Leadership Conversation - Episode 27 with Jim Penman

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Welcome to episode 27 of the Leadership Conversations podcast. Today's guest is Jim Penman. Jim is the Founder and CEO of Jim's Group. Jim started a part time gardening business While earning his PhD in history at La Trobe University. He launched a full time mowing business in 1982 with a $24 investment. He originally aimed only at taking on subcontractors, but his business grew and he gradually began to specialize in the building up and selling of lawn mowing rounds. By 1989 he franchised his business and since then Jim's Mowing has become the largest franchise chain in Australian and the largest and best known lawn mowing business in the world. Jim's Cleaning was launched in 1994, followed by more than 50 other divisions which now operate in Australia, New Zealand, Canada and The United Kingdom. Jim's group now has over four and a half thousand franchisees and a turnover of approximately 500 million. Jim says the key to success in franchising is an overriding concern for the welfare of franchisees and constant improvement in customer service. I'm really looking forward to asking him about that today. He is still actively involved in the running of the business, is directly accessible to all his franchisees and to any client with a serious complaint. He is funding a research program into the epigenetics of social behavior, a continuation of his PhD work, which he believes could help in the treatment of mental illness and addictive disorders. His books, biohistory, Bio History, Decline of the west, and Every Customer A Fan, are available on Amazon and from his website, biohistory.org well, I am so looking forward to this conversation. Welcome, Jim.

Yeah, how are you? Good to talk to you.

Yeah, great to talk to you too. We were just chatting before we went on, you know, started recording about. One thing you said is that it's been a very unique. Your story is very unique. And just reading, you know, your bio. That's so true. Tell us before we hear a bit more of your story in terms of how you got to be who you are and do what you're doing. Jim, tell us a bit about the context today. I read a few things there, the stats. But what does it. What does Jim's group look like now? And what does being founder and CEO look like in 2021?

Well, what do you say? It's doing very well. We're growing very, very fast. One of the peculiar things about gyms these days is about one third of our leads are unserviced. The demand for our services is vastly more than we can cope with.

Wow.

Which I attribute to the simple fact that we focus so much on customer service and people are very keen to. They want somebody who's going to provide good service, even though we make a point of not being the cheapest in the marketplace. So it's a very different philosophy. It's not what you see in business generally, you know, be cheap and advertise. We advertise little, but we focus on customer service.

Yeah. I can't wait to ask you more about that, because that is a very different philosophy. But I hear that and I can hear the wisdom in that. And so I hear that and go, well, no wonder you're experiencing more demand than you have supply for if you're. If you're focusing on customer service. So I really want to ask you more about that. Before we do though, give our, give our listeners a bit of Jim's story. You know, tell us as much as you want to share around some of the story of how you became who you are today, particularly as Jim the leader.

Well, it comes basically from me being a complete failure because I went to university, started in 1971 with the aim of becoming an academic. And the core of that was I wanted to understand the rise and fall of civilizations, which is. So I started off in sociology, give that away pretty quick, and focused on history. And then I completed my BA and then I went on to do a PhD. So I was quite confident that my ideas were good enough or strong enough to get me a career in academia. But I did something very foolish. In one sense, if you want to be an academic, you've got to focus on one area. Like if you're going to be a historian, you're going to be the absolute world expert in say the wars of the Roses middle phase in the 1460s in England, something like that. And not only was I not interested in one period, I wanted to look at all of human history and the broader, the better. African history, a pre Columbian American, East Asian. And to understand those sort of patterns, I started to look at cross cultural anthropology, how society is different, also psychology and also zoology and genetics, trying to find patterns in that which to me was essential to understand what's going on in human society. But from an academic point of view, it's virtually suicidal because I really, I really didn't know much about any particular period. And when it came to, you know, to write my PhD, they didn't know what to make of it. Two actually examiners put a paragraph back, which my supervisor said is completely unprecedented. You can't just respond to a PhD thesis with a paragraph and the other one says something like, what is this person Magnum opposite the end of a distinguished career then okay, but you know, who is this, this, this guy who's trying to overturn every idea about how society works? So there I was, I was basically completely failed as an academic. My whole career in smashed into smithereens in my late 20s. I was not only had no money, I was deeply in debt.

Wow.

And the only skill I had in any practical sense was gardening, which used to do as a part time student job, which I like because I like and pretty good money, you know, you can make more money in your own business. So that's what I knew how to do. So I started mowing lawns and I had like 24 bucks in some very crappy old equipment which soon gave up the gong. And I started from there. And I guess I, until that moment I never had any thought of becoming successful. A business of wealth, anything like that. It just hadn't occurred to me. But when I, when my academic career failed, I knew the only possible way I could get my research going is I had to fund it. Millions of dollars of funding to fund an academic. Because it's not just a matter of history, it's also things like all the research we do now is in the field of epigenetics and biochemistry and stuff. I've got a team working on it.

Yes.

So I need to be able to fund that. And I wasn't even an expert in the field, so that's why I had to become rich. And that was my simple idea. Somehow I had to be able to get the money to do my research. And that's always what's driven me.

That's fantastic. It's such a clear vision for being, I guess for the group being successful for you in terms of, well, what do I want to do with it? I want to be able to fund this really important research. I really would love to ask about your research you're doing at the moment. And we're sort of going to weave around into, into different places today. And I have to admit I'm very fascinated by you and your story, Jim. So it's really easy to ask you questions. Can you tell us a little bit about epigenetics and the current research that your team's doing?

Basically the conclusion I came to from my PhD work, which has been a lot developed since then, is that the key to history and cross cultural anthropology and economics and everything else is characteristic character determines. So society, politics, the economic reflects the sort of the general average character of the population. So if you have a population which is say, enterprising and ambitious and hard working, you'll tend to have be wealthy. If you have a kind of character which has very strong personal ties, you'll tend to have very fragmented politics. So you have civil wars and chaos and so forth. And what I did was suggest that this character really had to do with the way that animals control population in relation to food supplies. So that civilization in effect is the kind of character which is associated with limited food in animals. So what the research actually does is actually do experiments in limiting food to rats as it happens in various different ways at different times of life. And looking at the different changes, the changes in epigenetics, in pheromones, in hormones, in proteins, Cytokines, all kinds of different things, microbes even. And trying to understand what's going on and then from that work out a way to manipulate it, to change it.

Yeah. Incredible. That's really interesting and fascinating work. And I can hear as you described around your original Ph.D. how that, that's a really, really big idea. You know, that's a. You're linking some, something that across, you know, looking at the character of civilizations to. Yeah, that's so that's obviously something that's, that is unique to you is that there's an element of vision that showed up there in your PhD. You're looking, you're looking at civilizations and you're seeing a high level impact and strategy. Is that, is that something that has always been there with Jim's group as well? That similar ability to think high level like that, like you do with your PhD?

I think the biggest similarity is I'm very unorthodox in my thinking. I'm not governed by anybody else. I've never cared what anybody else thinks apart from the evidence.

Yeah.

What I was doing was outrageous. What I was saying was that all your historical explanations are all wrong. You know, why did the First World War break out? Well, it's nothing to do with politics or anything else. It's actually very similar to what happens to make lemmings migrate. It's what I call a lemming cycle. Second World War broke out with an echo of the First World War which is to do with the way that the First World War impacted on children born towards the end of the war. So it was completely novel thinking. And by the way, anybody wants to know about this www.Biohistory.org there's some nice videos in there which expl how it works. But anyway, so when I came to, when I came to look at the principle of franchising business, I wasn't constrained by what anybody else did at all. Now I only franchise in self defense. What actually happened was that I was running a small business, building up and selling lawn mowing rounds. And then another franchise system entered the market, VIP came from Adelaide. And I petrified of these guys. I thought they smashed me. They had 250 franchisees. I had like a half dozen studies.

Wow.

They had all these offices and videos and all kinds of really advanced stuff. And I thought these guys are going to crush me if I don't, if I don't, you know, do this in self defense. And I really didn't think I'd do anything more than just try and hold the line against them. In fact, when somebody asked me right when I first started what I would hope to do, I said, look, I don't know, but if it really works out, well, I. One day, one day, if possible, I might have as many as 100 franchisees. I actually said that that was the extent of my ambition. And if anybody told me, one day I'll have four and a half thousand, we'll almost certainly hit 5,000 next year, I would be an absolute idiot. You're a raving bonkers no way. But I had one principle in mind, and this is something that was very intense, very emotional. I wanted my franchisees to be fans, but that was my first priority. My first priority is the welfare of my franchisees. And I think if I can make my franchisees really, really, really happy, then just maybe I can survive against this really powerful, well financed interstate company, this national company that was threatening me. That was kind of the idea. So, you know, I set out to draw a contract up. Now, that was really hard because I would. My thought was, if I wanted to draw up a contract, I want something that I'd want to sign. Yeah, but lawyers don't think that way. They think, okay, you're the franchisor, you want all the power. And so I said, no, I want to give my franchisees all these rights. I want to give them the right to all jobs in their territory, but they can work wherever they want to. I want to give them the ownership of their customers. We can't take it off them. All this stuff I want to put. I wanted that automatic right of renewal as long as they're compliant with no further charges. I want them to be able to build a business as big as it possibly could be with as many employees as they wanted, as many vehicles or trailers as they wanted, but with no extra fees, only the base. Same base fees before. And the lawyer said, you're basically stupid. Nobody does a franchise like this. This is not proper. So I spent nine months largely arguing with lawyers, which was very frustrating. I actually find one lot got another lot. And then I got a contract, which I thought was the best contract I could think of. And then I got all my people. I wanted my founders together. Some people had bought lawmailing rounds off me that I was offering an exchange for, and some very good subbies I had. And I put them in a room and I gave them the contract. And I said, okay, guys, look at the contract. What do you think? And they said, well, we don't like this and this and this. So I Changed it. So I had a contract which is in terms of my first franchisees, the best contract that they could do. And the lawyer said to me, you're being crazy. This is not right. Thinking you're going to want to modify this with time, you're going to want to give yourself more. They talked about more flexibility. What they used to say to me is, you're being too nice. And I said, no, I want, I want something you'd have to be mad not to join. And they said, you're going to actually want to water this down. I did the absolute opposite. With time I put more stuff in place. I give my franchisees the right to change to a different franchisor if they're not happy, no other reason. If you're not happy with your own franchisor, go to somebody else and change across and your own franchise has no say. I gave my franchisees the right to vote out their franchisors, which by the way includes me. Went under direct franchisors and later on I gave them the right to veto changes to their own manual. This is not known. And nobody else in the world does this. And that's the same principle, John, really, isn't it? It's, it's looking at something totally through fresh eyes and said, I don't care what anybody else thinks, I don't care what they do. This is what I believe should be done. And I did it.

Yeah.

And what, what drove that for you.

At a deeper level? Why do you think you approached that and continue to approach it so differently?

Look, there's a temperamental thing behind it too. I was very, as a Christian, I'm very deeply impressed by the story of Jesus washing his disciples feet. Really extraordinary passage. It's something that's was so alien to the world at that time. See, washing of feet is a very degrading option. It's something that slaves did. People who were owned would wash somebody's feet. Now just occasionally, a really revered rabbi, his disciples would wash his feet as a sign of respect. What Jesus did to his disciples and that kind of servant leadership principle is very much the way that I think about life, I think about franchising. If you're a leader, your job is to serve your franchisees. And people sometimes franchisees sometimes refer to me as boss. I say, no, I'm not your boss. You're the boss, you're the client. I'm here to serve you, to help you to be successful. And that is my aim. So it's very fundamentally Christian thinking. You might say, and that is the. The core of the way I look at the world. But I also think, in a good business sense, I don't think the two are any different. Jesus actually is a very good guide to business. The principle of the parable of talents, for example. I mean, there's nothing more meaningful to me that God gives you talents. You're meant to use them in a way that is useful, that does something.

Yeah, I agree. I agree. And I love. You know, it's been really interesting doing these interviews with leaders from all around the world in different contexts, in different roles. And one thing that has come up again and again and again is a perspective as a leader to come in and say, my people aren't there to support me or serve me. I am there to support and to serve my people. And it's a fundamental difference, I think, between. It's something that I think the greatest great leadership has that. And if leaders want to step into a. And really become the sort of leader that people would want to follow, which is what I hear you saying as well, you wanted to be the sort of. You wanted to lead an organization where people would be, oh, I have to sign up for that because it's just. It's so fair. You have my best interests at heart. And if people want to lead like that, then I think serving people is sort of 101. It's really the first thing you can do to lead like that.

But I don't think everybody likes me, though. I can be a very, very tough character. I'm the only person in Jim's group that can delete a complaint or a poor survey, which is a very, very big thing with us. And Frank sis get very upset at me when I won't do it. I say, you've got to give me evidence. You've got to show me that the problem was Price, which is never a complaint with us. It wasn't some other aspect of poor service. If there's a problem with the client, you've got to show me that the client is now happy with you, that you've made them, you've done the right thing, you fixed the job, you've turned up, you've done it, they're content, and if they can't produce evidence, I won't take it off. And they get very angry at times and quite abusive. They'll even say things like, oh, you know, you're a hypocrite. You say you kind of put franchisees first, but I've got mental illness and mental stress because you won't take away these complaints that are so unfair. And what I always say to them is, listen, the problem with that is the reason that you can make a good living in Jim's group is because we've got so much work. And the reason they got so much work is because we are so fanatical about customer service that the customers aren't. The ultimate point of this exercise, you are. But for you to be successful, we've got to give great customer service, and we can't compromise on that.

Yeah, I love that perspective. When did you have that revelation, do you remember, about the importance of customer service?

When I was eight. When I was eight years old, I used to. I did a thing, we used to think called bobber jobs for the Cub Scouts to raise money. And you go and knock on a neighbor's door and you'd offer to do a job for a small amount of money. And this neighbor across the back fence. And Mr. Tapley got me to do a job, and then he said, do you want to have an ongoing job raking my driveway and stuff? And so I took that out. That was my first job. And I remember one time I was. I was. I didn't need a light drive bay rake, but he wanted me to take some garden clippings to the compost. On the way, I dripped some. And this guy who was very, very gentle man, he was very kindly. My father was a bit fierce. Mr. Tapley was very gentle. He just said to me, looked at me in a very disappointed way and said, if you're going to do it like that, I might as well do it myself. And I felt so ashamed. I'm never going to let this guy down ever again.

And that's a wonderful story. Thank you for sharing that. What have you learned about customer service? It's so central to what you do. For listeners out there who might be hearing this and thinking that's, yeah, maybe we have lost focus on what's most important. We focus more on strategy, X, Y or Z for our marketing and actually coming back to just delivering, being fanatical about making sure our customers have a great experience with us. What have you learned about great customer service?

It just. You just want your customers to be raving fans, in a sense. Of course, that's how I look at my franchisees. They're my primary customers. There's no. Really no different, but they're the important ones because fundamentally we've got so many of those other customers. We haven't got enough franchisees. We never have enough look, it's just a case of I have a standard I had when I was mowing lawns. I had a standard which was really, really high. For example, in the early days back in the 70s, I used to get very frustrated by edges. Now, lawn mowing. One of the things about lawn mowing is it's actually not that difficult to mow lawns. Well, it's quite difficult to do the edges correctly. And I had wheels so I could go along the concrete edges and cut it very neatly. And then I'd cut it with the mower and I put the left hand wheel on the concrete. And because mowers cut clockwise, they'd suck from the left. So I could do a really neat cut, but I couldn't get the other edges. I couldn't get around the trees or the clotheslines or the retaining walls. And there was this little scruffy bit of grass. Now, you know, no customer ever said to me, this is not good enough, never. But it used to really bug me. And then one day I was in the mower shop, which I used to go to, it was in Eltham at the time, and this guy who'd been in the business for decades, and I used to actually said to me once, he said, you know, Jim, you look after your customers better and your equipment worse than any contractor I know. Because I was always bringing stuff in with the most ridiculous things wrong with it, which is I just wasn't very good with machinery.

Yeah.

But I came one day with equipment to be fixed and because I was such a good customer, he looked at on the spot. And I was wandering around the shop while I was waiting for him, looking at it, and I saw this really weird thing in the corner. This is in the 70s. It's a long pole, had a handle in the middle, little engine on one end. Now the other end there was this plasticky thing with a bit of white cord sticking out. And I said, tom, what's that thing? And he said, it's a brush cutter. And I said, what is it? And he said, well, it's got this little nylon cord thing. And you basically pull this cord here and starts the engine. And the nylon cord whips out and it goes around and it cuts the grass without damaging the trees. And I said, tom, how much is it? And he gave me a price. That's a lot of money. That's more than a Mohawk. I had no money. I was an impoverished student. And I put it on the spot because I had to do that job perfectly. And when I had that I could do the job in a way that no client could do for themselves. Because even if you use this thing with the silver brush cutting, you don't know how to use it properly. If you're not a contractor, you've got no control. It looks horrible, but I could do a really clean and neat. And even when I finished mowing, I brush cut the front and the back and then I brush cut the nature strip the front and the back. And then I'd walk down the driveway and I was walking down, I'd leave the brush cutter going and I'd rev it a bit and I'd take the grass from the cracks in the driveway and I'd blow them up. And people would say to me, I never knew my lawn could look this good. I just did everything perfect. And it was so easy to find clients. They just come from everywhere.

Just because of the quality of the service you were giving people.

But it went far beyond money. And this is the thing I always say to people, it's not the, it's not that I'll do good service so I can make more money. I'll do good service because that's my nature to give good service and because it's offensive to me to give anything less than good service. And it's the same with franchisees, the same with clients. It doesn't matter. It's a really, really deep emotional drive. I really want to delight people. And one of my favorite jobs on Sunday evening, I ring up people who hit major anniversaries like 10, 15, 20, 25 years. And it's a great experience because they tell me how much difference it makes their lives. You know, one guy was saying to me that I asked how he got into it and he said, well, I used to work for retail and one morning, it was long hours and one morning my then 4 year old son said to me, daddy, why can't you have breakfast with breakfast with us? And he said he drove to work and he was crying on his way to work. And then he got there and he, and he quit the job on the spot basically. And he bought a Jim's mowing franchise. And he said to his son so many times, that was the greatest thing anybody ever said to me. Thank you for that. He said, thank you. So, so times now it's not because his income is, I think it actually makes a bit more money than he used to, but the biggest thing he'd been able to see his son growing up and all those years that he would have lost. Now that kind of story to me is the essence of everything that we're trying to achieve. And that's what gives me a lot more satisfaction than having a whole lot of money in the bank.

Yeah, you're right. That's what makes it all worth it, isn't it? That's a beautiful story. Looking back at your story, I'm interested in the ceilings you've hit along the way. Because your gym, you're there going maybe 100. Do you remember the first time Jim's group really hit a ceiling where you went, oh, wow, okay, how are we going to break through the ceiling? Was it when you had 10 franchisees? 100, 1000? Do you remember the first sort of ceiling you hit where you had to really change some of the way that you led or the way you managed in your role?

It sort of went so far beyond what I expected. You know, I had this goal of maybe having 100, maybe. And by the end of the first year, I had 60. People were just swarming in. I couldn't believe it.

Wow.

Look, in a sense, I really didn't hit it. The ceiling that I hit, the really serious one, was up until a couple of years ago, it was stuck just below 4,000. We had, like, about 3,800 franchisees, and we stayed that way for about three years. That was very frustrating. In fact, other divisions, like cleaning, were growing, but mowing was actually going backwards. And we had to really rethink what we were doing and how we were doing it. And we just launched a whole series of initiatives, like different ways of selling franchises, for example, and different forms of finance and stuff so we wouldn't lose people. And we took the prices way down, and we bought back quite a few regions ourselves, did a whole lot of stuff. And that was the biggest breakthrough. I mean, the mowing division alone has grown about 50 franchisees net in the last six months alone. It's exploding. So sometimes you just have to look at what you're doing. But look, I think people often get a misunderstanding about business. They sort of think somebody's going out, they're doing something ordinary, and they have some brilliant idea, and suddenly they're a multimillionaire and everything's going bonkers. But it's actually not like that at all. The biggest difference is to be successful in business. You look at what you do every day and you ask yourself the question, how can I do that better? It's not one idea, it's thousands of little ideas. And I mean that literally. There wouldn't be one day of the week, not evening, not anytime, not weekends, not Christmas day, not nothing. Where I'm not asking myself the question, how can we do it better? How can I give better service to my franchisees? How can I give better service to my clients? How can I give better service while also cutting costs? How can I look after my staff better? How can I be more effective myself? What do I need to do to change myself to be a better, more effective leader? All the time asking that question. And that is the difference.

Yeah, you're right.

That is such a great question to be asking yourself. How can I do. How can I become a better leader? How can I serve my customers better? I'm interested in your routine and what your day looks like as founder and CEO of Jim's Group. More about just Jim, the person behind an organization of that size. Can you tell us a little bit about some of your key routines in terms of anything that you'd share around self care, around work, life balance, around the big. I guess the things that you focus most on. You mentioned the Sunday night phone call for anniversaries. Can you tell us a little bit about how you structure your time when you're leading an organization that's now so large but also growing so quickly?

Well, look, the first thing about myself as a leader is I am incredibly incompetent at most things. I really am. I have exceptionally poor people skills. Notoriously bad. My wife says I'm just. She actually says I've got. I've got a mild form of Asperger's. I'm so bad at reading social cues. I'm very impatient. I can upset people a lot without meaning to. I get angry quite easily. I'm not very good at detailed work, you know, in terms of setting things up and like training systems and so forth. I'm not very good at finance. I'm not particularly good at it. I really. I don't have many skills. Now the great thing about that is because I am so thoroughly incompetent at most things, I have to try and find good people to be what I'm good at. So I have extraordinary people. My divisional manager, a guy called Rocky, is just amazing. He is just fantastic at organizing staff and getting things done and working out, training systems and communicating and so forth. And then I have my Cynthia, who's my wonderful finance head. She is amazing. She cares far more for my money than I do. She offers spending too much and can you save money? And, you know, I just have had to threaten her with a machine set to pay Rise. She's so dedicated. And then I had this wonderful guy, Kerem who's just started as IT head and he's an amazing guy. He's so fanatical about. My wife is wonderful, she's been a great helper, she's running the marketing department. She's sort of like self taught as a builder. She's an amazing lady. So I've got people around me who are incredibly capable and they can do things that I can't do very well. So what do I do on a day to day basis? Well, it's a very strange job. First of all I'm very keen on exercise this morning so far I have a half hour run, usually at least a half hour vigorous exercise every day with a cold shower. I drive my son to school which I think is really important. I don't think anything, no other success can compensate for failure in the home. And I think kids. I've got 10 children and I think children are absolutely as much the point of life as anything. I spend a lot of time dealing with complaints with customer service. I'm the only person that can delete complaints and that's an opportunity to have a look at understanding why they're happening and to try and coach people to do it better and to see what changes in the computer can make it better. I have a meeting once a week with my IT teams talking about the systems and what we're doing and how we can improve them. I spend just time, I do things management by wandering around, I wander around the office. I go in and chat to our group called Gyms plus which is where we sell our surplus leads to independent contractors. I spend time with them and talk about how they're going and what they can do better and they're very excited, hitting new records and all kinds of things and they're all wonderful group of girls and just chat to the people who are doing divisional support and how we can do better at that. I go and have a chat to Cynthia about finance, maybe a lot of emails. I'm very contactable Any. Every franchisee as you said in the intro has my phone number and email address. They can ring me anytime. Daytime, nighttime, weekends, it doesn't matter, I'm in church, I won't pick up the call but that's about it. So I just, I just stay very contactable and what I do a lot of, I don't know very much at all but I spend a lot of time listening, just trying to work out what's happening, being in touch with people Some of the most valuable actual insights come from franchisees contacting me and saying, I'm not happy with this. Now, quite often it's because they're not doing the right thing. And then I try and work with them to see what, how they can improve it. But sometimes a system is wrong, sometimes our software is wrong, sometimes the franchisor is doing the wrong thing. So that ability to be in contact with, you know, four and a half thousand people is. And also all of my staff is incredibly valuable. And you've got to. I believe in working at depth. If you just. If you just deal with it. I don't know if you ever seen the films, the series, yes Minister and yes Prime Minister. You ever seen those?

No, I haven't, no.

It's. It's really funny stuff. But one of the problems that Hacker has, the Minister, is all his information comes from basically his senior civil servants. He doesn't know what's going on, he has no clues. I remember I used to work for Department of Civilization when I schooled for unless I took a gap year and I moved it to six months and it was the most incredibly slack place you could possibly imagine. And I actually later time I had a chance to talk to the minister, he was a minister in the Whitlam government, and he said, oh, well, they were all flat out in my department and I didn't say so, but I said, not in your nelly. You've got no idea. Because you would never talk to a pleb like me and ask me what I was doing and I would have told you. I'm desperate for things to do and even now I can't even occupy half my time. So you work at depth, you understand the nitty gritty of what's going on. Like just as an example, we had an attempt to launch a trade exchange some years back, which is a terrible fiasco. Lost a lot of money, stupid idea, everything went wrong. But there was this young, There was this lady called Megan, single mother in her 40s, who was there, and she just impressed me. She was just a good worker and I gave her a pay rise and she actually had tears in her eye because she said, I've never ever been given a pay rise by anybody. I tell you what, she's now the head of one of my departments and she is the most fantastic manager you could possibly imagine. She is so dedicated, she is so full of ideas, of energy, of initiative. She's a great leader, she's inspiring. People love her, they work hard for it. She demands a lot of people, but they love her for it. She's just such an amazing lady. But I tell you something, in a normal business, how could the CEO of a company even know what somebody like Megan had, what potential she had? Because I would go and talk to people. Or another case, we had a young guy, Joel, who was occupied to do some work. No degree, no nothing. He was doing some basic administrative work just on a temporary basis. But I sort of talked in a bit, got to like him, moved him across into insurance as the assistant in the insurance department. And he just had ideas and he was talking about websites and stuff because I used to go in there and chat. He's now the head of my social media department and he's one of my top managers. And he's an amazing guy. He's had a huge impact on the business. But how would you know if you don't talk to people?

Yeah, you're so right. I think that, that, that accessibility, and I hear two elements to your accessibility is customer service is obviously central because you're accessible for complaint. You read complaints, you're the only one who can delete them. Serving your franchisees, that's customer service by being available to them whenever. But then obviously accessibility to your people on your team as well is part of who you are. And it sounds like part of the reason for a lot of your success in getting the best out of people. But also finding it sounds like some real hidden gems, people that others might have overlooked, where you've seen something in them and just acknowledged it and rewarded it and they've grown to be some of the best people on your team.

Yeah, yeah. And the people that are most effective often don't sound very good. Like, I've had. I had one particular manager who was so impressive. He just sounded great. He just gave all this great talk. And I had a business advisor. This guy is fantastic. This guy is so good. And he was actually, he, he was, he was no good at all when you actually. What he was doing. He sounded good, but he just wasn't effective. And yet someone who was a junior subordinate under his control actually proved to be a fantastic manager. So it kind of, Yes, I understand why so many businesses get into a mess because the people, people in charge just don't know what's going on. Like, I was reading a story about Blockbuster and about the failure Blockbuster and people think Blockbuster failed because the fact that, you know, online came on and everything else and the, you know, Netflix and stuff, but actual fact, they failed well before that. This is video stores. But it was amazingly incompetent, and the people in charge didn't listen to what was being told them all the time. So there was one franchisee who actually was quite successful, and he was telling them all the time, you got to do this and this and this, and he was doing it and he was succeeding and he was making it work, but they wouldn't listen to him. But. So, by contrast, this lady called Sharon, who was actually. She started as a cleaning franchisee, she bought a regional franchise, which is how our system works, and looked after croup franchises, and she was phenomenally successful. And then I came to her and I said, sheryl, I want to give you the dog wash division for you to run. And she's done that, and that's been amazing and jumped from 60 to, like 170.

Wow.

She's done is. She's worked out different ways of selling. She has a different method, different approach, and we've looked at that, and we adapted. I talked to Sharon all the time, of course, and we've learned from that, and we now apply that much, much more widely. And it's phenomenal. So by being in contact with lots of people, you get great ideas from everywhere.

Absolutely.

Are there any keys to finding great.

People that you've learned over the years?

I would say I'm the most incompetent interviewer you could possibly imagine. I haven't got a clue. This IT head, which we really. I mean, he's only been in his role for a few weeks, but my goodness, I interviewed him along with my wife and some others, and I said, his language is terrible. He doesn't speak very good English. I didn't favour him, actually, but my wife said, I thought somebody else would be better. And Lee said, no, no, this guy's good. He's got the right kind of mind. He thinks. He thinks in terms of systems and stuff. You've got to choose him. So I said, all right, okay, well, I'll listen to you. Because she has had a good track record, and it just turned out to be his. So far, he's doing absolutely brilliantly. And I couldn't pick it, but she did.

Yeah. Yeah. I'm a big believer in interview panels because of exactly that and. And vice versa as well. Sometimes you think this person's just amazing, and then someone else goes, but didn't you pick up on that big red flag? And you go, well, no, I. That. That wasn't some reason. I completely missed that because I was so in awe of this part. Of this part. Of it. I think interview panels are really helpful from that regard.

I just don't know how. Johnny, you've got to ask me one particular gift that I really like. I would say the ability to choose people well. And if I had that billionaire in six months because honestly, it's the biggest thing holding me back. I just don't know how to do it. I'm really terrible at it. I make some mistakes. I've actually got great stuff. I have a very. One thing I'm very proud of is that my staff in general are very long lived. I have very, very low attrition. But the one exception is at the senior level. I have been so bad at picking the right people. I've just had person after person. I've taken people who've been successful as franchisors, as divisional franchisors. I brought them in and it just failed again and again and again. So my middle to junior staff are fantastic. Very, very hard to find the right people to do the senior roles.

Why do you think that is?

I don't know. I'm just incompetent. I really don't know. I mean, seriously, when I look back at my career, I think how can anybody who's such an idiot as me ever being successful? I look at all this I've done, picking the wrong people, persisting with things after I should have dropped them. Just not just not understanding. I don't know. I mean, I'm 69 and I've only just started to learn how to run a business and I'm still a rank amateur. I really haven't got a clue. There's so much that I don't know how to do work very well. I just get better, that's all. Gradually, very slowly.

I love that though. I think there's a real gift in. In being aware of your own limitations because like you said, it really does get rid of any pride that could pop up and stop you from seeing someone else's ability because there's nothing. You just go, well, I know that I'm not actually any good at that. And I want to find someone who's world class.

I want to find someone who's 100.

Times better than me at that skill. And I think that's something that I've noticed a lot of great leaders have is that ability to say I want to have a team that absolutely show me up in every area. They're so talented. I want that team and I want to treat them well and lead them well. So that hearing you talk like That I guess for me it's not surprising then that you have been able to lead and have so many people who have done really well because you think like that.

One of the very few useful things I got from academic studies, useful to business studies is the idea of motivation, which from David McClellan, who's a social psychologist. So there's three basic kinds of motivation. There is power, there is affiliation, and there is achievement. Power is wanting to be better than somebody else. Affiliation is wanting to be liked by other people. Achievement is wanting to get things done. And what you often see in business is people who have got a very strong power motivation. In actual fact, he looked at US Presidents and judged them by their inauguration speeches. And for example, someone like Ronald Reagan is a power oriented person, whereas Jimmy Carter was achievement. Interestingly, in politics, American politics, power oriented leaders tend to do better. But what I found in business, it's achievement oriented leaders that do better because we're not interested, don't care if somebody has a good idea and they prove to be right. I will emphasize that again and again. I say you were right and I was wrong. I said it to Lee about this decision. I said, you were so right, that was such a good decision. So I'm always willing to give credit to people. I think that's, that's very useful if you're the kind of person that always wants to be right and you're not likely to listen and say, hey, no, I'm wrong and let somebody else show you and then you listen to some other person and that's an ability. There's an interesting thing about looking at leaders in American business. And one thing I do actually, which I'd recommend to anybody is I read and listen to a huge amount of books, probably at least two books a week about all kinds of subjects, a lot about business, but politics, all kinds of things.

Things.

But one of the things I remember reading about was the people who are most successful in business did not tend to be those who were ahead of their class. They tend to be very, in college, at university, they tend to be very average student. The really good ones went on to become, you know, investment bankers and lawyers and so forth like that, the smarter ones, accountants and so forth. But the people who were more mediocre were the ones that could actually go out and find the talents they didn't have.

Yeah, speaking of books, what, you know, what would be a couple of books that you gift the most? You know, if you have a great employee or you, you have a friend and, and you want to invest in them as particularly from a business sort of perspective. Are there any go to books that you would find yourself gifting to others?

Look, there's so many. One book I've read quite recently on the. On the recommendation of my daughter. One of my daughters actually is Atomic Habits.

Yes.

Are you familiar with that?

Yeah, I have. I have read Atomic Habits. It's a great book.

That's an amazing book. And it just talks about how if you look at the way that he thinks and stuff, a lot of that actually works the way that I do it, in terms of exercise and diet and so forth. But in terms of how you establish good habits and how you get rid of bad ones, it's really, really great thinking. One book that I actually, actually bought, I loved it so much I bought copies, multiple copies, and gave it to my key staff was no rules rules about Netflix.

I haven't read that one.

Amazing. And one of the things they talk about is, I mean, there's many brilliant ideas in it, but that you look at your staff and you put a very tough line. You say, okay, if somebody wanted to quit, what would be my attitude? Would it be a must keep? Whatever, I must keep this guy or okay to keep or I wouldn't mind and let him go. And he said, the thing to do is you look for the must keeps, the people who are really spectacularly good and the ones who you really should let go. Well, then let them go. If you don't mind. If they go, then let them go. So you have quality team. You have really, really great people. And you, and those who are great, you just give all the freedom, the independence, the rewards, the flexibility, you just give them everything they want. That's a wonderful book and it's been quite revolutionary.

Yeah, that's genius.

I love that.

So must keep. So you look at your people and you think, who are my must keeps who are okay to keep? And it, you know, actually wouldn't. Wouldn't really matter if they, if they left and you out of that, you look at your must keeps and you go, well, let's just give them anything and everything to make sure that they never, never want to leave. Let's particularly focus on them. And if anyone else in those other categories does want to leave, then let them go. But I think identifying those must keeps must have been a real game changer for you.

Well, the idea certainly was something that we pushed through. We've actually applied to some extent, but you actually actively remove the people who are. You don't mind losing. Yes, It's a tough process. Netflix actually doesn't have a higher turnover than most companies. It's nothing like the brutal thing they used to do at GE, which is you get rid of 10% every year before performance. That's just dreadful stuff. I hate that kind of thing. Awful corporation. And the way it's being run has been abysmal. I'm reading a book about how Gee Value has collapsed so utterly and it's not surprising the way it was written, including by Jack Welch, that he was revered, but he was a terrible leader and that brutal ways of treating people is just extraordinarily bad. I would never, ever, ever. And it leads to competition because instead of people working together on a project, it's this brutal struggle for survival, knowing that, you know, if you're going to be better than somebody else and you don't want to let anybody else get ahead. But yes. So their turnover isn't higher than in other industries, but they do tend to let more people go. They'd be generous with them, but they just push them out the door, which is a little harder in Australia, but you can still do it.

Yeah, yeah. And it's one of those things where it is, and I hear this about you as well, is, you know, the lawyers might have said that you were very nice in terms of the contracts, but I love the distinction. I think it's Patrick Lencioni who talks about the distinction between kind and nice. And I hear a lot of kindness in how you operate, but kindness. If you think of parenting as a great example, being kind as a parent is not about always being nice. There's a lot of moments. If you want to be a great parent, then you can't constantly be making decisions based on what, you know, a 5 year old or a 15 year old is going to say. Gee, I really love you for making that decision as a parent right now. But being kind is authentically wanting the best for that person and choosing what's best for them. And I hear that's a really big distinction. And I think a lot of not for profits in particular struggle with that because they go, we just want to be really nice. It's like, no, no, you want to be kind is what you really want to be. And sometimes to be kind of, you have to make really hard decisions. And like you said, it's about being generous in those moments and it's about doing it in a kind and the healthiest way you can. But it definitely doesn't mean you don't make hard decisions.

Yeah, it doesn't mean to say you're always nice to people, too, because sometimes we do terminate franchisees. I mean, we have a whole systems of warnings and coaching and all kinds of things. But sometimes if a franchisee cannot, cannot perform at the proper level, then we have to push them out. We have to say, you've got to go. You go independent, whatever. We don't mind if you take your clients and go independent, but you cannot stay with us because you're letting down every franchisee. See what we have. And the way I see it, and I think one of the reasons I have good staff in the whole, is because it's not about making Jim rich. I don't actually live a very luxurious life. You know, we have. I drive a $5,000 car and I buy my from Kmart, and Holiday to me is going up and working, cutting blackberries on my farm. I don't live a rich life myself. But we have a moral mission. And the mission is my research program, obviously, very much so. But it's also in terms of the franchisees, what we can do for them and being successful. And the trouble is, if you have somebody who's giving poor service, it's not just themselves looking down. They're looking down everybody else. And that other franchisees could be short of work. And see, the thing that I'm. One of the things I'm most proud of is something you can state statistically. If you look on the Internet and have a look at the proportion of people who start mowing and gardening business, this kind of thing, and fail in their first year, it's in the region of 90%. You can look at the statistics on this. They're there. There's a website called the Cleaning Janitorial association in America which absolutely reckons that 95% of cleaning businesses fail within a year. Okay. Our failure rate in terms of people leaving in the first year is 12%. And that's not all failures. And in fact, about 7%. And based on report, poor income, that's the difference. That 12% includes people who've just decided to get another job or they might have had health issues or they might have gone independent, all kinds of different reasons. So the difference between that 90% failure and this perhaps 10%, 8% failure, whatever it is, is the mission that we're on, and everybody's got to work towards that because it makes so much different. You're not just talking about. You're not just talking about one person. You're talking about thousands of people and their families and we have so much responsibility. When you are a leader, you actually change people's lives. There's something that happened a couple of years back in Perth where one of our franchisees went crazy and he killed his three little girls and his wife killed them. And that was such a terrible, terrible shock to everybody. Now, I didn't know this person personally, I probably met him at training, but I went over there to talk to the franchisees and we had a meeting in a golf club there, and most of the franchisees in the entire state turned up. And I tell you what, people were all so upset. People were in tears. It was such a terrible, terrible thing, because in a sense, there's this sense that we're a family, but we support each other. And I said to them at that meeting, I said, what can we do to reduce the chance of this happening again? Now, this wasn't anything to do with his business, by the way. He was happy. He's actually said. He said his business was very positive. He had a mowing business.

Yes.

But I said to them at the time, what can we do to reduce the chance of this kind of horror ever happening again? And they come up with all sorts of ideas. One of the things Frey said, for example, that people should have more access to help issues. So what we decided to do is to put a. A fridge bag together with all the emergency numbers, the health numbers, the concern numbers, and sent that one of those to every franchisee. Somebody suggested that maybe if there were mentors amongst the franchise, unpaid mentors, who would just be available to talk to somebody who needed it. And so I said, well, look, that's a lot. That's a lot to ask, you know, who would be paid to do such a thing. And you know what? Most of the people in that room put up their hands that we would volunteer. That was that sense of feeling unpaid to do this counseling work. So we've set that up as a system. We've got mentors all over the country. We've employed a psychologist now who's online. Any franchisee anywhere in Australia, anywhere in the world, can actually contact someone. You have a professional psychologist and speak to it. No. At no cost.

Yeah.

All these kinds of things are happening as a result of that, because it's not fundamentally, it's not a business thing. It's. You have a moral responsibility if something goes wrong. What could we have done? We had. Just a couple of weeks ago, we had a young man who's absolutely dreadful. He died as a result of an accident. He's using A chainsaw with one hand and it came back and cut him out and he bled to death before the ambulance could get there. And that's deeply shocking. So we go back and have a look at it. We're actually revamping all of our training and everybody's going to get really intensive compulsory chainsaw. It doesn't matter whether you're going to use a chainsaw or not, we're going to do it. Make it part of your induction course from now on. And working with height certificates and just really, what can we do about these kinds of issues? And it's not, ultimately, it's not a business thing, it's a moral thing, it's a personal thing, it's an emotional thing.

Yeah, that's a really significant distinction you made. It's not a, it's not a business thing. It's actually a deeper, at a deeper level. And as, as Jim's group, it's not, you know, yes, yes, we are a business, but we're a family and we, it's not just getting better for the bottom line. It's, it's, it's getting better because we have a moral responsibility to each other and to our customers. I want to ask you about data. You know, you're a researcher, you've done your PhD. Business wise, what data do you pay the most attention to? Are there any numbers? Is there any research, any focus groups, any market research, any customer satisfaction scores? Is there anything that over the years has really come to the top to be your number, that if you were going to look at one thing every day, that's the number you look at.

Okay. The most important number in Jim's group is what we call the support score from franchisors. Every year we run a confidential survey of franchisees. We actually email them, we ring them, we badger them, and we ask them about their franchisor. We say, okay, how often do they ring you? Weekly, monthly, less often, how quickly they get back to you? Get straight back, you take the call within 24 hours later. How helpful are they? Very helpful. Less helpful. How many meetings you have the last six months and how do you feel about your income? Not what you're making, but are you doing good, satisfactory, poor? Now what you do is you accumulate those score, particularly the first three, and you give them a service score. So, for example, we do awards, and if you're really, really, really good, you can get a diamond award. It's diamond, platinum and gold. Most franchises will get gold these days because the service is risen so much that Is very, very important. It's a big awards ceremony and stuff. We don't actually recognize franchisors for growth or making money. We just recog them for service, as decided by confidential surveys of franchisees. Franchisees don't know who says what unless they've only got one franchisee. They wouldn't know. They might see the code, but they don't see the numbers. That is the single most important statistic in Jim's group. And after that, there's what we call. There's a survey rating. Every time a franchisee does a job, we can all lead to a job that after 10 days, we actually contact the customer and just ask them what the service was like and if it's good. It's just very simple. Good, bad, price, whatever. Okay? And good is five stars, bad is one star, or anything wrong is one star. Any complaint, tall as one star. So that rating there is incredibly important way of understanding how well they're doing and providing rewards, incentives, encouragement, praise. Every time I talk to a franchisee, for example, I'll always look at their ratings and I'll congratulate them, which I usually do. Usually these days, they're very, very good, most of them.

Incredible.

And if they're not doing very well, then you can hone in and say, okay, what's gone wrong, by the way? A bad rating must be like 4.2. It's not that difficult to. But the good ones are like 4.8, 4.9, 5.0. More and more of those, too. So that rating is very, very important. And the lovely thing about it, too, is it's inherently positive because most franchisees get very good scores. The ones that get most upset is someone who's got this unbroken series of five stars and then a bad rating. They will do anything to get rid of it. Yes, money back. They'll go do the job all over again. It's become very big thing, and it's actually interesting since we've started doing this particular thing, is when the levels of leads have risen so dramatically. You know, unbelievable. We, you know, we've actually. We take a certain amount of money, about 140 bucks. Our franchisees pay up on average, about 8% of their turnover in fees. Not that way, but it's a base fee plus a lead fee. But we take about 140 bucks per month per franchisee for advertising. One of the really strange things in recent years is we had to start giving it back to. We just can't spend it. I mean, visions like fencing a lot of Mowing. We just, we've been like over a million dollars just, just recently because we just can't spend the money or sometimes we get uniforms and stuff because we just don't need the work. They're busy all year round.

I think there'll be a lot of listeners who are leading in an organization or leading an organization where they're struggling for leads who are going to have their, their jaws will be dropping at that. But I think everything you've said there about what you measure is the reason why, because you've identified customer service as king. If we can just give undeniably back to when you were 8, make sure that the person says wow and wow. I've never seen my lawn look so good. Across all of Jim's group. If you can do that and your franchisors treat your franchisees at that level and you treat your franchisors and your staff at that level, then it takes care of everything else.

It does too. We had a national conference once and we had a guy called Brian Duckerdale from the UK and this guy had decades of experience in franchising many, many, many different systems. He was an expert in that area and he said to me he's never seen anything like the gym's culture ever, which is that of genuine, real passionate concern for franchisee warfare.

Well, that is just a wonderful note to start, I guess wrapping up today, Jim, I would also love to officially invite you back maybe for another round to chat more about some of the other thoughts you have on leadership in coming months or down the track. I've just enjoyed this so much and it's been just a joy to hear your story and also to get to know a little of your ethos around how you around how you do business.

Yeah, sure. I don't know if there's much else for me to say. Very happy to talk.

And did you have any final thoughts for listeners?

No, I think that's pretty good actually. I just think that one of the things people and I guess is self interested pitch in a way. But I think one of the things people don't understand is what incredible opportunities there are out there. The service industry in general doesn't mean it's AGMS too in any area is fantastically open. The opportunity to grow, to develop, to have a great lifestyle in your own business. It's just amazing. I get frustrated by the fact that people always think you've got to go to university and have a degree. And I should know because I spent 10 years at university which was in terms of earning potential had zero impact at all. But people just don't understand how what amazing opportunities there are in the world of business and how just being focused on service and being focused on customers.

Can get you so so far, absolutely. And if people are listening and are interested in Jim's group, where can they find you? You mentioned bio history. What was the website? Biohistory.

We just look up Jim's group www.jims.net and that's where we are. We're not hard, we're not hard to contact. And you know, if you want to email me direct jims.net I'm very easy to contact. I don't give my phone out to anybody except franchisees. But I don't mind who emails me.

Yeah, Wonderful, Jim. Well, I want to say thank you to our listeners for tuning in and some of you who are leading in a role and looking, looking for a change and wanting something with a deeper meaning, particularly those who are Australia based. I wouldn't be surprised if there's some people jumping onto email jims.net because it's been just a wonderful testament to Jim's group today. Also, a reminder for our listeners that we also have a couple of other podcasts, the John O. White Leadership Podcast, where I just give you content. The recent one I did was the seven Rules for Raising Great Leaders. And so there's some content there. And the leadership question of the day where I put a stone in your shoe and ask you a leadership question every day to help you grow as a leader. So thank you so much for listening. But I really want to say thank you again to Jim Penman. It's just been honestly such a joy. I've got so many things going around in my head from today's conversation that have been really challenging in the best possible way for me as a leader. And I know that'll be true for our listeners. So thank you, Jim, for coming on.

Yeah, you're welcome.

Well, I hope you enjoyed that episode of the Leadership Conversations podcast as much as I did. If you're joining us for the first time, don't forget to check out consultclarity.org that's our website, consultclarity.org we have so many free resources on there, including our seven questions on leadership series. We've had more than 1,500 leaders from all over the world in all different roles in different industries answer these seven questions on leadership. And leaders give these in depth answers around how they spend their time. A book that's been Significant for them.

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It works.

So you can go to Amazon, look up, Step up or Step out. Johno White or store.consultclarity.org book well, thank you so much for listening. We're going to be back with a new episode next time of the Leadership Conversations podcast, and I hope today has helped you to take another step towards becoming the leader you're meant to be.

See you next.