Floyd Jerkins and Ron talk about leadership within the Capital Goods Industries.

We're certainly on the beach in the north.

No. You know, that's, as we were talking, I think there's There's such a volume of information available today about leadership that, you know, of course, when we were coming up, Ron, you just didn't have the internet. You know, it was still back to the old style of how did you collect information? Today, there's such a bombardment of information just around the term and the meaning of leadership that I think a lot of people, well, I think there's a lot of herd mentality. Sometimes they follow the wrong things. just because it's popular or because they think there's a quick fix. And, you know, in my experience, leading as well as teaching it, I just, there's not a quick fix to that. There's not a, you know, it starts with integrity in yourself. And if you don't have it, you know, it's hard to, it's hard to teach someone that, you know, I mean, someone can display the characteristics. But, you know, they've got to be able to communicate on an honest level. And, you know, it's not about anything other than that. You know, there's a lot of different traits of leadership, but certainly having the basics of integrity. And I'm not saying people are lying about it. I'm just saying that sometimes their truth isn't quite correct. You know, and I think there's some falsehoods that get created. You know, we were talking about absorption. You know, the old myth was. The reason to have a high absorption rate was to give away your whole goods so that you can make the money in the back end of the operation. Well, that's the most ridiculous. You know, I mean, that does not make sense at all. I mean, the reason you want a high absorption rate is so that you can make more money in the whole goods. You can sustain that on, you can sustain higher margins because you give that kind of service and you can't fake it. You can't fake that level of service to a customer, whether it's a, you know. construction, ag, whatever segment of the market we want to talk about.

Yes.

right. That's right.

I did some work with the large cat operation. One of the challenges that I presented to them was, you know, when we reviewed your job descriptions, I don't see anywhere in your management level and above where. you're requiring them to become mentors. And I said, well, they've not earned the right yet. So put that into their job description so that as soon as they're rolled into this new role, they understand part of their job is to train the replacement. And when you can do that, then you immediately begin to foster that in the organization instead of it being something that just happens when somebody gets promoted. I think that's how do we evolve that? that leadership mindset throughout the whole organization, you know, and they have to own those pieces to the puzzle. And I think when they do that, and so far that's worked really well. I mean, they've, they've done a pretty good job. You know, it took a little while to get the concept. And once we got the concept, you know, then, then the, you know, there's a dozen more steps that come past it, but at least the beginning steps to it. Sure. And, you know, because then HR says, well, how come and why? You know, you got to, all the stakeholders have to be sold on the concepts because you got to get that in place first before you can actually do any type of implementation, you know, on a broad range part of it. So, you know, I think that, you know, the senior people, you know, in these organizations, we were talking about some of that on the testing that you're doing. You know, it's still amazing to me that because they score a 72. You know, they're a little embarrassed by that, but that's okay. I mean, it's, you know, what we should have, our senior people need to become mentors, you know, and they need to be taught how to teach. You know, and I think when they can do that, they can bring these, the next layer of management up faster. But when the senior people withhold that knowledge and, you know, because we're still very much a knowledge-based business, you know, how the business. concepts in the business day-to-day operational dynamics are transferred, it's one-to-one, group-to-group, you know, and when we can get to where we're like the McDonald's, you know, we truly have that systems and procedural manuals that are true and living and breathing, then I think we'll see not just profitability go up, but sustainability, you know, I really do.

Handfuls.

Absolutely.

You know, I think it's maybe fear, wrong, lack of knowledge, time. You know, do we have the time? If I'm a manager managing 12,15,25 people, whatever that number is, I've got a lot of paperwork to do. You know, I and I still think that coaching people is a function of what they do every day, that if they do a performance review and that employee is surprised in there about something the manager is saying, I think the manager is not doing their job.

I really do. I don't think it takes as much effort to do the performance review when you got your head right, because that should be a coaching intervention. It should be short and sweet. Doesn't have to be long. Doesn't have to be three hours long. Now, when you only do one a year, you know, you're probably only, you know, looking at performance the last 60,90 days, not looking at an annual performance review. That's where I always had a challenge with that, thinking that. You know, somebody's looking at an annual process. I just didn't, it's just too long of a time span to go between there. You're not going to change behaviors when you're going to do that. You're going to affect an attitude. And what we're trying to do is change behaviors. You know, that's ultimately the goal. You know, it's changed what they do every day and then how they think about their day-to-day work. And then if we give them the right education and the right parameters, then they make good decisions.

Yes.

Well, that's, you know, that's still a big challenge, I think, because do we as a manager become a babysitter? I mean, come on, Ron. I mean, I don't want to have to know this guy's name of his wife and his kids and his dog. And oh, but now, wait a minute. You know, if I want to retain that person, if I want to truly give them a quality of life that is more than just a paycheck, because we now know that. We're in the employee era. I mean, employees are in control. I mean, they really are. In my area, I mean, I hear so many times about the employees are dictating how often they work. My grandson got a 17 years old, got a job at Target. Well, he's there two weeks. And he says, well, he's got to take the week off because he's coming to see us. And I said, so what did you tell him? So I just told him I'm taking the week off. When I say in my day around, I'm going, I would have never. You don't ask your boss to take a week off when you first get hired. But in today's era, that's it. You know, if they want good people, they have to have flexibility. And sometimes I think that it's lost, you know, because we want to, we do have to get to know our people. And I think that is part of the leader's job and the manager's job. If you manage 150 people, you can't know everybody, but you better know. the general ebbs and flows of your groups, you know, but your senior people need to know your people all the way down the chain. Because without that, that's when we get surprised. I can't believe he left us. You know, I'm surprised. Well, you know, it was, the handwriting was on the wall and it may not have been compensation. It may have been a disconnect in something they saw or they heard, or the rumor mills are terrible in some businesses. I mean, they're just terrible, bad. You know, they're not filled with truth, but yet management's not providing enough truth to counteract it. And I think all that affects sustainability. I do. You know, right now, the markets, some markets are hot. You know, and they're hot not because of what the business is doing. You're just there in the right place at the right time. You know, but I'm talking about sustainability. Let's look at these things in 5,10,15-year increments. You know, not. If you're here for seven years, you're coming gone. I mean, I don't know. That's not that your business model. Cool. You know, but for most, that's not really, especially in our in the equipment space. You know, we're talking about generational businesses. Yeah. And the generation businesses, a lot of them have failed because they didn't transfer over. Or maybe maybe the patriarch didn't know these things. You know, they grew up on command and control management. You know, that's the way they did it. You know, shut up, do what you're told. Just do what I tell you and everything's okay. Well, you know, but when you get to, when you're managing 10,15,20 people, you can do a little bit of that. But when you get into 100,200,300,400,500, that whole dynamic changes, the more employees you get, you know, and grow families.

You know, I've always contended that, you know, and I learned this really the hard way years ago, that what my employees tell me needs to be the same as what they tell their spouses when they go home. And what my employees tell me need to be the same as what they tell their friends when they're all sitting around having a beer and having a barbecue. That if they tell me the company's great, but they go and tell their family, hey, I hate my job. Well, wait a minute. we're disconnected. You know, we're, we are not truly connected. And it's, I think when you make those connections, you know it. And I mean, I've been blessed to know many organizations that certainly I think do a great job of these things, Ron, and have been a great model, you know, for it. And a lot of, they did that just out of love. And they did a love and respect of their people because they realized early on who's more important. You know, this other company I was mentioning to, you know, ask who's more important, you know, you or your people. And when the board or the owner says, well, we are more important, you know, you got to be careful with that statement because, you know, you can fly off and go to the Bahamas for a week, but your staff is still there. So who's more important? If all of your staff took the week off, decided not to come in, you've got a problem, you know, so who's more important? And I think there's a little bit of that that's kind of hard to swallow, you know, for many. I mean, even early on in my career, it was hard to swallow. I mean, I had a consultant that straightened me out at a young age because I thought I was more important. I had hired him to come in and fix my people. And after about two days, he's going to spend the rest of it with me. And I said, well, Evan, you don't need to spend it with me. You can spend it with them. No, I need to talk to you. Man, that was wounding, you know, but it wounded me in the right ways.

Well, that's why I think this is, I call it, it's the Oprah Winfrey style of leadership influence. You know, that, you know, the executive gets in these positions and there's no one that he's accountable for other than to the other executives like him or her. And, you know, the challenger is when they go to these group sessions that are being led by people that. can communicate well, but yet they may not have depth of experience, but they can communicate well, they can talk well, you know, and they can capture that soundbite and make it sound really, really good. But yet it's the Oprah Winfrey, you know, everybody gets a leadership class, you get a leadership class, you get one, and everybody's now become these business coaches and all that. I don't know, that's some of those just, you know, I listened to several just to kind of evaluate. you know, myself against that. And, you know, some of them, there's that sound might, but there's not that depth. So, you know, if that executive is in that role and the only person they're comparing themselves to is himself, well, that's, you know, we did 20 group models for years. You did the same thing. I mean, we did that. And part of that was a financial comparison. You know, we want to make sure to compare you against other like businesses. Well, but we also dug deeper and we went into the operational and the human resource side things too, because, you know, one store, you know, we had a guy that was, you know, a single store operation. And yet he was sitting next to a guy with an eight store. And the eight store guy was asking 87 questions. How do you do this? Why do you do that? Because he didn't have one store doing as good as what that one store guy was doing, you know, because this guy had got it figured out. on how to facilitate his people, utilize his capital, and be in a position where he didn't have to be there every day. But the ASTOR guy, man, he's working every day, seven days a week trying to get ahead stuff. And I think that's, again, an example where, what are we listening to? Who are we listening to? And right now, there's so many voices out there and chattering at us and so many articles and pieces of information. I mean, I do a lot of stuff now where I'm just trying to filter the junk out. You know, I mean, it really is because there's a lot of junk out there today that, I don't know, it doesn't represent a moral equation or a value-based equation or it's a soundbite. You know, that's why I've enjoyed our conversations on it because I think we were able to get in depth, you know, if we need to. We're able to talk on service if we need to, but there's credibility behind the words. You know, in a lot of instances, that's where I think these executives and leadership need that.

Yes.

Yes.

Well, I think the components that you're doing now in your educational models and what you're doing, Ron, to me, that's where I left off in that campus model that we had and certainly what you're doing. That was part of helping those in the equipment industry. Here's fact-based information that is substantial. It's easy to understand. when you take a hold of it, you don't have to question it. You can question what to do with it. But you get the education that you can form your own opinion. And you're allowed to think and breathe life into that because it's factual based. It's not hearsay. It's not conjecture. And I think that's what helped our success for 25 years was we presented that our guys on the ground were just, we were old operations people. We just, that's... You know, sometimes we weren't very fancy, you know, we weren't sometimes very pretty, you know, but we just knew what we knew. And we also knew, okay, I don't know about that. You know, I can't comment on that. I don't know. I mean, and some people today don't want to say they don't know. I want to say, I don't know. Where do I get the information? That's to me, the valuable employee, you know? And I think when you see the type of... educational opportunities out there, sometimes there's just not, you know, there's just not enough of it. And, you know, I think that's a part of help building those people and giving them the courage to be different and the courage to think. Because I think some of this is, I don't know, I've been five, almost six years now. Some of it's not changed. I mean, most of it's not. There's still fundamentals here that if you don't run the fundamentals in a business, it doesn't work well. leadership, financial management, asset management, whatever, parts, service, sales, all of it. You know, I had this conversation with a dealer the other day. He called, was ragging on me about one of my articles. And I said, well, okay, you know, go tell me what you think. And this is about sales and about measuring sales activities. And he was very down on me about saying measurement and measuring this isn't the way to do it. And I said, well, let me ask you this. How many salespeople do you have? You have over 20. Okay. How many people do they talk to in a month? Well, I don't know, but I know how many they quote. I said, okay, I know your business system shows you that because that's what they log. But how many people do they talk to? I mean, a quote to you is when they sit down and do a write-up. But what if they quoted someone as they walked through the shop floor? What if they quoted someone they were out getting feel? What if they quoted somebody? Does that count? Well, no, it doesn't count. I said, well, why doesn't it? I mean, I'm a little confused on why that wouldn't count against the measurement. I said, you know, if we have service recovery, don't we want to look at the hours bill, you know, as part of that equation? No, let's just take half of those hours bill. Well, we wouldn't do that. I said, well, but in the sales department, we really don't do it that way either because, and I said, you came from the sales department, didn't you? He said, yes, I did. I said, yeah, I know. Because he comes from the sales department. Everything's okay because he comes from the sales department. And I think that's, You know, we just got to see the some of those fundamentals. You know, I mean, they're still blocking and tackling that has to occur, you know, and when those when that's not happening, I just worry about, you know, the sustained, you know, you mentioned consolidation. I had this point in my head that, you know, when we started doing the shark or bait presentations across the U.S. and Canada, I mean, there were numerous issues with. You know, what's going to happen in the market? And, you know, John Deere was a big push to that. You know, when they started bringing their local dealers together and saying, hey, you're going to be a buyer or seller. You know, for us, that was a great opportunity because we would go back in and swoop in right behind them because dealers had choices, you know, and they had different ways to think about things. But it's amazing to me how when everybody would say, oh, the single store, the two store complex is gone. It's never going to be around. That's not true, Ron. But those smaller operations have had to learn how to compete better. They've had to get smarter with how they manage their business. And when they've done that, they're succeeding. I think that's a testimony itself to changing the way the management, the ownership, the leadership thinks about how they run their operation. And when they do that, they're surviving. And some are thriving, you know, and some in markets in which they said they would never make it. Now, does that mean it's going to happen for 20 more years? I can't project that far out. You know, I can't. But I know in the automotive segment, you know, they've certainly been rolling up and continue to roll up one, two, three stores. But there's still some out there doing a good job. That's their choice, you know, as a as a business owner. But at least they've chosen to become smarter about it. you know, and not be lackadaisical or maybe not drive themselves nuts, you know?

die

Well, our seasoned people, you know, to me, it's a transitional process. When we bring on our 25-year-old and put them in a role, part of their job description says, hey, you know, you will provide a mentoring process to others throughout the history you're in this role. And then we show them a career path. Here's what you have to do to get to certain places. And every time they transition, you know, they're training behind them. They're communicating behind them about these roles so that when they do become that senior person and that senior could be in these industries, senior could be a 42 year old person who's been at it for 27 years. You know, they started when they were 15,16 in the stores. That's that's very real. And it's easy to see them get burned out, you know, at that stage because they've not they've done the same thing over and over. You know, they've not been challenged or again, back to education. You know, I think that was a, to me, that was a big rally cry was when, you know, even today myself, I'm 62, Ron. So, but when I'm still learning and I feel like I'm learning something new and I'm still invigorating, you know, when I feel like I've come to an impasse, you know, it's like, okay, you know, I'm, I'm stalled, you know? And I think that happens a lot.

Well, I read every day. I understand.

One book, yeah. But I just had one and it wasn't.

Ron, every class that I taught, I had numerous questions that I was asking in order to further evaluate the competencies of the individuals in the room. And just in the dealer candidate class, we had owners and managers, controllers, all. How many books have you read about business? And it was amazing. Maybe a hand would go up. How many read something in the last six months, the last nine months, last year? Very, very little. And it goes right back to your statement that, you know, and I've got kids, grandkids that are preparing for college. And man, I'm all over. You know, I mean, I'm just college is only going to teach you how to learn better. Once you get out of college, your pathway of learning still is continuing on. You know, you cannot, it's just, it's not there. But yet when we, there's a disconnect somehow where we come out of school and we think that. We've got everything. But yet they're not being challenged or promoted through the ranks and saying, you've got to subsidize your education, you know, as a part of all this. And I think that's so important to do. And then where do you get that education? So I think in our industries, you know, the ones we're serving here, Ron, that's what's been hard is there's just, you know, some bits and pieces of it that are offered through some colleges and universities. But from an operational perspective, you know, that's just hard to come by. That's where I think the work that you've been doing, I think, is so extremely important. And I've always appreciated your challenges because, you know, when you got all this, you know, I've had all this knowledge and experience, you know, that's where some of my mentors have told me, Floyd, get off the beach. You're not done yet. You know, it's time to go back to work a little bit. But I've been in a leadership role since I was 19. So to me, it was nice to stop and get off the miracle round. You know, I certainly don't want to go back to having employees and full time, you know, but I do enjoy the sharing strategically, you know, in certain places, just like this information. Hopefully it can help somebody, you know, stimulate their thinking, you know, or help them learn from two guys who's been at this for a long time, you know, looking at the markets. you know, we get a chance to see things that maybe others don't see it from that same vantage point.

Yeah. Well, it's soundbites. You know, everybody.

Give me that paragraph. And that's all I need. Well, you can't really teach. You can't really become educated. You know, you don't get a degree on one class. You don't get a degree on our class, you know, once a month. It just doesn't mean the brain, the heart, the mind doesn't work that way, you know, and that's not changed. That's it's actually getting harder, I think, because it's the sound bites get in the way of deep thinking and rational thinking. And, you know, that's what we have to get back to is. Thinking about what's good for us and our own values and not just taking what everybody says as the gospel, because it's not always true. It's not always factual, you know, and we see much of that.

Right.

That's the old paradigm.

That's a clash of the culture that we're talking about. Absolutely.

Right.

You know, I think that just we're so preconditioned to everything being fast and delivered. You know, even the fast food analogy I gave a few minutes ago, you know, if we're four minutes in line, what is taking so long? You know, we're in such a speed. And I think that's a, you know, I think it's just an indication of the cycle we're in with technology, the information age. I don't question all that, but it's still the quality of life and the quality of business still is something that has to be done certain ways. There's the principles and laws that were tried and true in the law of gravity. I can have all the positive attitude that I want, but if I get on top of a building and jump off and it's more than a floor, I'm probably going to die. I mean, I can be positive all the way down, but the law of gravity says this and that. The rules of 78, I mean, the financial rules, I mean, those are tried and true. They're real. You know, so we understand what those laws and principles of life and business are. Then we start to apply them. Then that's, then I think that's when we're learning. You know, it's just when we try to recreate the law of gravity because we think we know better, you know, well, we don't. I mean, that's just something that's been around a long time, longer than me and you, you know, it's been around and it's not changed. Now, maybe physics changes it, you know, because of reasons down the line and all that. But, you know, today it's not. So, but everybody wants that quick fix and sometimes. learning the art of being in business, it isn't about a quick fix. It's about a growth of individuals and it's about collaborating when times are good and times are tough, but it's doing so with a sense of purpose and sense of service, you know, that sometimes, you know, isn't there today. And that's, but I still contend on the other side that there's, I think there's businesses that get it, you know, and they've adopted these. concepts of employee management, employee service. And I think these are the ones that are flourishing. I think those are the ones that we're going to continually see stand out. And some of them, you know, you don't, one of my guys that handles my investments keeps saying, Floyd, listen, you won't let us have everything. And I said, you're correct. You know, because I'm very well diversified because I have other parts of my portfolio that I make a lot of money from. And that's passive income. But I said, I don't need you doing all that. You just need to have a piece of it. You're good at that, you know, but you can't be good at everything. And I'm not good at everything. And, you know, I think today, if we look at the businesses that aren't good at what they do, and they've got that self-reflection, you know, where they know to stay in your core competencies, you know, adapt to the market, you know, bring your employees with you. You know, when you go through those transitions, don't stand back and avoid them, you know, because that's when they quit, they go home and then you're left going, oh, I didn't see that coming. You know what I mean? And you're left, you know, and then retraining employees. Right now, hiring employees is tough, but retraining is tougher. And then retaining them, you know, I mean, the cost of employee turnover is horrendous, you know? And I mean, we're missing good people for the wrong reasons. And some of this, that's the part that baffles me, you know, that it's pretty clear, but everybody wants that quick fix. You know, give me, I don't know, there's just, you know, I don't know any quick fix on some of these issues. And they're just, they're not.