tougher I need to be clear but kind I mean there's definitely I I needed to improve being clear about what I wanted as opposed to like dancing around stuff but I needed a better manager you know I needed somebody to be that buffer between me and my employees so that I could still be a nice person and be who I am okay I have to jump in I can't take anymore let's forget the word tougher let's forget the word let's how about just being a pushover because that's really what this comes down to it's being a pushover you know what you need for the business and the person's not doing it and you allow them to push you over so my argument is being nice you can be and not be a pushover at the same time I agree but I think where my hackles went up just a little bit or I was a little was you know she was giving the example of talking to somebody who needed to send an email or something and I think they needed to leave early to go pick somebody up or something it's the what I wasn't clear on is sometimes there's there's being flexible and there's being strict just for the sake of being strict and I don't want to see I've made the sake of being strict for the sake of being strict because it feels like that's what you're supposed to do whereas there are times when you know it doesn't matter if the email gets sent in 3 hours and if I mean we have a really flexible environment like and and I've been talked to that I'm too flexible in that way and that's where having a really good manager come in who is a little more strict than I am and doesn't allow me to get pushed over because I am a pushover I have the answer this is easy you are transitioning from being the m manager to the leader the leader shouldn't be doing that stuff I don't ever do that stuff at all I have nothing to do with that stuff everyone else is doing it my comment on on the Dana situation is again I I I agree with Jay that saying and saying this is a man woman issue is not helpful that what we're really talking about is whether people are uh willing to or dying to avoid conflict and do stupid things because of that or whether they lean into conflict because they enjoy it those are the two ends of the spectrum but the other thing that's not coming up is different organizations and different types of employees really require different management techniques I've noticed that much larger organizations that deal with their employees just by having systems and not having flexibility and I think a lot of that is the fact that by the time you get 200 people or 10,000 people you really can't be flexible with everybody whereas me with 24 employees who are all pretty good people I can be extremely flexible and so things that I do that in a different situation may look like conflict avoidance or leaning into it one or the other uh you know like I just have the freedom to do that and in different companies it just looks different well and the key is is does the flexibility harm the customer that's why I went through my four things like if you want to send an email to a vendor to question a price and you're 3 hours late who cares but an email that a customer was expecting to get by 1:00 needs to get out by 1:00 so it's about can you afford to be flexible on a particular on a particular issue all right let let me give you a different example um this past week in the morning report uh we High highlighted an obituary uh for Aaron furstein who for a time may have been the most famous business owner in America he was famous because he declined to move his textile mill out of New England when everyone else in the industry was leaving and going south and because he he continued to pay his workers including Christmas bonuses right after a devastating fire just completely destroyed his plant um he kept everybody on the payrolls he borrowed a lot of money to rebuild in the same place uh but as a result he ended up bankrupting the business and losing control of it it was taken over by another company and ultimately moved to the South this happened I think in '95 all these years later I'm curious what lesson you guys take from this what what was this an example of of forgetting that your job is to make sure the business stays profitable and and I want to absolutely add to this he's a was a wonderful human being I totally can with sympathize empathize the want to take care of his employees you know going bankrupt doesn't mean you went broke it means you stuck a lot of people for money so on one hand he was lovely and wonderful to his employees and he hung a bunch of people at the end for probably millions of dollars that he didn't pay the bills on that maybe put them out of business so uh it just illustrates once again our job is to take care of our people and to take care of the business at the same time not one or the other yeah I agree with Jay I mean I tell my people all the time if if you want the company to take care of you we got to take care of the company and there's moments when the the the flow is in one direction or the other but a lot of it is about being honest with people about the situation is like if we're doing well tell them and and then we've got goodies to hand out but if things are bad you have to go back and say we're in a bad situation and I expect if you like working here and you don't want to have to go work at Home Depot or something then uh we're going to have to take care of the company at this point and that's going to mean sacrifice same page which is interesting that goes back to this whole bonus conversation like at the end of the year or the thank you keep in mind he paid all his employees they could have gotten unemployment maybe it would have been smarter to just let him go on unemployment for two months and then come back to work I mean there's ways of doing it without putting yourself out of business and I've been through in 43 years I've been through what six recessions some really bad 2008 was brutal I mean I've lived through this stuff well he may have had a personal Fortune the interesting thing would be to dial back three years when presumably he's still confident just say hey how what do you think about that now that would be an interview well that interview was done and he said he would do it all over again he must not have suffered all that much from the decision personally or he doesn't care that at the end he stuck you know 50 vendors and put half them out of business well you don't you don't know the details I don't know that I don't know I'm just saying I all I know is when you go bankrupt that means you didn't pay some people last thing we just got a pretty scary inflation report um prices are up the most they've been up in 30 years um you guys concerned I'm not I sa my concern for things I have control over so you could name 20 things that I could be concerned with if I wanted to be neurotic and nuts and not sleep at night here's one more thing I just I there's nothing I can do about it it is what it is same page and I'll deal with it as it comes along I I there's 20 other things you say are you concern no I save concern for things that I can fix or adjust or so it hasn't hit you oh it's absolutely hitting me what are you going to do though there's going to be pressure to raise to raise wages and prices yeah I've done that we are always trying to raise our prices anytime we can sneak it by somebody but uh raising the wages is is is a much different issue because my company is not all that profitable to start with so if I just I mean it's an extension of the bonus conversation for us if I just start handing out handing out raises then that's really going to be bad for the the company so I've been stealing myself for that conversation about hey I need more money for gas or whatever and my response is get rid of that pickup and buy a Prius but uh um but I don't know how far that's going to go you know I don't know how it's going to play out with my people where is it hitting you Paul what prices are hitting you the prices I I actually don't even know I haven't dug into it in the last few weeks I mean when they measure the the inflation and release that number a lot of it is stuff that that doesn't affect me directly um people's rents or housing prices or gas prices like we're not running a fleet of trucks so I don't really care that much about gas prices but I do have people who drive an hour every day to work a lot of them and so if they're feeling pinched uh and they don't want to give up whatever vehicle they've got then you know it's then it becomes sort of some I got to deal with and I don't particularly want to have to have that conversation yeah stuff is going up in cost I I'll tell you what I There's an opportunity here there's always an opportunity the opportunity is your competitors are going to start making really bad decisions now they're going to have a really good employee who deserves a raised and needs to get a raised and they're not going to give it to them and they're going to quit and they're going to come to work for me or there's a a really good product you sell that's gotten more expensive expensive that people really like and you continue selling it and other people are oh no it's too expensive they're going to stop selling it um or or they're not going to raise their prices and they're going to go broke because of it so these times are what makes the difference between you know smooth Seas make a poor sailor that says it all these are the times that make you a better business person and you got to navigate this and the knee-jerk reaction of people that are afraid they usually make bad decisions and it takes some people out there were 25,000 Frank shops in America 20 years ago now there's 8,000 yeah for us um it hasn't necessarily hit us super hard yet but I'm anticipating that it will so we're just we've shifted our business model you know we're just focused more and more um this next year on profit margin you know and reducing the volume and reducing how much stuff we're doing but making each thing more profitable um and we've been working really hard in the side of things on making each person more efficient so our goal is to have fewer people but to pay each person more because we are rebuilding this business we have a lot of opportunity there my thanks to Paul DS Jay goz and Laura Zander as always thanks for sharing guys really appreciate it 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 21 hats.com this episode was produced by Jess thubron founder of blank word Productions okay now you can leave thanks for listening everyone