Sometimes some of the hardest working people are some of the lower wage workers. They’re tickled to come in early and stay late for the lowest possible pay. Perhaps $10 to $15 an hour might be a low wage to you but it may not be a low wage to someone else. One of the common mistakes I see a lot of entrepreneurs and business owners make is they think the pay is, in essence, the job description. If they pay 20% more, they’re going to get a 20% better candidate than at the lower pay rate. That is not the case. A lot of people say, “If you pay peanuts, you get monkeys.” That’s not the case. It’s how your offer is framed to the potential employee. The way you frame that initial offer, that initial job posting, sets the tone for everything. The question is how do you hire them, how do you keep them, and how do you motivate them?
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Hiring Lower Wage Workers
This is the podcast where my wife and I live life and as we bump into comments, suggestions, thoughts, any type of growth nugget, whether we stated it or not, we write it down if we feel it’s going to impact people and we eventually podcast on it. This particular episode came from an email question that came in while we were out in China visiting our daughter. She’s a sophomore at Pepperdine. We spent a week or so out there visiting Casey and while I was out there, I got an email from Tony Albert, one of our regular audience, and he had some good questions. I could tell immediately in my reply I wanted to get a couple data points nailed down, so I didn’t misquote things. I emailed him back that I would cover that one. I’m finally getting around to it.
Tony has a window cleaning business and he is perpetually working with what he claimed as lower income earning folks, which is in the $10 to $15 range and he had a series of questions to a degree. How do you hire them? How do you keep them? How do you motivate them? Should I bring in a big shot to do some hiring and training and leading a team? Things like that. He referenced an older podcast in which I talked about. I went in and bought a company for $1 that had under twenty sales reps and I eventually grew that to a bunch of work from home folks, commission only. We had ended up with 207 reps working from home and we blew that thing up so he had some questions about how did we do that.
I want to answer a few of these things and I’m going to go somewhat randomly. $10 to $15 an hour might be a low wage to Tony, but it may not be a low wage to someone else. You take $15 an hour relatively speaking, if you’re an adult with children, that’s a low wage. If you’re a teenager, if you’re a single person looking for part-time work, that might be perfect because a lot of people assess what is going to be the responsibility with the pay rate. Some people, like Uber drivers and different things like that, they’re looking for something that has a reasonable hourly average based on their level of commitment.
What I want to bring into play immediately is the concept of perception. Sometimes, in my 25 years in business, some of the hardest working people I’ve ever met were some of the lowest paid people. I had a chain of video stores when I was in my twenties. I had a sign company when I was in my twenties. In both companies, I had people much older and much younger than me, very happy with a very low wage. They were tickled to come in early and stays late for the lowest possible pay. I do want to slow the engine down here and I want to remove pay the actual dollar amount that people get paid as any kind of barometer or gauge to how hard someone’s willing to work and their qualifications.
I’m going to go through a couple different things. Number one, how did we go from twelve reps to 207 reps in about nineteen months? The answer is simple. I ran an ad that said, “Very demanding work, very high pay.” Was this work from home position very high-paid? It certainly was relative to the type of person that I knew would answer that ad. These stay-at-home moms, these teenagers, these single dads, these people that had one to five nights a week and weekends to work from home on their phones, they would end up making a couple hundred bucks to quite frankly a couple of thousand bucks. That was very high-paid to them. It’s all relative and I want to go right into what is called vision casting.
One of the common mistakes I see a lot of entrepreneurs and a lot of business owners make is they think the pay is, in essence, the job description. If they pay 20% more, they’re going to get a 20% better candidate than at the lower pay rate. That is not the case. A lot of people run around saying, “If you pay peanuts, you get monkeys.” That’s not the case. It’s, “How is it framed?” How is your offer framed to the potential employee? The way you frame that initial offer, that initial job posting sets the tone for everything. This is what I was looking for Tony, I want to bring in a little article and it goes like this.
Beverly Kaye and Sharon Jordan Evans surveyed more than 17,000 employees with various organizations for their book, Love ‘Em Or Lose ‘Em. These are about the reasons why employees stay with an organization. These are the top ten reasons why an employee will stay with an organization for two years or longer. Number one, an exciting work and challenge. Number two, career growth, learning, and development potential. Number three, working with great people. In the top three, have you heard anything about the pay? No, these are the top three reasons people stay at a company.
Number four, fair pay. it doesn’t say, “Great pay.” It’s says, “Fair pay.” Number five, supportive management, good boss. Number six, being recognized, valued, and respected employee. Number seven, benefits. Eight, meaningful work and making a difference. Nine, pride in the organization. Ten, great work environment and culture. The key is what are the first three? Exciting work and the challenge, career growth, learning and development, and working with great people.
Vision casting is all about how does Tony phrase, how does Tony deliver the potential job in the realm of how exciting this will be? The challenge will be the career growth, learning the development, the working with great people, not about the pay. Now, let’s get into the concept of pay as a starting point. How can you use $10 to $15? How can Tony use $10 to $15 as a starting point, as a platform to then take it up a notch? One of the parts of Tony’s email was, “Should I consider bringing in one big, high-paid expert let that person hire and train the team?” In essence what I believe Tony saying is, “I’ve only got so much energy. I’ve got to clean my own room. I’ve got to run the company. How am I going to do it all? What if I bring in one higher paid person let them have the responsibility of finding and training others.”
A real quick thought on this. That’s a possibility. I’ve done that many times. It does work, but you’re going to need to babysit that highly-trained person anyway. I want to bring in a number here. This is the rule. The rule is three to one, but what does that mean? It means when you’re dealing with the entry-level position, anything as Tony describes in this $10 to $15 mark, any entry level position for every three people you hire, one is going to stick two are not going to stick. This is not about a job or position. It’s about the position in the person’s life. It does not matter how incredibly well you train them, these positions are resume builders, stop gaps, pain point relievers for a business owner to expect them to hire three entry-level people and even two of them stay four to six months down the road is not a feasible outlook.
If we know going in, Tony’s going to hire three, two are going to quit, he’s got one good one. Then Tony’s going to hire three more, two are going to quit. He’s got two good ones. He’s going to hire three. Two are going to quit. He’s got three keepers. The challenge is business owners think they can hire three people, roll the dice, get lucky, and keep three people. It’s never happened for me. I don’t know anybody that happens to. The 207 people that stuck, we ended up hiring 450, and we lost 250. The reality is we have to take a frame of reference and understand the rules of the game. I love the phrase, “Relax in the numbers.” If Tony wants to build a killer team of ten, he’s going to have to hire, train, and motivate 30 people.
Let’s talk about using that base pay as a platform. If you want to have a slightly higher percentage of people stick with you, you’ve got to have some form of career growth development where what if you said, “You’re going to start out at $15 an hour. However, if you can average 20% more windows clean than the rest of the team, you can get 10% more pay instead of $15, you’re going to get $16.50.” All of a sudden, that guy goes, “I’m not going to take a 45-minute lunch. I’m going to take a twenty minute lunch because I may be able to do a couple extra windows. I would love that dollar 50 times 50 hours that week, and an extra $75 a week.” There are a lot of things that can be done, and when Tony does the math, 10% higher pay for 20% more windows clean.
It’s the same thing as only paying that man $13.75 for the same amount of windows. If you do the math, it’s called the reciprocal. The reality is there are things Tony can do to hire, train, and motivate more growth, more success. When you use carrot and stick like that where you use those promotional items as a way to get performance, that also shows you who some of the potential managers could be. Not that all great workers become great managers, but there is a slight indication that if they follow that incentive, you can overlap them with a management incentive and then they do the three to one ratio of hiring and training.
For this episode, how do you work with that lower income bracket? It is simple. You relax in the numbers, you work with a three to one ratio. You make sure your expectations or proper. Then finally I’m going to end with this, and I think I mentioned this a couple of weeks ago. Make sure that you don’t have what I had in the early days, a faith problem. I’m not talking about religion or spirituality. I’m talking about faith in other people. If you can’t go in with the three to one ratio, you might have a faith challenge. If you think all three people are going to stick the number one, that’s a business challenge, but if you think all three might quit and that’s the reason you’re not going to hire three people to begin, that’s a faith problem.
If you know in your heart of hearts that you can roll the dice and get the statistical average that two out of every six and three out of every nine are going to stick for you, then you can’t run enough ads in the newspaper, Craigslist, or wherever you place your ads because then it’s just a numbers game and then business becomes a very fun. For Tony and the rest, I hope this helps. Anybody else have any questions or business challenges you’d like me to talk through on a podcast like this, hit me up Ken@IncomeStore.com. I won’t always get to them in two days, but I’ll get to everybody that emails me a business challenge and I’ll give you my input of what I would do in that case. I hope this helps. Take care.