Jim's Group CEO Jim Penman on money, corporate culture plus more! with host Joel Kleber

That whole idea of a company and its employees and its customers is simply just a way of making money. I think it's a really gross attitude.

Hi, guys. So we're here with a bit of a different Jim's cast. We've actually got Instagram here as well going for anyone who's watching on the live stream. And there is Jim the man over.

There, stuck in a Jim's mowing stubby holder. It is.

It's the new version of it. It's a good phone holder. It's a stubby holder. That's a phone holder as well now. So we are live streaming a recording off the weekly Jim's Group podcast which we are doing. And we don't have any news to really report for Jim's Group this week, which is sometimes no news is good news because of.

Well, it's going good, actually. I mean, I don't know. Our training's coming back 22nd of June, which is exciting. In person training.

Let's talk about that a bit more, actually. Yeah, so let's. We had the temperature check station which people have seen, which is the thermal imaging camera. When you go up to it, it checks your temperature so they'll be in place.

Weird American voice speaking at you, telling you you've got the right temperature when you go in.

Yes. So that will be in place at training, won't it?

Yes.

So when they come to the.

Then we'll have one, we'll have hand washing and social distancing the rest of it. But we reckon we. We should be able to very safely have 50 people.

Well, 50 is the limit anyway. So make sure if you are thinking about coming to training, get in now because once the 50's done, we can't do anymore. Can't do anymore. Now, do you want to talk about the month afterwards? Because there's a bit of thing, you know, people within to stay and not come to training, all that sort of stuff. Maybe in July.

People cannot come to in person training. Will continue, the mobile training for sure. But we hope to go back to in person training. It's just that it's a different atmosphere as you know. It's just that feeling of, you know, being part of something and feeling that vibe, that spirit. It's quite noticeable. Naturally, you find the more people are there, the stronger the emotion is. I also just like to speak to franchisees. I like to meet everybody as far as I can, face to face, have it at least a short conversation with everybody there. Because what I've noticed is that when people have spoken to me, they're far more likely to call me back. I very rarely get people from Canada or the UK contacting me, but people from Australia who've been to this and sometimes from New Zealand who've been to the course. You think I've got a problem? I'll contact Jim just in case he's accessible, as they say, and they get me, and often it's very useful.

So if you can come to the training, please do so. I know it's tempting some days to stay just, oh, I don't have to fly over, but trust me, it's worth it if you come.

It's. Look, the online training is working okay, but it's a whole different experience.

You'll never forget it, so please do that. Guys, let's get into today's topic. Jim, so we had a chat yesterday and you're listening to an audio book, which you do.

Actually, it's on my tablet, as a matter of fact. It's an Amazon book.

Oh, it's a book, okay. You're reading a book.

I can't remember the title. Something to do with lab rats. But it's talking about business culture and about this thing that's been going on ever since the 1970s, since Milton Friedman, that says the only stage stakeholders that matter in a business is the shareholders, which of course, for Jim is me, of course. And people are coming up recently and saying things like, well, no, that's not a very good way to run a business. And there's other stakeholders that should be considered, like the employees, the customers, obviously, in our cases, our franchisees. And they just really rang a bell with me. I just think morally it's correct. The kind of stuff that goes on in a lot of these American companies is terrible. Like. Like they have a practice of every year they can the bottom 10% of performers, which is appalling. I mean, regardless of how good or they are, in absolute sense, whether they're trying them, they just get rid of them and then they put more in and people work incredibly ridiculous hours and just uses people out and spits them out. And I hate that kind of culture. I also think that even though some of these tech giants have done fairly well in recent companies like Uber and so forth, mind you, Uber's not even making a profit long term. Great companies do think about more than profits. I think it's a corrosive attitude and it's something that I would we really own. Not that I react against it, but it's one of the things that I very strongly feel about in gyms is that we are here for the benefit of everybody. And that's not just franchisees as I talk about, but also staff as well. And I take great pride in the fact that until quite recently we had three people working in gyms who'd been around like 25 years ago when we were in a single small office. A couple of them actually resigned. Since then, one's still with us. But to me that's good. And to me turnover of staff is a sign of failure.

Do you think so in America? Do you think that that ruthlessness in the corporation corporate culture is why their economy has been. Is the world's greatest economy?

I think in the short term it may actually have some benefits. But long term great companies, Hewlett Packard's a great example of that, of a company that really looks after people fairly well and builds relationships and builds culture. There's a series of books, James Collins, Good to Great, Built to Last, talking about the long term great companies. These tech giants are fairly new. Like Amazon is another example. Incredibly exploitative company. Every level.

Absolutely. Well, South Park. I don't know if you know South Park Gym, but South Park's a satirical program in America which is quite funny. It's an adult cartoon and they did a whole episode on Amazon. It was, it was quite, it was quite funny.

Well, it's awful. I mean, must say, I used to all the time I buy my books from Amazon and I get my audiobooks and there's really nothing else around it but the way they treat people in the warehouses and the sweatshop conditions and the base wages and the, you know, white collar head office workers are treated no better too. They're just incredibly miserly short term thinking. And I think in the long term, however much money these people make in the short term, it's just not a good, just not a good thing.

Now what do you try and do differently then? Is there something you actually try and do or you just naturally gravitated towards it or do you step outside the business sometimes and think about what can I do?

Well, I've always had from the beginning of gyms that my franchisees were my top priority. And that's something that I think when you have a look at companies like and Retail Food Group is a perfect example of this attitude, this exploitative attitude. Basically they went and they bought a whole lot of established franchises like Brumbies and so forth that had been booed up by somebody else and they just screwed them for the last dollar. And in the short Term that was pretty good for their share price, I presume. But in the end it just destroyed them. And these companies gone down, you've got massive bad publicity and inquiries and everything else, and they're down to a fraction of the value they were. It's just very short term thinking. In Gyms we just. Right from the beginning I had this attitude, no matter what it was, I wasn't going to do anything that would impact on my franchisees. The choices that you make, like for example, who do you choose? One of the things we push right from the beginning is that you've got to be selective and if somebody's not likely, somebody's likely to fail, you've got to say no to them because it's immoral to say yes. And I would. That's an ethical decision. But looking back, it's actually one of the most profoundly good business decisions I ever made to actually choose good people. Because people who fail are very bad in all kinds of ways. They put off. Well, they go out there and tell them that Gyms is a terrible idea and still does happen, of course, but any more than I can help it. But people who fail, they say Gyms is a terrible idea, don't do it, and they tell everybody they know not to do it. Potential for bad publicity. For example, they upset people who are in the system already and they drag them down and so forth and they take a lot of trouble and they upset franchisors because people you can't help. So it's a really, really bad idea. Even though in the short term putting on everybody would seem to be a great idea, we just don't do that.

And what do you think about the recent thing in Greenacres in NZ that we heard about the other day with them still charging fees during the lockdown?

Yeah, that's right. This is a franchisee who's made no money, who cannot work at all by law. Now, when we were told about this, we said, okay, we'll just suspend everyone, suspend everybody we spend at the franchisees fees. We suspended the franchisor's fees. Of course you do that. Not even nobody in Gyms would even dream of saying something different. And we just discovered that Green Acres say no, keep on paying us fees, you got no income. How is that fair? And it's not only immoral, but it's also incredibly, profoundly stupid because of course it got into the media. What are people gonna think about a company like that?

I know, and the silly thing for them is once a media outlet picks it up they're all syndicated. Right. So it goes from here goes bang, bang, bang, bang, bang, bang, bang. So when you type in Green Acres now into Google most likely that article for the next 10 years or five years is going to come up in the first couple of search results.

Yeah. So something happened in very early days when we were up against Vip, which is our major competitor. Look, I know, not vip. I think they're credible company in many ways, but one of their policies, they don't let people go. And they had six franchisees in the audience who wanted to go independent and they went to court and they lost the court. They had, you know, massively difficult court case and then it went on. The investigators all over the country, they never recovered from that. So. And we have a. Yeah, and so that, that sort of fight to the last kind of policy was just, just foolish. You're looking at short term income and you're not thinking of the long term consequences.

So I'll take it back to what you said about the American stuff you've been reading now. Let's just. So I think it's 10 days holidays, that's it in America. Do you think that in a way has contributed to a lot of the, obviously the economic prosperity, but obviously you can see the breakdown at the moment. We won't go into it too much, but there's a lot of breakdown. Do you think that sort of working conditions that's created that massive divide? Because there's a lot of poverty in America as well. There's a heap of people in poverty there now.

People are working at McDonald's warehouses, are in food stamps because they're so poor. It's a terrible system. I mean, in a sense you don't want to price people out of jobs, but the pitiful low wages they pay over there is just appalling for the kind of conditions they work under. I just hate to see that happening in this country.

Well, it's interesting. What do you think of tipping culture then? Because I know when I've been there once before, I can't understand tipping. If you're a business, you should pay your staff enough so they don't have to live off tips. What do you think about that whole tipping culture in America, for example?

Yeah, well, do you understand?

I don't understand it. I think if you're a business owner, you should pay them. And why they living off tips? I think it's ridiculous.

But yeah, I must say I don't, I don't tip. I'm a lousy, I'm A lousy restaurant payment. I don't tip. I think people get paid. Well, if I've got extra money, then I'd rather put it into something like scientific research or some sort of a charity or some of that nature where you can, where you can define.

What do you think about the modern CEO, then? So basically, when you're reading that book, you obviously have their main thing is to drive as much, make as much money, much revenue as possible to return if they're a public company, to that or for whoever themselves are, and then screw everyone else, is basically the sentiment. And what you found interesting, you said that they don't value the customer as a stock, don't consider the customer as a stakeholder.

No, they don't.

They don't. Which is interesting because for me, we obviously been taught the customer is the number one thing right after the franchisees. But I'm just saying the general business sense would be your customer, you know, is always right, customer's a priority, etc.

They do look after customers, but it's always from the point of view of is this good for our bottom line? Whereas to me, looking after a customer goes beyond that. It's a moral obligation. Even if I knew that we would never suffer any harm from a customer not being looked after, I'd still want to look after the customer because it's the right thing to do. So it's a different moral attitude. It's not that I don't care about customers, obviously they do everything they can to try and get the customers to come back and spend money, but customers don't have a value in their own sake as individuals. And sometimes you hear things that go wrong and, you know, there's no real good business case for it, but it's just the right thing to do.

Yeah, I completely agree. Now, what do you think of the actual. Was there much stuff written on about them as CEOs themselves, like the CEO mentality or their attitude or.

Yeah, just very ruthless and exploitative. It's just looking at the. These people are making this incredible amount of money. I think one of the things I find offensive too personally is that so much of this is based on. They put this vast investment into the idea and the whole idea is to build it up to something and then flip it. The whole idea of a company and its employees and its customers is simply just a way of making money. I think it's a really gross attitude. I mean, I love gyms. I've been, what, it's now 30 years, 31 years actually. This month since I started the franchise and I don't intend to do anything different for the rest of my life. I love this company. I have an obligation to my franchisees. I feel a sense of pride, of involvement. I have a meaning for getting up in the morning. It's not just about money and there's a lot of ways that you could use this, make a whole lot more money than we actually do. But it's, it's, it's far more than that.

And that's a common.

It's a family, it's community, it's a tribe. I love that, that concept.

Well, it's definitely a tribe. With the divisions you see when they come to training, you can definitely see the ones who in depending if they're cleaning, dog wash or mowing, they have a little tribe and where they go. But I was going to say it's quite interesting in what you said there about that. So is that you've always set out that mentality, right. It was never you, never. Because I've never intended to purely make this into a money making venture. Sort of an accidental story in a way. So what do you think moving forward that you would like to see companies sort of change their mindset to? I'll give you an example. Let's say ones like KPMG or these big ones, which are the massive firms where they're just there, you know, flogging people for their intellectual resources. And law firms, for example, is another good one. How do you think they should change businesses in the future? How do you think they should lead differently?

I think if people start acting ethically and properly, short term they'll suffer a.

Bit of a hit.

Long term it'll be good. That's one thing I'd love to do is Jim's Legal, because I know there's a. From wide experience after 30 years of business, there is. There is a huge difference between law firms. You have law firms that act decently and ethically in the interest of the customers and others just screw people in a way that I find unbelievable. They take money from a client knowing they must know that there's no possible way that this person can even get that much money back. Like at some of these cases, it's just awful what they do. And I reckon having a. If you could have a system of feedback so that lawyers who did the right thing were rewarded better than they are, then that would be positive.

It's a cloak and dagger profession really. I mean, it's quite interesting. You're right. You'd Think there'd be a lot more online about them and things like that, but it's really hidden.

There's a lot of cynicism about lawyers and sometimes it's justified, but sometimes it isn't. Some of the most decent people I know are actually lawyers. Really good, honourable, human, ethical human beings. I had a family law case 20 years ago and my family court lawyer was a lovely, lovely lady. She would lie awake at night worrying about the case and she just did everything she could to help. She was a fantastic human being. And some lawyers are absolute scumbag. I can't comprehend how badly they treat people and how they wreck people's lives.

But in the day they got to live with themselves though, Jim, don't they? They have to go in bed knowing it and at the end of their lives, for example, I don't think they're going to look back too kindly on what they've done. So that's how I look at things with that sort of. Karma always gets people in the end, Jim. So if you be a bad person doing that, it always catches up with you in some way.

Yeah, well, I think. I think ill gotten wealth doesn't do people any good. I think earning money in the wrong way will string back somehow either in your own life or what it does to your kids or whatever.

There's lots of miserable rich people, Jim. There's lots of miserable rich people.

There certainly are. And the people that are rich that are happy tend to be the ones that have actually made their money in a way that means something. And you read about some of these people like. Hewlett Packard. Yeah, yeah, good example. People who actually believed in what they do and they live for it and they get satisfaction out of their business. And then obviously you got people like Bill Gates that I've heard to report who actually use their money in a way that's helpful to other people. I think these are people most likely going to make some achieve happiness in life. Vast amount of money without happiness and without real benefit to your children. In terms of the kind of people they turn out to be, what's the point of it? What's the value? What's the value just being rich for its own sake.

Yeah, I've come across a lot of people like that. And their kids are reflection of their upbringing and they're not. Some of them are not very nice. Some of them turn out really, really well. It's just one of those things. But you're right, money people, people use money to compensate for a lot of things. And they go and buy a lot of things to make themselves feel better and all this sort of stuff and you know, it's good to have a nice car, whatever and. But, you know, is that really what you're missing? Is that really what you want in life sometimes, you know, deal with that inner stuff first before you've got to look after everybody.

I mean, we have a big thing at Jim's, as you know. We like. We just ordered a bucket box of home fresh box of home fresh fruit.

I love it.

We do things for staff. We have the staff lunch, which we just started to get on a Thursday. We're trying desperately to get a health club which is to a large extent to do with staff benefits. And I want staff to want to come to work here. I want them to enjoy working here. I don't want people to leave. I hate losing good people. It really, really upsets me when I lose a good person and what do we do wrong? Why couldn't we hold that person?

It's definitely been a lot, a lot. It's a really good. I love it as a place to work now. It's been really good. But the fruit thing is quite funny. Absolutely. The fruit thing's great. You know, we've got a couple of people in the office who buy junk food every day. So you're doing yourself, you know, you think yourself you're doing a benefit to the healthcare system. You're trying to reduce the healthcare bill, you know, because you know there's junk food around all the time. So having the box of fruit there.

Which we do, it does actually reduce the junk food. You can actually physically see it on the desk. There's less of that stuff lying around.

Like in sicken me. I'm always lecturing him in there, you know, they're always going, I need to do something about my health and fitness. And they go down and get hungry. Jack. So what are you doing? Weak minded, you know, same thing. So now they've got the fruit there. Give me the fruit.

Give.