Cameron Herold shows CEOs how to calculate their effective hourly rate (e.g., $500/hr for a $25M profit business) and stop doing work below that rate. He walks through hiring a COO by recruiting from competitors, not job boards, and quantifies a bad hire as costing 15 times the annual salary. Use Dan Sullivan's framework to categorize tasks and delegate everything that isn't your unique ability.
Chapters
How much do you earn in your business a year? What's your profit on that? $25-some million bucks. So it's $500 an hour. So $500 an hour times 40 hours a week times 50 weeks a year is, uh, $500 an hour. If you have jobs that you're doing that are $25 an hour tasks, which you probably do, if I was on your board, I'd be like, what the fuck am I paying you $500 an hour to do minimal? Like, I would literally lose my shit. Why are you doing it? If you don't have an assistant, you are one. Let that burn into your brain. If you're looking for a COO, where do you think you find one? Competitors' businesses, maybe? Yeah. Internally? Internally, possibly. Yeah. Better a W you know than a W you don't. Maybe a different industry. Networking. Networking, sure. I can tell you for sure that they're not looking for a job. A great second in command is not on Indeed and Craigslist and wherever else. Industry— they're not looking for a job. They have a job. They're already crushing it. You need to entice them and pull them away from your organization. Years ago, when Intrawest, that owned Whistler and Blackcomb, got acquired by a hedge fund in New called Fortress, and I heard about it on the news, and Intrawest was based here in Vancouver. Now imagine a company that owns all these ski resorts being acquired by a hedge fund. Do you think culture's going to change? Just a little, right? So I knew 5 people, 4 or 5 people at Intrawest, and I called them all one day and I said, I need you to introduce me to as many of the mid to senior level people as you know in the company. I just want to have coffee with them. What I really wanted them to do was have coffee at our office. So all these people started coming to our office at 1-800-GOT-JUNK, and they're like, shit, this place is really cool. We just ranked as the number 2 company in all of Canada to work for. We were twice ranked number 1 to work for in British Columbia. We were a cultural phenom in 2006, right when they got acquired. There were only 3 companies you wanted to work for in Vancouver: 1800 Got Junk, Lululemon that was from here, and the Vancouver Olympics that had just started to build out towards 2010. That was it. Everybody else was horribly average. We were the 3. As soon as these mid-level people came over to our company and walked into the office to have coffee, they were halfway to working for us. At that point, I just had to show them what the opportunity was, and I was able to poach them. We poached 7 people within 12 days. 7 mid to senior level people left, and the rest of the city was starting to wake up going, I wonder if we should maybe start recruiting. I already got 7 of them. The cost of the wrong person is 15 times their annual salary. So if you bring the wrong person into your company and you have to find out a year later that you're getting rid of them, if you're paying them $200 grand a year, it's costing you $3 million a year. Because of the problems, the opportunity cost, the mistakes, the negativity, the time that you're spending with them instead of the right people. So make sure that you really hire the right ones. I like using executive recruiters for these roles. I have 3 executive recruiters that we have all of our clients use. One of them only does COO searches exclusively. They only do second-in-command roles. We've referred clients to them for 11 years. He's on the board of Conscious Capitalism. He's the president of his YPO chapter.. He does North American searches for the role. That's who you got to talk to because they can actually find the right person who's the right culture fit for the right size organization and plug them in. Who knows the term unique ability from Dan Sullivan, Strategic Coach? The basic idea is there's 4 types of things that you do day to day in your job. You've got stuff that you are incompetent at, meaning you suck at it. You have stuff that you're competent at, meaning you're okay at it. You have stuff that you're excellent at, meaning you're really, really good at it, but you don't love to do it. And then you have your unique ability, the stuff that you love to do and you get fired up doing it. You'd do it for free except you have to pay bills once in a while. The way you can figure that stuff out for you is pretend that someone followed you around with a video camera for an entire month and filmed you kind of like Gary Vaynerchuk or Dan Martell. And they literally video everything you do for a whole month. And then you play back the video and you watch everything that you see yourself doing. Prep for meetings, show up at meetings, coach someone, attend masterminds, whatever it all is. And you might have 80 things that you do over the course of a month. What I do is I open up a spreadsheet and I write down every task, one task per row on the spreadsheet in column A. In column B, I categorize it for incompetent, competent, excellent, unique ability. In column C, I put an hourly rate down. If I was going to hire someone just to do that task, what would their hourly rate be? Forget about offshoring it for like a third of that price. Like, what would it be if you hired somebody even in North America? And then what I try to do is delegate everything that I'm incompetent and competent at. And try to hire people that can actually do the stuff that I'm excellent at that I don't love to do. And I certainly try to get anything below my effective hourly rate. So if your company makes $200,000 a year, your effective hourly rate's $100 an hour. If you make $2 million a year, your effective hourly rate's $1,000 an hour. Even if you divide it by 4, you should be delegating everything off your plate that's less than $50 to $250 an hour. All right, if you're the COO of a company that does at least $2 million or greater in revenue, or you're the CEO of a company and you're in the United States or Canada, if you would like a copy of my book, The Second command for free, go to cooalliance.com/freebook. That's cooalliance.com/freebook, and I will mail you a copy for free. I will even cover the shipping. Jump on that one today. Does anybody here do minimum wage jobs sometimes in their jobs, right? How much do you earn in your business a year, ballpark? What's your profit on that? $25-some million bucks. So it's $500 an hour. So $500 an hour times 40 hours a week times 50 weeks a year is $500 an hour. If you have jobs that you're doing that are $25 an hour tasks, which you probably do, if I was on your board, I'd be like, what the fuck am I paying you $500 an hour to do minimum wage? I would literally lose my shit. Why are you doing it? I haven't delegated it yet. But as soon as you start doing a minimum wage job, it should grind at you. Why am I paying my— like, you wouldn't pay one of your employees that. My executive assistant, who I've been with for 9.5 years now, has a full-time EA reporting to her, and she's hiring a second one as of this morning to really get more stuff off her plate, to work on the higher-level projects with me. Because it's just, it doesn't make any sense. If you don't have an assistant, you are one. Let that burn into your brain. It's actually not my quote, it's Jack Daly, is the guy that I would attribute that quote to. If you don't have an executive assistant, you are one.
