Tip 1: Teaching Employees To Think Like Owners.

Tip 1: Teaching Employees To Think Like Owners.

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Entitlement is defined as the belief that one is inherently deserving of privileges or special treatment.

I have been an entrepreneur most of my life. At the age of 14, a year after I learned how to play guitar, I recruited my first student. Shortly after I graduated college, my wife and I opened up a small music school. By the 1980’s we gradually built our school music dealership to a successful enterprise teaching 1,000 students a week. I have trained and hired dozen of employees in my career. Early on, I noticed that there were two types of employees; those that like to complain, and those that like to take positive action.

I wasn’t afraid to step out into the abyss and pursue innovation when I was convinced it was the right thing to do. I always tried to build a culture of problem solvers. Sometimes with more success than others.

I suspect like many of our readers, I’m not alone in prioritizing the importance of an “ownership” work ethic. Liane Rockley, Vice President of Rockley Music Center, in Colorado shared with me the following during an interview for Music Inc. magazine;

Because I married into the family, I have a different perspective. I don’t have that sense of entitlement. I believe you are not entitled to anything in life, you have to work for it.” Masters of Change” November 2016 Music Inc. by Jaimie Blackman.

I believe the number one action business owners can to take to maximize the value of their business is to find, motivate, and retain employees. Becoming aware of employees who behave with a sense of entitlement is important, because it can quickly spread like a virus, eventually killing its host. Your business.

Many owners and managers are frustrated with the current incentive plans they have in place. It doesn’t seem to get the desired results. Instead of promoting an ownership culture, the status quo continues. Often, the plan itself is communicated so poorly, employees are unable to see the connection to their work and incentive payouts.

Why not create an incentive plan which is self-funding? In other words, a plan which pays for itself.  That’s what Brad Hams, author of Ownership Thinking. How to End Entitlement and Create a Culture of Accountability, Purpose, and Profit recommends.

What if you helped your team understand what the net profit margin was for the various music instruments and accessories you routinely inventoried and encourage them to find creative ways to increase it.

For example, let’s say your employee Harry, discovered that through faster payment, and volume discounts, the store could save $500 on a specific orders and brought it to your attention. Now’s your turn to teach.

You say. “Congratulations Harry. Since this product had a thin 6% profit margin, we would have had to sell an additional $8,333 worth of products to realize the money you just saved us. ($500 divided by 6% profit margin)

That’s an ownership mindset. Taking this one step further, why not take the $500 and use it as part of an incentive program which encourages innovation and problem solving. Mr. Hams calls this self-funding incentives.

The author continues:

I suggest you think of (incentive plans) it this way instead: by implementing the Ownership Thinking way of doing business, profitability will increase from X to Y, and Y should be substantially greater than X. The organization now has additional profit dollars that are represented by the gap between X and Y, and the incentive will be a portion of that gap. In other words, the incentive is not only self-funded, but it will also drive the profitability of the organization higher, even after the incentive payout is made. Everyone must understand this simple premise: the incentive plan is meant to improve the financial performance of the company and to shape employee behavior accordingly. Incentives should never be paid if financial performance does not warrant them.

In other words, when done right, an incentive plan ought not to be considered the same as compensation. It should be considered as an opportunity to create more personal wealth.

It’s not a perfect world. There will be times  when conversations with an employee, and properly crafted incentive plans simply don’t give you the change in behavior you’re looking for. After listening to the words of your employee and feeling what’s inside their heart, if the fit isn’t right, the best action you can take on your part, is to part ways. This benefits the others on your team who are more committed to the vision of your business, as well as your exiting employee; freeing him or her up for a new journey.

 

Written by Jaimie Blackman

Jaimie Blackman

Jaimie Blackman — a former music educator & retailer— is a Certified Wealth Strategist & Succession Planner. Jaimie helps business owners maximize the value of their company through education & coaching. He is a frequent speaker at the National Association of Music Merchants, (NAMM) Idea Center and has spoken at Yamaha’s succession advantage.

As a financial literacy educator he has taught at New York University and has lectured at the 92nd Street Y, Marymount Manhattan College and CUNY.

His column is published in The Music & Sound Retailer and contributes to NAMM U online, as well as other industry trade magazines.

Jaimie is CEO of Jaimie Blackman & Company, President of BH Wealth Management, and Creator of MoneyCapsules® and the Sound of Money®.

To register for Jaimie’s live webinars, or to subscribe to his podcasts, visit jaimieblackman.com.

The purpose of this post is to educate. Our content should not be construed as advice. If legal, tax or other advice is required by the readers, professional advice should be sought.

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