Attendance | The Barefoot Spirit

Organizations That Say They Want an Entrepreneurial Culture Need to Walk the Talk

Michael Houlihan & Bonnie Harvey — Thu, 11 Aug 2016 17:00:16 +0000

Every day we hear companies, organizations, and institutions say they “want to hire people with entrepreneurial DNA.” They all say they “want an entrepreneurial culture where their employees are engaged and empowered.” But do they really? You can hire the best. You can vet for self-starting, creative, resourceful people with a sense of urgency, who take responsibility for their own actions. And you can even hire entrepreneurship grads. But without the proper environment in your own company you will stifle the new hires, and lose others who are frustrated.

We saw a cartoon recently that best summed up the paradox. The tired, haggard, office employee was down at the bar after work, sipping on his martini. He turns to the woman next to him and says, “Sure, they want me to be creative, imaginative, and resourceful, but I have a career to think about!”

Long before Barefoot Wines, Michael worked for the Federal Government. Right out of college, he was keen on being productive, making a mark, and moving ahead. But he ran into office politics, turf battles, and empire building within the organization. Few folks seemed to care about more than their job security. Most had become isolated and insulated from the real job at hand. Upon realizing that this could become his future too, Michael decided to not just quit his job, but quit the idea of having a job in any siloed organization.

The good news is that if it wasn’t for that experience, there would be no Barefoot Wine today!

The biggest problem with any kind of vertical or pyramid structure is that the structure itself is contrary to the entrepreneurial culture. Why? Because as the organization grows, sales and personal responsibility for the customer experience become more removed from the process. Soon, under the guise of efficiencies of scale and divisions of labor, folks get comfortable strictly focusing on their own specialties. They figure they‘re going to get paid, no matter what. Sales is someone else’s responsibility, they think. At the governmental level, it can be even worse. They can feel like their organization exists without customers, sales, or accountability.

Sales is the key to the entrepreneurial culture. Three entrepreneurs in a garage have no question that they must make sales happen or they won’t be there tomorrow. No matter what their skill set, all know that sales are critical. So what happened as they grew? Simply, many new divisions were created and they separated themselves from sales! So it’s not so much how to build an entrepreneurial culture as it is how you lose it! Little by little, the principles that allow an entrepreneurial culture to survive and flourish are replaced by fear, compliance, and restrictions on communication. Compensation systems increasingly are based on attendance, status, and tenure, rather than sales, growth, and productivity.

In order to attract and retain a staff with entrepreneurial DNA, you must provide the fertile ground that is essential for them to thrive and be effective. Just like an early stage startup, you must provide a culture of permission, enthusiasm, inclusiveness, recognition, acknowledgment, and performance-based compensation. The customer experience must be more important than the structural or political limitations of the organization.

You must get back in touch with the organization’s goals and means of support (i.e. sales). That must be the entrepreneurial motive that overrides corporate divisions of labor, status, and tenure. Serve your customer with an engaged and empowered culture that wants to, and is allowed to, deliver the excellent customer experience you desire. Your people are engaged when they know they can make a difference, and are encouraged, appreciated and compensated to do so!

Who We Are

Michael Houlihan and Bonnie Harvey co-authored the New York Times bestselling business book, The Barefoot Spirit: How Hardship, Hustle, and Heart Built America’s #1 Wine Brand. The book has been selected as recommended reading in the CEO Library for CEO Forum, the C-Suite Book Club, and numerous university classes on business and entrepreneurship. It chronicles their humble beginnings from the laundry room of a rented Sonoma County farmhouse to the board room of E&J Gallo, who ultimately acquired their brand and engaged them as brand consultants. Barefoot is now the world’s largest wine brand.

Beginning with virtually no money and no wine industry experience, they employed innovative ideas to overcome obstacles, create new markets and forge strategic alliances. They pioneered Worthy Cause Marketing and performance-based compensation. They built an internationally bestselling brand and received their industry’s “Hot Brand” award for several consecutive years.

They offer their Guiding Principles for Success (GPS) to help entrepreneurs become successful. Their book, The Entrepreneurial Culture: 23 Ways To Engage and Empower Your People, helps corporations maximize the value of their human resources.

Currently they travel the world leading workshops, trainings, & keynoting at business schools, corporations, conferences. They are regular media guests and contributors to international publications and professional journals. They are C-Suite Network Advisors & Contributing Editors. Visit their popular brand building site at www.consumerbrandbuilders.com.

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

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Are You Paying for Attendance or for Production?

Michael Houlihan & Bonnie Harvey — Thu, 14 Jul 2016 17:00:01 +0000

When you are a startup entrepreneur, you must hire those who are production driven and not attendance driven. Brian Tracy says, “Fully 80% of all production problems are caused by compensation plans!” In other words, you get what you pay for. If you pay by the hour, you get hours. If you pay for production, you get production. We think the best hires are other entrepreneurs.

When you pay by the hour or based on tenure, you’ll hear, “I haven’t had a raise in a year,” like the amount of time that has passed earns them the raise. You will also hear, “I’ve got enough to keep me busy,” as if keeping them busy is a goal of the company. And then there’s the classic, “I was there. Pay me,” as if their mere attendance is all you needed.

This is not to say that hourly employees and outsourced services ipso facto aren’t good producers. Many are. Especially the ones who know their job is on the line, and the ones who clearly understand their goals and deadlines. But there is far less lurking and sandbagging among folks who get paid for deliverables. They simply can’t afford it any other way!

As an entrepreneur, there is no question in your mind about the critical nature of sales and customer service, but what if your team gets paid whether or not you make sales, and whether or not your customer is happy? Do they have the same incentives you have? Probably not.

We like to say, “If you are paying your people right, the non-producers can’t afford to stay, and the producers can’t afford to leave!” Just take a moment to think about that…

When you pay your people right, you increase production, engagement, urgency, sales and the excellent customer experience you are looking for. Here are some ideas to get you started:

Clearly Define the Deliverables. Plainly state exactly the expectations you have of each team member. It is likely different for each player, so consider this carefully. One approach to get going is to ask each person to make a list of what they do and the relevant deadlines. This gives them ownership and forces them to think in terms of outcome. Then refine this list to better suit your company goals.
Create a Bonus Structure. It’s easy to pay the salespeople on production – their commission is based on it! But what about the receptionist, the assistant, and the bookkeeper? What about the marketing, legal, production and administrative people, and other folks who are paid by the hour industry wide? For them we created a quarterly bonus. The bonus was paid as a corporate contribution to their 401K tax-free retirement plan, matching at 50%, 100%, or 150%, and was based on sales, growth, and profitability.
Take a Smaller Slice of a Larger Pie. Be prepared to share the wealth in various ways appropriate to each individual’s accomplishments. One way is to bonus for a specific accomplishment that clearly adds to profits, like a new client, a big savings in overhead, achieving a stretch goal, or meeting a difficult deadline. Once your team sees the direct relationship between their production and their compensation, they will become more interested and engaged in the process of making your business more successful. Plus, now you have more “found money” to share with them.

Congratulate each one publically for their achievements, especially those who impact everybody’s bonuses. You’ll see more of what you acknowledge, create a stronger and more cohesive team, and get the production you paid for!

Who We Are

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

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Grow Your Business Faster by Sharing the Wealth

Michael Houlihan & Bonnie Harvey — Fri, 18 May 2012 03:19:46 +0000

Henry Ford used to say he’d rather have 1% of what a hundred others made working for him, than 100% of what he made by himself. Some business owners want to have it all, but in the process, cut off the very folks they need to get what they want.

Our business colleagues have chastised us for “overpaying” our sales people. They’d say, “Aren’t you afraid they will make more than you?” Actually, we had several sales people who made more than we did.

When we looked at the efficiencies of scale, the value of stability, and the increase in sales, we knew we were doing the right thing. So, why should you apply this winning philosophy to your business?

1. Reduce Your Turnover. Turnover is the largest hidden cost in business. It can take up to six months to find and train a new person. There is no guarantee that this new person will work out, either. You may have to start all over again with someone new. This can go on for quite a while until you get the right person.

Now you have someone who will be under-producing until he or she is fully trained. You also lose the time of the new hire’s trainer, who now has two jobs to do. Both jobs suffer. And the relationships built by the person who left could either be dropped or taken away by the departing employee. These must be re-built.

Remember, top performers who get a “piece of the action” are generally loyal and truly concerned about the welfare of your business.

2. Attract the Go-Getters. People who know they are excellent at their jobs want to work for a company that compensates them based on their performance. People who are less productive can’t afford to work for a company that has performance-based compensation plans.

When your job candidates ask where your profit centers are and how that flows into their paychecks, you should realize you are talking to a go-getter. Keep your performance metrics well thought out and achievable.

Rewarding for growth over same month last year is a good start. Averaging last year’s prior and subsequent months with the same month will smooth out most anomalies. Renegotiate profit-sharing bonuses annually.

3. It’s Free! If you know the profit of your business now, and you know your rate of growth for the past few years, any increase in that rate of growth attributable to your people’s performance is “found money.” When you cut an employee in for a piece of your increased profit, he is motivated to produce even more. It really costs you nothing. Just make sure the payment is tied into profitability, and not based solely on “growth.”

You are paying too much for labor when you pay for “attendance” alone. It’s their production you really want, because that is where your profits come from.

Why settle for 100% of a smaller pie when you can have more pie by taking a smaller piece of the larger pie others helped you get. When it comes to growing your business fast, it pays to share the wealth.

Who We Are

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

The post Grow Your Business Faster by Sharing the Wealth appeared first on The Barefoot Spirit.