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Fire Someone Today [Book Summary]

Despite the provocative title, in this book the author lists a number of lessons and experiences that he has learnt throughout his life as an entrepreneur and business owner.

FIRE SOMEONE TODAY, by Bob Pritchett

If you have more than a handful of employees, then you probably have some who need to go.  Typically the categories into which they fall are:

  • Whiner.  The whiner is happy only when he is unhappy. He sucks the joy out of an organisation.

  • Slacker.  Stands at the coffee machine, surfs the Internet, etc.

  • Incompetent.  Well behaved and eager to please, but just doesn't do their job very well.

  • Troublemaker.  Stirs up discontent, creates an "us versus them" environment.

  • Misfit.  Has all the skills, but his hearts is not in it; he's just in the wrong place.

  • Redundant.  He's the number two in a job that one person can do well.  A wasted resource.

Why are we reluctant to fire people?

  • We want to be kind.

  • We are concerned for the employees.

  • We don't want to admit we made a mistake in hiring.

  • We have a large investment in training.

  • We don't know how we will fill the position.

These are all selfish excuses.

What happens when we don't fire?

  • We are sending the employees a message: "You're no good"; even when we don't say these words, our silence communicates them.  This saps the energy of the whole team.

  • We are sending the employees' co-workers a message: "You don't need to do a good job. We don't distinguish between good work and bad around here".

  • We are poisoning our own attitudes.  We develop a feeling of pride about our "mercy" whilst at the same time resentment grows for what we perceive are their responsibilities and our wasted time and resources.

How to go about firing someone?

Be prepared, and be firmly decided.  When you announce that you are firing someone, you are taking your professional relationship with that person over the edge of a cliff.  There is no way back to the top of the cliff, there is only pathetic grasping at branches on the way down.

Cover the following points succinctly:

  • You're fired.

  • Why you're fired

  • Things we need from you

  • Things you need from us

  • Good-bye

Hiring

Don't delegate the job of hiring to someone else.  Do not hire anyone you have not interviewed and approved personally.

Success in most roles in a company comes from attitude and sense.  You can teach systems and train for skills.  It is a lot harder to teach someone how to have a good attitude or common sense.

Don't hire "needs the job" when you can hire "wants the job".  Ask the candidate "Why did you apply for this job?" and listen carefully to the answer.

The QPS Triangle

Draw a triangle, and write at the three points:  Quality, Price, and Service.

Then draw an emphasis arrow.  It starts in the middle and points out in one direction.

The key is putting your emphasis mark far away from the marks of your competitors.  If your competitor is hanging a sign that reads "We'll beat any price", you should take a look at the quality and service corners.

You can also expand the triangle by staking a position that is beyond what anyone is doing in your market today (i.e. an even lower price, an even better quality).

You can always find 5%

Look to cut 5% from your expenses.  It probably isn't hard to find.  Your accounting software should allow you to output all your expenses in descending order - look first at the highest expenses.

You'll find expenses that can be cut altogether without making any difference to your business.  Look at your payroll and ask the "what would happen" question about each name on the list.

Negotiate a 5% discount with your suppliers.  Ask politely.  Be informed beforehand - get a pricing quote from a competitor.

Cutting your expenses by 5% doesn't increase your sales, it directly increases your profit.  That's why it's so important.

Profit is why you are in business

Pay primary attention to profit, not secondary numbers (gross revenue, employee headcount, number of customers, etc.)

There are many ways to be unprofitable:

  • Falling in love with your customers - e.g. spending huge amounts of time doing lots of little things individual customers requested even if they were only of interest to that one customer.

  • Not distinguishing good customers from bad customers - i.e. the profitable ones from the unprofitable ones.

  • Creating work to keep the staff busy.

  • Taking projects at a loss to keep a competitor from getting them.

  • Failing to correctly account for costs when bidding for a project.

  • Losing a little on every sale and trying to make it up in volume.

Everything you do should be profitable.

Stand firm for profit - if a customer bargains you down, stand firm.

If you are not growing, you are shrinking

It is easy to believe that a business isn't shrinking because it is maintaining its top line revenue, but the shrinkage that kills many businesses is not the top line; it is on the bottom line - expenses creep up from below and prices fall from above.

Note: Don't price your products at $99.95 or $149.95 because it makes it difficult to increase prices to match inflation.

Growth is the answer.  Grow gross revenue, employee headcount, product line, office space, customer base, locations, and leadership vision.

Remember that money is not a growth aid.  Money is an accelerant - money helps a business move faster.  It is like gasoline: in the right circumstances more gasoline means more power and more speed, in the wrong circumstances gasoline means more fire.

Good systems protect you from the perfect employee

Beware of the perfect employee - employees that remember everything, are self-directed, and have it all in their head.  They do a great job, but if one day they get hit by the proverbial bus (or resign, move to another country, get a heart attack, etc.) you can end up in deep trouble.

Good systems protect you from this risk.

  • Good systems are not dependent on specific individuals.

  • Good systems facilitate consistency.

  • Good systems reduce fraud.

  • Good systems prevent lockouts (are there two copies of the key?)

  • Good systems scale.

Make it easy to design good systems - make them easy to create.

The one who writes wins

Negotiating deals is fun; writing them up is not.  Typically when you get to the end of a negotiation, the parties have to decide who will write up the legal agreement.  You should volunteer to do that.  Whats more, you should write the first draft yourself, and only then send it to your lawyer to finalise it into proper legal wording.

Most business people are fair and honourable, and typically contracts are put into a drawer and never seen again. But sometimes a deal turns sour, and then that dusty old manuscript is inspected with a magnifying glass - definitions are looked up, phrases are parsed and reparsed to extract new meaning.  The person least likely to be surprised by the detailed meaning of a contract is the person who wrote it.  This is reason enough for doing that work.

Other advantages are that writing the contract frames the debate.  It also gives you control over the small stuff - all those reasonable small clauses that are not worth arguing over at the outset.

Don't send an editable contract to the other party, send a PDF instead.  That way you control and are aware of all changes.

Build a dashboard

A profit and loss statement or a monthly report are not a dashboard - they tell you what happened in the past.  A dashboard tells you what is happening now, and can even tell you what is going to happen next.

The dashboard should contain:

  • Cash

  • Sales

  • Profitability

  • Operations: (i) Sales by channel or salesperson, (ii) Production statistics, (iii) Service metrics.

  • Early indicators (changes in internal ratios / external factors such as interest rates)

Use charts instead of gauges.  Watch trends instead of snapshots.  Use weeks as a unit instead of months (every month doesn't have the same number of days, and holidays make variability between months even higher).

Visit everyone in person

Visit your customers in person:

  • You personalise the business relationship.

  • You make yourself available for feedback.

  • You have the time to get to yes.

  • You learn how the customer makes decisions.

  • You get context.

  • You get ideas.

  • You get the truth.

Visit your suppliers in person.  Same reasons as above in reverse: you want your supplier to understand your needs, to offer new products, etc.

Visit your competitors in person.  You'll understand their real size.  You'll learn the direction of their business.  You'll feel their rhythm.  You may even end up buying or selling them assets, developing partnerships and joint-ventures.

Do you really have to visit everyone?  Remember the sign on the dentist's wall that explains why you do not have to floss all of your teeth, just the ones you want to keep.  You do not have to visit all of your business relationships; just the ones you want to keep.

Press

The press wants story hooks.  Find the one that fits your business story best:

  • Rags to Riches

  • Doing the impossible

  • Small-town boy/girl makes it in the big city

  • Exotic connection

  • Current events

  • David and Goliath

  • Celebrity

  • Social good

  • New technology

  • Scandal

Be persistent without being annoying.  Remember that you are always on the record, and that a reporter is never your friendExpect some errors in the reporting.  Provide help to the reporter - a quick fact sheetRespect the press like you would an elephant, it can sit wherever and on whatever it chooses.  The press is sometimes sloppy, always hurried, and loyal to no-one.

Acquisitions

In acquisitions, the buyer is always the loser.  Businesses always sell for their true value or more.  They are too expensive because the price includes the best possible value for the assets and makes no allowances for unforeseeable liabilities.  Businesses are too expensive because there is no value in the transaction itself:  the seller can only increase value from the sale if the buyer pays too much.

Buy lunch

Breakfast is about the individual, waking up and starting the day.  Dinner is about family and friends.  Lunch is all about business.

It is good to do business over lunch.  Meals are more relaxing than meetings.  Eating levels the playing field.  Lunch is long enough for both the friendly small talk and the time to talk business.

Winning takes 51%

There is a lot of inspirational stuff out there about giving 100%.  That is great, though possibly exhausting when it comes to effort.  But success in business is not about how hard you work.  It comes from winning more than you lose.  You win by making the right decisions.  You don't need to make the right decisions anywhere near 100% of the time. You just need to make the right decisions more often than you make the wrong decisions.

Keep making decisions.  Many business people are so concerned with making the perfect decision that they do not make any decision at all.  Make lots of decisions - it increases your forward momentum.

There are four types of decisions:

  1. Foundational decisions - E.g. choosing a business partner.  Take the time to get the right data before making these decisions, and look for ways to keep these decisions as flexible and revocable as possible.

  2. Trivial decisions - Delegate.  Get other people to make these decisions.

  3. Fatal decisions - E.g. breaking the law, shipping a product with a life-threatening defect.  Address these issues very quickly after you discover them.

  4. Every other decision - grind them quickly with as much wisdom as you can muster.

Learn to be content with winning.  You do not need a 100% win any more than you need to be 100% correct in your decision making.  Accept that 51% is enough to win.  100% is a goal, not a requirement.  Learn to be content.  In particular there are things you should never do:

  • Don't treat customers like criminals.

  • Don't insist that others lose in order to feel like you have won.

  • Don't stomp ants.  The business world is full of parasites, people abusing your policies, bad-mouthing you on the Internet, selling your product on the gray market.  Don't become obsessed with stomping all the ants to death; new ants always show up.

Some people are your greatest assets

Most employees are interchangeable parts in your corporate machine - but make sure that you have already set "good" as your baseline for all employees.

However exceptional people are people with something extra:  Attitude, Talent, Creativity, Initiative, Genius, or Versatility.  Exceptional employees work and care for the business as if they owned it.  One way to smoke out the exceptional people is to create a list of all your employees in the order in which you would eat them if your entire company was stranded for weeks on a remote, snowy mountaintop after your chartered plane crashed on the way home from a weekend of team-building.

The best way to take care of and keep your exceptional employees is to be an exceptional employer.  The best employees want to work for a business where they are treated with respect and dignity and where there is a great work environment:

  • The coolest tools

  • Choice of projects

  • Flexible schedule

  • Recognition

  • Freedom to play (time to explore and invent)