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The Team-Based business model ROCKS

September 29, 2014 | By Neil Ducoff | 3 Comments

TBPC_groupOn September 21st-22nd, Strategies held our first annual Team-Based Pay (TBP) Conference in Chicago, IL. It’s amazing that 158 business owners and leaders gathered to learn, to be inspired and to celebrate this thing called “Team-Based Pay.” Heck, it’s just a pay system. But labeling it “just a pay system” is a shortsighted conclusion that discounts what a company can achieve by rewarding the right overall individual and team performance. Team-Based Pay isn’t about the “pay” … it’s about achieving excellence by defining and rewarding excellence. It’s about building a team-based business model that is void of the “I/me/mine” commission mindset.

The intent of the TBP Conference was to bring together our community of TBP companies to network and share knowledge of the team-based business model. From the owners on the panel discussion to success story upon success story told by attendees, there was one common denominator essential to each experience – company culture. Our closing keynote speaker, Jack Stack, CEO of SRC Holding Corp. and author of bestseller, The Great Game of Business, said it best, “Create Leaders. Create business people who think and act like owners. Become a successful business of business people.” Jack offered the following three essentials to building a team-based company.

  1. Recognition: People need to be recognized for their contributions and their talents. They don’t want to be treated as irrelevant or disposable.
  2. Career Opportunities: Believe that everyone can go somewhere.
  3. A Stake in the Outcome: Believe in creating wealth for those you work with while you create wealth for yourself.

Strategies Coach Robin Gribbin delivered the following 12 No-Compromise Strategies to keep commission thinking from creeping back into a team-based culture:

  1. Stop talking about and comparing commission to TBP: Too often, owners/leaders keep the commission conversation going when there is no need to continue the debate. If you’re a TBP company … you don’t pay commission. Why keep the conversation on the table?
  2. Thinking and behavior drive the numbers you want: You can tell employees to “get their numbers up” all day long, but the fact of the matter is that numbers are an outcome. Focus on getting “Culture & Teamwork” and “Individual Strengths” right and the numbers will amaze you. The more these two critical areas shift to TBP thinking and behavior, the better “Performance & Critical Numbers” and “Skills Requirements” will get.
  3. Stop tracking “Request Rate”: Request rate is 100% super-concentrated “I/me/mine” thinking. The power is in tracking client retention and loyalty to the company.
  4. Column vision is “I/me/mine”: Coach employees to think WIDE, not narrow. “Column vision” cannot compete with “Everyone is responsible for every hour the company has available for sale” team thinking and behavior.
  5. For “top producers” and “senior staff”: Their future earning potential resides on all the columns on the appointment book – not just their own.
  6. It’s about managing your “Service Payroll %”: Once set, commission, including sliding scales, is inflexible. Simply put, you can’t control your payroll percentage as long as payroll is a fixed percent of revenue. Any change or adjustment in commission rates instantly turns into a full-blown pay conversion. Because TBP is hourly, not commission based, it can be controlled to adjust to changes in operating costs and cash flow.
  7. Never ever: Don’t use “cutting hours” as an everyday means to control your TBP payroll costs. If you have too many hours for sale, it’s a symptom that your productivity rate systems need attention and that you’re not following your cash-flow plan. Keep cutting hours and you’ll demoralize employees that want to work.
  8. I repeat: If you believe that employees won’t be motivated to work without the incentive of “commission,” why are so many leaders complaining about unmotivated commission employees? Leadership, clarified expectations, rewarding the right behaviors, systems, accountability, teamwork and culture are all where motivation is derived.
  9. Busier isn’t always better: The more you drive revenues in a commission-based business, the more you drive up your payroll costs. Make payroll a fixed expense and you can manage payroll costs just like any other cost.
  10. Watch your words: Commission has its own vocabulary that speaks “I/me/mine.” Build your request rate. Build your book. Your client/my client. That’s my sale … I should get the credit. It’s hard to build a team-based culture when your terminology does not match what it means to be a team.
  11. Love/hate relationship: Too many owners and leaders hold themselves hostage because they “love the money but hate the employee.” The longer you continue to pay an employee for performance and behavior that drives you crazy, the more toxic and contaminated your culture becomes. Make the tough decision and get it over with.
  12. Double trouble: Double standards in any company will wreck your culture. Reread number 11.

I want to personally thank my Strategies team for making our first TBP Conference an outstanding success for everyone. Eric Ducoff and the corporate office team planned and executed the entire event without a hitch. My team of Strategies Coaches delivered powerful content in the breakout sessions … and, when it came to customer service … they truly practiced what we coach and teach at Strategies every day.

We hope you join us at the 2015 TBP Conference next September.

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Categories: Business Builders , Leadership , Monday Morning Wake-Up , No-Compromise Leadership , Teamwork

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Comments

  1. I LOVE this Monday Morning Wake Up. I loved it when you talked about it a little at the Gathering. I’ve read lots of articles by salon owners who have tried it. The one thing they talk about most often is how hard the transition was. Any transition for stylists is threatening and this one is especially. I live in an area that is really really tight on stylists. Truly. I know you hear this all the time but we are on a rock in the middle of the Pacific with no beauty schools. I’ve done a nice job creating a team atmosphere and I definitely will take your advice and watch the language so I keep fostering it. But I am really afraid that switching to TBP is a huge risk. Just one obstacle is how to guard against looking like the big box stores that stylists only like to work at when they’re new?

  2. Hi Sue,
    TBP is about rewarding the right behavior and performance. Commission pay is simply a % of individuals sales … and in the process, rewards lateness, attitude, “I don’t retail”, low client retention … and a bunch of other stuff. Is what it is.

    Yup…everyone says it’s hard to find good stylists. Doesn’t mater if you’re on that beautiful little paradise rock in the middle of the Pacific or on Manhatten island. The best talent always gravitates to the best salon cultures and brands. When you offer income growth opportunities tied to clarified performance exptections … it really doesn’t matter what the pay method is.

    The reason that some owners say the the conversion to TBP was difficult is because they didn’t have any financial or operational systems in place to drive TBP. Too many owners convert to TBP and think everything is going to change whether they implement the necessary systems or not. What they eventually discover is that all they changed was the pay … everything else was still commission based.

    We’ve been doing TBP conversions for years. Walkouts occur in salons where trust doesn’t exist and owners don’t deliver what they promise. If you run a well-structured business with a solid and positive culture…converting to TBP is anything but a huge risk. And nothing about the TBP system we teach and coach is designed to look like “big box” stores or large chains.

    You have a vision and believe in your people. You want to give them an extraordinary place to work, grow and reward them the best you can. TBP cultures are dynamic and impressive … and financially viable. There’s nothing to fear other than your commitment to follow the program and do the work of leadership.

    TBP is so much more than a pay method.

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