Rethink Your Rewards and Create an Ownership Mindset for Life

all right and i'll just start greeting them as they come in so what yeah you got it all right thank you i am admitting all and i am going to st i'm obviously going to be here i'll be stopping my video and i'll be in the background so if you need something very good you got it thanks again for all the help of course no problem at all this power pleasure won't be there and that's when welcome everybody as you're coming into the room we're still a couple of minutes out but i thought i'd uh say hello and see how everybody's enjoying the conference [Music] uh um all right looks like uh we're we got some first timers first conference so far they're very good good to have you glad you're part of the community great keynote speakers excellent and uh mike says pretty swell so far great info great speakers great stories that's right and we're gonna have some more good stories today um one minute out so just uh saying hi and hoping you all are having a great conference we'll be starting up very shortly i see hello from minneapolis and hello from colorado springs that's awesome i mean i'm coming to you live from springfield missouri oh darling you saw my beard i know it's so weird hello from tokyo well hello to tokyo and we've got minnesota dc awesome i love it raleigh missouri huntsville alaska florida yeah from frisco texas that's so great and boise as well good to have you all hey this is exactly what we want to do right is we want to make sure that we begin this whole process with lots of interaction i've got my chat open and we are a live session so i want to make sure it's as lively as possible my name is steve baker i'm with the great game of business in springfield missouri and uh welcome to rethink your rewards and create an ownership mindset for life i am very excited to be here with you um the uh the ground rules here are you're gonna be able to get some uh ce credits from uh sherm uh but you do have to you should be able to see my screen you have to do three things you've got to be signed in under your email and you've got to fill out the three polling questions and you have to submit the survey i would highly recommend that you do those things and get the credit but even if you don't go for the credit what you are going to get is an enriched life you're gonna have some fun we should have a lot of fun together i want to make sure that you guys feel look turn on your cameras uh if you're willing to i like to see faces and see if i'm you know landing some ideas and getting things across thank you jamie and kathy it's good to see you guys appreciate you coming i'm very excited to share some of the information that we've got i don't know what you guys know about the great game of business so just as a quick survey visual survey by show of hands or some sort of uh emoji on the screen how many of you are familiar with the great game of business i am you ever read in a conference all day oh okay no i don't have to watch it and see audio there too well um what we're trying to there you go look at michelle i love it so uh one of the things that i wanted to share with you is um there is so much content there's 38 years of content that has been created at great game of business and src holdings our parent company as an employee-owned company over the last 38 years i want to share as much as i can so i've added a lot of things to the presentation so if you pull the powerpoint down from swap card from the platform i'm going to invite you to go to greatgame.com nceo and in addition to the updated powerpoint you'll also have access to jack's second book a stake in the outcome building a culture of ownership free audiobook for you there and i have created just for this session a nifty little handout that contains a number of tools in fact it's kind of weird that i'm going to be talking about bonus plans and this is bonus material it's like double bonus wow and then all that comes from our get in the game workshop so show them to you on screen but you'll probably want to have them after so um what i would like to like to do and i see uh ron i see a few people in the chat are mentioning they would like to be led into the zoom so i'm going to let you handle that part um as we begin i guess i should probably tell you we are you so i'm part of src holdings core corporation in springfield missouri we are now and about 680 million dollars in sales most of our companies the 10 companies that make up src all of them but us make things they remanufacture engines and engine components and we help people we're the educational arm of src and we came about because way back in 83 jack snack and 12 other managers bought out a dying division of international harvesters a story told in the great game of business book and so we've been known as the open book management people and jack has been known as the father of open book management but what's weird is that seems like a long time ago and uh just recently last fall uh reid hastings the guy who started netflix and his chief people officer both put out books um on their netflix culture they're famous for it right and what's interesting is both of them attribute the foundation of their culture as jack stack the great game of business and open book management from src in those early days and what's powerful about that is is that it's about a culture of freedom and responsibility meaning freedom to take advantage and and do things for the organization that makes it better but responsibility and that we hold one another accountable and what i'd like to do is kind of shine a light on one of the the practices that we really focus on these are the the basic principles of the great game of business so you've got a critical number what's that one thing that matters most for the organization and uh you know we say you can't play a game like the great game of business if you don't know the rules of the business that's where financial transparency and education come in you gotta follow the action and keep score of course that's keeping score that's um huddles and forward forecasting and scoreboards and finally staking the outcome i mean why are we playing this game if we can't win so under provide a stake in the outcome i want to talk to you about expanding your minds about how you reward and recognize your people does that sound okay i want to see some smiles or some thumbs up or anything any indication you're still breathing yes we are alive people so we think about this in a very big way we think about rewards as much more than bonus plans and so what i've done is i've kind of organized my thinking today in three segments one is i do want to give you the basics of good bonus design i'm not going to get into the nuts and bolts of a spreadsheet or anything i want to give you the philosophy that has worked for us for nearly four decades i also want to tell you a little bit more about how to leverage this employee ownership mindset that we're all trying to foster um by getting into how do you connect your short-term [Music] your midterm and your long-term reward system so it's not just about an annual bonus program this whole minutes that we have together is really about aligning our short-term midterm and long-term rewards to one bigger goal and guess what that is the the building of a phenomenal organization right because no matter what you do the company is the product i'd like you to write that down even scroll it on your arm it could be new art you might want to get a tattoo i'm thinking about it the company is the product isn't that awesome because won't you have to have great products and what you have to have great services and won't you have to build an education program know and teach the rules well you have to have an accountability program follow the action to keep score and won't you have to give great rewards short-term midterm and long-term company is the product if that's our critical number we're going to focus on building that over the long haul and our esop is the long-term reward would you agree with that that's not a short term thing if you don't believe me go ask a 20 year old you just hired hey how important is the esop to you you're going to get some wake up calls baby but the thing is what we want to talk about is it's not about retirement you know the magic words around this conference it's about wealth generation and that's long-term wealth generation so what's midterm and what a short-term look like so that's what i want to talk to you today now of course the great game of business is known for the this idea of a self-funding team-based uh gain sharing program and i just want to give you the fundamentals so if that's okay i'm going to jump right in and and talk about okay for me i think about short term midterm long term a little bit differently than a lot of folks the long term definitely out there you know tell me five years plus the midterm would be something like what's happening this year so probably an annual bonus program paid out quarterly are you with me so far anybody do that now remember you can use the chat you can wave you can do all kinds of stuff i just want to make sure that it's resonating and then short term what is it 30 60 90 days i want to know that in between zero which is today i want to thank you dave and thank you lauren um when when i think about right now i want to know what's in what's got my attention between now and the quarter if that's as soon as i'm going to be able to bonus a lot of people do it annually i see coming in on the chat twice annually dallin thanks and shannon says yes quarterly bonus program i want to know that people know what they're doing matters their theirs their actions their behaviors their decisions are tied as closely as possible to the reward system as the behavior that earned the reward cindy you said annually thank you very much i'm going to just shock you all a little bit since we're talking about bonus programs right now and say you know we think about this as a much bigger thing than just the annual um here's another one from jim annually but provide spot bonuses throughout the year for achievements great thank you and another one from mike quarterly we think of it as an equitable system and what i mean by that is it is not equal it is equitable meaning we all share in the same program we all are in it but it's basically a percent of salary so equitable meaning it's fair not equal meaning it's the same amount for every person so for us as a percent of our earnings then that means we want people to aspire to greater heights we want to show them a career path we want them to get new training get new education work and and work their way up in the organization knowing that they're still participating in the same stake in the outcome program but that their their piece of the pie gets just a little bit bigger because we're making a bigger pie now who for extra bonus points can tell me what the premise of this movie is if you aren't watching this every year i'm not certain that you should be allowed citizenship okay i got lauren saying uh jelly of the month ha yeah good for you got another jelly of the month i got christmas bonus end of year bonus yeah that's right very good so i want you to go deeper now deeper expectations paul thanks for getting there what was he gonna do with the bonus somebody get in there there he couldn't buy a pool m brown i don't know who em brown is but you just got it and you just got it too aubry here check this out clark was digging a hole for a pool he could not afford based on a bonus he didn't even know he was going to get you follow me how many clark w griswolds do you have in your organization today this is important guys because if you don't think about this every day what's happening is your incentive program may not be effective at all so just in the chat tell me how effective do you think your bonus program is whether it's annually quarterly uh semi-annually whatever just uh zero to ten if you want just how effective let's look at the chat zero being the worst ten being best three be a bro oh my gosh seven okay you're in the right place ladies and gentlemen so why do you think that is it's because we typically set up bonus programs to fail we don't even realize it so first of all there's discretionary bonuses right we as leaders sit down on thanksgiving with a spreadsheet and start deciding who gets what that is a lot of weight to carry you know that's exactly like christmas right you don't know what you're going to get but i hope it's nothing better than last year what about if it's just too complex and i can't calculate it if i have to be a rocket scientist it's not very effective or if it's a dog fight if we create silos department against department person against person it's not building a great company what if there's no buy-in what if there's just no understanding at all that's equivalent to winning the lottery and we know that doesn't really work and then finally what if there's just not enough communication we've literally done uh surveys as we go in to coach a company and we say hey what do you think about the stake in the outcome program you have they're like what's that in a quarter where they're actually getting a bonus check now that is messed up i don't want that for you at all these are the building blocks of an effective bonus program and i want to build it just like a house from the foundation on up and i want you to think about it this way first of all you've got to have a strong foundation that's building a great company and so at the bottom you want to make sure that this thing is self-funded and you insure the company's financial security first now what i mean by that is we don't do profit sharing in other words if you can see my hands profit sharing infers that at the break-even level as soon as we make a buck we share a buck nope sorry that doesn't ensure our long-term sustainability does it it doesn't and what are we doing when we're having a the opportunity to participate in an esop we're trying to build value in the organization correct come on give me a head nod give me something darling you have to nod because you work at nceo you know what i'm saying baby this is it man i'm telling you you've got to make sure what do we need to invest in new equipment new technology maybe new software platforms i mean who knows it's your business nobody knows the job better than you we need to make sure that's right dave elliott need to invest in the company first because what do we really want to do build an amazing company build that great company provide jobs over the long period of time and also build value i don't want to eat a crankshaft when i retire i would like to have a payout from src not a piece of an engine so what i want to do is i want to make sure that we self-fund the bonus program and we call it a gain share versus profit share so it's literally on top of uh whatever minimum threshold that we create and i'll show you how you can think about that threshold here in a moment the next thing is we want to rally people around a common goal what's the one thing that's important to win this game what's that critical number and so for some of you it might be profitability for some it might be diversification for us in the early days if you know the story of the great game of business we started out with an 89 to one debt to equity financial standing it was horrible right worst corporate buyout in american history the first thing we wanted to do is get rid of debt and ever since then jack stack and the team have all been very debt averse so whatever your critical number is let's just say you want to make more money than you did in covid well profitability could be your critical number but rally people around that goal and then set up the bonus program to feed that to drive that critical number then you want to create line of sight you'll see that in the third level up to the right line of sight that's where we actually use the bonus payouts to teach people the business to help them understand more about the financials of the business and how they have direct line of sight from what they do every day to the financial impacts then on the top row what you see is i'm going to go from one side to the other from left to right and leave the middle for last one is create early wins now we call them mini games these are those 30 60 90 days self-funding incentive programs that that really act on the right drivers to your critical number but the idea is they're probably non-monetary rewards that people have chosen within the work groups that designed the mini-games in fact i'm going to do a little demo of many games at our booth tomorrow at 12 30 central if you'd like to come by great game i'll do that for you just a 30 minute you know quick show you what that's all about but what we're trying to do is again reward people early and often we're trying to create a culture of winning and as well as a culture of ownership because they own those line items they're driving but we also want to put the rewards as close to the behavior that earned the rewards as possible remember that put those rewards as close to the behavior that earned the rewards as possible and then on the far right you see celebrate the win and recognize the players did you just catch what i did i didn't say the first word always you have got to stop and celebrate you would be amazed at how many people we've seen through the years who are too busy to celebrate and they do a direct deposit of a bonus payout or they say hey we'll have the party later and what is the message to all of our people who made these results happen it just didn't matter anyway oh my god that's not really what you think is it i don't think it is so we've got to stop even just for a little bit recognize the players really celebrate the folks who went above and beyond and finally above all of this the one thing you never get to stop doing is that central top block communicate communicate communicate you can't stop educating and communicating about the program because bonuses are extremely personal and i will tell you that they get misconstrued misunderstood and misshapen all the time because people make assumptions when they don't have the right information so you've got to communicate and educate endlessly even when you think they get it keep going now i promised that i would tell you a little bit about that threshold or that minimum performance that thing that that level right above uh zero profitability where it's like what do we do with the money that we earn first these are just examples of course but what we say is these are the things some of the things that we need to address if we're going to have a long-term sustainable organization so in the example here you've got well you better make sure that you pay your taxes you better make sure that you uh add back depreciation what about changes in ar what about inventory capex those are the investments we talked about uh what if you've got debt what if you've got a you know take care of the uh the owners if you're a partial esop at this point uh what do we need in retained earnings so it's really very unique as unique as a fingerprint i've been in companies where uh i was at a restaurant once where all they wanted was a new range it cost 30 000 but they didn't think that they could do what they needed to do at other companies i've seen things that were millions of dollars in in hardcore capital expenditures real estate buildings machinery it just depends on you the key is you want to teach people why that's important and that helps in that journey of building a business of business people who think and act and feel like owners do now here's a little quiz for you by the way i'm gonna pause for a second is this pace okay with you guys we're gonna cover a lot so i'm just making sure you're all good yeah great all right so is this a super exciting coupon are you excited yeah christian thank you for the look on your face that was priceless yeah it's like dude no it's not good i wouldn't i don't know i'd probably bend over to pick it up off the sidewalk just so there wasn't litter but 10 percent off is what they give old people that's it's not interesting here's the crazy part when was the last time any of you received a bonus that was 10 of your salary i hope a lot of it dave elliott says 10 doesn't do it for me here's the point when i say communicate and educate this is one of the things that it's a special gift for you guys look at this when you're thinking about designing your bonus program you need to know every percent of bonus is extremely valuable so what we do is we say let's try to create a bonus program that at one to three percent we'd call that an early win at five to eight percent it's very reasonable that we could get there meaning that the let's say you've got uh profitability targets that are xyz you know two million dollars or something just make a number up whatever your number is don't tell me that i could get a five percent bonus for doubling profitability next year that doesn't seem reasonable to me you see what i'm saying i want reasonable achievable and stretch goals and these are just suggestions but the reason i showed you the ten percent coupon was just to get you in the frame of mind that 10 percent is jack it's nothing man it's nothing but boy is it look at 10 percent an achievable goal it's 5.2 weeks of pay where are we europe come on okay who's gonna stop for a second and think about getting 5.2 weeks of pay i'll take it are you with me come on people this is interactive yes you'd take it i know you would so the thing is it's very rare very rare that we see people constantly getting 15 to 20 bonuses but if it was self-funding would you be willing to pay it didn't cost you anything the thing is when you design a good bonus program with those basic fundamental things cath katie i'm sorry he says i'm with you i see tina saying yes and fred is with me all right so the key is it's all about frame of reference if we teach people that instead of look here's the way it is if you say uh ten percent bonus or better yet more realistically five percent bonus if that's basically three weeks of pay or so why don't we talk in weeks why don't we talk in hours many people get paid in hours not percentages so i want to make sure that we talk about it in a lot of different ways and this is one other important component that we like to do when we're building a successful long-term sustainable business we don't pay out the whole pool that's available at any given quarter why would we do that anybody want to share why would we do a progressive payout in other words 10 percent of the available pool in the first quarter 20 percent the second 30 in the third quarter of the available pool at that time make sure the employee is there all year yeah heather i like your your raw steel heart because you're tough and you're fair right what i'm going for is yeah keep the effort going yes i would like to keep them in the game but there you go sophie's got it uh to not go broke if the company goes downhill and then i've got another one here leave room for the unknown absolutely we build up the rewards we don't incentivize someone for leaving those are all true so think about it this way it's not a punitive bonus program it's totally cumulative you never lose the bonus let's say you have a crappy first quarter crappy second quarter oh kovid sorry but by third quarter you're hitting your year-to-date goals what could you receive at the end of third quarter type it into the chat this is my dramatic pause first second third that's right you could get 60 because you could get the the 20 and the 30. and an amazon gift card says lauren just kidding that's funny i like you so here's the thing what we're doing is we're back basically saying it's still there for you in fact in 2019 src electrical one of our divisions was max bonusing all year long and fourth quarter you know what was happening globally december of 2019 i think you'll probably remember you started hearing about some virus over in china remember that guess what global oems started cutting orders they just dropped off src got hit so hard that they went from maxing bonus for three quarters straight to boom losing major customers in the last month of the year are you with me so guess what didn't kill the company because they never paid a bonus that they had not earned they had earned all of those bonuses along the way are you with me so this is just again exposure to a bigger idea of a progressive payout is very equitable to both employees employee owners and to the business itself now usually we don't see that sort of thing happening but aren't you glad you built it in when you created this um so another just is just another example and again it's in my uh expanded powerpoint that i have on the uh nce or great game of business or greatgame.com and you can have all of these and all of our pre-con power points that we did uh the other day as well um including the uh the the bonus material that i've created for you so um there's the landing page checking in with you again any questions so far you'd like to have answered about basic bonus design and these remember this is high level stuff it's it's philosophy more than nuts and bolts tactics you're with me so far still okay you guys want to shift gears a little bit and talk about other stake in the outcome let's see honestly uh what is a standard bonus uh in uh a e world uh um what is a e world just so i know uh while you're typing that in lauren i'm gonna say a standard bonus typically what we see is people will be probably um in that range somewhere between three and eight percent this is fairly typical what we see arts and entertainment thank you i appreciate that is that right dallin or are you just reading your tv guide oh architecture engineering you know what i was way i'm going to stick right i took a stab at it steve i think it was good i think it was very good listen i will tell you architecture engineering yes i think that somewhere in that 3-8 is pretty typical i would also tell you that it's not unusual for people their first two to three years of great game of business when they first implement seeing pretty hefty bonuses because people are coming alive you know that for the first time they're going oh i i didn't know i made a difference and all of a sudden they're driving their own bonus program i'm just going to tell you flat out great game of business with covid we went from 100 in person the whole business right that's what we do training coaching consulting conferences to 100 virtual in a matter of five weeks we haven't seen a bonus since uh 2019 but my people our young people are amazing to me because they see the bigger picture they know we made a major shift in what we do and now we're so much better than we were that i love it they're not knuckle dragging down the hallway they're going what can we do differently what and so now we're tracking about a four percent bonus and everybody's super excited well in reality that's not a huge bonus is it but it's extra right we don't build lifestyles on the backs of bonuses it's extra so thank you lauren for the question that's what i want to make sure of so let's shift gears a little bit i want to do an exercise with you now by the way those basic bonus design steps are in the added material that i gave you um on the uh the website right here greatgame.comceo and the next part of this is you'll you'll also find in that same thing a bonus design checklist and a planned document no matter what your bonus plan is whether you use great game or not don't try to read it michelle it's uh it's just an example but you need to lay out the rules of the bonus program this takes out all of that emotional stuff when you start to say hey if you're on probation you may not be eligible for that quarters bonus those kinds of things but lay out the rules because you will be happy later and this is also a great time to talk with your with your legal and comp advisors and folks like that to make sure that it's right for your organization um as we go into this next part i want to remind you what we're talking about short short-term midterm long-term rewards if you don't set up your bonus plan as that mid-term aligned reward system and the long-term being the um the esop you're missing an opportunity because let's just say that you set up an annual bonus program and it's not aligned with building a long-term value-driven organization chances are you might win for the year but are you really driving that stock price so think about that alignment and then let's talk about how do you align these things so i just laid out this thing i've tested this once before and it's people it seems to resonate with people don't try to read it yet i'm going to zoom in and out of it for you but this is one of the tools that i included in your bonus material and what it is it's a little worksheet and it has three columns on the one column on the left is src these are examples of things that we do and then there's hillcorp hilcorp energy is not employee owned um but i'm going to tell you about them as we go they're one of my oldest clients and they've been wildly successful with aligning uh short-term midterm and long-term rewards and then finally there's a blank for you to say what is our stake in the outcome short term what's our stake in the outcome midterm and what is that long term plus by the way when we get done with this i've also included for your i just want you to be so overloaded with resources that you vomit i've got two other things for you one is a a cheat sheet that gives you ideas if you already have some of these benefits you should put them in your short term midterm long term but it's a it's a full on uh cheat sheet of everything i could think of that people do to provide a stake in the outcome so let's look at this a little closely so it's easier to read you should be able to read that now can you see src hill corp and our stake in the outcome all right so first of all mini games are exceptionally popular um we continue to have people uh sophie i thank you for so much i love handouts too i love anything that gives me value after the fact so um what i've done here is i've said that you know many games are those things that it's probably something that you should be doing all the time but a short-term self-funding incentive plan that your teams create at the work group or departmental level that drive your critical number and these things can happen where there's rewards at 30 60 you know 90 days boom boom boom um we have lots and lots of resources for you on the website and i'm happy to answer any questions about them but this is not a mini games workshop it's staking the outcome so short term you're going to have mini games but you're also probably going to have some recognition and i've got a tool for you at the very end that i'm going to share there how many of you have some sort of recognition program you know if somebody does something good you catch them doing something right i see some smiles i see some soul searching a little bit of nodding yep sure do good good subjective that's great and i'm okay with subjective in fact i really love um peer driven recognition as well as supervisory driven if that makes sense i think peer recognition is pretty huge um but then there's also other stuff that you can include there we have a community community relations board that's something that you can do even as a frontline employee if they want to develop themselves if they want more exposure to grow in the organization they can volunteer for community relations in other words you have a budget that you get to spend in the community maybe it's for a charity or not for profit or a victim shelter or helping the homeless or whatever it might be hilcorp also does that sort of thing and here's where if we were doing this in person i'd have you fill out a paper form and you would write down what your version of that community involvement is maybe you're volunteering on a board something like that and then what about your health care holy crap what does that cost that is a benefit and that is short term i mean what is it it's right now baby it's not just what if something happens right now so many people are using it to to get uh you know treatment for everything except coven you know what i mean copen is covered baby i'm talking about everything else what about just the regular old i got sick my kid broke their arm all that other stuff this is a huge expense perhaps one of your biggest and then what about the unsung heroes like the eap the employee assistance program you probably have and no one uses you're still paying for it it's a short-term thing paul d thank you for the nod baby you know it's real whether it's mental health uh financial health legal help it's all there and it's just waiting for them to use now i'm a big fan of an fsa or an hsa we have an fsa at src hillcorp uses a health savings account do you do a lot of you have those it's a nice benefit and it's something to think about you just have to decide whether or not it's worth it for you and your organization we happen to be big enough where it makes sense we are also um self-insured so our health insurance is very important to us many many of us love the hsa yeah absolutely pre-tax dollars to pay for those deductibles and such it's very good stuff and then we learned something from hill corp they have a helping hands fund which is basically you help your fellow employees we we got inspired by that and we started an employee emergency fund i was one of the first donors to this because look hey is is life hard dalain you saw me do this the other day is life hard guys just give me a nod give me something is life hard admit it it is right and and is it fair not really guess what it's tough as heck that's right dave man i'm telling you your people are coming in every day you are creating a culture of winning and along the way you're going to hit bumps in the road that's what that emergency fund is for so i get to give pre-tax dollars to a fund that helps someone out instead of them going to you know a title loan place or a payday loan place or whatever maybe you know whatever things are isn't it nice that we're helping one another out so those are those helpful inspirations for you okay so that's short term let's go to midterm so in midterm i'm gonna keep a couple of things in here number one is health care because then and on and on you're always going to have health care stuff to deal with um so keep reminding people that has real value but here's where the annual bonus program comes in and i suggest that you try to do quarterly payouts if you've already got it set for 2021 that's fine but if you're involved in the compensation program at all or maybe you're on an ownership culture committee ask your bosses and the the leading employee owners of the business what would happen if you had more frequent payouts if you knew it was self-funding and you knew that um it wasn't going to kill the company you can't you'd pay it out on a progressive basis i think that it makes a difference now it's going to be your culture right you have to decide what else is there now i wanted to mention a couple of other things hill corp actually enhances their community involvement now hillcorp is in oil and gas someone asked me about architecture and engineering now oil and gas historically i'm saying they've had pretty lucrative uh stake in the outcome right they just can because the energy sector has been historically uh very lucrative here's the thing they actually have a giving program where they grant you 2500 a year to give to in addition to your own money to give to the charity of your choice pretty cool and that's a really nice benefit now we can't do that at se i mean we're five percent on a dollar is a pretty good year for us in profitability but we in in the past we've had something called the top gun program now this is just for inspiration i just want to give it to you it doesn't exist anymore but when i first started about 15 years ago i became aware of this and the top gun program was discretionary now remember everybody else at src each of the 10 companies has its own critical number its own bonus program its own business plan its own financials were all separate companies under the esop umbrella of src holdings so top gun was the only thing that cut across all the organizations and the idea was if you did something absolutely extraordinary you might be you might get some votes for top gun awards and these were like a thousand dollars for each vote and each president or general manager of a division had so many votes i still to this day don't know how many and as an example when we came out with the 20th anniversary edition of this book that happened to be my idea and i got some top guns and i will tell you it was freaking awesome but for a whole year i kept going i wonder what else i can do i wonder what else i cause it wasn't so clear right and the reason that we don't do it anymore is because discretionary bonuses often have that effect right it becomes sort of like what what did i do there our regular bonus program is amazing because everybody knows every day what they need to do to make that number move and it's not one person trying to move the number everybody's trying to move the number so we have a higher law of business it's higher law of business number two uh that jack wrote many years ago and that is pretty easy to stop one guy pretty hard to stop a hundred so keep your bonuses group oriented team based if at all possible so now i get to tell you a fun story about another inspirational idea for you in fact this is something that we're literally talking about at src now so hillcorp many years ago uh started a five-year bonus program now i'm including this in the midterm just so you can be inspired because you can make a two year a three year a five year bonus whatever you want it's it's uh it's america right you can do whatever you want what i want to do is in addition to the regular bonus program what these guys did jeff hildebrand who is now on the billionaires list if you read fortune magazine he said hey guys let's do this in the next five years i want to double our production rate our approved reserves and the equity in my business and if you do that everybody gets 25 000 now that's on top of your regular salary it's on top of all your benefits it's on top of your annual bonus program which by the way averages 36 of their salary are you seeing it but 25 grand people will stick around for they blew it away the next one he called double drive he said hey if we can double our uh production rate double our approved reserves and double the equity in my company everybody gets a fifty thousand dollar truck and they blew it away everybody gotta try i'm talking everybody janitor so now this gets written up right this is all over the business magazines and people are going crazy this uh this last one uh they call it the dream 2015 is he hiring always he's always hiring because guess what every five years he's doubling the equity in his business his business holy cow these bonuses are nothing if you think about the billions that he's creating in equity now the last one and this is where they hired us to come back in and do mini game training literally from alaska to louisiana to pennsylvania to ohio everywhere hillcorp is they're now the largest independent oil and gas company in north america that is pretty amazing and what i love about this is the dream this was the uh the last one that they hit um by june of uh 2015 everybody got a hundred thousand dollars and what was powerful i know you're shaking your heads and i'm telling you when we were doing the training in between uh 2010 and 2015 you would see in everybody's offices even out in the field where they you know the roughnecks get together every morning at 5am before they go out to the wells in those metal buildings and containers and all where those portable offices were were calendars because what you had to do is you had to turn in what were you gonna do with your hundred thousand dollars and then the company made you a calendar where every time so if you wanted to go on a hawaiian vacation or you want to go around the world you want to buy a plane or you want i mean people had all kinds of stuff i want to ride sled dogs to the north pole they had pictures of that dream on your calendar right so every time you flipped it isn't that a wonderful idea is anyone else inspired to this day i can't get over how well they tie in the short-term midterm and long-term rewards so let's keep going you all good so far all right it is very cool and by the way uh you know this is something that when you work with the hill corp uh that there are companies that do that but because jeff has a good heart um what he is created is what you see at the middle top under hillcorp's logo the buy-in program so he created a synthetic equity program called the buy pro program you had to hire a department of people who run any of the hill court properties that you ch choose to so maybe it's the place you work or maybe i'll give you an example there's a place called the eagle ford shale in texas this is when fracking first started to become a technology that was widespread that became a very fruitful uh patch as they call it and hillcorp had a big stake there and they chose to sell out at its highest rating so the person i was working with the hr director at the time miss janice she told me that she had put a significant amount of her own money in that property and it was sold at a 21 times multiple what an incredible deal right now not all of them are going to perform like that but it's the opportunity now for us for everyone on this call my hope is that you're probably in an esop or thinking about it and for me i can tell you that at src i mean our stock value continues to rise and rise and i've built more um more equity more more wealth if you will in my 15 years here than in my whole previous life up till now in my 401 k it's amazing what we can do together and that's what i hope for each of you is that you show people there's not just the the typical or what i would call mainstream kind of investments that you can make sure i do want that so on long term i want the esop maybe some kind of buy-in program could be sars i don't you know whatever it is maybe it's stock options 401k match absolutely i think that's a huge deal but it takes education ladies and gentlemen if you think it's easy to throw stake in the outcome out there and have it stick it ain't you've got to keep going you've got to teach all the time in fact i remember with a 401k match years ago we had something like a 60 percent participation and it took incredible creativity and education to get it in the 90s anybody else got that have you experienced that i'm just going to wait for a couple of responses here well i'll keep going there you go tina says yeah so look it's the thing free money esop free money 401k match free money should be you should be jerry maguire you had me at free money but unfortunately people come to us without good solid financial education so we do need to as tim marion says we need to get more people recognize the benefit of the 401k match and remember tim when you're doing this think short term midterm long term that's what we're trying to do if we build a great organization all these things will appreciate now there's something else at hillcorp they do mentoring and training because they're in a specific industry where they have to develop their own talent it's even though there's a lot of people in oil and gas not everybody does it the hill corp way so they have a very deep education culture they also do a scholarship fund which is used for um or can be used for um if i worked for them my kids could do it so i'm not sure what i'm trying to say here for offspring children help me out you know what i'm saying right it's for your kids and then um let's see paul d says did you say at the beginning hill corp is not an esop that is correct often wondered if any company adopted engagement they would have comparable results now remember uh they do have high engagement but they're doing all of the practices right they uh they're educating people so you've got no one teach the rules they have a very strong critical number you know what it is now it's it's rate reserves and equity that's what they focus on every single day everybody knows what they're doing and uh and then they have follow the action to keep score right they're huddling they're forecasting the numbers and they're holding one another accountable and the stake in the outcome is this short term midterm long term layout so esop is not the only way to have engagement in fact i would challenge you and say many folks uh have an esop and i think you know some of them i'm not going to say the name but i know a grocery store i shop at that is an esop and the people that work there really don't know what it is and that makes me sad and even though i try to educate them while i'm buying milk and beer and other important life staples you can only do so much as they ring up a 12-pack so and that's of milk of course so look if you've got an esop if you're thinking about an esop i want you to take it i want you to stick it into this form i want you to say that is one of many things that we need to create an education program and an engagement program around so people understand what they do every day matters now one of the things that we do at src is tuition reimbursement so you have to maintain a certain gpa to get your tuition reimbursed but we're actually trying to get people to um improve themselves to grow now here's something interesting our hr group said that our our number to replace someone in what i would call from entry level to about a mid-level kind of supervisory thing there's something like 53 50 400 in training and investment that we would have to make to replace them now that's springfield missouri so i dig i dug a little bit deeper i have a client that's in the salon and spa business you know what a colorist cost to replace 13 000 so are we really motivated very much in any way to keep people i don't know what your number is but you better figure it out and you better do it quick so this this idea is big and we've actually gone so far as and i'm really hoping we do this one we're looking at it's in brackets student loan repayment wouldn't that be amazing you think i'm going to stick around look i'm already gray-headed but i'll stick around longer if i can get rid of some of the kids student loans you know what i'm saying i've made every wrong financial decision in my life dallin's on the call he can tell you i have an art degree ladies and gentlemen and i'm teaching you business holy this is america let me tell you you have got to know that yes other people have made incorrect decisions for a long time so when i accidentally found src 15 years ago and started learning about how money really works what i'm telling you is i want you guys to be the people who benefit from that kind of knowledge so here's another bonus thing i don't expect you to read it now it's for inspiration and it is included in your in your bonus bonus materials full size eight and a half by 11 sheet this is a sheet that we use when we sit down to talk to someone and i believe i got it from our hr group who are amazing in fact i've worked at a lot of places but i've never worked at a place that had such a really robust team is src this is something that we can sit down with if we're trying to attract someone if we're trying to retain someone and you can literally put down in this case it's a it's a what is src offering and what is your current rate and not only does it go through the 401 k esop bonus health care so all that can be calculated and then written down to do a side-by-side comparison i just checked in with one of our hr team and they told me that the average that they are looking at is that so look in springfield missouri who do we compete against for talent we have um o'reilly automotive headquarters bass pro headquarters they're building a new million square foot amazon warehouse across town everybody pays more than src but do they so when we sit down with someone you know we have to i mean we don't set salaries the marketplace does right so we have to sit down and we say you know this is actually worth just the healthcare the 401k match the esop up to 548 an hour we know that number and you need to know that number two so if you don't know it now go calculate what it would be worth in your market the reason that you want to do this is i want you to be as confident as possible in laying out your total rewards program now i warn you total rewards is actually a copyrighted name of some casino out in vegas where you plug your card into a slot machine but the idea is what is your total reward right that you're offering it's not just an hourly wage it's not just a salary and if you're an esop company and you're not teaching people what an esop can be worth you're missing a huge opportunity so i'm pausing again and saying are these takeaways worth it are we inspiring you to look short-term midterm and long-term you know i can see you right in fact i can see you top to bottom i can see what you're wearing no i'm kidding i can't see below your desk come on all right there you go that's what i'd like to see so worth it hope you're awesome all right so i have one more goodie for you so i promised you the cheat sheet that's in the extra materials but basically what i did is i organized them by compensation benefits work life balance performance and recognition so kind of variable comp stuff and then development and career the thing is sometimes we forget um i want you to if you can see my hands i want you to think about something there's something called the and i didn't invent this i just discovered it it's called the zone of proximal development zpd and what it is so this is what i can do now but just draw another circle out here that's the zone of proximal development meaning i can't do it without help i gotta get a teacher a coach someone who cares about me who will help me go grow beyond my current zone so zone of proximal development and now i'm a growth person i gotta be honest i mean i read a ton of books and i go to workshops and i go to conferences like this and i'm passionate about sharing it i want to give lots of takeaways what i want you to think about is who are you developing right now i want you to go back in time and tell me what your biggest problem put it in the chat what was your biggest problem in december of 2019 what was it i'm gonna write mine down so you can see it come on put it in there staffing i see what you got there yep staff relationships this was ours people now i'm going to write down for you what our biggest problem is right now you ready it's the same thing we have 104 openings at src anybody want to help out we can't find people it's the same problem we had before covid why would we think it'd be any different now so who are you developing that's what i'm trying to tell you turnover engagement thank you aubrey stacy staffing engagement retraining people tina very good training you've got to get in there man you got to get in there and develop these folks because where are you going to find them we can't just hire the ready-made employee much less the ready-made employee owner okay i know i'm going crazy here i hope the emotion isn't too much for you let's go to the last thing that i want to give you we have six minutes left and i hope that you'll ask any questions that you've got but this is an kind of a bonus bonus bonus recognition is that unsung hero that thing that costs you nothing virtually nothing to do and what i've included in the in the bonus packet that i created for you is this and what it is i'll zoom in a little bit for you it's an a recognition profile for every single employee now this is probably something you're going oh my god i can't even get the i-9 filled out what am i talking about here i want you to think about asking people what do they like what do they not like we even ask them do you like to be recognized publicly or not now the the thing is fred by the way that all these bonus documents are at great game dot com slash nceo and there's instructions on how to get them um but it includes the uh there you go thank you dallin uh but it's uh what we're trying to do here is give you just a and i'm not even saying this is the best one we've ever seen it's just one that i could get my hands on from src um you know who are you what do you like what are your favorite foods snacks beverages what's your favorite sports team what's your favorite color i mean this is how you get across the bridge right so i mean where do you like to eat uh what kind of books do you like music anything like that and the thing is not only does this help you with a recognition profile but it also helps you when you're creating mini games because here's what people will do when you say hey can we put a minigame on that issue that big thing that's in everybody's way a lot of people are gonna be like this like i don't know what to do i don't i don't know what i like well if you've already asked you could start there and say i know a lot of people like and just fill in the blank kansas city chiefs green bay packers oakland raiders who is whoever is going to be i just said oakland raiders didn't i they don't exist anymore do they i'm just a little too old um it even goes down when's your birthday how do you like to be rewarded if you prefer gift cards what kind do you want tell us a little bit more about yourself maybe there's something special about them if you know what people's hobbies are you're much more likely to be able to give them some exciting rewards and and really check them out i see michael's gift card i love it i'll give you a 10 discount if you want um so it looks like people are getting some stuff out of this i'm going to stop sharing so i can see a little bit more of you and i'm just going to ask the question now what oh can you go back up a page yes i can um if you're looking for the recognition profile yes i can do that for you for sure and so what we had here was hang on so there's the top half of it and there's the bottom half i think that's the one you were looking for if you need something else i'm happy to go there kimberly and okay so remember you've got to answer the polling questions you've got to take the survey and make sure that that survey for my mother's well-being that everything's like straight tens or fives or whatever that magical number is netflix the crap out of this thing look seriously give good feedback because this is what makes nceo better it's what makes a great game of business better it makes these sessions better you tell us what worked and what didn't work we still have three minutes i'd like to go ahead and go to the chat and answer any questions if you're really passionate on mute and just call it out we have quite a few folks here now we've got 210 people on the call so we should be seeing a lot more action and where are the polling questions i believe in there in the right-hand side of swap card on the the platform that you're on right now so let's let's do this i can't wait to dig into the bonus materials great good for you and tina says the questions are in zoom and dallin's got some instructions for you in the chat awesome presentation well thank you that's very kind what percentage of the profit goes to the bonus pool after you hit your critical number daniel you get great extra bonus points so i want you to picture something for me i want you to picture that uh bottom line that zero break even level right here we've all agreed now in theory that we want to invest in the business first so now we're going to put a threshold on top of that so we have to have a minimum performance above that that's where we do the gain share and we literally take whatever the gain is and we split it 50 50 50 goes to the company 50 goes to the bonus pool now the powerful part about that is we are literally partners we are partners in the business but we're still if we don't put back into the company guess what happens to our stock value hmm that's right jamie did a perfect downward spiral that was great so great question daniel and uh there's there's plenty more on uh bonuses uh on our website and you can always contact us we're happy to answer questions um let's see we have one minute left nothing in the chat for polling questions i'm gonna leave that one to you darling i don't know exactly how to advise them um let's see what other questions did we have great session excited about the profile good starting with ggob definitely helped us implement esop good for you at interest i.t very good uh what you covered in this presentation is a good representation of that pat on the head sophie gives me a pat right on that thank you so much for that and i appreciate you guys so much it's always a pleasure to speak to fellow employee owners let's go change the world guys what if we could actually get more companies to do this so preach it teach it and keep building value in your companies thank you so much and please reach out to us anytime dallin thanks for having me i'll see you next time thanks steve this