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Really, really interesting way of managing talent to get and drive higher performance and output.

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Welcome to the game where we talk about how to get more customers, how to make more

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customers, how to keep them longer in the many failures and lessons we have learned

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along the way. I hope you enjoy and subscribe.

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A good friend of mine in my building had a really, really interesting way of managing talent to

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get and drive higher performance and output. This will be a short video, but I wanted to share

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with you. If you're new to the channel, my name is Alex Ramozi, I'm an acquisition.com. We do

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about $85 million a year. The reason I wanted to make this video is because at the end of the day,

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every entrepreneur has the same problem, which is they need better people and they need to get more

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out of the people that they have. A lot of that comes from culture and training, but every once in a

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while you stumble upon a process that has teeth. I haven't implemented this yet. It's not normal for

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me to make a video about something like this, but we will be implementing something like this

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in our holding company. I think it's super cool because it is reinforced through multiple

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different psychological levers. It's got really cool stuff to it. Let's dive in. One of the things

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that he shared with me that he did is that he has a level of variable computation. That's not new.

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It means that there's some level of performance, check marks, etc. that they have to hit in order to

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get paid. Makes sense. Now, the way that most companies do this, and I'll tell you that what we've

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done at this point for us, is that in positions that are not directly like sales, for example, it's

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very easy to have a commission structure, etc. But for, let's say, leadership and executive

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positions. This is important if you're trying to build your sole ownership into an actual company

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that has values. You need to have people who are all lined and driving hard like owners towards

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the same goal. Honestly, it's much more enjoyable that way. The way that we exploit our things up

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to this point is that we do something called MBOs, which manage the bi-objectives, which are for

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the company, and then also for the individual. We usually split them 50-50s. Let's say we've got

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a leader who, let's say like a director of marketing. They're not going to get a sale, but we know

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that they're in charge of all of the rain making for that particular business line. They might

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get, let's say half of their, so they might have a base, let's just use round numbers. Let's say

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they're making, they're targeted earnings as $200,000. We're going to give them $100,000 base,

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and we're going to give them $100,000 of variable compensation, right? Now of that variable

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compensation, that half, we split that again and half, half of that, which would be 25% of their

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total cost, is going to be of whether the company grows overall. So if we hit x, y, and z metrics,

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they'll get growth or new sales or profitability, then they're going to get those things, right?

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And the other half is going to be on whether they did something personally that they've

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control over. So it might be adding a new channel or a new platform, or creating some sort of

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process that we want to automate, or bringing in a new x, y, z manager, right? Those would be

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things that they have complete control over that we can check box. Even if the business doesn't do

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well or it doesn't hit the goals of growth or just marginally grows, they can still get half

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of their variable income. So if you've got a hundred grand, they got that guaranteed,

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and they've got 50 that as long as they do their all their stuff, they've got, and then they get

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to purchase being the upside of the business if the business overall grows, right? And so that is

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how we've done it up to this point. It's worked well, right? But what he presented was a different way

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that I really, really, really liked. And a key part of this is that the management by objectives and

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the things that we set, we set for our team, okay? So they don't have a choice in it. They just accept

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it, or they might try and negotiate a competition service, but that's more or less how the compensation

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structure works, right? With the way that he sets it up is that every position has a level of variable

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compensation. And that level you can determine, you know, you can say you want it to be 10%,

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or you can be 20%, or it could be 50%, you know, it depends on the role. But maybe let's say a

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front line customer service role, right? Let's say we wanted to make a, you know, let's say 15% of

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their compensation variable. So if they're targeting, let's say, $50,000 a year, then that would

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mean $7,500 would be potential to be variable. So that would be like whatever, $600 a month

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ish, right? Of their compensation is kind of in the air hung in the balance. And so here's the cool

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thing. Hey guys, real quick for those of you guys who are $100 million offer fans. I love you.

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I added in a lost chapter that has never been released. I'm releasing it now transparently.

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I'm doing that to build hype for $100 million leads. But you will have the unreleased chapter.

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It talks about your first avatar and how to segment customers to make more money. You can get it

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by going to acquisition.com forward slash leads. It's a free exchange for emails so that I can

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email you when we launch $100 million leads and so that you cannot miss out on it because last

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time I sold out for like eight straight weeks really fast. So that is my way of making sure that

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y'all get first steps. What he does is that he says this is the variable comp

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and you get to set the goal every month. So it's a 30 day rolling goal and every month

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they get to set the goal of what they're going to do. They have to, you know, show it publicly.

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So you get some social pressure in there, right? You also get autonomy because they're the ones

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who are picking it. And so here's what's cool is that if everybody on the team has to say what

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their personal goal is, right? And they get to set it. And if they hit their personal goal,

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as long as it's aligned with the company goal overall, like it, it's going to contribute to that

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goal, then they can make it, right? They have to obviously prove that it in some way furthers the

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overall division or department school. But as long as it's aligned with that, the extent to which

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in the amount that they have to hit because it's got to be quantifiable, right? If they set that

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goal, they can set it as bigger as little as they want. What happens is that the social pressure

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of wanting to set good goals automatically self-cracks, you might think, well, what if they just say

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they get, you know, a half a percent improvement or something like that? And they hit it. Cool.

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But the thing is, is that people on the team are going to be like, dude, come on. That's the goal.

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And then all of a sudden they raise it. But they raised it. No one else. And so they have complete

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autonomy and ownership over that goal. Now for you as an owner, what you can do, obviously, is let's

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say that you're targeted earnings for the person's 50,000 years. That's fine. You just take 15%

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and make your variable. So like they have the potential to earn the whole thing or they have a

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potential to earn somewhat less. Like don't worry about the variable cop. The the pieces that we have

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intermittent reinforcement, which is another way of saying variable reward for an employee,

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they have complete autonomy and they have social pressure and they have some level of competition.

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And this is really useful in roles that don't necessarily A, directly, you know, tied to the

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bottom line like sales does and are more difficult to quantify. Right. And so this gives those roles

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the opportunity to feel like they're contributing to the overall growth of the company and have

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something in the balance that matters. So I wanted to share this with you because I thought it was

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really, really cool. We're going to be implementing stuff like this in some of our portfolio

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companies. I thought I was just incredibly sexy and I didn't want to I didn't want to keep it

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from you because I think it's really really cool because there's just so much psychology behind

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doing things this way. And it just allows everyone to participate and grow as employees within

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the company. And as a as a tangential tertiary benefit of this, your turn will go down because

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people will feel like they're making progress. Pretty cool, right. It'll feel like they're making

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progress and that they are growing and that they are challenging themselves. And that at the

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end of the day is what you want every workplace to fulfill for your employees. Now, whether they

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feel fulfilled, you have no control over. But if you can create an environment that increases the

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likelihood that they feel that way, given a normal human construct, I think that you're going to

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build a better business. So lots of love, keeping awesome, amazing nation, love you all, and I'll

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see you guys in the next video. Bye!