The Impact of Gratitude on Business Vitality and Employee Retention

You're very welcome. Kurt wrote a blog for us about employee engagement and rewards. And the very first... article I wrote for the AED back in the 90s was headlined, Who Are Your Heroes? And it was the people that touched the customers and how they were underappreciated, undervalued. And Kurt, to make a big circle out of it, tell us what the genesis was, what the thinking was that got you to write about a reward program for employees, because it's wonderful.

Yeah. The caring aspect. You know, we've gone through generations. I've been working in this industry for over 50 years. And at the beginning, nobody really thought to challenge or question the boss. You get hired. I came out of university in 1968 and was told, and it was a pretty tough time to get a job, and was told by everybody, take your time, because wherever you end up, that's it for the rest of your life. Now, that's the 60s. My daughter goes to work in the 90s. And at that time, so basically, let's say 70 to 90, from this is it for your life. The feeling was in the 90s, you're going to have five to nine jobs over the course of your career. Today, the 20s changes a century in there. And the young folks, my granddaughter, who's 22, says to me, Poppy, our generation has what they call quiet quitting. I said, what the heck is that? She said, we only do as much as we need to do to keep the job because we need the money, and then we go do with our lives whatever the heck it is we were meant to do. So in those three generations, Kurt, worthwhile work, bosses that care, I believe it's always been true, needed, and necessary. But I think you proved it in your blog that it is still something that gets people to contribute to the best of their ability. They feel that they're recognized, they're listened to, they're cared about, that there's people that know about their lives, that they're having a baby, that their wife is sick or whatever is going on, which is just being people.

Yeah, I agree with you. Everybody wants to do a good job. That's part of. You know, Lou Holtz years ago, the coach at Notre Dame and other places became a speaker. And he had a film that he put out called Do Right. And it was predicated on the fact that there's three things that every employee needs to be or every boss needs to be aware of. Everybody wants to do a good job, number one. Number two, and this one's intriguing and we spoke about it, everybody can do more than what they think they can. And three, everybody's fundamentally lazy, but not in a bad way, in a way that they try and do things the most effective way that they can find. And it is absolutely remarkable. You and I have talked about it. I call the boss the conductor. And he's the only musician that has his back to the audience, to the customer. And his success, the boss's success, is totally dependent on the skills and talents and efforts and motivation and commitment. and hard work of the musicians. And we have that with every, you know, you and I started in parts. Actually, you went to Mexico first, didn't you? And wet your teeth in a completely different place. We've gone through different journeys. And I think we've been blessed by having those opportunities that most people don't have. They go to school, they learn. Some go to technical schools, come to the university, some come straight out of high school, go to a job. A boss takes them in. If they do a nice onboarding job, they introduce them to other people, show them where the toilets are and lunches and all the rest of that stuff. And then they sit with them and tell them and show them how to do the job. And that's an old teaching thing. I'm going to show you what I'm going to tell you. Then I'm going to tell you what I just showed you. Then I'm going to show you again. And then I want you to try. we kind of leave them with the impression is this is the job. This is how I want you to do it. Now get good at it, make fewer mistakes and do it faster. And I'm happy. And that's such a flawed approach to life. In my view, maybe it's because I pushed back on my father. I'm not an obedient person. You know, I'm going to challenge everything in sight. Why do we do it that way? You know, from a little person, our children, everybody, why is the sky blue? You know, be curious, ask.

You know, there's so many. As you know, I'm really passionate about helping people get better at whatever the hell it is that they do. And Seneca, the old Greek Stoic, is famous for saying, opportunities come to those that are prepared. And something that I've cottoned on to for a long time is, and posing the question is, what would you do if you weren't afraid? And I don't, I subject myself and I understand the word stress, but I change that. I call it performance anxiety. And my granddaughter, who's a very talented, hardworking, curious person. doesn't like to speak in public because they're older people. She feels that they're more knowledgeable. And who is she to be telling them what to do or being a subject matter expert on anything, which she is. I started teaching when I was 16. I started teaching at university when I was 18. And I've always been involved in... How can you get better? And the thing that I learned, and you and I have talked about this, I was a swimmer for a long time, competitive swimmer, reasonably good. But in swimming, you're not competing with other people, which is, I think, also part of our workforce structural problem. You're competing with yourself. And I think I've even said this with you, standing on the blocks before a race, if I finished last, But beat my best time, I won. And that's something that's really interesting. Now, here comes stress and performance anxiety. Before I left the home going to a meet, and I never lost a race, just for the record, I would throw up. I'd get to the pool, and I'm changing, and I would throw up again. I was anxious like hell. And a lot of people say that's stress. And I was 16 when I stopped competing competitively. Had records for five or six years. I think some of them still stand in Canada. Just missed the Rome Olympics by two-tenths of a second. So I was pretty good in the pool, but I couldn't handle the performance anxiety. So that gave me another vision into people, the people that are the top of the pile, the best of the best, the top guns, whatever terminology you want to have. The Michael Phelps, if I look at the pool, he has physical attributes that give him an advantage. But he has emotional attributes and discipline attributes that are really rarities in people. We grow up. We go to school. We're obedient. We follow the law. We apply for work. We get a job. We get good at the job. We work hard. We get married. We have children. We progress through our life. And ultimately, we all end up in the same place. We can't control when we're born. And as they say in Japan, you can't control when you die. And the only thing you can't control is between those things, what some people call the dash on the headstone. 1946 to 2025, dash in the middle. The dash is everything that we do. And that's kind of, you go to work, I want to do something worthwhile, exactly what you were saying. But how do I get a performance review? Who tells me whether I'm doing a good job? How do I know what doing a good job looks like? I think we do a terrible job in communication. as leaders. What do I want you to do? Simple question. Or have you found you've been here six months? What do you see that you really want to question? Why? You know, you've got anything out there you found that why do we do it that way? We don't do that stuff. It used to be called personnel. Then it morphed into human relations. Now it's called talent management. Interesting nomenclature changes. A lady that writes for us out of Australia, a very talented human relations person, Sonia Law, she calls it a job architect. And what she's implying is that the person who works with you is the one who's going to design the job that they're best at, not the job that the company needs. And that's an interesting view. So I got eight guys on the counter, telephone and walk-in business. What do I want them to do? And that's a nasty job, Kurt, as you well know. That phone's ringing all the time. Hair's straight back. And yet anytime the boss is there, they're all sitting on their butt having a cup of coffee because they're taking a deep breath. And everybody, the boss would come and say, why you got so many? You don't need that many people. So now we're into the next phase of leadership, which is doing more with less, making more money because I've become, quote unquote, more efficient. And efficiency is measured by sales per employee. And that number goes up when I cut the number of employees, which is exactly what I see in our workforce today in the construction equipment world. We do not have enough people to provide the level of customer service that I think our customers deserve. And if we don't channel the employee properly, if we don't have some kind of formal or informal rewards. What's going to move them to do something more, to call a guy back and say, thank you. I appreciate your business. It's a tough game.

It's actually quite shocking. In 1980, I was asked to get to put together a bunch of metrics and standards. And one of them was sales per employee. And the number that came out was $600,000 per parts person per year, excluding product support sales and excluding the manager. So if I had 10 people in parts, that's warehouse, office, counter, inventory, purchasing, all of that stuff. If I had 10 people, I was expected to sell $6 million a year. And from there, you look at what your gross profit should be, your expense ratios and all the rest of this stuff. That's 1980. One of the standards was payroll expense should be expressed as a percentage of your sales. And the number that's right is 7%. So if $600,000 is my salesman employee, my payroll package for a parts person, everybody but the manager and no product support salesman is $42,000. That's 1980. Today, Most dealers that I touch are between a million two and a million eight per person per year. And being the idiot that I am, and you know me well enough to know that I do this, I said, you know, that standard 7%. So let's just make this easy and say you get a million dollars a person. Are you paying the people in the parts department $70,000 a year? And the answer is hell no. Right? Yeah. But I know dealers that are selling $2 million per person. That's 140 grand. Sure. So let's just say gently that 60 grand would be a reasonable pay package today for a parts person,72,80, whatever the number is. Where does the difference go if I have sales per employee that generates more net income than is required by a standard metric? Goes to profitability.

So now we get into the situation where I'm fighting with the boss, who's really happy because he's making a lot of money, saying, wait a second, you're doing this on the back of people and you're losing customers every year. And they don't know that. And that's your retention point. Yep.

And that's kind of a shocking statement, isn't it, on the face of it? And I agree with that 100%. You know what? The market share animal that we look at, manufacturers, OEMs, and you were with deer for a long time, live and die on machine sales. And if we look at the construction equipment world and look at the majors, let's say Caterpillar, Komatsu deer, Volvo, Case, JCB, blah, blah. There's only two or three of them that'll get 20% on any aspect of the market on the equipment side.

And then I asked dealers, I want to see their retention rate. And every five years, we did a survey with the AED, and the customers responded to us. And one of the questions was, who does your maintenance work? Is it the dealer? Is it your employee? Is it an independent? Is it a specialty? Blah, blah, blah. We found that really, really good dealers, really good dealers would get 35% of the labor that was for their equipment. I have found that if you get 10% or more of your total dealer sales in the service department, you're at about the 90% of dealers in the planet area. Meaning that 90% of the sales that you got in your business come from something other than the labor aspect. And you and I talked about it. Every time my technician sells an hour of labor, he buys parts.

And he's the only one that's guaranteed to buy my parts. That's not always true, but for the most part. And then it really got my attention when I asked, and these surveys, who does your maintenance work? And 95% of the customers said they didn't go to the OEM dealer. In other words,5% said they went to the OAM dealer. And 50% of the labor hours that are applied to a machine over the course of the life of a machine go to maintenance. This is shocking stuff, Kurt.

Huge. Huge. Now, if I'm doing all your maintenance, I should be the first one to know when there's going to be a problem, when there's going to be a failure. That should give me a head start on all the repair business. Somehow we're in the equipment business and I think we should be in the labor business.

I call that subscription services.

When we sell a machine. And think to buying your car. You're in a building. It's a little different, obviously. The salesman will do everything. They'll wander around. They'll answer all your questions. They'll do the 60 font pen, writing out the quote. And you come to an agreement, you and your wife or your partner, that we're going to buy this vehicle. We love this vehicle. And here's a price. And boy, we've agreed on it. But then the salesman says, well, I have to go check with my box. To get that approved, there's some water, coffee, tea, pop, whatever. Give me a couple of minutes. And he comes back and not once will they come back at that price. The price goes up. So now you're in a different place. I want that vehicle. I agreed to a price. He changed the price on me. So instead of 30, it's now 33. Oh, darn. And they've written books about this. I mean, this is a planned deal. However, now they get shuttled over to the real closer, who's the finance person. Would you like some insurance? Would you like a maintenance program? Would you like an extended warranty program? Would you like a parts guarantee program? This is $15 a month. This is $25 a month. This is $75 a month. And we have been, we're real slow to the game here, Kurt. Yes. But now change the context from the customer and buying something to the employee. I've got the employee. I've hired the employee. I've trained the employee. They've been with me for a while. What's their next step? How do they make more money? How do they progress through the organization? What would they like to do? We don't engage in those discussions for the most part. I had a boss for years. I worked in dealers for 13 years, I think, and I never once had a performance review. And I would ask my boss in Montreal, who was a very talented guy, for a performance review. I don't believe in those things. Did you get more money? Yeah. Well, that's your performance review. Get out of here. And it's not about money, as you said. In the old days, people didn't leave because they weren't paid properly. They left because the boss abused them. That's what used to be the case. Now they're leaving because nobody cares. It's still not about money. But that reward structure thing can be financial. It doesn't need to just be, you know, come by us and put my arm around your shoulder. You're a really good guy. I love what you do for me. Thank you very much. I can incentivize people with money. I can incentivize people with days off. I can incentivize people with gift certificates to a restaurant for you and your wife on your anniversary. Or I can give you a day off on your birthday, like the automotive businesses used to do. There's a lot of different ways that we could explore how we could make the employee happier at what they do. But we don't ask those questions. What would you like that would make your job better? Has anybody ever done that to you?

The fact that it brings tears to the eyes of a person, and I know that you as a person would do that even if there wasn't the 50 bucks. The fact that it brings tears to people's eyes is an acknowledgement of how lonely and how isolated people genuinely feel. They're alone. They got to figure their way through this by themselves. And so rhetorically, I often say to people, have you been thanked too much? You know, there's no such thing as, and thank you. A lot of people say, well, that's old fashioned, Ron. I thank people. You know, I'm sorry if that makes you feel bad. And then I always used to start off a class. And I don't remember if you were in a class or we did things informally. But, you know, how many people can give me the definition of ignorance? And you've heard this routine. And everybody, they don't know me. They're walking in. It's the first time they've had me in a class. And there's 20 or 30 people that don't want to embarrass themselves. So they keep their mouth shut because they don't know what the hell to do, right? So I poke and I get questions and I get people talking and thinking and then I take them off the hook and say, well, ignorance is not knowing what to do. Ah, okay. So then I say, now we've got a second one. What's the definition of stupidity? Well, some people in the room have figured it out and they come up with the answer, but probably two-thirds to three-quarters still don't because they don't know quite. They haven't been asked to think for themselves yet, often. Their parents didn't ask them to think for themselves. They learned to be obedient. Their teacher didn't ask them to think for themselves. This is how you learn arithmetic. This is how you write cursive, which doesn't apply anymore. So the answer to the stupidity question is knowing what to do but not doing it. Well, that is stupid. And so we have a little bit of discussion of that. And we end it with the definition of insanity, which is attributed to Mark Twain or Einstein, continue to do what you've always done, expecting different results, which is insane. But that's how I started every single class for 20 years. And it always shocked me the first time through that people wouldn't get to question ignorance. And I'm ignorant in so many ways, it's scary. I think we all are. But I go back to the tears. The last couple of years, I was on a podcast with somebody and the statement was made. relative to customer service and engaging with people, that I changed an approach to my life. Whatever anybody asked me for, I say yes, period. Doesn't matter what it is. Yes, it's got to be legal. It's got to be relatively moral. And if they don't ask a question, I'm going to provoke you. How can I help you? And both those questions confuse the hell out of the audience. You ask me for something, I say yes. Whoa. How can you do that? You don't even know how to do it yet. I'll figure it out. Do that to your employees. You know, this customer has been a customer of ours for 25 years. Is there anything that they don't buy from us that you think you could get them to buy from us? Stupid things, Kurt. You know, Barry, you've been dealing with that customer for a long time. You know, they don't buy one filter from us. Do you know why? And then just, here we go, you know? It's changing the view. It's changing the perspective. It's like our other podcast is called The Clouds Are Upside Down, which is looking at the world from a different perspective. Employees are heroes. They're the glue that creates the relationship with the customer. And we're in the relationship business. We're not in the parts business or the equipment business. We're in the people business. We're in the relationship business. I love you, man. You know, what did I do to get you mad? I haven't heard from you for the last 30 days. Everything OK. We don't give the employees that kind of thought pattern. Do the job. You're a tool in a toolbox. I hate that. Absolutely hate it. And that's why I was so struck by your blog on rewards, because it's the real deal, baby.

As you know, that's what I'm... My purpose in life is to help people identify their potential, personal and professional, and then to give them learning paths or opportunities to achieve it. And that's nasty, nasty, nasty work. And I've been there. It's not very happy. When I first got married and became a father, every year I would do a personal review of myself. And after a couple of three years, Marlene, my wife said to me, Ron, why don't you go get a hotel room? Because we don't want to be around you when you're doing this to yourself. You know, because if you think about it, who's going to be the most harsh critic of you? If it isn't you, who is it? It's you. And I don't like being nasty to myself and saying, oh, God, you failed on this. You could have done better on that. But that's me. You

absolutely. One of the things that I'd like to have the employees that I work with give me a review. What do you like that I do and you want me to continue?

What don't you like that I do and you want me to stop?

And what do I do that doesn't really matter to you? And I started doing that in, I don't know, my second or third year in a supervisory role. Good for you. And it was selfish on my part because I can, the things you like, terrific. You know, I can keep doing that. the things that you don't like. Then I had to evaluate, is it a style? Is it the communication style? Is it a personality? Or is it legitimate? And I have to be a little bit better at getting it done. But the one that was most beneficial, what are the things that don't really matter? Guess what I did? I unloaded those to other people. So it gave me more time to do the rest of my job. There's so many things. Another little exercise I used to do, and I still teach it this way, five things. Tell me five things, Mr. Employee, all of you, everybody in my team, make a list, and then we're going to get together and talk about it. Give me five things that you'd like to do that would make your job better. We go through that exercise. They write it down. Then give me five things that you'd like to change on your job or think we could change on the job that would be better for the company. Okay? then give me five things that you do in your job that are real pain in the butt for you to do. And they hand them all in to me. And we're in a team meeting. It's in the evening. It's a whiteboard or a flip chart or blackboard or whatever. And I start writing them down. And I'll take the first one and I'll write it up and we'll talk about it and we'll make it the same for everybody. So everybody's in agreement with what that thing means. And we end up with five things that would make their lives better. Five things. That would make the job better and the company better. And five things that are a pain in the ass. And I would always ask the question. After all this is up there, you guys are agreeing with all of this. Yeah, absolutely. So why are these things that are five better for the company not done already? And it was silent. And I say, okay, who wants to take the first one? And I'd assign the five. And then we go to the next list. are better for you as a person. Who wants to take those? So now I got 10. If there's 10 people in a group, I got 10 people busy. The five things that are a pain in the ass, I'll look after that. Or something. Little exercises to get people thinking differently about what they do. And we are with our employees in our workplace more than any other aspect of our life. We spend more time with co-workers than our families. And that's disgraceful.

Think about that for a second, because the first time I would do this with a new group of people. It scared the hell out of them. They didn't know what to do with me.

Well, the other part of it is if they make mistakes, they get whacked up the side of the head. Mistakes is how we learn. If you're not making mistakes, you're not doing anything. And yet, and you're talking about, I love the term, legacy managers. We're going through this transition from being thing-oriented to being people-oriented. And just think of where we are now, Kurt, with artificial intelligence, data analytics, machine learning, all the technological tools that we have available. It's remarkable. So my last little foray into this with you is I was dealing with a dealership, a John Deere dealership in the Northwest. And I gave every single one of the people on the counter 100 customers. And I said, here's the parts volume. Here's the service volume. I'm going to give you a check every month at the rate of 10% of that which it increased. And parts and service people are probably more salary focused than anybody else. And they don't want to jeopardize this stuff. So they're very conservative about money. So we did this and they made money. And it was really interesting exercise. I think there were six or seven people. The guy that did the best. was the youngest. He didn't know what he couldn't do. The guys that made the worst were the ones that have been there forever. They didn't know what to do. But they learned and they talked to each other, they collaborated. The next year, instead of 10%, I said, okay, I'm going to make it 20% this year. And they, whoa, this is great because they were making money and they knew how to do it. So it's now month 25. I said, okay, I'll make you a deal. I'm going to reduce your pay by 20%. but I'm going to pay you 40% of the growth. I'm going to give you a choice. I'm going to let you have three months to pick and choose, but at the end of three months, you have to pick one. They all took a pay cut. Performance-driven rewards work. Your blog is right on point. Whether it's understanding the job, whether it's being trained on how to do the job. You know, we have job assessments, Kirk,96 questions that I like every employee that touches a customer leads people to take once a year. And I want the boss to see it. And I want the boss and I to talk about it. And I want collectively for us to talk about how I can improve my score. And that makes life so much easier. And to your point about the annual review, every time I see something, I'm walking around all the time. Half of my day always was out of my office walking around. People get used to it. They love to see you. How are you, Ron? And everybody says, well, no, you're wasting their time. Bullshit. I'm getting to know them as people, and they're getting to know me as people so that they're not afraid to make mistakes. They're not afraid to try new things. That's how we progress. Our filter market share is terrible. Well, we don't make the filter. It doesn't really matter. Ah, bull. Well, my price is too high because Fleet Guard is just down the street, and Fleet Guard supplies deer or whatever. Doesn't matter. And who owns Fleet Guard? Well, Cummins does. Yeah, gee, we have their engines. You know, all of this stuff. And we don't even know it. We don't give the people that information. You change how they're rewarded, all of a sudden they thirst for that information. They can't wait to see it. Let me see, let me see. How'd I do? How'd I do? And here comes the check. Hey, George, here's $2,000. You increased the sales that much by $20,000. Congratulations. And that's a lot of money for the people on the counter. Got to be impactful. So thank you so much for that blog. It was right on the money.

I would probably like to close it there. But you know I'm going to want to do another of these with you. It'll be a different thing. It'll be a complimentary thing. Kurt, thank you very much. Thank you for the blog, and thank you for this time. And to everybody listening, I really appreciate your thoughts and comments. So when you see the podcast published, if you want to make any comments, please do. In the meantime, mahalo, and thank you. Thank you for listening to our podcast. We appreciate your support. Should you have any thoughts or comments, please don't hesitate to contact us at www. learningwithoutscars. com The time is now. Mahalo!